Winston Peters

New Zealand First Leader

Member of Parliament for Northland

23 AUGUST 2017

BusinessNZ Election Conference

Te Papa Wellington

3 pm, 23 August 2017

“Putting the New Zealand economy first”

This morning Treasury released its PREFU.

The Treasury forecasts puts a rosy and reassuring glow over New Zealand’s economic outlook - as you would expect.

But Look under the bonnet and the superficial gloss and illusion of a strong economy evaporates.

Let’s start with what’s not in the Budget.

National has announced $12.3 billion of expenditure of promises in the last 10 days – roads galore, a new hospital for Dunedin, Auckland commuter rail, etc.

On growth, it’s the familiar story.

Once you take out immigration the economy is barely growing at all.

All Kiwis know that con trick is played out.

The forecast vindicates New Zealand First’s position on cutting immigration to a net 10,000.

Treasury forecasts immigration will be down to 15,000 people by 2022 with no adverse economic repercussion.

Once you take out immigration the economy is barely growing at above 1 per cent. As the economic backdrop to the election, the PREFU is a watershed.

Kiwis have a choice.

They accept the Treasury numbers at face value, and all is well with the world, and the government has done an okay job on the economy.

Or, they can choose reality. The reality is that the rosy picture is a sham as the PREFU confirms the illusion of a “strong and sound economy is wafer thin”.

The much touted surplus will vanish in the twink of an eye when population growth driven by immigration is properly accounted for.

New Zealand is now a land of backlogs and deficits and nothing in the Treasury data will improve that.

Kiwis can choose the smokescreen economy or the real economy because people are seeing their standards of living going steadily down, with stagnant incomes, insecure jobs and a massive housing crisis.

New Zealand First’s economic policy renounces wishful thinking and deals with the economic realities.

Every election is different

Every election is different but this one is shaping up for catastrophic consequences.

First because it is occurring in a national economy that is seriously unstable and wracked with debt.

Second, there are promises being made domestically that ignore New Zealand’s present economic state of mass population growth and consumption as opposed to careful population planning and export recreated wealth.

Contrary to today’s PREFU the surplus is artificial and results from years of under-expenditure in nearly every area of economic and social debate in this campaign.

So this speech will be a dose of common sense ahead of Labour’s “Neo-cracy” but just before National’s continuing “Chum-ocracy”.

New Zealand First is very much aware that most at this meeting back the status quo regardless of it not delivering for Kiwis outside of Karori, Remuera or Fendalton.

But for those here with an open mind, NZ First wants to put the last nine years of National into some sense of perspective:

· Since National was elected in 2008, our Merchandise Trade Exports to the rest of the world has grown, in real-terms, by a paltry 1.5%. that is not success.
· In December 2008, the National Median House price was $330,000. Even then becoming seriously unaffordable when the median household income was just under $58,000;

· Under national median house costs last month was $518,000 whilst median household incomes had risen to around $60,000 – that’s a mere $2,000 over nine years;

· We have been through month upon month, year on year record immigration and as at last month another record net 72,400 migrated here. By the way, this happened whilst more Kiwis left New Zealand than returned to New Zealand, just to dispose of an absurd porkie to the contrary.

· 72,400 net immigrants on a per capita basis is way, way more than any other First World economy.

Aside from clogged roads, struggling infrastructure, packed schools and exploding house prices, what else has this delivered?

And massive queues at hospitals, DHB underfunding everywhere, Kiwis missing out on operations, waiting lists to go on a waiting list absurdities, and verbal contortions to try and explain it all away.

It’s brought low wages and flat lining incomes.

Like the Government’s roading announcements, National’s economic credentials are 90% spin and 10% substance. Does anyone here really think any of this is economically or politically sustainable?

But let’s be fair, these policies are largely what National inherited. How many businessmen and women told me: “But John Key is not doing anything”.

So Red or Blue, you have got nothing new.

What National has delivered for New Zealanders – is more debt

· Housing debt is growing annually at 7.7% and is now just under $238bn
· Consumer Debt is growing annually at 6.5% and is just under $15.4bn
· Business debt is growing annually at 6.2% and is over $105bn
· Agriculture debt is growing annually at 2.6% and is now just over $60bn

You are business people. You know debt is growing faster than wages and revenue. StatisticsNZ’s most recent Producers Price Indexes in fact shows that National is “all smoke and no barbecue”.

Now the government touts its credentials in reducing core Crown Debt.

It sounds true, so long as you don’t stop counting debt being pushed off the Crown’s balance sheet and on to State-Owned Enterprises and Local Government.

That adds another $45 billion and when combined with Net Crown Debt and private debt, takes what we collectively owe to over half a trillion dollars.

Put another way, that’s over $104,000 for every person here in New Zealand legally.

Here’s a headline, Business Herald, June 10:”Kiwis Drowning In Debt”.

All this should be a warning to those political parties playing divisive politics over water, whilst supporting an emissions trading scheme, all of which threatens in particular $60 billion worth of agricultural debt being repaid.

If this agricultural debt repayment capacity is imperilled then our entire economy goes with it. It is the old parties’ - and National in particular -love of debt which has landed us in this mess.

We have little financial freeboard for the next shock and that shock is imminent.

In that environment who are you going to make the call to at 2.30 in the morning? Someone who predicted that you would need to make the call, or someone blithely ignorant of financial correction and inevitability.

Listen to the media broadcasting from Auckland or Wellington and it is all sweetness and light. But go to the rest of New Zealand it is a very different picture.

Around the provinces Kiwis are busting a gut just to stand still.

They look at Auckland and Wellington like astronomers perceive black holes to be - sucking the economic life out of the regions.

