NEWS ON POLICY
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ELECTION NEWS National announces fiscal policy more... Redundancy report more... Labour launches economic stabilisation plan more... Lessons from the 'Great White North'…eh? more... Students! more... Benson-Pope's last serve more...AND IN BUSINESS Consultation on renewable preference regulations more... Draft ETS regulations for energy and industry more... Forestry sector update more... New regulations for international carbon credits more... SEMINAR -MANAGING CONFLICTS OF INTEREST IN THE PUBLIC SECTOR more... IN PARLIAMENT more... Acts Assented more... Regulations more... IN CONSULTATION more...
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| ELECTION NEWS | ||||||||||||||||||||||||||||||||||||||||||||
National announces fiscal policyNational has released its long-awaited tax cut package as part of a wider paper on fiscal policy to deal with Government operating deficits, Crown borrowing and new capital spending. In terms of gross revenue forgone, National's proposed tax cuts are larger than Labour and the focus is on middle and higher income earners. The proposed introduction of an Independent Earner's Rebate for taxpayers who don't receive any other form of Government assistance, such as Working For Families payments or superannuation, addresses the needs of the less well off and will appeal to voters who have missed out on the Government's targeted assistance programmes. For its part, Labour has indicated that it does not plan any changes to the tax cuts it legislated for in the May 2008 budget. Under Labour's tax plan, low income earners receive a higher tax cut as the new 12.5% bracket will move up to include all income less than $20,000. Comparing packages, those employees earning over $20,000 and eligible for National's proposed Independent Earner Rebate will be on average $9-$15 a week better off under National. But whilst National's package is on its face more generous than Labour's, it comes at a price and others changes are foreshadowed including:
Against that, National proposes to lower the minimum payments employers must make to employees' KiwiSaver accounts to 2% of employees' salaries. It will also allow "whole of contract" bargaining so that employers can take the 2% contribution into account when setting wages. For most employers these changes will more than offset the loss of the $1040 per annum tax credit. Finance Spokesperson Bill English has stated that National will develop alternative policies to replace the research and development tax credit, but National has not yet announced what those policies will be. English argues the research and development credit is not well targeted, as businesses will simply re-categorise existing expenditure in order to gain the credit. However, several business lobby groups and commentators have taken a different view, most notably Business New Zealand's Phil O'Reilly. With respect to infrastructure spending, National's pared back scheme means it plans to increase capital spending at about the same level as Labour proposes to do over the next five years. However, Labour's plan for a mini budget in December to stimulate the economy through increased infrastructure spending may see increases in Labour's spending on broadband, roading, rail and construction. The extent to which this is a response to the international credit crisis or the dictates of the general election will be for the electorate to judge. Redundancy reportThe Department of Labour last week released the report of the Public Advisory Group on Restructuring and Redundancy. The report recommended the Government consider the introduction of a statutory requirement for redundancy compensation and other entitlements that incorporate the following features:
In response to the report the Government has announced further consultation on the possible redundancy entitlements that will take place in the autumn of 2009. Tellingly, however, Labour Minister Trevor Mallard also announced Labour's commitment to the concept of statutory redundancy provisions in a move that may pre-judge the outcome of next year's consultation. Also since the report's release Labour has included the issue of redundancy provisions within its wider policy response to the credit crunch and announced at its campaign launch that it will introduce a "retraining" allowance for workers made redundant who enter into re-training. The National Party's public position on the report has not advanced beyond the initial rejection of statutory redundancy entitlements delivered by employment relations spokeswoman Kate Wilkinson. Speaking to the CTU, Wilkinson said that National considers redundancy arrangements to be more properly a matter for negotiations between employers and their employees - the current position. Labour launches economic stabilisation planEvents in the form of the global financial crisis have thrown the Labour administration an electoral lifeline and simultaneously wrong-footed John Key. Whatever the merits of the present Labour Government's legislative plan and policies, no one could accuse it of ambling into the election campaign. Sunday's announcement that the Government will guarantee all New Zealanders' retail bank deposits radiated energy and rendered neutral simultaneous accusations of inactivity against Labour by John Key at National's campaign launch on Sunday. Helen Clark's speech focused squarely on the world's economic situation right from the beginning. She reminded supporters that the first Labour Government faced the Great Depression of the 1930s. Clark promised that, if re-elected, her fifth Labour Government would do the same. The message from Labour's campaign launch was all about the current crisis. The Party aims to focus voters' attention