Guest post: Fletcher Tabuteau – NZ First’s Trade Spokesperson
NZ First is committed to trade as a way to grow the NZ economy. It is one of our founding principles and remains a core belief. Economic policy will comprise a strategy for export-led economic development to add value to our resources and empower our export industries.
So let’s put that commitment into the context of a National government that has held the reigns since it was elected in 2008
- Merchandise Trade Exports to the rest of the world has grown, in real-terms, by a paltry 1.5%.
- 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
We now collectively owe over half a trillion dollars. And none of that debt is going into core productive investment to facilitate meaningful growth. That’s over $104,000 for every person here in New Zealand legally.
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.
- 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.
New Zealand First is committed to setting macro-economic settings in favour of our exporters. To that end we have tried repeatedly to have our Reserve Bank Act amended to bring our overvalued dollar into considerations when setting the OCR.
Additionally we unashamedly look to Singapore as an example of an economy that has managed it’s exchange rate in its exporters favour, for generations. We would look to model our own exchange rate along the lines of the Basket, Band and Crawl method:
- 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 become.
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. Seemingly all good at the moment but when immigration slows it will be devastating.
On Specific agreements New Zealand first commits to bi-lateral agreements with Russia. New bilateral free and fair trade deals would be prioritised with Japan, United Kingdom, EU and the United States
Finally, we’d initiate Closer Commonwealth Economic Relations to build off and deepen existing bilateral deals with Commonwealth countries. Modelled on CER with Australia.