Q+A debate: Grant Robertson and Paul Goldsmith battle on post-Covid-19 economy

October 4, 2020

National and Labour’s finance spokespeople outline their plans about getting New Zealand’s economy on track after Covid-19.

Contrasting visions toward economic recovery following the Covid-19 pandemic saw passionate exchanges between National’s Paul Goldsmith and Labour’s Grant Robertson on Q+A this morning.

Debate topics between the two finance spokespeople included tax, spending, the price of housing and superannuation. 

TAXATION

Host Jack Tame asked the pair why both National and Labour 's tax policies didn't broaden the tax base to include, for example, a capital gains tax, given the rising cost of housing despite the economic downturn following the pandemic.

Robertson said Labour was "prioritising stability at the moment".

"I think a major shake-up of our tax system right now just isn't right in terms of providing certainty."

He said Labour's tax policy, which proposes to introduce a new top tax rate of 39 per cent for income earned over $180,000, will help with the Government’s balance sheet. 

But, the policy is expected to affect the top two per cent of earners, and raise about $500 million a year.

Robertson said Labour may look at other taxes "in the future", but said tax is only ever one part of the Government’s books. He said it also needed to consider job creation, debt and the economy’s productivity and sustainability. 

"We will seek a mandate for anything we want to do in the future," he said of further taxes.

After taking digs from National, Robertson said their numbers did “add up” with the graph later being corrected.

Goldsmith said the previous National Government didn't have to raise or introduce new taxes while it was recovering from the Global Financial Crisis in 2008. 

So, there wasn't a need to introduce more taxes to recover from Covid-19, because National would focus on "growth and careful spending", he said. 

Goldsmith said a National Government would have $1.8 billion extra to spend each year on health and education. 

The party had based their projected debt target on older figures - a mistake which Labour's Grant Robertson pointed out.

But, Robertson accused National of falling into a "fiscal Bermuda triangle", repeating his comments from September. 

"He wants to cut taxes, he wants to increase spending, and he wants to dramatically speed up the repayment of debt. You actually can’t do all of those things credibly," he said of Goldsmith. 

Goldsmith rejected his comment and said: "You can if you're skillful."

TAX CUTS

Goldsmith this morning re-iterated his party's policy to cut taxes from December this year for 16 months. 

It could mean a worker earning $64,000 per year would get to keep an extra $3226 over a 16-month period, with the policy estimated to cost $4.7 billion. 

Meanwhile, minimum wage earners would keep an extra $8.10 a week.

Goldsmith said in September the $4.7 billion would come out of the Covid-19 Response Fund. 

"We've allowed another $4 billion for potential spending, and then we're working on the assumption we can use the rest of it to pay off debt."

He said that would leave about $9 billion left to spend on the fund.

Later in September, Goldsmith defended targeting middle-income earners on Q+A, despite economists saying tax cuts to lower-income earners led to more spending and economic stimulus.

National’s finance spokesperson Paul Goldsmith says it’s about giving money back to “people who are working hard”.

"We want to put some extra money into the hands of people who are working hard," he said at the time.

When asked by Tame today whether those on lower incomes would more likely spend their tax cuts in the economy than those on higher incomes, Goldsmith said: "Yes. ... But, there are many ways to stimulate the economy."

He added: "Everybody can spend money."

Goldsmith couldn't point to an economic theory that supported his point that tax cuts for those on higher incomes would deliver the greatest economic stimulus when asked by Tame. 

But, he said there was "very clear evidence" giving money back to people stimulated the economy. 

Robertson said National should focus on median incomes, rather than the average. 

He accused the policy as an example of trickle-down economics, to which Goldsmith said: “There’s nothing trickle-down about it.”

SMALL BUSINESS

Goldsmith said National's proposed policy to double the depreciation rate of new equipment and machinery worth more than $150,000 was one of the party’s many policies aimed at giving businesses confidence to invest and hire new staff. 

"It's tens of thousands of businesses large and small taking on that extra person that gives you the chance to have a job and that gets the economy ticking."

Under Todd Muller, National also proposed giving businesses $10,000 per new employee they hired, up to the value of $100,000.

Tame challenged Labour's proposals to double sick leave, increase minimum wage and introduce a new public holiday, all of which put additional pressure on small businesses.

Robertson said Labour was following the advice of its Small Business Advisory Panel. 

He also pointed to the Small Business Cashflow Loan Scheme and the Government's regulation of merchant fees .

Goldsmith criticised Labour's proposals, and said increases should "be based on productivity". 

"You've got this naïve sort of the view of the world, somehow you tell businesses to pay people more, and magically it happens," he said.

HOUSING

Both spokespeople did not say outright that the price of houses should drop. 

Robertson said "sustained moderation" was appropriate when it came to house prices, and "not having the big spikes we've seen".

Goldsmith said prices of houses should be lower in some areas, but wouldn't point to specific areas. 

"We don't need a capital gains tax," he said.

Both parties are proposing to amend the RMA. 

Robertson said of property investment: "There's a security in property in people like."

RENTING

In response to Residential Tenancies Act changes this year, Goldsmith said: "This Government’s gone to war on landlords".

Robertson rejected the statement and asked what was wrong with providing renters warm and dry housing.

Goldsmith responded: "Every little change on its own might make sense. But, if you do them all together at once … in totality, it means that you end up with a shortage of supply and the price goes up, and that is a real driver of poverty.

"If you're concerned about poverty, this is making it much, much more difficult for New Zealand households."

Property owners say it will now be harder to get rid of the few tenants who are ratbags.

He also pointed to the record-high waitlist for social housing and the Labour not keeping its KiwiBuild promises. 

But Robertson said the long list was because Labour actually recognised those who needed housing. 

SUPERANNUATION

Goldsmith said introducing universal superannuation was one of the best policies the country had introduced because it gave retirees security, and the policy was affordable over time with a strong economy. 

He said National would move the superannuation age from 65 to 67 in 18 years' time.

Robertson said superannuation was affordable "if we prioritise it and we don't go around cutting taxes".

Watch the full episode of Q+A on TVNZ OnDemand here.

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