1 May 2024

David Seymour on whether we can really afford tax cuts

From 30 with Guyon Espiner, 3:00 pm on 1 May 2024

Just a few years back, ACT’s David Seymour led a party of one. Now he's one of New Zealand's most powerful, influential and controversial politicians. And he's destined to be Deputy Prime Minister next year.  

ACT aims to continue the unfinished business of right-wing economic reforms started in the mid 1980s, but is David Seymour's agenda a recipe for increased prosperity, or increased inequality? 

Guyon Espiner sat down for a frank and honest discussion with David Seymour about finally being at the decision-making table with Christopher Luxon and political rival Winston Peters. 

Follow 30 with Guyon Espiner on Apple Podcasts, Spotify, iHeart, YouTube or wherever you get your podcasts.

"I've always seen politics as a very hot contest, [but] I think it's extremely collegial, for a couple of reasons. You've got three parties that want this government to be a success - their success is tied to the success of the government.  

But putting aside the politics, I think there's also the fact that people know that we're in one of those periods which is make or break for New Zealand.  We don't have that sort of shared sense of purpose. People talk about division and lack of trust, and the institutions that they don't trust as much [as they used to.] There’s been a lot of talk around the media, but I don't think it's just the media. It's also government. It's almost everybody, really. People don't trust each other as much."

"Related to that is the lack of social mobility. Once upon a time, the incentive was to go to school, work hard, get a job, save some money, put it aside, maybe invest it carefully, and buy a house. Now there’s a whole generation of people saying, well, hang on, I did all that stuff. But now I'm coming out as a graduate, I might be earning $50,000, I might have a student loan that's pretty close to that. And to buy anything that looks vaguely like the house my parents had, I'm looking at a million dollars. I've got to save four times my income for a deposit."

How do you rate the quality of the public service? 

"Extremely variable. There are people in there who are very capable, and extremely committed. In some areas, I've been blown away by the quality of the advice that we've had." 

"In other areas, I think it's fair to say that...we haven't really seen the quality of advice coming through, and it's been faster to do it ourselves.  

What’s good about cutting nearly 3,500 jobs in education, or Oranga Tamariki, who are supposed to care for the future of our children? 

"Well, there's actually no good. But what would have been better is if the previous government hadn't added 18,000 people to [the public service] without getting the results."  

"What else are we here to do, but to make sure that kids who are vulnerable and in dangerous situations get put in a safer place, so their basic needs are met? That hasn't been happening, despite the expansion of [the public service]. And you can make the same argument across just about every area."

What about ministerial services? Will they be cut back too? 

"Well, the answer is no. And the reason is that the [same expansion] hasn't happened. Over the last six years, it's been almost static."  

But why shouldn’t ministers also take the hit? 

"Because I think you've misinterpreted the principle here. We're applying the same principle to ministerial offices, to MPs, and government departments. It's just that the government departments are the ones that have grown. Ministerial parliamentary salaries have actually been static for six years."

Have you had a whisky with Winston Peters? 

[Chuckles] "Well, I barely drink these days, so it probably wouldn't be that. I'm not sure what he's up to in the coffee department. But we've both got areas of responsibility."

"Look, I respect everybody at a basic level. I've never actually said that I didn't respect him. But obviously, we have a totally different view when it comes to many issues, and how politics should be done. And of course, in an election campaign, you put your best foot forward. It would have been odd if I’d said, well, you know, I think ACT's probably the best party, but those guys [NZ First] might be okay." 

Does Christopher Luxon have what it takes to be a great Prime Minister?  

"I think he absolutely does. Chris and I have known each other since about 2016, when we were neighbours. I think Chris has got a good skill set that allows him to bring together teams of people and create a platform environment where they can achieve.  

Chris has done, I think, a good job so far at pulling together a coalition of three, as have the other two partners, because ultimately, it's a three-way relationship."

You're going to be Deputy Prime Minister halfway through this term. Why do you want that job? 

"This is a coalition and therefore you need to share power equally. It would be strange if you had a party that was the second biggest of the three parties that didn't occupy that position for at least some of it."

Did you want to go first?  

"To be honest, I didn't really give it a lot of thought. I don't think it makes a lot of difference either way, to be perfectly honest. People put a lot of emphasis on the Deputy Prime Minister, but that [position] doesn't allow me to do anything more on red tape and regulation."  

"It’s about mana ōrite - equal mana amongst the partners."  

