Mood of the Boardroom: Video reaction

See video reaction to this morning's Mood of the Boardroom breakfast debate between Bill English and David Parker this morning. The issue of tax was the big talking point.

Tax tax issues came to the fore when Finance Minister Bill English and Labour's finance spokesman David Parker squared off against each other at a New Zealand Herald Mood of the Boardroom breakfast debate this morning.

Labour has said it would introduce a capital gains tax, excluding the family home, aimed at property speculators, while a key part of the National Party's election platform are tax cuts designed to come into effect in 2017.

English told the breakfast a National-led government would spend up to $10 billion more over the next our years, compared with $18 billion planned by opposition parties.
He told APNZ the debate surrounding a capital gains tax over the last four weeks had highlighted the need for various exemptions.

"It's a tax that a number of people quite like the idea of but no one wants to pay it," he said.

Parker said there was support in the business community for a capital gains tax as it would aid the flow of capital to more productive parts of the economy.

He said a capital gains tax was neither a tax grab nor an inheritance tax.

"A lot of people understand that with the lowest home ownership rates in 60 years, that we need to start doing things differently," he told APNZ.

"We have had lower general price inflation in New Zealand for a few years now and we have had a huge increase in house prices at the same time," he said.

"As is stands, people are incentivised to invest in rental property, which puts them in competition with first home buyers," he said.

In his speech, Parker said New Zealand just had the best terms of trade in 41 years but had not run a current account surplus.

"How do you fix that? Through capital accumulation and capital allocation," he said.
Parker said capital allocation in New Zealand had been distorted by the tax system "and it ought not to be," he said, adding capital needed to shift from speculative forms of investment to more ones.

Three-quarters of CEO respondents to this year's Mood of the Boardroom survey anticipated revenue growth in the next year, with all but four of those CEOs predicting an improvement to bottom line profits.

The confidence from business leaders is evident in their commitment to investing in themselves - 57 per cent said they were likely to increase staff numbers in the next 12 months and 61 per cent expected to authorise further expenditure in IT.

Only 12 per cent of CEOs said that they expected to authorise less capital expenditure. It's a strong message from our business leaders - the platform for national economic success has been laid - now it's about capitalising on it.

In his speech, English said the government had hard worked hard to gain voters' confidence. "New Zealanders have sorted out how to adjust to a changed world - both in their homes and in their work places," he said. "And they now feel like they know how to handle it," he said.