By Kim Choe
With the election campaign now in its finals days, 3 News is taking a look at some of the main policies that may influence your voting decision.
The cornerstone economic policies of the two main parties: the sale of state assets versus capital gains tax are the latest to go under the microscope.
There's no doubting the economy needs a helping hand, but just what that hand should be has been a contentious point all year.
At the last election, National promised it wouldn't sell any state assets in its first term. Now that it's facing a second - its intentions are clear.
“We said we wouldn't sell assets in the first term - we didn't. We said we'd like to move on these assets between 2011 and 2014 - we will,” says Prime Minister John Key.
National plans to extend mixed ownership to four state-owned energy companies:
- Genesis
- Mighty River
- Meridian
- Solid Energy
It'll sell up to 49 percent of each, and will also reduce its 75 percent stake in Air New Zealand.
National knows the word "privatisation", however partial, is unpalatable to many voters. So to sweeten the deal, it says it will channel all sale proceeds into a fund solely for capital investment.
“The new projects I'm talking about here are things like major hospital redevelopments, new schools and transport projects,” says Mr Key.
The party says it will prioritise share sales to New Zealanders and no one shareholder will be able to own more than 10 percent of a company, but Labour still says the policy is short-sighted.
“You can only sell your assets once and then they're gone forever and with it, the profits that you used to return every year to the taxpayer,” says opposition leader Phil Goff.
So Labour’s plan to improve the Government's books is to introduce a Capital Gains Tax. Set at 15 percent, it will apply to the sale of all investment houses, baches, land, farms, shares and most businesses from 2013.
“The Capital Gains Tax enables us to pay down our debt, keep our assets, and give tax cuts to the overwhelming majority of people,” says Mr Goff.
The policy has even found favour with some of those who'll end up having to pay the most - such as IT entrepreneur Selwyn Pellett who has made more than $8m selling shares in his business but hasn't paid a cent in tax.
“Clearly if you go to Otara or Otangarei in Whangarei, or any poorly serviced communities with no income, that looks really bad. So I think its time people like me stepped up to the plate and paid more tax,” he says.
Financial commentator Bernard Hickey says voters shouldn't consider either the Capital Gains Tax or asset sales as a fix-all for the economy.
“The two parties are both missing the point on the real issue for the NZ electorate and the NZ economy. And that is borrowing. Both of them are going to continue borrowing heavily for the next 2-3 years. And that borrowing is being used to pay for consumption spending,” says interest.co.nz’s Bernard Hickey.
Two bold policies on offer from each of the major parties - but they're only part of the solution.
3 News