Category: Election 2023

Source: Council of Trade Unions – CTU

Fresh analysis by the New Zealand Council of Trade Unions has revealed that New Zealanders under the age of 44 would face an effective ‘Pension Tax’ of up to $200 a fortnight if National forms the next government.

NZCTU Economist Craig Renney said “No analysis of National’s plan to raise the age of qualification for superannuation by two years to age 67 has ever been provided by them.  

“National has a habit of not being upfront with voters about its plans and this latest example underlines again the real costs to working people of a National-led government.”

Using recently released data from the Pre-Election Economic and Fiscal Update, the NZCTU has quantified the impact of that change on Kiwi families.

 “A couple aged 43 and under would lose $175,206 in super payments, after tax. To replace this, they would need to save an extra $196 each fortnight, assuming a 5% annual interest rate.

“The maximum income tax cut for a couple under National’s tax plan is $102 a fortnight – meaning that they would be at least $94 a fortnight worse off. This means that they would need to save an extra $5,085 between them every year.

“Single people aged 43 and under would lose $113,885 after tax. To make up for that, they would need to save an extra $129 a fortnight in an account paying 5% annual interest. The maximum tax cut for a single person under National would be $51 a fortnight, meaning that they would be at least $78 a fortnight short.  

“This money from affected people and their families doesn’t buy them anything new. It just replaces the income they would have had if the pension age remained the same. This is money they won’t have for saving for a home deposit or meeting the cost of living.

“Working people deserve better from National. They are giving small tax changes with one hand yet taking even more back with the other and failing to tell voters the cost.”

Many Kiwis are not able to work an additional two years due to their health and the physical nature of their jobs.

Paramedic Geoff Hunt said this change would be unworkable.

“I love my job working for my community. But it’s mentally demanding, physical work that no one should have to be doing at 67. I don’t know how I would save an extra $100 a week to make up the difference.”

The Retirement Commissioner’s 2022 Review of Retirement Income Policies recommended against increasing the age of superannuation due to its disproportionate impact on Māori, Pasifika, women, and people with disabilities or chronic health conditions.

The Commissioner said the move would disadvantage certain demographics.

“Any increase to the age of people accessing NZ Super will only further disadvantage women, Māori, and Pacific People.”

Renney said “This is sensible advice, and our analysis lays out the real and significant financial costs to younger New Zealanders today from National’s ‘Pension Tax’.”

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Note on the calculations:
To calculate the loss of superannuation payments, the CTU has taken the current after-tax rates of superannuation payments for couples and single people. We have projected these payments forward to 2047, when National’s superannuation age increase would be in full effect, based on the average rate of after-tax wage growth across 20 years (3.5%, according to Treasury’s Fiscal Strategy Model).

For the required savings calculation, we have assumed an average savings interest rate of 5% based on historical experience and deducted 30% tax.

Source: Council of Trade Unions – CTU

New Zealand Council of Trade Unions analysis has revealed that a select group of landlords would be made tax-cut millionaires if Christopher Luxon’s landlord tax breaks are delivered after 14 October.

NZCTU Economist Craig Renney said “National waited until the very last moment to tell New Zealanders about their tax and fiscal plans. Day after day their numbers are being challenged.

“Now, we can reveal another harsh and unfair reality of their tax plan. ‘Mega-landlords’ would each likely make more than a million dollars extra from the removal of mortgage interest deductibility. Meanwhile, those who get disability benefits would see their incomes fall by more than $17,000 across the same period.

“Over five years, Nationals tax cuts would give $1.3 million to each of those landlords with more than 200 properties. This is based on the average benefit that landlords would get. Over five years this group of 346 mega-landlords would collectively gain nearly half a billion dollars in tax breaks.

“We know this windfall gain would not be passed on in lower rents, but would just further fatten the bank accounts of landlords.”

These figures have been independently verified by Terry Baucher, taxation specialist at Baucher Consulting.

Renney said “Christopher Luxon clearly wants to cut public services and will likely have to go further than planned because his foreign buyer’s tax and casino tax don’t add up. But National has not been upfront with voters about who gains from his tax policy. Last week we discovered that only 3,000 households would get the much claimed $250 a fortnight benefit. Now we discover that around 300 landlords would make millions.

“This is just another example of National’s reverse Robin Hood tax plan. We found out only last Friday that National plans to take $2 billion off those on benefits, including disabled people, to help fund its tax cuts. Our most marginalised would suffer while rich landlords get even richer.”

