Specific United Future policies to address BOP problem

United Future finance spokesman, Gordon Copeland, today detailed specific policies intended to deal with New Zealand's looming balance of payments problem.

"We need," he said,

A. To encourage private savings by

i) A 33 cent in the dollar tax rebate for long term savings through approved superannuation funds on the first $2,000 saved each year.

ii) The alignment of the tax rate paid on superannuation fund earnings with the marginal tax rate of the member.

iii) A reduction in the tax rate on employer contributions to superannuation funds to a rate at least 6% below the marginal tax rate of the employee member (already adopted by the Government).

United Future supports the NZ Superannuation Fund because it is a savings mechanism.

B. To lower the tax rate to 30% coupled with the ongoing reduction in compliance costs - this recognises the higher cost of capital for New Zealand companies (this is linked in part to our high overall indebtedness) so that we maintain parity with Australia.

C. A free trade deal with the USA should be pursued vigorously but quietly on the basis of friendship, respecting the differing foreign policy perspectives of the two nations.

D. To pursue vigorously in the interest both of New Zealand and the developing countries of the world, parity, in free trade terms, between agricultural products, merchandise and services.

E. To foster industry sector cooperation so that the necessary critical mass is created for joint marketing and pricing initiatives by New Zealand to penetrate and maintain exports of value added products.

F. Changes to the Conservation Act 1987 so that hydro schemes can be progressed consistent with robust environmental outcomes. Revision of the Resource Management Act to permit the rapid development of wind based generating plants both large and small.

G. Encouragement of private provision in competition with public provision in the interests of competition, efficiency and effectiveness.

H. The use of the Crown's balance sheet, its AAA debt rating, and its below-target debt levels to fast-track the decongestion of Auckland. Provision through the Land Transport Management Bill for private public partnerships (PPPs) and a wide variety of funding mechanisms.

I. To grow New Zealand's annual population through net migration to add at least 0.5% per annum to GDP, plus a Government funded research programme to establish the linkages between economic growth and population growth.

J. Continued R&D investment so that we can work smarter and increase productivity, coupled with direct linkages between wage increases and productivity outcomes.

Other United Future Economic Policies

1. The immediate adjustment of the income tax bands to recognise inflation since 1 April 2002 and a move towards a general flattening-out of the income tax system as circumstances permit. Indexation for inflation between 1 April 2000 and 1 April 2004 is both fair to all (since otherwise real rates of tax are being increased year after year) and would provide tax reductions of between $1.16 and $16.50 per week to all New Zealand taxpayers.

2. Income splitting for couples raising children. This policy, which recognises the costs involved in supporting children, would give significant tax reductions to couples and provide financial incentives for family stability. Coupled with the work of the Families Commission (which will focus inter alia on relationship enrichment and parenting), these policies have the potential to greatly boost the standard of living for all New Zealanders. Maxim Institute estimate that family breakdown is currently costing New Zealand $5 billion per annum, a sum which is equal to the total amount of tax paid by our 65,000 tax paying companies!

3. Investment of the NZ Superannuation Fund (projected to grow to around $60 billion by 2025) having regard to the nation's debt profile. This does not mean that all of the funds should be invested in New Zealand. However it is United Future's view that the investment spread for the Fund should have regard to the reality of New Zealand's balance sheet. One way of doing that would be for the Government to lend its annual capital contributions to the Guardians at an interest rate equal to the 10 year Government Bond rate.

4. To be a strong voice for free and open markets.

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