4 Oct 2023

Luxon disputes Goldman Sachs and beneficiaries criticisms

10:02 am on 4 October 2023
National Party leader Christopher Luxon at Westfield Riccarton Mall on 3 October 2023.

National Party leader Christopher Luxon out on the campaign trail on Tuesday. Photo: RNZ / Nathan McKinnon

Christopher Luxon says he disagrees with Goldman Sachs' finding his policies would increase inflation, and with the suggestion beneficiaries will be left worse off under National.

The party leader appeared on RNZ's Morning Report on Wednesday, and was asked about the warning from Goldman Sachs analysts Andrew Boak and William Nixon that National's proposed tax cuts risked exacerbating inflation.

The analysts said National's plan to fully pay for its plan from a combination of savings and new taxes may not fully offset the inflation effect the cuts would have.

"Look, I disagree, I think Labour's legacy on the OCR and interest rates are absolutely appalling," Luxon told Morning Report host Ingrid Hipkiss.

"I disagree, we're going to focus on the causes of inflation, we're going to bring inflation down, when we do that that will bring interest rates down, interest rates being down will actually get the economy growing."

He moved on to one of his oft-repeated lines about the effects of high interest rates on homeowners.

"You've got Kiwis having to magic up $700 to $750 a fortnight when they move from 2.5 up to almost 7 percent [mortgage] interest rates, and there's no relief in sight," he said.

"As the Treasury have said, tax relief in the way that we've proposed it is a lot less inflationary than government spending."

Despite economists' calculations suggesting National's tax plan has a roughly $530m shortfall, the party has so far failed to provide evidence debunking those calculations - or front up with its own.

The party's fiscal plan revealed last week cast no illumination over those numbers but predicted a bigger surplus in the same timeframe compared to Labour's, unveiled just two days prior.

This would in part be achieved by shifting benefit increases back to being adjusted in line with inflation - rather than whichever is higher between inflation and wage growth. The plan showed this was expected to save about $2 billion over four years.

Luxon disputed Hipkiss' suggestion beneficiaries would be worse off under National.

"No they're not. They're not going to be worse off," he said.

It was put to him that beneficiaries would be better off under Labour: "We haven't seen that, have we," he said.

Luxon said National would "run the economy much better because we know how to run the economy versus the economic vandalism and mismanagement that we've seen from Hipkins and from Robertson who clearly don't understand it".

"If we can get the economy growing it creates opportunity for beneficiaries and all New Zealanders."

Hipkiss argued beneficiaries who could not get a job would be left worse off under National.

"Well, we want people who are deemed able to work, can work, should be working ... that has to be our goal. You cannot just leave people languishing on welfare for the rest of their life."

Luxon was also challenged on his refusal to attend The Press debate after his opponent, Labour's Chris Hipkins, pulled out having got Covid-19.

"It is what it is," he said. "With 10 days to go in the last week, we can't make that work in the final week of the campaign, but the good news is, look, we have another TVNZ debate at the end of the week which I'm looking forward to."

He disputed the suggestion it was beneficial for him to be slowing Hipkins' momentum after his performance in the Newshub debate last week.

"I would disagree with that, I think what we saw was Chris Hipkins, sadly in this campaign, his fearmongering and his scaremongering and his negativity. And I think that's what we saw in that debate, sadly."

He also disputed the "mschief-making" characterisation of National's claim that Hipkins would be "rolled" by Labour to impose a wealth tax.

"Yesterday you had Ingrid Leary - who's actually the chair of the powerful finance and expenditure committee - talking about and advocating again for a wealth tax. You've had another MP in Wellington doing exactly the same thing and it's quite obvious that obviously the Labour Party caucus still want to see a wealth tax.

"And then you've got Te Pāti Māori and you've also got the Greens wanting a wealth tax so the reality is from those comments from those individuals what they're saying is the wealth tax is only there as long as Chris Hipkins is there ... despite most of his protestations, actually most of his caucus want it."

"What I'd say is they're linking it all back to, Hipkins is the only reason while he's leader it's not happening - apparently - but after that all bets are off ... I just think a wealth tax would put a wrecking ball through the New Zealand economy, it's a bad idea."

It was put to Luxon that John Key was not "rolled" because of his commitment not to change the pension age.

"Well, no, they're different issues," Luxon said. "We've got a major schism here on wealth tax, and I'm just saying to you when the Labour Party are going to very much need the Greens and Te Pāti Māori who that's a major focus of their agenda, coupled with MPs in their own caucus who desperately want a wealth tax as well, it's coming. It's coming whether they want it or not."

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