“National’s tax plan would overwhelmingly enrich those who already have significant assets – while harming those with the least.  National should scrap their unfair and unreliable tax plans which are balanced on the backs of the most vulnerable. They shouldn’t have to pay the price of National’s plan.”

Disabled community advocate Henrietta Bollinger said this policy was unaffordable for disabled people and their whānau.

“It completely fails to account for the reality of disability, the number of barriers we face in housing, education, employment, or healthcare that may lead us to rely on welfare. It completely fails to account for the hidden costs of disability.

“It also completely fails to recognise the financial pressures disabled people are already under. 
Instead of choosing to stand with around 24% of the population, their families, and communities National are choosing as a prospective governing party to stand with a privileged few.”

Systemic advocate Rhonda Swenson, who is on a supported living benefit, said the proposed changes will see disabled people falling further behind.

“For me, $17,000 is just under a year’s salary. It just makes it harder in terms of buying food and the basics.

“It makes me angry, it means they’re not valuing the people at the bottom. The disabled community deserves to be respected. [These cuts] will tip some people over the edge. They will make people more desperate.”

What is the size of tax cuts for Mega-Landlords under National’s tax plan?

National’s policy is to restore interest deductibility for rentals in 25% steps, until it is fully restored from 1 April 2026.

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Background

	24/25	25/26	26/27	27/28	28/29	Total
IR Costing	$522,500,000	$617,500,000	$760,000,000	$760,000,000	$760,000,000	$3,420,000,000
Number of private rentals	510,000	510,000	510,000	510,000	510,000
Per rental	$1,025	$1,211	$1,490	$1,490	$1,490	$6,706
Number of Mega-Landlords	346
Minimum rentals per Mega-Landlord	200
Average per Mega-Landlord	$1,341,176
Mega-Landlords total tax cut	$464,047,059

Beneficiaries Calculations

Year		2023/24 (Current)	2024/25	2025/26	2026/27	2027/28	2028/29
Rates	Wages (FSM)	7.29%	6.53%	5.59%	4.40%	3.74%	3.19%
	CPI (FSM)	6.03%	3.78%	2.47%	2.15%	2.01%	2.00%
Single 18+ years	Wages	$786.69	$838.06	$884.91	$923.84	$958.39	$994.72
	CPI		$816.43	$836.59	$854.58	$871.76	$889.19
	Diff		-$21.63	-$48.32	-$69.26	-$86.64	-$105.53	Total
	Annual		-$1,124.97	-$2,512.42	-$3,601.78	-$4,505.27	-$5,487.45	($17,231.89)

Source: Council of Trade Unions – CTU

Nicola Willis has today agreed with NZCTU analysis that shows less than 0.2% of New Zealand households will receive the advertised $252 a fortnight rate claimed by National.

NZCTU President Richard Wagstaff also agreed with Willis, in her belief that the NZCTU must stand for working people.

“That is exactly why we won’t back anyone who wants to strip away Fair Pay Agreements from hundreds of thousands of New Zealand’s lowest paid workers.

“We won’t support anyone who wants to reintroduce 90-day trials – something the Treasury has shown doesn’t work and leads to insecurity and exploitation. We won’t support people who don’t support increases in the Minimum Wage”.

“We won’t support a tax plan that is balanced by taking $2 billion from 350,000 low-income New Zealanders on benefits. We won’t back a plan that relies on making thousands of public servants redundant and cutting essential public services. We won’t back a plan that takes $2 billion out of climate change action and puts it in the pockets of landlords.”

Wagstaff said he would love to see the National Party deliver policies and programmes that would genuinely support working people across New Zealand. “But their proposed policies for the government would instead make life harder for working people right across Aotearoa.”

Source: Council of Trade Unions – CTU

National has finally released its fiscal plan after much delay and it reveals a plan to cut the incomes and essential public services the poorest New Zealanders rely on, just so they can pay for tax cuts for landlords and the well-off, says NZCTU President Richard Wagstaff.

“Cutting $2 billion from benefits during a cost-of-living crisis is cruel. These are the New Zealanders who can least afford a cut and who get $2 a week if they’re lucky from National’s tax cuts, and they would lose $40 a week in benefit cuts. On top of that, National would be putting up the price of public transport and prescription drugs.

“This doesn’t just affect workers who are out of a job, it also targets disabled New Zealanders and people with chronic illnesses. Why is National attacking these Kiwis who have the least?

