National Party leader Christopher Luxon attacks Labour Government; socialism in 'state of the nation' address

A National government would reverse all of the taxes introduced under Labour, party leader Christopher Luxon says.

This includes the regional fuel tax, proposed light rail tax, brightline extension, removal of interest deductibility on rentals, the new 39 per cent income tax rate and job insurance scheme.

The party would also adjust the bottom three income tax thresholds to account for the inflation seen in the last four years.

"The facts are stark – we have a cost of living crisis in New Zealand," Luxon said today in his first state of the nation address, in Auckland.

Luxon criticised the Labour Government for its lack of delivery - and for its spending.

He also attacked socialism as a political system, saying it "created misery".

He said Kiwis were frustrated and that was leading to "division in society".

The Government was addicted to spending, he said.

All this poor quality, unfocussed spending was "having serious consequences for the economy".

"Inflation is at a three-decade high," he said.

"With prices rising twice as fast as wages, Kiwi families are worse off than they were 12 months ago.

"Food price rises are the highest in a decade, petrol has hit more than $3 a litre, and rents are through the roof."

Meanwhile, the average house price was up $400,000 under Labour, he said.

Increasing spending made sense in 2020 but times had changed he said. Instead of pulling back Labour was continuing to "spend up large", he said.

He railed against new taxes introduced.

"It's classic Labour – spend, spend, spend, and then they tax you to pay for it," he said.

"National will repeal each of these tax increases implemented by Labour."

Luxon said inflation was "another tax grab by stealth".

"We've got the perverse situation where someone on the average wage now has a marginal tax rate of 33 percent.

"And someone on the minimum wage only has to work a 44 hour week to face a tax rate of 30 cents on the dollar.

"That's ridiculous."

He called for the Government to adjust income tax thresholds to account for the inflation seen under Labour.

This would see each of the first three tax thresholds immediately increase by around eleven and a half percent, he said.

Under the proposal the 10.5 per cent tax rate would apply to the first $15,600 of income, not $14,000 as it is currently, he said.

The 17.5 per cent rate would extend to $53,500 rather than $48,000.

And rather than the 33 per cent tax rate kicking in at $70,000 – less than the average wage – it would increase to $78,100.

Someone on $55,000 a year would get $800 in tax relief a year.

Someone on the average wage would be better off by $870 a year.

And anyone earning $78,100 or above would be better off by over $1,000 a year.

They would not touch the 39 per cent threshold, as it only recently came into effect, he said.

This would cost just under $1.7 billion, he said.

They would be met from the $6b spending announced by Finance Minister Grant Robertson for this year's budget, he said.

"Even after accounting for the $1.7b cost of these tax cuts, the remaining $4.3b would still be the biggest allowance for new spending initiatives ever," he said.

Luxon's "different background from most politicians"

Luxon began his address by acknowledging the "unprovoked and senseless attack on Ukraine".

"Their bravery has been inspiring to us all."

Luxon, who as a new MP and leader he remains unknown to many New Zealanders, said he came to politics with a "different background from most politicians".

He spoke of his upbringing and his parents. His father was a salesman, from whom he learned to have "ambition and never settle for mediocrity".

From his mother he learned about "people, relationships and from her I got my sense of humour". She went on to be a psychotherapist and counsellor.

"From her I learnt that life can be complicated, messy and hard – and that we all have a responsibility to support those that are doing it tough."

He said he was proud of his achievements in business, but his "greatest achievement" was convincing his wife Amanda to marry him and their two children.

"Being a husband and a father will forever be the role that defines me. Nothing else comes close."

His first job was at McDonalds, and he worked in a drive-through. After university he joined Unilever.

"Living and working across the globe for 16 years I saw the good and bad of different political systems."

He referenced how several Labour Party MPs said they were proud socialists.

"Whatever you call it, Labour has time and again shown us that it thinks it alone knows what is best for Kiwis and their communities.

"They don't trust us to make decisions for ourselves and our families – they insist more and more things should be dictated by politicians and bureaucrats in Wellington.

