Dear Friend,

As we've said since the election – the uncertainty of a couple of extra weeks of negotiation is nothing compared to the benefits of a better outcome for New Zealand.  And, having now had the documents for a few hours (your humble Taxpayers’ Union received the documents under embargo at the same time as the media 😀) – on first impression it is a worthwhile outcome.

Of course, the coalition agreements contain a few political boondoggles. For example, Winston Peters gets the racing portfolio, Shane Jones gets regional development (ahhh!), and NZ First can tell government agencies to use woollen carpets to support the wool industry, rather than the cheapest (taxpayer friendly) option. 

But overall , these documents represent a solid programme of reform consistent with the change New Zealanders voted for last month.

Below are some of our highlights – but are the actual documents are available to download here:

1. National – ACT coalition agreement
2. National – NZ First coalition agreement
3. Ministerial list

The Ministers

On a personal note, we are delighted that our friend (and former Taxpayers’ Union Chair) Casey Costello goes straight into Cabinet as Minister of Customs, Minister for Seniors, Associate Minister of Health, Associate Minister of Immigration, and Associate Minister of Police. On behalf of all of us here at the Taxpayers’ Union, congratulations Casey!

Similarly, Chris Bishop – a friend of the Taxpayers’ Union since day one. Chris was my debating coach when I was at school (yes, I admit it, I’m a nerd), and his dad, John, was instrumental in setting up the Taxpayers’ Union when David Farrar and I approached John to be our first Chair.

From Monday, Chris will be Minister of Housing, Minister for Infrastructure, Minister Responsible for RMA Reform, Minister for Sport and Recreation, Leader of the House, and Associate Minister of Finance.

The Wins

So from a taxpayer perspective here are the wins:

• Stop-work notices:
  • Three Waters – With people-power we Stopped Three Waters!!! 🎉🎉🎉
  • Auckland Light Rail 
  • Let’s Get Wellington Moving
  • The Income Insurance tax
  • Lake Onslow Pumped Hydro – This was a Think Big scale boondoggle that has screwed up investment in electricity generation for too long. Good to get certainty on this.
• Remove co-governance from delivery of public services and ensure government contracts awarded are based on value, not race – This so so basic, but so vital. We have lost count of the number of small business people who have contacted the Taxpayers' Union in recent years because they've lost government contracts because of their skin colour. Racial preference in procurement was one of the most disgraceful policies from the Ardern-era, and thank goodness it's gone.
• Repeal the Natural and Built Environment Act 2023 and the Spatial Planning Act 2023 by Christmas. – Our “Stop Central Planning Committees” campaign worked! 🥳
• Replace the RMA with new laws focused on property rights. – This is huge. The RMA is arguably the biggest handbrake on New Zealand’s economic prosperity. If they get this right, New Zealand could set a course to growth not seen since the early 1990s. 🚀
• Reducing public sector spending by setting headcount targets based on 2017 levels – Arguably the public sector was already bloated in 2017 – but it is a start!  Wellington will hate this. 🫢
• Repeal Labour’s Fair Pay Agreement regime by Christmas –  Labour’s dream of 1970s-style negotiation models was never going to work in 2023. Nevertheless, expect Labour's union mates to scaremonger.
• Return the Reserve Bank’s mandate to solely inflation, with a clearer time horizon for targets. – More than anything else, this will help tackle the cost of living. Hopefully Adrian Orr does the decent thing and falls on his sword too. 🤞
• New Regulation Minister and Department to replace the Productivity Commission. Will assess quality of new and existing regulation. – If done well, this could be as significant as Ruth Richardson’s pioneering Fiscal Responsibility Act, but for regulations. 🙏
• Restore mortgage interest deductibility for rental properties, with 60% deduction in 23/24, 80% in 24/25 and 100% in 25/26 – When Grant Robertson claimed that interest deductibility was a ‘tax loophole’ the world financial commentators laughed at him. The coalition agreement restores for housing the status quo enjoyed by every other type of investment.
• Repeal clean car discount – During the election campaign, Christopher Luxon showed he understands how the ETS works and isn't prepared to ignore the ‘waterbed effect’ for popularism. Despite the rallying cry from the electric car people, the subsidy does Zipadee-Zip to reduce New Zealand’s emissions. This is a good sign taxpayers won't continue to lose money on politically based climate change headlines that do absolutely nothing. 🚗
• Freedom to contract re: contractors. Uber drivers etc unable to challenge employment status in Employment Court
• Repeal ban on offshore oil and gas exploration. – Ironically, this will likely see NZ use less coal and reduce energy emissions! Somehow we doubt the Green will see it that way... 💚
• Reintroduce partnership schools – This time round, ACT have managed to get National and NZ First to agree to allow existing state schools to become ‘partnership schools’.
• Abolish Māori Health Authority – Less money on hui, more on frontline doi – just what the doctor ordered! 🩺
• Require Medsafe to approve new pharmaceuticals within 30 days of them being approved by at least two overseas regulatory agencies recognized by New Zealand. – This is a real win for our friends over at the NZ Initiative think tank. Why are kiwi taxpayers paying to replicate what the American FDA (and other overseas agencies) already do?
• Repeal Canterbury Regional Council (Ngai Tahu Representation) Act 2022 – This will stop the outrageous situation of having two totally unaccountable and undemocratic iwi appointees on the Canterbury Regional Council. Another win for the Taxpayers' Union.
• Restore local referendums on Māori wards, and require them for future creation of Māori wards. – Big win here. We've campaign for years that the model of local democracy should be up to the people, not the politicians. Thank you for making it possible to highlight, boring the politicians to take it seriously. 🙏

