Reckless borrowing will throw us off-balance

The sharp fall in share market prices amidst the current global financial turmoil highlights the economic uncertainty we are facing and the need for a strong plan to get New Zealand’s economy growing again.

National does not have a plan. The only ideas it has come up with is to sell off our valuable community-owned assets, like power companies and Air New Zealand and borrow heavily to pay for the big tax cuts it is giving mostly to the wealthiest Kiwis.

That is not the answer.

You cannot keep borrowing as the National-led Government has done this year.

It is spending $16.7 billion more than it gets in income. That is not sustainable. We have to pay off the debt or it will fall on to future generations.

You can only sell assets once. When you do, you lose hundreds of millions of dollars in dividends they pay to all of us every year.

Control over those key assets also quickly falls into the hands of big corporate and foreign companies. That means power prices will rise as the new owners push for bigger profits.

We need to fundamentally change the way our economy works.

Part of that plan involves making changes to the tax system but those changes must be fair to all. Many middle and low-income New Zealanders are worse off now because the higher prices they are paying have not been compensated by the tax cuts they got or by pay rises.

Wages went up in the last year by 1.9% but prices soared by 5.3%. Food prices were even higher.

Relief efforts

Labour’s plan is to provide some relief.

We will do that by making the first $5000 in income each year tax-free. For couples, that will be worth over $1000 extra in income each year.

Labour will take the full 15% of GST off fresh fruit and vegetables, which will help families with their budgets and allow them to give healthy food to their children. We will also lift the minimum wage to $15 an hour.

That will be paid for by a fairer tax system, which will require those who make money from capital gains to pay 15% on that income, excluding the family home.

That is only fair, since people earning their money from wages and salaries and interest on bank accounts have to pay tax on every dollar they earn.

Those earning over $150,000 in personal income will also have to pay a little more with a new 39c tax rate above that level.

At a time when debt is rising and Canterbury has to be rebuilt, that is not too much to ask.

After all, the top 150 earners in New Zealand last year got thousands of dollars a week in tax cuts and increased their wealth by 20% or $7 billion.

It is time our tax system was fairer to middle and low-income earners who are working hard but struggling to get ahead.

We want to build a strong and better New Zealand and help Kiwis realise their dreams.

Labour will invest in a smart New Zealand, which is high-skill, high-tech and high-wage.

We will do that by helping with research and development, up-skilling and promoting a tax and monetary policy that benefits the export and productive economy to create real incomes and jobs.

Labour’s policy is bold and courageous. It has to be if we are to make the decisions we need for a better future rather than short-term policies, which just focus on the next election.

Phil Goff is the Leader of the Labour Party and Leader of the Opposition in Parliament. The above article is exclusive to Indian Newslink ©

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