Taxpayer money-go-rounds hampering growth: NZ Initiative 21 Nov 2014
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- Sludge Report #192: The Naked Budget Columns
- Budget 2010 – Building the Recovery News
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
Taxpayer money-go-rounds hampering growth, says NZ Initiative
By Pattrick Smellie
Nov. 20 (BusinessDesk) - Income redistribution schemes such as Working for Families, which pay back money people have often already paid as tax, are a barrier to the economic productivity improvements that could easily overcome projections showing New Zealand faces a long term government debt problem, says a new paper from the New Zealand Initiative, a think tank.
Authored by economist Bryce Wilkinson and research assistant, Khyaati Acharya, the "Guarding the Public Purse" report suggests New Zealand has slipped behind best international practice in its control of government finances and would benefit from establishing an office of Parliament akin to Australia's Parliamentary Budget Office to independently monitor progress towards the government's published fiscal goals.
A table in the report shows that New Zealand was a pioneer on fiscal rectitude with the introduction of the Fiscal Responsibility Act in 1994, ahead of similar legislation subsequently implemented in 21 other countries that belong to the rich countries' club, the OECD, but has since lagged other countries in the range of budget rules it imposes on governments.
Some 22 countries, including New Zealand, had rules requiring publication of explicit budget and public debt targets, but New Zealand was not among 13 to have a rule targeting the level of government spending as a proportion of the economy, unlike 13 other countries.
Using 2013 projections of public debt published by the Treasury and showing a serious threat of a public debt build-up as the New Zealand population ages, the report says that problem could be more efficiently dealt with by having a more productive, faster-growing economy as by cutting spending or raising taxes.
However, that would require pursuit of policies that raised economic productivity.
"Increasing labour force participation by raising the age of eligibility for New Zealand Superannuation, lowering the minimum wage, improving educational outcomes for the tail end of school leavers and reducing the extremely high effective marginal tax rates imposed on some welfare recipients," are cited as ways to increase productivity, along with "reducing unnecessary spending on transfer payments to those on middle and upper incomes."
The Resource Management Act was also a "stand-out obstacle to investment and productivity, but is hardly atypical," the report says. "Less restrictive product and labour market regulation would be pro-growth."
Among its main recommendations, the report says "corrective policy actions should focus on reducing barriers to achieving higher economy-wide productivity growth, in part by reducing the degree to which national income is needlessly churned through the tax-benefit system and increasing the role for competition and price discovery in the provision of goods and services."
The report warns it will become increasingly difficult for future governments to deal with issues created by the ageing population, such as the age of pension entitlement and public health care.
By the mid-2050's, people aged over 60 will comprise around 37.6 percent of eligible voters and, because older people vote more than younger people, could account for 50.2 percent of those actually voting, based on analysis of the 2011 election.
In New Zealand's favour, however, is the fact that these future problems "arise primarily from demographic and health care cost factors rather than from the burden of existing (government) debt", which remains low by OECD standards.
The proposed independent budget office would monitor the government's compliance with fiscal responsibility principles, the Treasury's expenditure control and assessment procedures, the credibility of the government's fiscal plans and the performance of government agencies. The office would also service Parliament's finance and expenditure select committee.
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more