"I simply do not agree."

He spoke of living in Moscow and developing a sense "socialism – in terms of Government control of everyday life and lack of rewards for hard work – had abjectly failed and actually created misery".

He spoke of returning to New Zealand and leading Air New Zealand and its 12,000 employees.

"These experiences shaped my belief that business has a responsibility to engage on the economic, social and environmental issues that will ultimately strengthen our society."

He said he joined National because he wants New Zealand to "realise its maximum potential, and to help build a society where every Kiwi can flourish and get ahead".

"Where communities aren't dictated to by politicians in Wellington.

"Where if you work hard you can afford to buy a house.

"Where we support those who are doing it tough.

"Where our public health and education systems are first-class for all Kiwis.

"Where we protect our natural environment and play our part on climate change."

He was critical of the Government, saying it was "all spin and no action".

He railed against Labour policies including Three Waters, said the Government was "deeply suspicious of business", yet led a public sector that could not deliver.

Young people were locked out of the housing market while rent was up $140 a week under Labour. Climate policies were filing, real wages falling, education going backwards and child poverty increasing.

"These aren't the signs of a nation at its best.

"They're signs of Labour's low expectations and a lack of faith in people's ability to succeed.

"We're missing trust."

Luxon said he was a "proud defender of free enterprise because of how much good the system has done creating opportunity and reducing poverty".

"The ladder of opportunity seems to be losing its lowest rungs. And that's not right."

He said he believed in a social safety net, but Labour's approach was to "spend billions on welfare payments that only succeed in making poverty marginally less painful. They're reinforcing learned helplessness, not supporting Kiwis to become self-sufficient".

"It is the subtle prejudice of low expectations."

It was not delivering results, the number of people on benefits had increased.

"It's not caring or kind. It's crippling.

"Being prepared to invest in the right places to secure better long-term results for the most vulnerable New Zealanders, and save taxpayers money in the long run, is what Bill English called 'social investment'.

"This will be back under National."

Luxon said there needed to be a shift away from "Labour's view that politicians control the economy" back to Kiwis and businesses.

"I believe that practical, modern centre-right political principles can help us navigate the social, environmental and economic challenges we face as a country."

National Party leader Chris Luxon delivering his 'state of the nation' speech this morning. Photo / Alex Burton

Luxon and his finance spokesman Simon Bridges hammered out tax policies over the summer, and since the start of the year have increasingly turned their attacks on the Government to an economic front.

Bridges was not at Luxon's state of the nation because he has Covid-19 - he confirmed he and the rest of his family are all infected. Bridges tested positive on Thursday afternoon.

Luxon had previously called for the Auckland Regional Fuel Tax to be dumped, and National had opposed other taxation changes the Government has made, including the new top tax rate, increasing the bright line test for property buying and scrapping interest deductibility on investment properties.

In recent weeks Luxon has challenged Prime Minister Jacinda Ardern in Question Time on the rising cost of living, including fuel prices, and shortage of affordable houses.

Last week Luxon challenged Ardern to name tools the Government could use to trim inflation - essentially goading Ardern to promise to cut spending.

Luxon singled out the Government's decision to spend "billions on vanity projects like underground trams" as a particularly egregious funding choice.

Two weeks ago Luxon delivered a major speech on the Government's Covid-19 response, while addressing concerns of protesters at Parliament.

He said New Zealand had become "a society divided" under the Labour Government and it was time to phase out vaccine mandates.

"The Prime Minister talks about the team of five million, but actually she leads the most divisive Government in recent memory," he said.

"Renters versus landlords. Business owners versus workers. Farmers versus cities. Kiwis at home versus those stuck abroad. The vaccinated versus the unvaccinated."

Ardern responded saying his comments were "dangerously close to sympathy" with the protesters.

Since Luxon became leader of the National Party in December there has been a steady growth in support for the party, largely at the expense of Act.

The Curia poll for February had Labour - up 1 percentage point - at 42 per cent, just four points ahead of National on 38 per cent. National gained 5 percentage points on January.