 The Not So good

• Enable Auckland congestion charging. – We agree with congestion charging in principle, but not while the Auckland Regional Fuel Tax is in place. Helping Wayne Brown tax more when his Council still wastes billions, doesn't make Auckland more affordable! We will be fighting for assurances that the new tax will be revenue neutral (i.e. Auckland ratepayers compensated elsewhere).
• Replacing first year fees-free uni with third year fees-free. – The transfer from the working class to grads who are likely to be higher income earners will continue, but at least it pays for kids to finish a degree, rather than making it costless to just start it.
• Taking up to 6 months to issue a Cabinet Office circular stating that Government services should be prioritised on need, not race. – But why take 6 months?
• Only supporting a Treaty Principles Bill up to the select committee stage. – The National Party and/or NZ First are clearly not convinced on ACT's policy for a referendum to define the Treaty principles once and for all. It is judicial activism about the so-called ‘principles’ that got us onto the path of undemocratic race-based government and many will believe that only a referendum will put it to bed and prevent backsliding in years and governments to come. Clearly a well-organised organised grassroots campaign could get the government over the line.

Public sector reform, and cutting the cost of government

Nicola Willis managed to win over both support parties to deliver tax relief effective from 1 July next year.  While her package is modest (it doesn’t even compensate for fiscal drag – where effective tax rates get higher thanks to inflation pushing incomes into higher marginal tax brackets – since the start of the last Government) at least it is a start! But with NZ First vetoing the foreign buyers tax, Christopher Luxon and Nicola Willis will need to work even harder to slim government agencies (good!) or face borrowing even more (bad!).  

Based on what we are hearing around Wellington, and what is now slowly coming to light about fiscal stink bombs that were not included in Treasury’s pre-election fiscal update, it’s looking likely that deeper cuts or a later surplus is inevitable. The first meeting between Ms Willis and the Secretary to the Treasury – who is supposed to ensure there are no fiscal surprises for an incoming government – could be awkward... 👀

All eyes will be on the half-year update, that must be published before the end of the year. 

The unlikely ally? Winston gets it. 🦅

NZ First’s agreement contains the commitment to Reduce Core Crown expenditure as a proportion of the overall economy. For this to come from NZ First, rather than ACT, suggests they ‘get it’ in terms of the fiscal challenges New Zealand faces. We were watching Mr Peters comments very closely prior to the election, and they were refreshingly hawkish.

After all Mr Peters is experienced enough to know that the only true tax cut is a cut to spending!

Where to from here?

Right now the team are at work, heads down on policies and possible Parliamentary bills consistent with the objectives of the new Government. While the coalition agreements are a great first step, the devil is always in the detail, and we know that once officials get the ear of Ministers, everything becomes much harder.

Join us tomorrow with special guest, Lord Daniel Hannan

Tomorrow, we celebrate our first 10 years, hosting Lord (Daniel) Hannan, and special guests at the Gibbs Farm. We will also be launching our book The Mission – The Taxpayers’ Union at 10.

We still have a limited number of tickets available, so if you would like to join us at the most impressive outdoor sculpture park in the southern hemisphere, head over to our website for details on how to buy tickets.

Onwards and upwards!

Jordan Williams Executive Director New Zealand Taxpayers’ Union.