Peter Williams: Time to spend the surplus and invest in Kiwis’ future

Photo: Getty.

OPINION: So let’s start the discussion about money.

Put yourself in the Finance Minister’s office, and you’ve got an extra four billion dollars to spend. What’s important? Do you give everybody tax cuts, do you increase benefits, or do you put more into health? Do you fund more drugs for cancer? Do you build more and bigger prisons?  Do you put more into education and pay teachers more so that you attract better and brighter and young people into teaching - and keep them in the job.

Or do we just give it all away to the United Nations so that they can distribute it to poorer and developing countries. We’ll let them keep on polluting of course, and building coal fired power stations, but we’ll feel so much better about it because we would have given away our hard earned money and shared it with poor people and evened up the amount of affluence on the globe.

That last bit was being very sarcastic, by the way.

So let’s get serious about all this extra money that is sloshing around in the country, and try for a moment to disregard that next year is election year, and that election year is used by politicians to bribe us all with goodies so that we vote for them again - that’s if we ever did in the first place.

Instead let’s think about spending these billions on things which are not short term bribes but long term investments, things that the country would benefit from for the next 40 or 50 or 100 years - things like Hitler’s autobahns, still going strong nearly a hundred years later, or things like Julius Vogel’s railways in this country that we’re still using over a hundred years later, or all those hydro power stations which are still the foundation of this country’s mostly reliable electricity supply.

Then there is the ideological argument. Just whose money is this? Who earned it in the first place before this outfit called the government came along and put out its big strong arm and took a third of it, or certainly a decent chunk of it anyway.

The point is this is essentially our money. The reason Grant Robertson has so much of it sitting there ready to spend, so much more than he originally thought he would have, is because more of us are working, more of us are earning more and paying more tax that he and his officials thought we would.

Now in the normal course of events, if you pay somebody too much, you would expect them to give it back. So that’s what a government which believes fully and completely in the power of the individual would do. We would get our own money back.

The government would either give us all a one off payment, and to keep it fair, those who paid the most would get the most back.

So if you make a hundred thousand a year and you pay 33,000 in tax you might get a couple of thousand back because the government doesn’t need all your money.

But if you only earned 50,000 and have 3 kids, your actual tax paid was zero because of all the benefits and rebates you’d already had - so in the great payback, you would get nothing.

Now some people would say that is fair. I’m not one of them.

I actually think that in a society you as an individual should be encouraged to work hard, to be entrepreneurial and have a profitable life, but to pay your fair share of tax, and that Jack or Jane next door who doesn’t have the same ability to make as much money as you, should get a helping hand along the way - which you as a nice and caring member of the community are more than happy to help with. 

But when there’s a whole lot of money left over and the government doesn’t actually have anything planned to spend it on, and thinks its people should get a wee present just before Christmas - or more likely just before an election - a fair government, especially a New Zealand one, would give everybody the same amount of money.

So that’s one way of spending this money - give everybody a present of cash. Maybe, say a thousand dollars. In fact if you did that, this whole cash surplus would be gone.

There’s about 3.85 million individual taxpayers - give us all a grand, and there’s your money gone, 3.85 billion of the 4 billion anyway. The rest will get lost in the rounding.

But maybe it’s better if the government keeps the money it’s got, but doesn’t collect as much in the future. Let’s cut the taxes. So the top taxpayers have their rate cut from 33 cents in the dollar to say 31, and those paying 17.5 cents only pay 15 or 16 cents.

Now if you had a government led by the National Party that’s of course what they would do. In fact, they would have done that early last year if Winston had picked Bill instead of Jacinda.

But a Labour government doesn’t do that. In fact recent Labour governments in this country have a real vindictiveness towards people who earn too much. That’s why the 2018 tax cuts were cancelled. That’s why Michael Cullen made those comments about rich pricks and then the same man tried to impose a capital gains tax on us.

So personal tax cuts, especially for those who already pay 33 cents in the dollars are highly unlikely, because these guys in government just don’t want high earning New Zealanders to have any more money to keep for themselves.

I’d be a starter for tax cuts, not because I might get to have a few extra dollars each week but because it’s pretty obvious that the government has too much money, it collects too much off us in tax, it can’t spend all it gets, it doesn’t need all it has, so it would be much better staying with the people who owned that money in the first place.

Go on - defy that logic!

But as we know, this government in particular has absolutely no intention of giving us back what was ours in the first place. It just has to go and spend it, but as has been pretty obvious in the two years it’s been in power, it actually has no idea about what to spend it on.

I’d spew if benefits were put up. Yes there are people on the bones of their arse. Yes we have lots of people who struggle from one welfare payment to another. I’d be happy if we spent more money getting people off welfare and into work, but handing out more in benefits is just not any incentive to be productive in the community.

I’m for using the money to build things. Something this government just doesn’t want to do. Yes they’ve finally got some plans underway for a new hospital in Dunedin. That’s great. And they finally committed to a long overdue new road through the Manawatu Gorge.

But we have this extra money - so let’s spend it to make something that will last us for generations. Like those power stations we stopped building 30 years ago, like those autobahns in Germany.

Let’s build some high quality roads in the industrial areas of south Auckland, then between Auckland and Whangarei and between Auckland and Tauranga. That’s where the people live. That’s where people need to be able to get around. That’s where their stuff needs to get around.

And while we’re at it build some extra railway lines too. Double track the main routes around the golden triangle in the upper north island so that passenger trains can be used more regularly and not get in the way of the freight trains.

So there you go, a couple of four lane highways, and some double tracked railway lines and hey presto - four billion dollars all spent, and you know I wouldn’t decry a cent of it. Actually, I think those ideas would cost a whole lot more than four billion but we can spend next year’s surplus too.

That’s what good, progressive governments do. They think about the future and build stuff for the future. It’s not sexy; it doesn’t put money in voters’ pockets straight away but is an investment for New Zealand. But it won’t happen.

Governments really only care about their job prospects at the next election.

Peter Williams is host of Mornings on Magic Talk, weekdays 9am – 12pm.