on the economic situation and to thus paint Labour as the party with a plan. The economic plan announced by Clark on Sunday has two limbs: a banking guarantee and a stimulus package. Under the banking guarantee the Government plans to assume a liability of up to $150 billion by guaranteeing the deposits of New Zealand investors. The announcement here coincided with a similar announcement by Kevin Rudd's Labour Government in Australia (although these down-under guarantees pale in comparison both in scope and cost to the UK's £37 billion bailout of trading banks this week). The Government can make the deposit guarantees under the Public Finance Act 1989, section 65ZD of which allows the Minister of Finance to make guarantees on behalf of the Crown on conditions he/she sees fit if it is "necessary or expedient in the public interest to do so". The Minister's powers under section 65ZD were introduced by a 2004 amendment to the Act. The guarantee appears a deft move to calm investors' nerves. It was, however, all but inevitable that the Government would guarantee deposits once Australia decided to do so. As at writing six banks confirmed they would accept the guarantee, namely ANZ-National, Westpac, ASB, BNZ, TSB and SBS Bank (the latter only gaining its banking registration last week). Labour also promised a stimulus package in a pre-Christmas mini-budget if re-elected and if the economic situation continues to worsen. Projects identified for a stimulus package are spending on additional:
On Tuesday Michael Cullen announced more details about the mini budget. He proposed a 20-year infrastructure plan. Details included an electrified railway network in Auckland encompassing the North Shore and beyond. Labour also promised to continue with annual increases in the minimum wage linked to inflation or wage growth, whichever is greater. Funding details emerged, with long term infrastructure bonds proposed that would be tax free and provide payments linked to inflation. In a major move Michael Cullen also announced that he will direct the guardians of the Superannuation Fund to invest more in New Zealand so as to utilise that fund for capital injections into the New Zealand economy during an upcoming recession. Talk of post-election mini-budgets evokes memories of Roger Douglas in 1984 and Ruth Richardson in 1990. In both situations a newly-elected Government took immediate and drastic hold of the fiscal reins as the economy faltered. What makes Clark's and Cullen's promise surprising is that they would not be a newly-elected Government, rather a fourth-term Government proposing an economic adrenaline injection. Come Christmas we may well speculate that Clark's announcements over the weekend regained the political initiative for Labour and won the unwinnable election. Only time and a few million votes will tell. Lessons from the 'Great White North'…eh?On those rare occasions when the local media are not preoccupied with our election, their attention turns to the US and the stoush between senators John McCain and Barack Hussein Obama. Unremarked is that other North American electoral contest - Canada's. On 14 October Canadians went to the polls in which the Prime Minister and leader of the minority Conservative Government, Stephen Harper, hoped to secure a majority in Canada's House of Commons. He did not and the Conservatives are back in power but again as a minority government. The Canadian election may prove more of a bellwether for New Zealand's political fortunes than its US counterpart. Harper took a hands-off policy response to the economic woes facing his country and was accused throughout the campaign of being indifferent to voters' economic concerns. While the opposition Liberals languished at the polls, the failure of Conservatives to address the only serious election issue - the economic downturn - cost them their chance at a majority. The Canadian experience will not have gone unnoticed by political strategists here. An interventionist and expansive economic plan is what voters want to hear in these uncertain times. Students!National has released its education policy - a 10-step "Crusade for Literacy and Numeracy". The plan aims to tackle the long tail of underachieving school leavers - which National puts at one out of every five. The first and most publicised step in National's plan calls for the introduction of national reading and mathematical standards. Under this proposal primary and intermediate school pupils will be assessed regularly against those standards. Complementary steps will include prosecuting the parents of recidivist truant pupils. The estimated annual cost of the new initiative is $47 million. Labour went for a king hit of its own on education, focusing its attention on university- and polytechnic students. Choosing the University of Otago as her venue Helen Clark announced that Labour would increase the parental income threshold on student allowances in four stages so that every student would be entitled to an allowance by 2012, by which time the promise would cost $210 million per annum. Even to the uninitiated the politics of this one was writ large as an attempt to reprise the appeal to the student vote that delivered Labour the crucial 2% lead over National to give it the Treasury benches in 2005. Universal student allowances by 2012 are not, however, interest-free student loans. The 2005 announcement was a lightening-rod that appealed to the almost half-million Kiwis with student loans, whether they were students or graduates. Monday's allowance announcement will only benefit future and intending students. Labour will nonetheless hope for a surge in student support and a "halo effect" of support from the parents and grandparents of students who are concerned about levels of student