David Seymour in studio for '30 with Guyon Espiner'

David Seymour in studio for '30 with Guyon Espiner' Photo: RNZ / Cole Eastham-Farrelly

Why don't poor people vote for ACT? 

"Well, actually, the evidence is that some do, but you're right, not as many as we'd like. The reason is that we are a party that campaigns on the idea of social mobility; that we need to do better in education, we need to make housing easier to build so it's more available. We believe that it's important that people can make a difference in their own lives.  

We're also competing against a lot of people in politics who come along and say, no, no, no, it's those rich people's fault. We'll just take the money off them and give it to you. Now, that's a much easier political message: we will give you this and we'll take it from them."

"Once you go out there and say, we're going to create an environment of social mobility, we're going to deregulate the housing market; we're going to do better infrastructure funding and financing, we're going to devolve education so you're more likely to get an education that you would like, that's a much harder message than ‘vote for us and you'll get this money.’  

So I understand why it's a challenge. But nonetheless, social mobility the ability to make a difference in your own life, that is the only way that you build real self esteem."

Why don't Māori vote for ACT? 

"You seem to be defining Māori as people who have made the self-selecting choice to be on a Māori roll. That's only about half of Māori. We did an exit poll after the election and asked people who they voted for. We also asked them demographic questions, and our poll said 17% of people whakapapa Māori, which sounds about right. And of those, 7% voted for ACT. So 8.6 [percent of voters voted for ACT] across the New Zealand average, and 7% of Māori.  So I think, you know, I hate to say it, but your basic facts are wrong.  

But what is interesting is that people who self-select to go on the Māori roll are quite different from people, as a group, that whakapapa Māori."

The MAPAS scheme allocates about 30% of entries in Medical School to Maori and Pasifika students. Does that fit with your view of “need not race?” 

"I think that we need to ask ourselves after 25, 30 years, has the MAPAS scheme actually had results for patients? Now, we know that [students] went through the scheme, we know that they became doctors. We don't know to what extent they're actually dealing with Māori and Pacific patients. And we don't know to what extent they're improving the outcomes for those patients. That's the theory, right? You get more Māori and Pacific doctors, they'll tend to Māori Pacific patients, and those patients will be better off. So, in this government we're actually going to robustly ask those questions."  

Do you support the idea of the scheme? 

"No. I don't support racial discrimination."  

Is that what you think MAPAS is?  

"Well, it's a scheme that says you qualify for the scheme if you're a certain race. So, by definition, that's exactly what it is."  

So, are you pushing for it to go?  

"No. I'm pushing for evidence to demonstrate that it's actually had a positive effect."  

And your answer is?  

"Well, my answer is nobody knows. But we keep doing it." 

Your answer seems to be no, it's not.  

"My answer is that if the evidence shows it isn't, then we should stop discriminating." 

What about a scheme like bowel cancer screening?

"Again, at the moment we have a study of what causes morbidity, or what makes people ill, that has an almost entirely racial lens. I think it would be better and more helpful to have a much richer appreciation of the data.  

I suspect that when it comes down to the reasons people die earlier, some of it has to do with rural location, some of it has to do with choices around lifestyle - eating, smoking, alcohol, and so on. Some of it has to do with the quality of housing.  

And if we start looking at things like that, what we'll find is that there's some Māori people - I claim to be one of them - who don't have those problems and are doing quite well, thank you."

So, do you think that bowel-screening policy should change? 

"Well, this is supposed to be the “big idea” show.  There are other people who are not Māori, but do have those problems. So ACT’s point is, let's use good evidence and good data to target based on the needs people have, rather than lazily looking at everyone through the lens of race. We think we can do better practically and have less division." 

Are Māori currently equal before the law? 

"Well, they absolutely should be." 

Are they? 

"I'm aware that there are various statistics around the likelihood of being arrested, the likelihood of being prosecuted and so on. Those are things that concern me as much as anybody." 

"First of all, there is no law that says that someone should be treated differently based on their race. And they never should be when it comes to criminal justice. What you’re talking about, I think, is the application of the law. You then need to ask yourself, why is this happening? Are there other variables that lead to more Māori being prosecuted or getting heavier sentences? Is it something to do with the nature of the sentencing? I think you have to understand all that evidence, and that's what we're all about - using good data and evidence to understand the real drivers, so we don't have to lazily categorise people by race." 

But do you agree that Māori are disproportionately negatively impacted by the criminal justice system? 

"Well, no, because you're using categories of crime, saying, well, ‘assault in general.’ But it would be interesting to look at the nature of those assaults, the nature of the sentencing decisions. But just as with health, is there a difference between Māori and Pakeha life expectancy? Yes, there is, that is very easy for all to see."  