“Additionally, National has confirmed that it plans to strip billions out of public services that are already under huge strain with current resources. The scale of the cuts that will be required to fund National’s fiscal plan will be felt deeply whether it’s at our borders, in our justice system, protecting our environment, or in numerous other areas of public sector activity.

“National’s claims that they can save billions by firing a few comms staff (who do vital working informing and consulting with the public) is pure fiction,” said Wagstaff.

Source: Council of Trade Unions – CTU

The New Zealand Council of Trade Unions says it beggars belief that National Leader Christopher Luxon can retain confidence in his finance spokesperson Nicola Willis after the latest revelations about the size of the hole in its tax plan.

As reported on RNZ today, two respected economists, working with property experts CoreLogic, show National’s Foreign Buyer Tax would raise just $210m a year compared to National’s optimistic estimates of $740 million.

“This amounts to a staggering hole of more than $2 billion over the four-year forecast period,” said CTU President Richard Wagstaff.

“The CTU has said all along that National’s tax plan doesn’t add up and the weight of expert evidence continues to mount daily, confirming a huge headache for National – the credibility of finance spokesperson Nicola Willis is at stake here.

“We call on Christopher Luxon to express confidence in Ms Willis and explain how the Foreign Buyer Tax will work and release the reports which they are relying on instead of resorting to the sweeping and shallow defences he has made to date. He needs to front up and answer the hard questions journalists are asking every day.

“There is too much at stake here. If the numbers don’t add up as many now suspect, and a huge fiscal hole to the tune of billions of dollars opens up, a National-ACT government would have to take an even sharper axe to public services and slash and burn core services should it form the next government.

“Nicola Willis has said she wants to cut $600 million in public sector spending by Christmas. Clearly, the cuts would be more severe to make the tax plan work – they would need to more than double – and that means the public service would be incapacitated and unable to function effectively.

“National needs to come clean on what those cuts will mean for New Zealanders – without a doubt services New Zealanders need across health, education, justice, welfare, conservation, biosecurity, customs and much more are at risk.  

“Mr Luxon makes a lot of his corporate record – but no leader of a listed company would stand for this shambolic accounting.

“This election is all about earning the right to lead New Zealand. Right now, Mr Luxon is not doing enough to prove he’s got what it takes. He needs to front up with evidence and numbers that add up, or own up to the fact that his plan is not fit for purpose.”

Source: Council of Trade Unions – CTU

Treasury data released today shows a resilient economy, but one with long-term challenges that need to be addressed to make sure that New Zealanders benefit from future economic growth, said CTU Economist and Director of Policy Craig Renney. The Treasury forecasts show that government debt will continue to be low by international standards, and unemployment will continue to be lower than the long-run. Wages will continue to grow faster than inflation, with record migration driving house prices higher in the future.

Craig Renney said “While it is pleasing to see growth returning in the economy, we need to make sure that the benefits of that growth are being equally shared. That means making sure that the government is continuing to invest in essential public services. It means making sure that benefits and pensions rise in line with wages, rather than with inflation. Maintaining fiscal control is important, but it shouldn’t come at the cost of leaving the most vulnerable New Zealanders behind.

Renney said “Whoever is in government after the election will be faced with the same set of choices. The test is how they respond to them. Spending cuts and tax giveaways, or maintaining the public services that we all rely upon. Treasury data today shows that we should take heart from the resilience of the economy. What we choose to use that resilience for will determine the outcomes for New Zealanders”.

Source: Council of Trade Unions – CTU

The National Party has identified nearly $2.5bn of cuts to public services to pay for its tax programme, but an analysis by the CTU shows that this includes services many New Zealanders would consider front-line, says CTU Economist and Director of Policy Craig Renney. “National targets what it calls back office government bureaucracies. But the areas in scope of the cuts include courts, biosecurity, and cybersecurity. These aren’t back-office services”.

“Troublingly, the areas identified for cuts also include work on family violence and sexual violence. It includes serious fraud. It includes food safety. These are not areas that should be under the microscope for cuts. These should be areas where there is cross-party consensus that we need to invest more”.

National’s numbers come from Treasury data published at the last Budget. This has given the CTU the ability to identify what is within National’s savings programme. If we concentrate on the truly ‘non-front line’ the size of the cuts necessary to achieve National’s target rises nearly 5-fold – to 31% of spending. The reality is deeper and deeper cuts to public services, or no tax changes.

