Speech by New Zealand First Leader and Northland MP Rt Hon Winston Peters: The facade of prosperity, living off past capital

03 May 2017

Wellington Chamber of Commerce,
PwC, Level 16,
113 The Terrace,
7.30am, Wednesday, 3 May 2017

Thank you for the invitation to speak here today.

Your guest speaker last week, Steven Joyce, will soon deliver his first Budget.

Being election year we can predict its design.


It will tout the government’s record on the economy.

After almost 9 years the government’s brag of doing an outstanding job in managing the New Zealand economy has worn wafer thin.

The gap between the facade and the reality is stark for more and more New Zealanders.

They live in the real economy not the fabricated version.

Mass immigration fired economic growth has a huge price to it.

This country is in economic trouble.

A few facts quickly bring any assessment of the NZ economy down to earth.  

There are still nearly 140,000 people without jobs.

The government trumpets a nominal annual rate of GDP growth of around 3% - but the bulk of that is from a 2% annual population growth.  Our GDP less 2% from mass net immigration is well towards the bottom and not the top of the OECD as the government frequently, falsely claims.

What is happening is that the massive immigration influx is distorting all the economic indicators – and creating a very flattering but totally misleading impression that NZ is an economic success.

The fact is that New Zealand’s productivity levels are woeful; well below those of the better performing OECD countries.

Our Research and Development spending as a proportion of GDP, at 1.28%, is well below the OECD norm at 2.4%.

The fundamental imbalance in the economy has not been tackled. NZ was still running a large balance of payments deficit - $7 billion last year.

In 2017 we remain massively indebted to the rest of world – to the extent of $156 billion! 

That is a figure the government is always careful to avoid.

And continually flogging off New Zealand’s assets to overseas ownership is not smart – it is just another example of government living off our capital. 

The recent sales of Cook Strait ferry service Bluebridge and trucking company Freight Lines to Australian investors are just the latest examples of foreign owners gaining control of Kiwi businesses.

Claims that the government has managed public finances well are also spurious because so many areas of public expenditure are chronically underfunded.

Put simply, rapid population growth has not been matched by adequate funding across a whole spectrum of services. 

And remember that in 2009 Bill English stopped the contributions to Super Fund in favour of tax cuts to the wealthy and he had to borrow to do that.

Had contributions been continued the Super Fund would now be worth well over $50 billion – rather than around $34 billion.
So what has the Government been up to over almost 9 years in government?

Steven Joyce was here last week with policies that have had more re-reruns than Gone with the Wind.

What this government has been doing is fabricating its own self-serving version about New Zealand’s economic performance – complete with an array of “alternative facts.” 

It has been doing this living off New Zealand’s capital built by previous generations.

Living off capital is not a sound principle for either an individual or a nation.

At best it’s a short-term fix.

When it is applied as a country’s policy it is courting disaster.

A country’s capital is both physical and human.

It includes the existing stock of housing, schools, hospitals, roading and other infrastructure that has been built up over decades.

And all the human capital that New Zealanders have acquired through their education and training.

Nowhere is this Government’s draw down on New Zealand’s capital more obvious than in the area of economic growth.

The truth is that the quantum and quality of New Zealand’s GDP growth has been low.
The only real measure of prosperity is GDP growth per capita.
Because GDP per capita must be set against the rapid growth in population.
Statistics NZ’s latest figures shows that across New Zealand GDP per person grew at 2%.

In other words take out population growth, and per capita GDP is static.

The government has shamelessly used spin to propagate the myth, that somehow New Zealand can absorb a staggering influx of over 70,000 net immigrants a year – at no cost!
Someone bears those costs– and it’s ordinary Kiwis!
At the recent Masters Games in Auckland the locals were asked to endure the extra stress of 29,000 visiting sporting veterans on motorways, transport and accommodation.
Well Auckland has been taking far bigger numbers than that every year recently.
And they aren’t going home after 10 days.
As NZ First has long pointed out we are adding a city the size of Rotorua or New Plymouth every year.
Think of what that entails in terms of extra:
• Housing
• Education facilities
• Health facilities
• Infrastructure, such as road and rail
And when you think about an actual city we can extend that list.
Real cities have swimming pools, libraries, medical centres, bus services – and all the other things that constitute a decent standard of living. And housing ownership which for so many is now impossible whilst many contemplate “Generation Rent”.
So that’s a Rotorua every year with all its components and none of that has been properly planned and properly funded under National.
They won’t even acknowledge the massive costs that are being imposed through population growth.
In their make-believe world immigration is a free good – a gift.
They have turned a blind eye to the downside of immigration and trumpet how well the economy has grown.
There are some international commentators who now look at New Zealand and some of its institutions with grave concern.
Every country, be it Switzerland or Norway or New Zealand, needs high quality and high skilled immigration.

