Q+A: Amy Adams interviewed by Corin Dann

National Finance Spokesperson: tax cuts should still be on the agenda

National’s Finance Spokesperson Amy Adams says her party stands by its pre-election promise of cutting taxes and says the government’s budget has failed to deliver on its pre-election pledges.

Speaking on TVNZ 1’s Q+A programme this morning Ms Adams told Corin Dann that tax cuts should not be off the table.

“I would like to make sure that we don’t take any more than we need, and I would absolutely want to make sure that, every dollar we do take, we spend effectively and in a targeted way,” she said.

“This government talked a big game on that — haven’t delivered. And I have to say, the numbers that they put out pre-election — they told us all, ‘Look, we’ve got this fully costed plan’ — that plan has been completely shredded in this Budget, which has to tell you that they didn’t have the skills and the understanding of what it is to be government.”

Q + A
Episode 10
AMY ADAMS
Interviewed by CORIN DANN

CORIN You have called this Budget a ‘broken promises’ Budget but also one that’s ‘tax, spend and hope’. How can you have both?

AMY Well, look, it’s really simple. This is a government that is taxing more, so New Zealanders are going to be paying $2.4 billion extra tax, thanks to the changes this government has made already.

CORIN Hang on, hang on—

AMY They’re borrowing more.

CORIN Sorry.

AMY Sure.

CORIN Just to break down those taxes, they’re taxes you would’ve done too, though, right?

AMY Well, the point is — this is a government that campaigned on not increasing the tax burden on New Zealanders. Actually, we wouldn’t have done the regional fuel tax. We’d rejected the arguments around the petrol excise increases. Yup, we were looking at the Amazon tax. We certainly wouldn’t have done the five-year bright-line test and the negative gearing tax.

CORIN But you did the two-year bright-line test—

AMY We did.

CORIN …and you did bring in petrol tax increases, and in fact, when you were in government, you just whacked it in in December before Christmas — didn’t even bother to warn people.

AMY Corin, the point is that this government campaigned on no new taxes, and already in the first six months, we’ve got 2.4 billion of new tax; they are borrowing billions and billions more than they said— well, certainly, that we said we were going to do and even that they indicated in December. They are spending huge amounts more than they said, again, in their fiscal plan, and for all that money — they’re awash with cash — and they’re still breaking their promises. And the important thing is — it is not because of some sort of crisis in underfunding. That is now absolutely clear. It’s because they overpromised. They got their numbers completely wrong pre-election, and they simply put paying out Winston — the price of coalition government — ahead of their promises to New Zealanders.

CORIN Okay. Would you, as Finance Minister, continue with the tax cuts in the face of clear signs of poverty, of homelessness? All these issues, the crises we can see there — would you continue with tax cuts for wealthy New Zealanders?

AMY So we had our policy going into the last election, which was that we could afford to return $1000 a week to the average worker and continue to put more funding into health, more funding into education, more funding into homelessness, more funding into state housing and the private housing market. We were doing all of that. But the most important thing, remember, if you want to get people out of poverty, is making sure they’ve got a job and a good-paying job. One of the worst things, I think, in terms of what we’re seeing from this government is they are slowing down the economy. We’re seeing that in Treasury’s numbers; we’re seeing that in business confidence.

CORIN Okay, let’s pick up on that. Let’s pick up on that, because your leader said that trickle-down economics are still working. So what you’re talking about is if you grow the economic pie, the money will trickle down. Do you agree with him?

AMY What we’re saying is you’ve got to have an economy where jobs are being created. Actually, you need an economy that works for everyone. It’s not just about the people at the top; it’s about the whole part of the economy. But you don't get out of poverty if you don't have a job. We got people working; we created more jobs—

CORIN How did trickle-down work over the last few years in New Zealand? Because it seems to me that people who own property in this country got very wealthy, and those wage earners barely saw any wage gains. That is not trickle-down working at all; that’s trickling up.

AMY Well, actually, what we saw under us is wages growing at twice the rate of inflation. What we saw under us—

CORIN And inflation was very low.

AMY Wages were still growing at twice the rate of what people’s cost of living was growing at. What we saw under us was 50,000 children being lifted out of poverty, and we’d committed to doing another 50,000 in our first term. Now, those are actually bolder targets than what Jacinda Ardern is talking about, so actually, we had set ourselves much more aggressive and ambitious targets around poverty reduction, around homelessness. Just take state housing for example — we promised 2000 new houses a year, so 6000 over three years. This government is now committing to deliver less than they promised and only 1600 a year. We actually put more into health, more into education over our nine years than we’ve seen in this Budget. If there was a crisis of underfunding, why are they funding broadly the same and, in some cases, less than we did?

CORIN All right, you have talked up that this government is going to ruin the economy. You’ve said business confidence is hurting the economy. Where do you base that on, given the forecasts in this Budget show a very strong economy? And Treasury is clearly confident that the policies that this government is bringing in are not going to wreck the economy at all.

