Wellington (Friday, 26 March 2021): Tuesday’s announcement of new housing policies from the Government has just made New Zealand a far riskier place to do business, warns a policy paper released today by The New Zealand Initiative.

A risky place to do business, written by Dr Eric Crampton and Dr Bryce Wilkinson does not assess the effects of these policies, rather it warns of the consequences of this approach to policy-making.

Substantial changes to tax policy, such as the ones signalled in this announcement, blindsided many and appeared to back-track on promises made by Finance Minister Grant Robertson before the election when he said no new taxes would be introduced.

Important changes in tax policy needs to be well analysed and well signalled. These complex policies require expert advice and consultation and perhaps most importantly, adequate time to work through implications of the changes as they work their way through the economy.

Worryingly, despite the significance of the proposed tax changes, Treasury provided no analysis of the likely effects, saying it had not had time to provide a proper assessment.

The Initiative’s Chief Economist Dr Eric Crampton says, “Passing substantial legislation with inadequate opportunity for checking its effects not only risks unpredictable and inferior outcomes but also strongly signals that New Zealand’s policy environment is fundamentally unstable.”

Read our Policy Point: A risky place to do business

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