That is not what New Zealand has been getting.

National has been grossly irresponsible. And they have a number of highly placed accomplices.
Ladies and gentlemen you know New Zealand First is on the march by the number of people ganging up against us.

In a weekend attack on me one commentator said this: “After nine years of economic growth, those at the bottom may actually be better off. But they may not feel like it.”
He also said: “We can’t let the politics become emotive.”
Over the same weekend, the New Zealand Herald under the veil of an opinion piece accused me of xenophobia and racism.
In recent articles the New Zealand Initiative has also attacked me with a stunning piece of intellectual research which concluded that if mass population growth has not been good for New Zealand, then at least we are no worse off.
Immigration is about ethnicity. But what the NZ Initiative failed to mention is the number of its people who are themselves immigrants, which begs the question, is an immigrant likely to say their presence in NZ is not a good thing for the NZ people.
The fact is, massive immigration is neo-liberal, globalist voodoo.
It is an attack on those who believe in the nation state.
Reduced to its worst it tells so many New Zealanders that you are actually better off even though you don’t feel like it.
There is a touchingly arrogant elitism in their approach. But the blunt reality is that we will spend the next 15 years trying to fund the infrastructure deficit that their policies have created.
The bills have to be paid even if Ministers of Finance contrive to keep them out of the government’s accounts.

One could wager that there are people in this room who do understand that their children and their grandchildren are now hard up against it, some facing house prices 12 times their income, and needing their parents to make a huge contribution if they are going to get a start on the housing ladder.


Another area where National has been living off New Zealand’s capital has been the natural environment.

Our country claims to be “100 Pure” and “Clean and Green”.

We’re not, and many of us know it, having witnessed the degradation of what was once an environmental showcase.

Nothing has revealed this government’s duplicity on the environment better than Nick Smith’s ludicrous policy on fresh water.

How do we get clean water in New Zealand’s rivers and streams?

“Simple”, says Dr Smith.

“Just redefine what we mean by clean!”

Arbitrarily increase the acceptable level of E.coli for all our major water bodies.

And put the target back 10 years to 2040 and build 54,000 kilometres of fencing, 14 times the length of Donald Trump’s wall.

How brilliant is that! 

Forget about addressing problems, just redefine it away!

You may not be able to safely swim in our rivers and streams until 2040 but at the stroke of a pen this government claims to have upgraded New Zealand’s water quality.

It’s what George Orwell called “Doublespeak” and National Ministers seem to have been taking lessons in it!

New Zealand’s water quality is a fundamental issue – it is no exaggeration to say that it is crucial to the future of both the dairy and tourism sectors, and its worst in our urban areas.

Our international reputation is at stake whilst policy on fresh water illustrates duplicity, concoction and hoodwinking.

This is not an economic policy – it is a recipe for ruin.

In contrast, NZ First has economic policies to build a prosperous and sustainable economy.
It is not based on the ideology of either the Left or the Right.
Our policy is built on common sense and a comprehensive approach to building the economy at both the national and regional level. 
Here is an outline of just a few of the policy areas where we consider change is vital.
Reserve Bank Reform

Since the Global Financial Crisis we have been in a new economic era that makes reform of the Reserve Bank Act urgent.

Updating the obsolete Reserve Bank Act is critical to take account of the realities of 2017 rather than using a tool that is now decades out of date.

While we cannot slavishly copy from others, in the area of monetary policy we can certainly learn from the experience of countries like Singapore.

The city-state of Singapore has a population of around 5.7 milllion people in a country hardly larger than Lake Taupo. 

They don’t have our advantages but they have achieved an enviable record of growth and stayed competitive through using an exchange-rate based monetary policy.

Singapore has a managed float and has a good record in moderating short-term currency fluctuations to ensure that the Singaporean dollar reflects their economy's fundamentals.

There is no magic wand to get the dollar down to an appropriate and competitive level – and we have never pretended that there is.

But in today’s environment of historically unprecedented low interest rates, failure to reform the Reserve Bank’s Act to make it fit for purpose is inexcusable. 

Supporting Enterprise

NZ First will announce over coming months a comprehensive range of policies to support businesses.

In New Zealand the majority of businesses are small to medium enterprises (SMEs). While the National Government is full of window dressing about how it values the market and private enterprise, in practice it does little to support SMEs.

That has to change.

We say being excessively reliant on two sectors - dairying and tourism – is dangerously short-sighted. 

They are both vitally important sectors but each has its risks and vulnerabilities. 