"However, the real question is not, ‘is there a difference?’ but, ‘what are the real causes of that difference?’ You might find causes that don't apply to all Māori and do apply to non-Māori, or some non-Māori, and therefore you want to start addressing the causes, so you can practically solve the problem, rather than just dividing people." 

So, if Māori are being locked up on the basis of institutional racism, wouldn't you be better to address that problem, rather than go down the track of something ephemeral, like a Treaty Principles Bill?  

"Well, here's the flip side of that question. I'm sure you will also agree that Māori are more likely to be a victim of many crimes. If you're worried about the welfare of Māori, are you sure that being softer on crime or letting people off more often, is going to help them as victims?"

"People who are Māori, who are victims of crime by other Māori, are saying, actually, we want to be tougher. I think you've got to drill down a little bit and ask yourself, what are we really trying to achieve here? Not just fewer people going to prison; ultimately, we want people to be safe from violence."  

Are you saying that there is no Māori worldview? No Te Ao Māori? 

"There most certainly is. But that doesn't mean that every person who whakapapa’s Māori subscribes to all of it. It also tends to evolve. I'm also Scottish, but I don't have to dance around in a kilt like I'm on the set of Braveheart."  

"In my view, te ao Māori starts with the individual. Then you've got Whanau, Hapu, Iwi, then te ao Maori. Tikanga is something that evolves over time, in response to the wants and needs of individuals."  

"This came up in the end-of-life debate. People would say, oh, you know, euthanasia is foreign to Te ao Māori. And I remember a man who stood up at one of our public meetings, who was an expert in tikanga and he said, I'm sorry, tikanga burial customs and the Māori world have evolved enormously, even in the 40 years of my life, and they will continue to evolve. So yes, I believe there's such a thing as te ao Māori. But I also believe that each of us have the right to self-determination and to live on our own terms. It's not a straitjacket. It's something that evolves to serve us, as does every culture."  

David Seymour in studio for '30 with Guyon Espiner'

David Seymour in studio for '30 with Guyon Espiner' Photo: RNZ / Cole Eastham-Farrelly

Let’s switch to the economy and tax. Can we afford tax cuts? 

"Well, I think the real question is - 

No, no, no, no, that is the question. Can we afford tax cuts? 

"Well, my question is, who is “we?” 

New Zealand. Can New Zealand afford tax cuts?  

"Well, the answer is obviously yes. But here's a better question -  

No let's answer that question, because -  

"Well, I have. I said yes. Now, let me give you a better question. Can the government deliver the services that people expect and require, while also taking less money and tax? The answer to that is unequivocally yes.  

Without the tax cuts, you wouldn’t need to borrow 15 million. Is that true? 

"No, because it's just as valid to say that if we didn't have education, which was about 20 billion-  

Are you putting tax cuts on a par with the whole education budget?  

"Well, it's a roughly similar amount."  

But is it of similar importance?  

"Well, no." 

So how's your analogy standing up?  

"Well, very simply, we're putting together a budget that is going to return money to people that they would have paid in tax, and allow them to deal with the significant challenges that everyone up and down this country is facing."  

"I think we need a reality check here. There's so many people who are focused on the three and a half thousand job losses in the public sector. But they ought to get out on the main streets of New Zealand. I was on Waiuku Main Street talking to the business owners, the people that run social provision, do family budgeting. The real estate agents tell me that people are selling their houses due to family break ups caused by the cost-of-living crisis." 

And how much money will those people get in their pay checks with your tax cuts? 

"Obviously that it depends on how much they earn but you're looking at 10 to 20 dollars a week for the average earner."  

And you're going to borrow $15 billion for that?  

"That's because there's 5.3 million people." 

So, you're confident you've got your priorities right? 

"Yes, because our priority is allowing people who have battled pretty hard and had rising tax bills -  

To get 20 bucks a week? 

"Well, actually, to you it may not seem like a lot, but to a lot of people, that means a big difference."  

Why is it that the richest families in New Zealand are paying half the rate of taxes as a middle-income grunter? 

"Because it's a totally bogus study based on false premises. That study looked at the paper gain and people's assets [capital gains.] In 2021, the average house in New Zealand went up $135,000.

Now, if we took the IRD study seriously, then every New Zealander who owned a home would have had $135,000 of income that had to be taxed. For most people, that will be 33%, so everyone would have had a $45,000 tax bill just because their house went up in 2021."  

