What a difference a pandemic makes.
That was obvious this week when Finance Minister Grant Robertson made an election pitch to business elites for Labour this week as a stable, consistent and careful manager of the Government's finances, and National as chaotic and inconsistent.
Paul Goldsmith, National's spokesman, shared the stage with Robertson at the Herald's Mood of the Boardroom forum, but Robertson was the hero.
Just over 90 per cent of the chief executives had rated his performance as credible in a survey, compared with 54 per cent last year, and they viewed him as the stand-out current minister - more so than Prime Minister Jacinda Ardern - for his agility and economic management during the Covid-19 crisis.
But the economic crisis is yet to reveal its full impact. And the big question this election is which party has the best way of limiting the pandemic's impacts on jobs and livelihoods, while maintaining public services and preparing the country for another crisis.
In other words, which can grow the economy strongest?
New Zealand officially fell into recession in the June quarter with a record 12.2 per cent contraction of gross domestic product, GDP.
Despite the unemployment rate sitting at 4 per cent, Treasury forecasts 100,000 job losses in the next two years.
Much of what Robertson did under Covid was supported by other parties, principally the wage subsidy scheme and its extensions through which $14 billion was paid to employers.
National has its own versions of schemes to help business. But besides the party's large and temporary move on depreciation there is not a great deal to easily differentiate one form of life-support scheme for business with another.
TAX
Tax did not look like being a big factor in this election as it has in the past.
Robertson had promised that Labour would set a new higher personal tax rate of 39c on income over $180,000 which would raise $550 million a year from the top 2 per cent of income earners.
Then National unveiled a surprise promise of temporary tax cuts at a cost of $4.6 billion from the unallocated $14 billion Covid fund – an option it settled on late in the piece, having previously ruled them out.
In an instant the differences between the two big parties widened in a way that could be condensed to slogans: higher tax or lower tax.
The NZ Herald-Kantar Vote2020 poll suggests that half of respondents want them – and 29 per cent don't want tax rates to change.
The other big tax move is the Green Party's wealth tax – at 1 per cent on net wealth over $1 million and 2 per cent on net wealth over $2 million - a poor man's substitute for a failed attempt to get a capital gains tax.
Mortgages and other debt would not be taxed, just the equity. For those such as the elderly who may be asset rich and cash poor, there is an option to defer payment until sale of the asset.
It would raise about $8 billion a year, the Greens estimate, which could fund some of its costly policies such as a guaranteed minimum income for beneficiaries and students.
PLANS AND ERRORS
National's tax cuts were set out by Goldsmith in his 10-year fiscal plan, finalised hastily after the Pre-Election Fiscal and Economic Update which, incidentally, was a document riddled with errors because someone in Treasury did not check which version had been printed.
Robertson revealed a $4 billion error in Goldsmith's plan - he had used old forecasts to estimate savings to a National Government on suspending contributions to the Superannuation Fund.
The correction altered National's net debt to GDP ratio in 2034 from 35 per cent to 36 per cent – compared to 48 per cent under Labour.
It may have been inconsequential in that it was a paper adjustment in a long-term projection which is almost akin to guesswork given the volatility of global events.
But it has almost certainly had some effect on National's reputation as careful stewards of the books and Robertson has been relentless in prosecuting the case.
Mistakes are apparently easy. The press statement of Robertson's pointing out Goldsmith's error itself contained an error in the accompanying table on Super to the tune of $100 million.
The big picture is that National would borrow less, spend less on Government services, and reduce debt levels quicker. National says it would cut wasteful spending. Act would cut it even more.
Labour would borrow more, spend more on Government services and reduce debt more gradually. Labour says National has not left itself enough headroom for normal cost rises in health and education.
National's plan has allowed itself a smaller pot each year for operating spending - $23 billion compared with $30 billion in Prefu - allowing National to forecast a return to surplus in 2028.
In the same period, Labour under Prefu settings would see the deficit peak at 10 per cent of GDP next year then gradually reduce to a deficit of 0.7 per cent of GDP by 2028.
National has budgeted less spending for future initiatives and cost pressures, $1.8 billion a year compared to the current $2.4 billion set by Robertson.
Basically both would spend more on education and health in the coming years but National's increases would be less.
Robertson is not producing a fiscal plan – and that is not usual for an incumbent Government. Many of its forward plans are already baked into the books as Government policy.
But yesterday he issued what he called a "fiscal strategy".
It sets out the net cost of Labour promises that have not been factored in - $4.4 billion over four years which is easily accommodated in the cumulative operating allowances of $26.25 billion over the same period.
And it also provides a scenario in which net debt to GDP would reduce more quickly – to 45 per cent - if the bulk of the unallocated $14 billion in the Covid fund is not used.
INFRASTRUCTURE
The big hairy policy area this election is in infrastructure spending, especially transport projects.
Until a year ago, National thought it had the territory to itself. It was maintaining support across the country with promises of local roading projects that had been stalled or shelved by the Government.
That happened before the Covid downturn demanded stimulus, quite apart from New Zealand First's $3 billion provincial growth fund that Shane Jones has dispensed over the term.
Now there is a bidding war between the big parties as to which has the best infrastructure plan. The Government adopted many of National's projects, so much of the debate is now around the ability to actually deliver, not to promise.
Labour is promising to spend $42 billion on infrastructure over four years – in fact it is already baked into the Government accounts – and the same as the previous Government spent in nine years.
National is promising to spend $31 billion on transport projects over the next 10 years and to start building a second Auckland harbour crossing by 2028 – as yet unfunded.
Whether New Zealand has the skills to undertake this infrastructure bonanza may be a debate for another election.
How the economy has affected me
Lizzi Whaley has been in business since 2000 and in that time she has faced operating under both National and Labour-led Governments.
