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No Cullen Fund restart until surplus, says Shearer - but did he tell his MPs?

Labour leader David Shearer has recommitted his party to a capital gains tax but says it will emulate National and delay restarting payments into the Superannuation Fund.

It is not clear, though, whether he told his caucus of the NZ Super Fund move.

Mr Shearer told a Wellington business audience this morning that New Zealand exporters cannot access enough capital to expand because there is not a capital gains tax.

Labour’s policy is for a CGT on all businesses – including, presumably, exporters – and on all other investments except the family home.

Family homes which also run a home business – for export or not – would, however, have that part of the home included in a CGT.

Mr Shearer says his party’s first priority for growing the economy is tax.

"The first is creating pro-growth tax reform. That includes a capital gains tax that will encourage people to invest in productive parts of our economy rather than speculation.

“At the moment, the Government is starving our productive exporters of the investment capital they need.

"New Zealanders are borrowing heavily overseas because we don’t export enough to pay for our imports and interest.”

That is in line with previous speeches.

The only new move was a promise not to restart repayments into the New Zealand Superannuation Fund – known as the Cullen Fund – until the government’s books are back in surplus.

This is National’s position, and Labour has, until today, strongly opposed this.

Indeed, Labour hatchet man Trevor Mallard was, only three days ago, criticising National’s policy on this in the House.

In a debate on Tuesday on a tax bill – held after that day's caucus meeting, during which it would be expected Mr Shearer would have mentioned the policy change – Mr Mallard said National’s policy in this and other savings policy areas is shortsighted.

“One of the things that we need to consider is whether, rather than giving preference to offshore lenders, we should, in fact, focus on building up our own domestic capital and domestic borrowing in order to retain the financing of our businesses onshore as much as possible and thereby reduce the flow offshore.

“That, of course, would require more ambition around savings than we currently have," he said.

"I note that it has been the policy of the government to not put money into the Cullen Fund.

"I note that it has been the decision of the government to run down KiwiSaver, to reduce the incentives and to reduce the flow of payments into the system.

"And that, of course, is something that works against the development of capital in New Zealand. I think that has been a short-term approach,” Mr Mallard said.

This morning Mr Shearer said the previous committment to restart Super Fund repayments was not popular with voters.

"New Zealanders told us they were uncomfortable about the rate of borrowing... They saw this as borrowing to invest and they didn't like that.

"We have listened.

"That’s why I won’t continue with Labour’s previous policy to restore contributions to the Cullen Super Fund until I think we can afford it.

"It wouldn’t have increased net debt because it gave us an asset that matched the liability.

"However, New Zealanders saw this as borrowing to invest and they didn’t like that," Mr Shearer said.

"We’ve decided that until we are back in surplus, any new spending will have to be paid for out of existing budget provisions, new revenue, or by re-prioritising."

More by Rob Hosking

Comments and questions
20

Also ALL treaty of waitangi settlements should be halted until the government’s books are back in surplus.

Why does NBR insist on using that pic of Shearer? It makes him look even more befuddled, even drongo-ish.

It's the only apt one they have... and Labour have finally learnt their lesson from photoshoppping Auntie, dressing up mutton as lamb... they dont want to do that with Shearer...

Besides... if he holds his tongue just right... he might be able to hold onto his leadership for another month - Yeah Right!

Well cant make a silk purse out of a sows ear.Get used to it truth is stranger than fiction.We had enough of air brushing in our recent past with some other Labour leaders.

Should be called an inheritance tax.Check the proposal,also if the Greens have their way ,the inheritance tax will increase with the CPI.Seems after plunging NZ into so much debt when they were in power,they still have learnt nothing.

Just stop borrowing to pay for new cars, TVs, overseas holidays, second holiday homes (especially those in Queenstown and beach side), learn to live within your means and NZ will be fine.

Can you do that?

As I thought, you cannot.

So stop dreaming - NZ is in a mess and will continue down the debt-induced drunken path of destruction until all capable NZers are in Australia, leaving the losers behind.

Then, we will own you.

So true. I don’t hold a lot of hope for NZ. The future of NZ is dependent on the skilled and educated younger generations, however their future isn’t in NZ.
You can cut their kiwisaver, make education, houses, rent (everything) more expensive and user pays, even add interest to their loans, but after all that you won’t get any of their tax dollars which is what NZ needs more than ever.

Australias got more debt than NZ. Cannot get even close to balancing books.

Heard about a NZ couple in Australia on weekend, earn't $3 million in 6 years, and have spent it all, holidays, casinos etc.
Saved zero.

Grass always looks greener next door.

Just dig a few more holes in Oz and their deficit is solved. Latent wealth to be released.

NZ digs holes too - but of a different kind. Holes to bury the hopes and aspirations of the young generation.

Yep - just keep borrowing and pandering to the debt and social welfare addicts.

And yes, keep paying on treaty settlements and still, keep paying for Maori welfare. Best of both worlds for the greedy Maori elite - Maoris and NZers cannot see it but it's clear only a tiny Maori minority benefit from the treaty settlements.

You losers have not got a clue, have you?

Wouldn't it be good if we had a responsible, fiscally conservative party that didn't advocate the sell-off of this country's income? Oh yeah, the Conservatives. It's about time the media caught up with Colin Craig.

Another week of Bonkers Banksie and Key might get the teapot out and travel out to Rodney to talk to Colin Craig.....who doesn't seem to have the sort of c**p that Hide-Brash-Banks have trailing behind them.
But the media (I use the term loosely....the NZH/ TV3/etc) love inconsequential trivia to 'tabloid' the increasingly isolated and ignorant NZ electorate with.

Wouldn't it be good if NZ had a responsible, fiscally conservative party that didn't advocate the mass sell-off of the country's major income generators? Oh yeah, the Conservatives. When is the media going to catch up with Colin Craig?

If we introduce a policy of culling the bottom 5% of our society every year, the problem will be solved in about 5 years.

I think you will find Labour is gaining significantly in the polls ( NZ Herald digi 3 days ago puts them up 7 points). It would seem claims that Shearer is on his last legs are wishful thinking by those who fear a Labour/Green coalition. His steady as she goes approach is unsettling the rabbid right.

So Shearer thinks that economic growth will be encouraged by increasing taxes. Strange logic!

The headline issue is the super-fund contributions that are currently on hold. I would expect that by the time the Govt (whoever is the govt of the day) balances the books, the NZ dollar will be weak and offshore asset prices will have recovered even more from where they are today, note that the Dow Jones index now sits at twice the level of just three years ago and we haven't been buying these rising assets with our VERY strong (overpriced) NZ dollar, go figure??? I don't know why the govt pandered to the critics who couldn't see the wood for the trees, those assets were cheaper than the cost of funding the debt

Have I missed something here - how does a capital gains tax generate capital for exporters??

Simple, the Govt takes the money in tax, then lends it at low interest to selected exporters, selected by a new Govt dept which will decide which exporters are best. The bind moggels !!

I laugh every-time I hear someone mention the grass is greener in Australia - from a business owners point of view - and someone that works with Australian businesses - I can assure you they are stuffed. Just like with the sinking of the Titanic - thr is a lag period. When the bubble burst the bubble wages will
disappear with to.

Perhaps, Ms Jacinta Ardern will do a better job...future NZ Prime Minister in 2014...watch this space!