debt. The risk is that it will be seen as not only cynical but reckless given the fiscal constraints that recession will produce. Labour must also be wary of the unforeseen implications of having to deliver on its pledge. High unemployment and middling economic performance in the 1990s saw tertiary education rolls grow rapidly as universities and polytechnics absorbed many who would otherwise have been out of work. A prolonged recession could see the same boom in student numbers again, this time though with the promise of an allowance. Benson-Pope's last serveWhile all eyes were on the Prime Minister in Dunedin as she announced the roll-out of universal student allowances observers may have missed who was not shadowing her. Certainly Labour party strategist and Dunedin North MP Pete Hodgson was one step behind Ms Clark, as was Labour's Dunedin South candidate and one-time PR advisor to the Ministry for the Environment Clare Curran. But missing from the tableau was former minister and incumbent Dunedin South MP David Benson-Pope. Benson-Pope ended speculation about his political future over the weekend by announcing he would not stand as an independent in Dunedin South. He lost the selection for one of the safest Labour seats in the country after a bitter selection process on 2 February this year. Nonetheless, Otago Daily Times polling suggested an independent Benson-Pope could have won the seat "at a canter". Benson-Pope's announcement ends a nine-year stint in Parliament which saw him promoted meteorically, given hard-tasks such as managing the Civil Unions Bill and dropped as quickly as he rose over misleading Parliament and the public. The announcement also ends what could have been a fascinating electoral footnote: a loyal party man standing as an independent, potentially winning and potentially making the difference in post-election Government formation in a closely-divided Parliament. |
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| AND IN BUSINESS | ||||||||||||||||||||||||||||||||||||||||||||
Consultation on renewable preference regulationsSubmissions are being sought by the Ministry of Economic Development on draft regulations relating to the Electricity (Renewable Preference) Amendment Act 2008 additions to the Electricity Act 1992 (otherwise known as the 10 year restriction on fossil-fuelled electricity generation). A Discussion Paper has been released and outlines the proposed design and substance for the regulations, including where applicable, the quantitative values. At the same time, a number of Cabinet papers have also been released on the MED's website, providing valuable background information to assist submitters. Submissions are due by 5 November 2008. Draft ETS regulations for energy and industryThe Ministry for Environment has released the proposed draft regulations for the energy and industrial processes sectors under the new NZ ETS. Both sectors will have compliance obligations under the new legislation from 1 January 2010. The draft regulations provide stationary energy and industrial processes organisations with notice of the content and extent of their proposed obligations under the NZ ETS. Content includes the proposed requirements for collecting reporting information and calculating greenhouse gas emissions, as well as setting out default emissions factors for activities that create an obligation under the NZ ETS. The regulations also cover matters such as commencement and interpretation. Activities that will be captured under the NZ ETS include the following:
Submissions are due by 15 December 2008. Forestry sector updateThe Minister Responsible for Climate Change Issues has given public notice of the Draft Forestry Allocation Plan for owners of pre-1990 forest land. The Draft Allocation Plan is accompanied by a supporting Information Document which sets out the rationale for the intended approach in allocation, as well as the intended approach for granting exemptions. All owners of pre-1990 forest land need to decide in the first half of 2009 whether to:
The Draft Allocation Plan establishes the criteria and process for allocations and exemptions. Submissions are due by 28 February 2009. Public workshops will be held in January and February. The finalised Allocation Plan is proposed to be issued in April 2009. New regulations for international carbon creditsThe Government is developing regulations to specify the carbon credits known as 'assigned amount units' that will be accepted for compliance with the New Zealand Emissions Trading Scheme (NZ ETS). Draft regulations will be released for consultation in January 2009, and the finalised regulations are expected to be issued in June 2009 (coming into force three months later). Seminar - Managing conflicts of interest in the public sector
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| The 48th Parliament has now been dissolved and all outstanding business, including Bills and Select Committee hearings will lapse until a new Parliament is formed. Whether lapsed business returns to the agenda will be decided by the new Government. Any submissions on items of business that were before committees as at 3 October 2008 will be held in the custody of the Clerk of the House of Representatives until the new Committees are formed. The affected Bills are:
Acts AssentedClimate Change Response (Emissions Trading) Amendment Act 2008 RegulationsFisheries (Quota Management Areas, Total Allowable Catches, and Catch Histories) Amendment Notice (No 3) 2008
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Legislation in the wingsCabinet also approved implementing a new bottom rate of secondary income tax of 12.5 percent from 1 April 2010.
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© Russell McVeagh 2005. All rights reserved.