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Dear Friend
Going for
Growth
What gets
us up in the morning is a determination to put a stop to the economic
drift - and the low productivity - that New Zealand's had for a
generation.
Economic
growth isn't the silver bullet to all New Zealand's problems, but it
comes close! Only with growth can we afford world-class public
services, to protect the environment, and economic opportunities so
our kids (and grandkids) can thrive.
And with
the Prime Minister now 'talking the talk' on growth, our job is to
ensure the Government 'walks the walk'.
That's why, today we are launching the first of a
series of Taxpayers' Union Briefing Papers: Going
for Growth: Full Expensing of Capital
Expenditure.
The best
tax policy you've (probably) never heard of: Full Expensing
🚜🖥️
Simply put,
Full Capital Expensing lets businesses write off the cost of new
equipment, machinery, and technology immediately, instead of dragging
it out over years through depreciation schedules.
In other words, it
puts money back into businesses faster, allowing them to invest,
expand, and create better jobs and higher wages for hardworking
Kiwis.
Here at the Taxpayers' Union, you'll
understand that we love tax relief (no kidding). But this is,
we think, the best type of tax relief in terms of promoting economic
growth, and its driver: productivity.
Politicians
often like to dangle personal tax relief (National) and entitlement
handouts (Labour) in front of voters as a sweetener to get people to
rush down to Harvey Norman for big-screen-TV-fuelled economic sugar
hits.
In
comparison, Full Capital Expensing promotes the very type of spending
that serves to make New Zealand's economy more productive and labour
more efficient (which is the key driver of wages).
And the
best part: if introduced as part of Budget 2025 (which is less than
three months away) it could serve to boost the economy immediately.
Unlike most tax changes, it could come into effect straight
away...
And this
policy has form! As covered in the Briefing Paper, it's proven
effective in the UK and the USA. More investment means more
productivity, higher wages, and more tax revenue in the long
run.
Read
the Briefing Paper here.
The 'use
it or lose it' approach 😉
We think
Full Capital Expensing is such a good idea, it should be done right
now, and made permanent.
But if the Government wanted to really put a
rocket under the economy in the short term, Nicola Willis could tell
firms that Full Capital Expensing is time-limited (as happened in the
UK and USA, originally).
Think about
what that would mean. Say you're a business owner looking to upgrade
machines or build a factory later this decade. If suddenly you could
deduct the cost from taxable income (rather than do the same over a
decade or more under IRD's complex depreciation rules) you'd bring the
investment forward to take advantage of Full Expensing,
right?
That's what
makes this tool so powerful in boosting capital spending and
productivity.
We
set out this option in the Briefing Paper.
War on
Waste 🎯 NZTA's $85,000 golden gecko wild goose chase 🦎🪿
From the
'you couldn't make this up file', the team have uncovered that Waka
Kotahi NZ Transport Agency (NZTA) has shelled out $85,000
to catch and relocate just one lizard in
Taranaki!
Since one
skink was found back in 2023, NZTA have been waiting for sign-off to
send in the lizard life-savers – and we wonder why infrastructure
takes so long and is so expensive...
The $85,000
includes travel and accommodation costs for our gecko guardians -
because for a project in Taranaki, a Rotorua-based company was
contracted to conduct the gecko hunt in New Plymouth, employing
contractors from as far afield as Wellington.
We're all
for conservation, but not wild goose gecko chases. But to be fair to NZTA,
they've got some catching up to do – remember when we uncovered Otago
Regional Council's $2.76 million hunt that nabbed just 18
wallabies?
The
Reserve Bank's Orr-deal is over (finally)! 🥳🎉
Reserve
Bank Governor Adrian Orr is finally out the door, and his
resignation couldn't come soon enough. Think we’re overstating things?
Buckle
up.
 Orr's "Large Scale Asset Purchase
(LSAP) programme" (effectively, a fancy name for money-printing) lost
taxpayers $11 billion because when interest rates rose after COVID the
value of the bonds plummeted. Those losses (underwritten by Grant Robertson the
taxpayer) could pay for four Dunedin hospitals. Per
household, it's five and a half thousand
dollars!).
Then
there's the extreme capital rules (applicable to how banks finance
themselves) that spiked mortgage costs, putting an extra
$3,750 on the annual interest bill for a $1 million home
loan.
And being
too slow to ease up on interest rates plunged New Zealand into the
worst
economic downturn in thirty years.
Under Orr, the
Bank's staff numbers increased 2.5x between 2018 and 2024, and the
cost to taxpayers climbed with it. No wonder Nicola
Willis refused Orr's demands for $1 billion of funding for the Reserve
Bank over the next five years.
Good
riddance.
We say the
next Reserve Bank Governor needs to cut through the distractions and
focus on one thing, and one thing only: keeping inflation in
check.
SHOCK
POLL: Chris Hipkins is now the preferred PM 🛑
The news
keeps getting worse for the Government in the
latest Taxpayers' Union-Curia Poll, as the Centre-Left
bloc increases their lead. Labour, the Greens, and Te Pāti Māori could
form a government.
National is up 1.7 points to 33.6% while Labour
gain 2.8 points to 34.1%. The Greens are down 3.2 points to 10.0%,
while ACT are down to 7.7% (-2.3 points). New Zealand First are down
1.3 points to 5.1% while Te Pāti Māori is up 2.1 points to
6.5%.
On
these results, this is how Parliament would look:
The
combined projected seats for the Centre-Right of 58 is down 1 seat
from last month. The combined seats for the Centre-Left is up 1 to 62.
On these numbers, National and ACT could not form a government
even with the support of New Zealand First.
In the
Preferred Prime Minister rankings, Christopher Luxon is down from last
month at 20.3% (-0.4 points) while Chris Hipkins is up 3.1 points to
20.7%. For the first time since the election, Hipkins has
overtaken Luxon as top choice for Prime Minister.
It is
highly unusual for Opposition Leaders to top "preferred Prime
Minister" polls outside of an election period.
What do
voters want? 🏭🤔
In last
month's poll, our pollsters dug into voters' views on economic growth
and policy reform. They found Kiwis are overwhelmingly in favour of
boosting tourism, more international students, and (the important
one) cutting taxes to drive growth.
65
percent want income tax slashed, with just 15 percent opposed.
The country’s less keen currently on asset
sales. Although, as a
recent report by our friends at the
NZ Initiative think tank shows, there is plenty of room to recycle
capital and avoid selling the family silver while increasing New
Zealand's prosperity by having the Government sell off the clapped-out old car rusting in
the driveway underperforming assets.
We say, all
options need to be on the table in Nicola Willis’ next budget to get the country growing again, and Mr Luxon "back
on track".
NZTA's
$1.338 billion ticket to nowhere 🚌🎫
16 years
since the Transport Agency agreed to a National Ticketing system (Motu
Move), it's still nowhere in sight. An
investigation by the Taxpayers' Union has revealed the scheme has
already cost taxpayers $146.4 million with nothing to show for
it!
 All we've had so far is a
test run in Christchurch, and a planned rollout in Timaru – which has
once again been pushed back. What's worse – the total cost of
the project is set to hit $1.338 billion - that's $700 for every New
Zealand household!
All of it
would be solved if we could just tap on with PayWave like most of the
developed world. Nicola Willis needs to find $12 billion of
savings in May's Budget to get the books back in the black - scrapping
this programme would put a big dent in that
target.
Enjoy the
rest of your Monday,
 |
James
Ross
Policy & Public Affairs Manager
New Zealand
Taxpayers’ Union
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