Wealth not tax NZ First focus

Winston Peters told a Mt Maunganui meeting yesterday he wants a rethink on free-trade agreements to protect jobs. Picture / Alan Gibson

While Labour and National continue to wrestle over the affordability or otherwise of hefty income tax cuts, New Zealand First leader Winston Peters says they are ignoring the real economic issues.

"The key thing in this whole debate is being lost. The great economies of the world have one fundamental overriding factor, they have huge activity, there's a vibrancy about them. Tax policy is not a central issue to them. It's activity," he said. "Our greatest problem is we are not growing productive wealth."

Peters believes the country's well-being depends on expanding exports and neither major party will be able to meet their election promises if export receipts dwindle.

Nevertheless, NZ First's plan to stimulate the economy and treble exports in real terms over the next 15 years involves a fair amount of tinkering with the tax system.

While Peters says New Zealand is not highly taxed in relative terms, "We're an extraordinarily high tax country for a low-wage and low-profit country. Small business, in particular, is up against it, we need a reduction in business tax."

That means trimming the company tax rate to 30 per cent and a 20 per cent tax for new export businesses.

"A 20 per cent tax rate is a huge incentive ... I want business not to relocate offshore but to relocate here."

Peters also wants tax breaks for research and development and training to address the skills shortage.

NZ First's other big tax plan is the removal of GST on petrol. Remaining petrol taxes should be "ring fenced" for spending on roads.

The minimum wage should be lifted from $9.50 to $12 an hour to staunch the flow of people heading overseas for better pay.

"We are losing our best and brightest because of our low wage regime and you can't turn that around unless you give business and the worker a fairer deal."

Peters wants a rethink on free- trade agreements to protect jobs in the manufacturing sector.

"Free-trade agreements with low-wage countries, particularly China, are a looming disaster."

The long-standing closer economic relations (CER) agreement with Australia should also be reviewed. The NZ Superannuation Fund investments should be redirected into local infrastructure investments. Peters would prefer to follow the example set by countries such as Chile and Singapore whose own retirement funds had to be invested domestically, at least in their first few years. That would provide a much-needed boost to sectors suffering from underinvestment.

He believes the deregulation of the electricity industry is "an absolute disaster, a failure," with businesses and consumers subject to "price gouging". Therefore prices should be regulated.

First in line

* Cut company tax rate to 30 per cent and 20 per cent for new export businesses.

* Raise the minimum wage to $12 an hour.

* Remove GST on petrol.

* Review present and future bilateral trade agreements.

* Buy back "key national infrastructure".

* Price regulation of electricity industry.

* Tougher rules on foreign investment.