AMY Well, a couple of things — first of all, if you look at most of the range of the independent economists, most of them are labelling Treasury’s forecasts as optimistic. But even on Treasury's numbers, the change from what they put out in December in the half-year update to what they’re putting out now around GDP per capita has gone backwards. It’s slowed—

CORIN So you’re like Phil Twyford, are you? You don't back Treasury's findings. You’re saying, ‘Don’t believe Treasury.’

AMY Oh, no. No, no. No, not at all. I’m saying economists are a bit like lawyers—

CORIN Well, that’s what you just inferred.

AMY I’m saying economists are a bit like lawyers — there are a range of opinions, and if you look at all of the predictions in the market — these are predictions, right; it’s not an exact science — the Treasury ones are stronger than a lot of the independent economists’. But what I would say is that GDP growth is a lag indicator. It really shows us the strength of the economy over the last few years, the hard work that’s gone in by New Zealand businesses. We would say we got the economic settings right to do that. If you want to look at the future, business confidence is telling you where the economy’s going, because it’s the decision of businesses about whether or not they invest that sets the direction.

CORIN Okay, a lot of those economists that you’re talking about who say that Treasury’s too heroic are also praising this government for a conservative Budget that is orthodox, that is not doing anything radical, that isn’t spending too much. And in fact, they’re almost saying to business, ‘Stop being so grumpy, because you’re not being rational.’

AMY Well, I think if you look at what the policies that this government is bringing in or has signalled, a return to 1970s-style industrial law changes — effectively, turning off the tap on foreign investment into New Zealand, cutting immigration numbers. And remember, even Treasury—
CORIN What, giving people meal and tea breaks in 1970s?

AMY Can I just finish, though? Can I just finish? Even Treasury is saying that the GDP growth that they’re forecasting is only held up because of strong and, in fact, growing immigration numbers — something that Grant Robertson went on about for nine years in opposition. So it’s been driven by immigration, industrial law changes, foreign direct investment, new taxes. Those things will slow the economy.

CORIN Are you seriously criticising this government for relying on immigration to grow its economy when your government relied on immigration and housing?

AMY Am I going to get a chance to answer? Okay, so what I’m going to say, Corin, is that for nine years in opposition, Grant Robertson made a big deal about the fact that immigration and the net flow of migrants into New Zealand was what was holding up the economy. What I’m pointing out is that Treasury, in its own estimates in the Budget, has said it is continuing strong immigration that is going to continue to see GDP held up. We’ve always argued that you need a good inflow of skilled workers. We’ve never made any bones about that, but this is a government, again, that talked one game in opposition and is entirely going the other way in government.

CORIN Fair enough — that’s a fair point, but it’s a bit rich to criticise them for relying on immigration.

AMY I’m not criticising them for doing it; I’m saying I’m criticising them for breaking their promises about what they said. They said in the campaign they would slash immigration, and now it’s strong immigration numbers that they’re looking at, or at least, Treasury are looking at to support those figures.

CORIN Okay, fair enough. Now, tell us how you would be a different finance minister — not than Labour but than Steven Joyce and Bill English. How would you be different?

AMY Well, first of all, Bill and Steven and I all come from the same party obviously; we have the same views and the same values. So it’s not going to be a radical package of different reform, and you will see over the next three years exactly what our policies are going into the next election. As a finance minister, you, first of all, have to look at what the economic conditions you have are and then think about how you will use those most effectively. I would argue that the finance minister's job is to, first of all, use the economic conditions they have to the best advantage for New Zealand, to keep their promises — which this finance minister hasn’t done — and then, very importantly, to ensure you’re laying a good foundation for economic growth going forward. I would argue, on both of those heads, Grant Robertson has not done a good job. Bill English and Steven Joyce were working through — particularly Bill — very different and difficult economic conditions, and even so, we put up funding into health and education every single year.

CORIN Sure. So that’s an interesting point.

AMY And in strong times, we’d want to give some back to New Zealanders who earn it where we can afford it but continue to support New Zealanders who need it.

CORIN Because that’s an interesting point — they were constrained by circumstance — GFC, earthquakes.

AMY Yeah, absolutely.

CORIN So they were inherently cautious, and I’m just wondering whether if you, as a finance minister, might be bolder and braver.

AMY Well, what I would like to do is, first of all, work on the principle that governments should not take any more out of New Zealanders' pockets than they need to effectively run the country and to provide for those who need government assistance. So that’s the first principle. Every dollar government spends is not government’s money; it’s money that’s come out of the pocket of a Kiwi that’s got up hard and worked for it.

CORIN So tax cuts — very much on the agenda.

AMY I would like to make sure that we don’t take any more than we need, and I would absolutely want to make sure that, every dollar we do take, we spend effectively and in a targeted way. This government talked a big game on that — haven’t delivered. And I have to say, the numbers that they put out pre-election — they told us all, ‘Look, we’ve got this fully costed plan’ — that plan has been completely shredded in this Budget, which has to tell you that they didn’t have the skills and the understanding of what it is to be government.

CORIN Amy Adams, thank you very for your time. Next election, of course, there’ll be an independent panel—

AMY Looking forward to it.

CORIN …that will decide on the numbers and make sure they are all kosher.

END

Please find attached the full transcript and the link to the interview

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