The two main centre-right parties yesterday launched Budget Week, agreeing that it was time to cut Government spending.
There was much that was near enough to be similar in the National and ACT proposals.
But the practicality of some of National’s and the political viability of some of ACT’s might raise questions.
But if there was one overriding theme, it was what might be called a war on Wellington.
National wants to put senior public servants on corporate-style performance contracts, while ACT not only wants to abolish a range of Crown agencies but also to effectively freeze public servants’ pay by allowing it to rise by no more than the consumers’ price index each year.
ACT also wants to restart the partial privatisation of a number of state-owned enterprises, but its big promise is to reduce income tax.
It would have only a tax rate of 17.5% on all income up to $70000, thereby reducing the total paid by someone earning that much by 13 per cent.
There would be tax cuts for the rich.
ACT would phase the cuts in so that someone earning $180,000 would be 33% better off in 2025-2026.
But there would be more.
ACT would return the Emissions Trading Scheme revenue to people “through a simple per person refund”; it estimates this could come to $248 per person, but that is based on forecasts that Treasury a fortnight ago conceded were overestimates.
There would also be a tax credit for any low- or middle-income earners disadvantaged by the tax changes.
But ACT is also proposing to cut spending.
It would abolish a range of Government agencies, including the Ministry for Maori Development and the Ministry for Crown Maori Relations, in a move which could be expected to attract widespread Maori opposition.
It would partially (49%) privatise a number of SOEs, including NZ Post.
And while it abolishes the subsidies for film production, which come from GST refunds, it would allow half of the GST paid on new homes to go to local authorities for infrastructure construction.
There is much more, including a pledge to go to two per cent of GDP on defence spending, to cease contributions to the NZ Super Fund and a slow phasing in of a higher retirement age for national superannuation.
There is a detailed table on how it all adds up.
National’s effort, on the other hand, was much less comprehensive and much less detailed and rested on an approach to the public sector which seemed to draw heavily on Leader Christopher Luxon’s experience as a corporate CEO.
Luxon told an Auckland Chamber of Commerce lunch that whereas we used to be a country of go-getters, we had become a country of bureaucrats.
And so, a National Party government would be on the warpath to eliminate wasteful expenditure in Wellington and thus be able to afford changes to tax thresholds.
But so far, there is no detail on which thresholds would move and by how much.
Instead, Luxon introduced a new idea; an annual “Taxpayer’s Receipt” from Inland Revenue, which would show taxes paid and government payments received, including Working for Families and benefit payments.
It would break down where taxpayers’ money had been spent, “e.g. education, health, and welfare.”
Treasury already publishes such a breakdown in the Budget, and the summary tables take up two full pages.
Prime Minister Chris Hipkins was dismissive of the idea.
“I think it does suggest that their priorities are in the wrong place,” he told his post-Cabinet press conference yesterday.
“This is budget week.
“This is the week where we talk about the big issues that are in front of New Zealand as if the thing that the National Party think is the most pressing priority for New Zealanders is to receive effectively a bank statement of how much they’ve paid in tax.
“I think that suggests that they’ve got their priorities all wrong.
“This is their opportunity to set out what they would do differently in government if this is the best they can come up with; I think maybe it’s time for them to go back to the drawing board.”
But Luxon’s big pitch was the different experience he would bring to Government.
During his question-and-answer session with the Chamber’s CEO, former National leader Simon Bridges, Luxon repeatedly reminded his audience that he was not a politician but a former CEO who had “done a lot of turnarounds.”
Consequently, he believed there should be more accountability from the public sector.
“There is almost no focus in Wellington on whether the money government spends on behalf of taxpayers is actually delivering results,”
“Performance is an afterthought, so millions of dollars continue to be wasted on projects that don’t work and achieve nothing.
“I’m upfront that I’m not a career politician –I’m still new to the way things work in Wellington.
“But in my former corporate life, that approach to managing money would be unthinkable.
“There’s no way a responsible CEO would spend millions of dollars of shareholders’ money on a new programme, only to never check whether it worked.
“But in Wellington, it’s business as usual.”
And so he has proposed putting senior public servants on performance-based contracts.
Exactly how that would work in the policy advisory agencies, he didn’t say.
But generally, he wanted a more business-like approach right across the economy.
“We have to make it a pro-business environment,” he said.
“You know, I was stunned when I used to be CEO in North America.
“I was in Chicago, and I would have 14-year-old kids come and say, Mr Luxon, how do I become a CEO?
“It was aspirational to be a businessperson in the US, and I want it to be the same here in New Zealand.”
Luxon’s heavy emphasis on his business experience was appropriate for a business audience, but it may also have been prompted by criticism of his leadership that appears to be coming from some of the party’s wealthier supporters in Auckland.
Mathew Hooton’s private newsletter has suggested that the party could romp home with another leader but that a caucus coup must be out of the question; therefore, Luxon should be persuaded to resign.
That sort of talk is the difference between politics and business.