While some politicians’ talk of trams for Auckland, its metal roads for the regions. Others talk up world-class cities while underinvestment is turning parts of New Zealand into the Third World.

There’s a dangerous policy disconnect between big city and country.

Our economy is not a paint by numbers exercise because economic wealth starts in the regions where the priority needs to be.

Tax Reform for Workers and Businesses

Last week, in Tauranga, NZ First announced our goal to reduce taxes for our businesses to enable employers to increase the minimum wage and increase productivity.

This is about giving workers, Kiwi battlers, a fair shake of the stick.

We have delivered significant minimum wage increases before in government, but unlike some other parties we don’t believe in magical money trees.

We know this money needs to be earned but we also recognise that we are our brother’s keeper. There is an obligation here but NZ First is committed to giving business not only the means to pay higher minimum wages, but the means to grow.

Today, NZ First confirms that we will reduce Company Tax rates to 25% over three-years commencing from 1 April 2019. That date will also see the following tax changes commence:

· An Export Tax rate of 20%, which will apply to export generated income in order to bolster the export economy.

· For small to medium sized businesses, we will introduce 100% depreciation for business equipment worth up to $20,000 for each item.

· Introduce Research & Development Tax Credits starting at 125% in the second year when a company invests 2% of its revenue on research. This rises to 150% for the third consecutive year and then 200% from year four onwards.

An immediate New Zealand First priority from 1 April 2018 is:

· To change Capital Limitation rules in the Income Tax Act to treat seismic strengthening as “repairs and maintenance”. Without this, there is serious risk that Wellington and provincial centres will be gutted by National’s one shoe approach to earthquake strengthening.

Inflation Targeted Monetary Policy Is Dead

Too many here have become brainwashed into believing that there’s no alternative to either a free floating Kiwi dollar or Inflation-targeted Monetary Policy. Both products of the 1980’s.

We think the Singaporeans might know a little more about running an economy than some in New Zealand do.

There are worse demons out there.

The IMF is worried with China’s debt roaring past 251% of GDP and is forecast to hit around 300% by 2022.

This takes us to the verge of a 1929 style crash.

Meanwhile we’ve swapped a 20th Century imperial economic arrangement with Great Britain, for one in the 21st Century with China, minus democracy, legal tradition and a sense of fair play. When China’s bubble bursts it will be bad, which is why we need to regain our economic sovereignty and fast.

What then, is New Zealand First’s solution?

It is no secret that we admire Singapore. From an impoverished war ravaged city-state about Lake Taupo’s size, its per-person Gross Domestic Product is the third highest on earth while we languish far behind it.

Singapore has achieved all of this with low inflation, low levels of debt, price stability and a metronome-like dollar while the Kiwi dollar resembles a cardiogram.

Singapore’s exchange rate based monetary policy is the Basket, Band and Crawl:

· The Singaporean Dollar is managed against a weighted ‘basket’ of currencies made up of who they trade with, as well as who they compete against.
· This is a managed float and its trade-weighted exchange rate goes up and down within a pre-announced ‘band.’
· The 'crawl' is a continual reassessment of where the exchange rate is going to prevent it from becoming misaligned as our dollar has.

There is a direct relationship between the Singaporean dollar and interest rates, while here, we suck in foreign money to fuel a consumptive domestic economy.

As we conclude

No doubt you will soon hear of Labour’s trade credentials as they try to “run with the voter hares” while “hunting votes from you business hounds”.

No doubt Mr English will extol National’s trade brilliance while blasting everyone else. When he does, bear in mind those merchandise trade exports, which have increased under National by just 1.5% in real terms.

Now some of you may fall for the fake news that NZ First is anti-trade. How can we be? We export or we die but trade must work in our interests and not those we trade with. It’s dumb to negotiate deals with Korea that are worth three-fifths of precious little to the dairy industry, just so Ministers can put out self-congratulatory media releases.

· So we’d seriously question the Trans-Pacific Partnership Agreement because thus far it has been a colossal waste of time, money and resources. We’re losing markets to Australia, who’s played along with the TPPA, while signing a bilateral deal with Japan in 2014.
· Russia is insulted and ignored by this government. The Russia-New Zealand Free Trade Agreement is an absolute priority for us, it being the world’s number two dairy and beef importer.
· We’d revise some of the current deals being negotiated to make sure they are real and not like the TPPA’s ridiculous 3,719 tons of butter and milkpowder to Japan “within five years”.
· New bilateral free and fair trade deals would be prioritised with Japan, United Kingdom, EU and the United States. Right now is the best time to talk to Washington so long as we respect each other’s self-interests. NZ First is supremely confident that we’d find “The Art of the Deal.”
· Finally, we’d initiate Closer Commonwealth Economic Relations to build off and deepen existing bilateral deals with Commonwealth countries. Modelled on CER with Australia, CCER would be a gold-standard deal and we envisage launching it with Australia and Singapore but with the UK to follow post-Brexit.

New Zealand First stands ready to keep the excesses at bay. Be it an economy destroying water tax and ETS on one side, to the people in Blue backing racially divisive Koha for Consents and a ‘Waterlords deal’ for Big Iwi to control water.

I haven’t time today to refer to the growing presence in New Zealand of race based policies.

Suffice to say, I will be speaking about it further in this campaign. But racial preference on assets, such as water, and malevolent misuse of the RMA should be a dire warning for this country of the inevitable economic and social consequences which will a disaster for everyone in this country regardless of race.

This is why we ask some of you to seriously recognise the need for a smart change, and recognise in your phraseology, the need to hedge your bet and vote.

ENDS

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