The commercial interior design company boss, who runs Karangahape Rd-based Spaceworks Design Group, says the past three years running her business has meant longer hours, more compliance costs and higher wage bills.
Whaley, who employs 28 staff, says changes to employment law and other regulations that came into affect last year has cost her business up to $1000 more each month.
It has meant the business has had to hire experts and consultants to ensure all requirements are being met, when it shouldn't need to for a relatively small-scale business.
She says the current Government hasn't done her business any favours.
"I'm a big fan of the way John Key ran the country because I believe he ran it like a business, and I believe that is the best way to run the country to make sure that all people are catered, and that you can't cherry-pick and try to do the best for everyone."
Whaley says the existing Government had "done very well on the international stage" and been "very diplomatic" but had taken the wrong approach towards the Covid-19 response and its worker-first policies.
"They have cherry-picked some industries that they think they want to support more than others. Whilst we have fared pretty well through Covid, we haven't had to make any redundancies or anything like that, what we are finding it has affected the markets that we are service which is retail and hospitality, they feel like they are really forgotten."
Current policies such as mandatory rises to the minimum wage affected industries and businesses that could not afford them. It had meant that businesses were now less likely to hire additional staff, says Whaley.
"Businesses are going to choose not to employ and make the people that are already working for them work harder and longer, and that brings about all sorts of issues around stress and mental health and wellbeing," she says, adding that she does not believe it is the Government's job to create jobs.
"I believe it is the Government's job to support small and medium-sized businesses or business in New Zealand to create jobs for New Zealanders.
She says she felt the Government was "putting money in the wrong places": "The intention is right, the direction is entirely wrong."
The minimum wage set to increase to $20 per hour in April next year and the proposal to double paid sick leave entitlements were examples of this, she says.
"What we'll do is we just won't employ more people. For example, I would have employed graduates from the universities but if now it's going to cost me more, why would? I would much rather pay for a senior who is twice as productive for not a huge amount more. I'm not going to take the opportunity to train a graduate out of university because they are just costing so much more, I'm just going to invest my money into more qualified people because the productivity for me is going to be so much higher, which is far better for our business model long term.
Whaley says she felt the Government was taking from businesses that create jobs, or should be creating jobs, and making it tougher to remain viable.
"You would hope that your Government was out there for every New Zealander and to help them grow their business.
"I feel that in my attempts to grow my business I'm now be persecuted and it's now more expensive for me to hire staff and I'm potentially going to be taxed more, which means it is stopping me from living a life that means I can give back to people that actually need it."
Economy: The policies
Labour
• New top tax rate of 39 per cent on income over $180,000. Continue work on digital services tax for multinationals.
• Increase the minimum wage to $20 an hour in 2021. Double statutory sick leave entitlement to 10 days a year.
• Extend the Small Business Cash Flow Loan Scheme — up to $100,000 for employers of 50 people. Tighten regulations around merchant service fees charged by banks.
• Establish Regional Strategic Partnership Fund with $200m for projects identified in local development plans.
• Create 20,000 jobs through $3b in big projects, and more with the $8b NZ Upgrade programme, part of a $42b infrastructure spend.
Free apprenticeships and trades training in key areas.
National
• Tax cuts for 16 months, worth $8 a week for someone on $30,000, $37 on $60,000 and $58 on$90,000. Index tax thresholds to inflation. No new taxes.
• Return to surplus by 2028. Reduce net debt to Gdp ratio to 36 per cent by 2034.
• Spend $31b in transport infrastructure over 10 years, with 4 lane highways linking • Whangarei, Auckland, Hamilton and Tauranga. Give employers $10,000 for every new employee hired to March 2021. Limit of 10 per employer.
• Allow firms to immediately write off new assets valued up to $150,000.
Greens
• 1 per cent tax on net wealth over $1m, 2 per cent over $2m including houses, property, KiwiSaver, bonds, shares, business assets and art.
• New income tax brackets of 37 per cent over $100,000, 42 per cent over $150,000.
• New 3 per cent digital services tax on gross NZ revenue made by the likes of FaceBook and Amazon or with OECD agreement.
• Guaranteed annual minimum wage increases pegged to median wage.
• Guaranteed $325 weekly minimum income for students and jobless. Weekly $100 benefit for children under 3. Extra $110 a week for sole parents.
• Regional investment on sustainable building and infrastructure, regenerative agriculture and horticulture, and iwi and hapū-led activity.
NZ First
• No increase in taxes. Tax breaks for exporters. Reduce company taxes over time, accelerate capital depreciation and urgently business taxation with a view to increasing productivity.
• Step up work on infrastructure, especially water projects.
• Bring back the 90-day work trial for all businesses to make it easier to hire new employees.
• Adjust abatement rates for jobless to help vineyard and orchard work .
• Ramp up the Provincial Growth Fund for export and import substitution. Focus on climate change initiatives, waste reduction and sustainability
ACT
• Cut Gst to 10 per cent until June 2021. Implement three tax rates — 10.5 per cent up to $14,000; 17.5 per cent to $70,000 and 33 per cent over $70,000.
• Return to surplus by 2024 and begin repaying debt.
• Reduce borrowing by $76b from a projected $165.6b by 2030. Reduce debt to Gdp from 53 per cent to 37 per cent.
• Cut over $7b spending a year including interest-free student loans, winter energy payment, film and racing subsidies.
• Cut top civil servants' pay by 20 per cent. Cut the minimum hourly wage to $17.70. • Extend 90-day trial period to one year.
Māori Party
• Increase minimum hourly wage to $25. Double benefits.
• Raise business tax to 33 per cent. Lift threshold for the top personal tax rate to $80,000.
• Increase minimum KiwiSaver employer contribution to 5 per cent.
Create universal student allowance.