Craig Renney said “This analysis adds to the existing problems facing National’s tax plan. The cuts to public services will have to get even bigger if their overseas tax measures fail to bring in the $3.6bn necessary. National says that $2.3bn in tax cuts for landlords are necessary, but it hasn’t identified why possible cuts to front line services, such as search and rescue, are necessary”.

Craig Renney said “National should provide voters with clarity about how it will achieve such potentially deep cuts to public services. There are only a few weeks left until early voting opens, which only adds to the urgency. New Zealanders deserve to know how National will make its sums work, without cutting the essential services that are in their sights”.

Example areas within the scope of National’s savings programme:

Department	Service Description
Crown Law	The provision and supervision of a national Crown prosecution service and oversight of public prosecutions
DPMC	Supporting activities that address cyber security threats and improving cyber security resilience
DPMC	Leadership and co-ordination of the government’s response to the sequence of 2023 extreme weather events that impacted the North Island.
Minister for the Prevention of Family and Sexual Violence	A whole-of-government approach to prevent, address and eliminate family violence and sexual violence, as well as related services and support to Ministers.
Serious Fraud Office	Preventing, detecting, investigating and prosecuting serious financial crimes by the Serious Fraud Office.
Customs	The provision of services relating to goods crossing borders, including trade compliance, and the protection of New Zealand through interventions, investigations and enforcement.
Ministry of Primary Industries	Biosecurity monitoring and clearance programmes that manage the biosecurity risk associated with international trade and travel.
Ministry of Primary Industries	Scientific inputs and development and implementation of food related standards (including as appropriate international and joint Australia/New Zealand standards) and standards related to inputs into food production, imports, exports, new and emerging issues and the domestic market.
Ministry of Transport	The coordination of search and rescue activities as authorised by section 9(1) of Land Transport Management Act 2003.
Inland Revenue	Inland Revenue undertaking investigation, audit and litigation activities
Ministry of Justice	Providing services that support the work of the Supreme Court, Court of Appeal and High Court
Ministry of Social Development	The processing and administrative aspects of payment of Veterans’ Pensions and related allowances
Department of Internal Affairs	Providing effective management of New Zealand’s records of identity, authenticating official documents, and coordinating the congratulatory message service.

Source: Council of Trade Unions – CTU

The New Zealand Council of Trade Unions has launched its 2023 election campaign focused on why a National-led government will leave working people worse off.

“Christopher Luxon and National will take New Zealand backwards and working people will be the first to feel the pain,” said NZCTU President Richard Wagstaff.

“The buck stops with Christopher Luxon. He’s the leader, these are his policies. People need to take notice of that.

“We are running a strong, evidence-based campaign which sets out why Christopher Luxon and National are out of touch with what matters to the lives of working people – and out of touch with the challenges New Zealand faces.

“It’s not just us. A Newshub poll in May found nearly half of New Zealanders thought he was out of touch.

“Anyone who thinks the answer is a $10 per week tax cut for someone on the minimum wage, and savage cuts to public services, has to be seriously out of touch.”

The NZCTU said the campaign would focus on the clear evidence of what National is promising:

• Fair Pay Agreements would be abolished – these provide minimum protections for workers and prevent the race to the bottom, by cutting the wages of the most vulnerable workers.
• 90-day trials for workers would be reinstated – there is no evidence these help businesses hire workers. In fact, it is the opposite, it will be easier to lay off workers for no reason.
• Minimum wage rises would be restrained – National promises to raise the minimum wage every year, but we know National’s track record is poor. Under the current government minimum wages rises have increased the fortnightly income of those workers by $556 since 2017.
• Tax breaks for landlords and speculators would make a comeback – these fuel the property market and simply enrich property investors, making it harder to buy a first home and pushing up rents.
• Public transport costs for many low-paid workers would rise, along with prescription charges.
• Welfare payments would be pegged to CPI inflation, meaning that many of the lowest-income New Zealanders will fall further behind.
• The public service would be gutted – National would cut $8.5 billion of spending and savage frontline services up and down the country. Services working people depend on, and jobs that employ union members.
• Climate Emergency Response Fund would be axed – $2.4 billion dollars committed to reducing our climate emissions to fund National’s landlord tax breaks. This will undermine New Zealand’s ability to tackle our climate crisis.

“National’s plan under Christopher Luxon is short-sighted, it is not good economic management,” said Wagstaff.

“October’s election is the most significant election for working people in a generation. It’s essential that going into this election, people understand what is at risk for not just working people, but all New Zealanders.”