The New Zealand election is upon us. A few days ago, I was an ‘undecided’ voter. That’s why I spent hours trawling party policy to try and analyse who might have the best ideas.
I’ve enjoyed the leader debates. Judith Collins has it overall in my view. A verbal charcuterie board, versus celery sticks and hummus.
But putting that aside, I’m not loyal to any particular party. Growing up in the 1980s, I saw Labour transform the economy under Roger Douglas. And then National also improve prosperity.
This election sees the country at a crossroads. Housing is so unaffordable, our research sees the highest rates of homelessness in the developed world. Population growth — largely through migration — has been more rapid than before. And infrastructure, especially in Auckland, seems at breaking point.
Then there is COVID-19. Which has put the country into serious debt and threatens many jobs.
For savvy Wealth Morning readers, I want to unpick which set of party policies — or combination thereof — could offer the best potential for your wealth. For the wealth and future of this country.
Because we all know that generating wealth and prosperity in an even and fair way means better schools, better healthcare, and more prospects for us all. More good wealth and less dangerous poverty.
So allow me to analyse in detail the policies of our electable parties. And assign each a ‘Wealth Score’. Here’s some policy highlights. And my score for each party:
- COVID-19 response has been decisive with good health outcomes. Economic not so good — Q2 GDP fell 12.2% compared to Australia 7%, US 9.1% ,and UK 20.4%. [+3]
- Have restarted contributions to the New Zealand Superannuation Fund. [+3]
- Foreign-buyer ban to protect failure in the local housing market. Remove the RMA. Fund the build of 8,000 new public and transitional homes — though may not be visionary enough. [+3]
- New top tax rate of 39% on $180,000+ fails to compete with Australia (or other jurisdictions) for wealthy earners and encourages the use of other structures. [-2]
[Wealth Morning score = 7]
- A clear and thorough infrastructure plan, including a second harbour crossing for Auckland. Plus a dedicated STEM strategy. [+5]
- Reduce debt to 35% of GDP by 2034, while running a 16-month tax reduction plan to help with economic recovery. Linking income tax brackets to inflation thereafter. [+4]
- Reduce red tape across the economy by repealing the RMA and requiring government departments to measure the cost of compliance imposed on small businesses. [+4]
- A confused housing plan that, on the positive, encourages opening up of land and faster consenting, but on the negative, encourages local (and foreign) investor speculation, which could worsen market failure. [-5]
[Wealth Morning score = 8]
- Incentivises the work of middle-income New Zealand by reducing the 30% tax band to 17.5%. Opening up global opportunity by pursuing free trade and movement agreements with Canada, Australia, New Zealand, and the United Kingdom (CANZUK). [+5]
- Cuts red tape by specifically limiting government ability to pass harmful regulation. Reduces the size and cost of government. [+4]
- Frees up building regulation by repealing the RMA and moving to a private insurance model for new builds (as opposed to council inspections). [+3]
- No clear population policy beyond being a ‘pro-immigration’ party and requiring new residents to sign up to ‘New Zealand values’. [-3]
[Wealth Morning score = 9]
- A range of environmental policies to protect, preserve, and enhance the natural beauty of New Zealand. Plus a dedication to maximising productive land for food production. [+4]
- A dedicated clean energy plan with a clear target to end thermal coal use. [+3]
- A commitment to continue building houses and increased protections for renters. [+3]
- A wealth tax of 1% on net worth over $1 million. This could be devastating for asset-rich, income-poor people who have no way to pay. And discourage many wealthy people from living here. [-5]
[Wealth Morning score = 5]
- Demonstrated strong commitment to economic growth across the regions in coalition with Labour. A plan to refocus immigration on skill shortages has so far failed to deliver. But the party may seek an immigration role in any new coalition and review a 30-year population plan. [+4]
- Economic policy focuses on export-led economic development to add value to New Zealand’s resources. A cluster plan to remove red tape restricting small business. [+4]
- Has a long-term objective to reduce the tax paid by New Zealanders, while providing increased incentives for R&D and export-led growth. [+4]
- Housing, business, and tax policies lack, in many cases, specific detailed and numerated plans. [-4]
[Wealth Morning score = 8]
- Will overhaul the tax system, allowing people to earn the first $20,000 tax free and increasing other brackets. Cut red tape and compliance for business. Incentivise all New Zealanders to reach their potential. [+5]
- Implement net-zero immigration until the housing stock reaches a sufficient level to support further migration. [+4]
- A brave approach to addressing the unaffordability of current superannuation: gradual increases to eligibility age and increasing the residency time in New Zealand to qualify. [+3]
- No clear plan or costing to address infrastructure deficits, especially in Auckland. Though there does appear strong policy on addressing housing and building. [-3]
[Wealth Morning score = 9]
By all means do your own digging on each party’s policies. I’ve highlighted here a few standout policies that could help many New Zealanders build and protect their wealth in a fair way.
Of course, one of the problems with MMP is when voting for any party polling below 5%, your vote may be wasted. The last Colmar Brunton poll revealed Labour on 47%, National 32%, Act 8%, Greens 6%, and other parties on 2% or below. But this only polled 1,005 people — and 13% of them were undecided! And in last election’s poll, NZ First received 2.3% more votes than polled, while the Greens saw 1.7% less.
Note: I’ve not considered any parties polling below certain thresholds — unless they have candidates standing across most electorates. Given the margin of error and undecided voters, it is possible that a party on 2% could still reach the 5% threshold.
Experience tends to show that people vote with their wallet. Parties offering tax relief and a jobs focus may get more than they poll. And deliver better economic results in the long run.
One observation is that politics in New Zealand is not as divisive as in other places. We have a range of choices and some very good people offering them.
Editor, Wealth Morning
PS: Many of our clients will not be concerned at all about the result of this election. They are building a global portfolio, where they’re not financially exposed to any particular country. Come and join us on our acclaimed Lifetime Wealth Investor research programme.