"The premise of that study was set up to get a certain result that nobody takes seriously, because if you take it seriously you would have to tax every person on every paper profit. People would have to pay tax on their KiwiSaver if the value of your KiwiSaver went up a few percent."  

What is the inherent difference and fairness that a factory worker’s pay is taxed, but an investor’s capital gains on property is not taxed? Why is that fair? 

"First of all, it is taxed. Because you'll know that the value of a capital asset is the value of the revenue that it produces in future years. That revenue is taxed under an income tax system. So, if you have a business that becomes very successful, and you say to me, David, I want to sell it to you for $100 million, because I think you're going to get 100 million from it in future revenue, I'm going to turn around and say sorry mate, I'm going to pay 28% company tax on that, therefore, I'm only prepared to pay you 72 million.  

So your $100 million dollars of capital gain is actually $72 million, because I'm pricing in the tax I'll pay for owning your business in the future. So it is taxed."  

"The second thing is, we as a country are starved of capital, we don't have the investment. We can't afford the infrastructure. We're not investing enough private capital in our businesses, and that's lowering the productivity of the guy or girl at the factory who wants to get higher wages and afford the things they need for themselves and their family.  

Now, some people say, oh, we don't have enough capital, let's put a tax on that as well. I think that's completely nuts. We should be doing everything we can to attract more capital in this country. We already tax it through income tax, the way I just outlined, so why put another tax on top?" 

The ACT party constitution says that foreigners should be able to own anything in New Zealand unless it threatens national security. 

"Yes. I put the challenge is back to people to explain why they object."  

So, how's that worked out with selling all of our banks to Australia, for example? 

"Well, this is the problem Guyon, you've got a real problem with pronouns, and I didn't expect this from you. I thought you'd be more sensitive. You said, can “we” afford tax cuts? “We're” selling all our banks." 

I haven't got pronouns on my question line anywhere. 

"I know, I'm very sensitive about the use of pronouns. Now, you're saying “our” banks. Well, actually, we don't own them, private companies and shareholders own them, and -  

How has it worked out for New Zealand? Having all the big four banks owned by Australia? 

"They're not owned by “Australia,” they're owned by certain shareholders of Australian companies. As well as a lot of New Zealand shareholders."  

And how do you think that's worked out? 

"I think it's worked out actually extremely well." 


"Yep. If you look at the banking services that people get, the stability, the fact that through the Global Financial Crisis nobody had massive losses. Actually, the really big loss during the GFC was South Canterbury Finance. Now, that was a major hiccup for a lot of people, including the taxpayer that had to bail them out."

The Commerce Commission has just come out and said that there's no proper competition. So what's the good bit?

"That's a really interesting conversation. But you're focused on the citizenship of the investors. I'm focused on the regulation on the structure of the market. And yes, I do think that our financial sector is over regulated. I think it's made it harder for newcomers to enter the market. But as you'll see, just this week, this government has removed the triple CFA restrictions that make it easy that will make it easier for smaller competitors to enter the market."  

"Because what you've got to remember, is one of the biggest supporters of extra regulation is actually big business. If you're a big business, more regulations are a pain - but they are going to hurt and maybe wipe out your competitors and stop any upstarts coming and competing with you. So, let's focus on the competition regulation. Let's focus on getting more competition. Let's not focus on someone's race or whether they're Australian or whatever."  

You're a career politician really, aren't you? 

"I think that's probably a fair description. But ultimately, you know, so what? I'm someone that has devoted most of their adult life apart from a short stint as an electrical engineer, to actually getting good at what it is that we're trying to achieve through politics. How do we get better public policy? How do we ultimately allow people to live together peacefully and more prosperously."  

Who is David Seymour without the politics?  

"I'm a New Zealander who wants to see a better future." 

But you're talking like a politician.  

"Well, I actually am a politician, but I'm also a New Zealander who wants to see a better future for all people. And at various times, I think I've actually given up quite a lot in order to try and do that."  

What have you given up? 

"Well, for one thing, I've worked a lot more hours, and a lot more days of the week than any of my friends who went and did other things., and in most cases earn more money than I do. I have gone through, being the only person in a party entering Parliament alone. People have told me no one's done that in 100 years. It was bloody tough. And for a long time, people wouldn't take me seriously. They’d question my right to be there. And actually, over time, I've been able to show people, no, you know, what I'm trying to do is have honest conversations, stand up for the right principles when things are tough, and make New Zealand a better place, through better public policy."