And what has long been apparent is that each has its limits, especially when adding value in New Zealand has not been a priority.

They cannot be expanded indefinitely.

Tourists coming to New Zealand are not coming to see cathedrals and medieval town centres.

They are here to experience the natural environment and that environment is easily damaged and spoilt.

And it also has to be acknowledged that dairy and tourism are not complimentary – they are, to an extent, in competition with each other.

This tension needs to be faced squarely and planned for if we are to create sustainable tourism and dairy sectors for the long term.

Sound economic policy is needed to build a diversified and resilient economy.

New Zealand First wants to use tax policy to support and encourage the growth and innovation of the SME sector.

Specifically, we support increasing the automatic depreciation threshold for SMEs investing in business assets (for example computers, plant and machinery and tools).

NZ First policy is for SMEs to have automatic approval for tax deductibility for assets costing up to a specific amount which we will announce soon.

Small businesses can then apply a monetary quantum up to a set value in any one year.
By increasing the depreciation threshold in this way the cash flow for small businesses will be improved.
Our policy will cut red tape and mean business owners can concentrate on running and growing their business.
NZ First policy is for a simpler tax system with a designated IRD unit, with the core role of simplifying the tax on SMEs.
We have a team working on cutting taxation rates, whilst expanding our legitimate tax base and collecting tax much of which today is simply not paid to our economy.
Some multinationals are paying less than a third of 1% tax in this country. We are not waiting for some nebulous OECD report on this. So we intend to take action as a priority, and because more businesses in New Zealand will be paying tax your tax rates will come down not go up.
We are going to announce the details much closer to this election when the polls have caught up with New Zealand First’s serious growth in support. I trust then you will take the party I lead seriously.
Climate Change
The December 2015 Paris Climate Conference brought into sharp focus the issue of climate change.
Reducing carbon emissions is the great global challenge of our times.
In a sense, every industry will need to be a “green’’ industry in the future.
NZ First’s approach to climate change is based on common sense.
That is why we oppose the Emissions Trading Scheme – the government’s main climate change policy.  The ETS is a sham and a rort – and has done nothing to actually reduce carbon emissions.
NZ First will repeal the Emissions Trading Scheme and replace it with a UK-style Climate Change Act.
The new Act will include establishment of a Parliamentary Commission for Climate Change – responsible for reporting progress with both the Kyoto and Paris Climate Agreements.
The Commission will work with government to set a three-yearly ‘Carbon Budget’ to ensure that New Zealand is meeting its climate change commitments.
Our policy will establish a regime for reducing carbon emissions for each of the main economic sectors in the economy.
That plan will involve the industry itself, government, as well as the science community – all three working co-operatively to make real progress on reducing emissions.
And we will not pay into some offshore fund when that money would be better used to fix up our own backyard.
We will soon announce a policy to comprehensively clean up our environment and tell you how we are going to pay for it.

Government deaf to real concerns
For a party that claims it’s business friendly against red tape, there’s been little demonstration of this.
After the quakes hit National went into overdrive on building strengthening.
Building owners are facing tens of thousands of dollars of work to strengthen facades, verandas and buildings. Some are simple one storey wooden places that have withstood some big shakes.
Owners know it will be smarter on their pockets to abandon them than do the work.
So rotting and empty buildings will litter many of our towns.
NZ First has tried three times to get National to amend the tax treatment as IRD says the work is a capital expense for tax purposes.
We want to redress the tax disadvantages for building owners.
But National always knocks our amendment down.
Without our common sense and sanity the buildings will be abandoned in Wellington and around New Zealand.
Strengthening should be tax deductible.
There’s no value for owners to strengthen many buildings.
Strengthening should be tax deductible.
Once again it was Nick Smith who dreamt up a foolish code that says it’s not.


In the September election the state of the economy will be a primary consideration in how New Zealanders vote.

And New Zealanders will be weighing up the real economy – not the false and fabricated version this government has been touting.

NZ First says that National has squandered enough of New Zealand’s capital.

We have exposed a government addiction to massive immigration at record levels to mask the underlying poor performance of the NZ economy.

Now a growing number of political interests are climbing on the bandwagon, but if they couldn’t see what was coming why would you trust them to fix it.

Every country could flatter its economic growth by turning on the immigration tap.

But only NZ has seen governments reckless and irresponsible enough to try it.

We are living in uncertain and unpredictable times – globally the risks abound.

This is not a time for make-believe and illusion on the economy.

There are some perverse cheerleaders out there - one even said that the government had prepared us for when our economic bubble burst one more time.

New Zealand First has comprehensive, common sense economic policies designed to build a strong and resilient economy.

And that is the choice we will give New Zealanders in this year’s election.