Prime Minister's Newsletter

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15 July 2011
Key Notes – Building ties with the US

In this edition of Key Notes, I talk about what I'll be doing during my trip to the United States, where I'll meet with President Obama and other senior leaders in government and the business community. I also discuss recent signs of growth in the economy and Westpac's Red and Black Bonds as part of the effort to rebuild Canterbury. Also, ACC levies are coming down, there are encouraging developments in local governance and the Government's leaky homes package was passed by Parliament this week.

Click here to watch my latest video journal on YouTube

BUILDING TIES WITH THE UNITED STATES

On Monday I'm going to the United States. This will be the last of my international travel for the year, as we head into the Rugby World Cup and, after that, the general election on 26 November.

The US is one of our most important partners, so I hope the visit will help strengthen ties further. I'm looking forward to meeting President Obama in the Oval Office. I'll also speak to the United States Chamber of Commerce and meet a number of senior government leaders.

Earlier in the week I'll be on the West Coast, visiting Google and Facebook and catching up with people from the film industry.

GROWING THE ECONOMY

Yesterday Finance Minister Bill English welcomed the news that our economy grew 0.8 per cent in the March quarter.

Our gross domestic product has grown in the seven of the past eight quarters. This shows how resilient our economy is, particularly after the recession and the Canterbury earthquakes.

As our economy picks up, National will continue to build the foundations for long-term economic growth, based on savings and exports.

REBUILDING CANTERBURY

I spent yesterday in Christchurch and launched Westpac's Red and Black Bonds. The bonds will help raise money for the Christchurch Earthquake Appeal.

Since the Appeal was set up in February, people from all over New Zealand and the world have dug deep to help Christchurch recover. That generosity means the Appeal can fund worthy projects that will make a difference for the people of Christchurch.

The Appeal's latest projects include accommodation for community organisations, small businesses and CBD retailers; assistance for Women's Refuge; an arts programme for school pupils; and a community facility for children in the eastern suburbs.

To donate, visit www.christchurchearthquakeappeal.govt.nz.

KEEPING THE COST OF LIVING DOWN

On Monday ACC Minister Nick Smith and I announced new ACC levies for consultation for next year. These proposed levy reductions will put half a billion dollars a year back into the economy and help keep the cost of living down.

Someone on the average wage would save about $170 a year. A typical Kiwi small business with seven employees would save $1120 a year.

WORKING WITH LOCAL GOVERNMENT

I opened the Local Government New Zealand Conference on Monday. I spoke about progress in Auckland since the governance reforms and about local government's role in the Canterbury earthquake recovery. It was also a chance to thank the local government sector for the hard work communities all over New Zealand are putting in ahead of the Rugby World Cup.

Click here to read my speech.

FIXING LEAKY HOMES

The Government's financial assistance package for owners of leaky homes was passed by Parliament this week. It's a fair and effective package, which will help qualifying homeowners get their homes fixed faster and get on with their lives. Under the package, the Government and local authorities each contribute 25 per cent of agreed repair costs, and affected homeowners fund the remaining 50 per cent.

Visit www.dbh.govt.nz for further information.

FROM MY DIARY

I'm in Auckland today. I launched The Telecom Foundation, and caught up with the All Blacks, amongst other events.

Best wishes,

John Key
Prime Minister

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#1 - David 2011-07-15 16:23 - (Reply)

No comment on Labour's plan to tax inflation? (Speculation in and trading of assets are already taxed at people's marginal tax rates - much higher than Labour's 15%)

#2 - Warren Brown 2011-07-15 17:38 - (Reply)

Hi I've been to Wintec today to see Labour leader Phil Goff try to sell a capital gains tax to the people of Hamilton. I wasn't convinced. According to his myopic vision, it seems that the problem with New Zealand is the poor are paying tax and the wealthy are speculating their financial gains on ever-more-speculative investments. What he fails to understand is that the country needs investors to create jobs to make the poor rather more well off. He can't create jobs by redistributing income to his political supporters. If he hits property speculators with a tax, who will own the houses that the poor need to rent for their shelter and warmth? Maybe it's time for him to enrol in ECON101. The most revealing speaker today was Labour revenue spokesman Stuart Nash. In his two minutes behind the microphone, he kept referring to the present tax system as a "rort". How can it be a rort not to pay tax on income that is not taxed? His repeated use of the word "rort" suggests the underhand way that Labour is going to try to sell its capital gains tax policy to middle-class voters during the election campaign. The wealthy will be demonised on the hustings. Surely the job of a responsible government is to raise as little tax as possible to pay for its administrative costs. It's disgusting to think that a Labour list MP (whose grandfather was prime minister from 1957 to 1960) thinks it's all right to grab a large share of everyone's income and redistribute it according to his absurd views on social justice. Mr Goff recounted the story of an Auckland couple earning $90,000 a year who couldn't afford fruit and vegetables. Really? When their health packs up from such a poor diet, they will find that they squandered their $90,000 on the wrong priorities. Then who's going to pay their doctor's bills? Health is so heavily subsidised in New Zealand that the present GST on fruit and vegetables only contributes a tiny fraction of the money that the Government needs to run public hospitals. Mr Goff claimed that 92 per cent of New Zealanders would not have to pay Labour's capital gains taxes. I think he meant 92 per cent a year. People move in and out of the higher tax brackets, according to their income and usually their age. In reality, many New Zealanders will find themselves having to pay a capital gains tax at some time in their lives. Labour's capital gains taxation looks more like capital gains taxidermy. The outside might look wrinkle free. But inside there's no getting around the fact that it's stuffed. Unfortunately, I couldn't avoid shaking hands with Mr Goff. He must have spoken to nearly everyone in the room in a shake-a-hand-athon. I was sitting next to a guy who had a short discussion with Mr Goff about farming. From listening in, I learnt that Mr Goff owns a sheep farm. He recently sold some stock for $143 a head. I wonder if he'll sell the farm in 2013, to avoid paying Labour's proposed capital gains tax? If I bought a Labour list MP after 2013, could I avoid GST by declaring him or her as a vegetable? Warren Brown.

#2.1 - Gary Westwood 2011-07-15 20:52 - (Reply)

"If I bought a Labour list MP after 2013, could I avoid GST by declaring him or her as a vegetable?" Not at all likely I'm afraid Warren as Labour list MPSs fall under the category of fruitcake.

#2.1.1 - Warren Brown. 2011-07-16 13:36 - (Reply)

If Labour list MPs fall under the category of fruitcake, what percentage of them constitutes fruit (which would be exempt from GST after 2013) and what percentage constitutes sugar and other harmful substances?

#2.1.1.1 - Gary Westwood 2011-07-16 15:17 - (Reply)

Point taken Warren. A tough one to rule on but no doubt the IRD will be given ample additional budget and extra staff to adjudicate on matters such as this.

#3 - Anne de Jong 2011-07-16 08:00 - (Reply)

My Keys,I am a little puzzled - you speak of the economy picking up and of savings. Which savings are you speaking of as it does not appear to me that the Government is saving anything if it is borrowing so many millions a week. Why is this borrowing necessary - after all, it has to be repaid and probably at a good interest to benefit the lenders? I see this borrowing will cripple this country in the long run.

#4 - Pamela 2011-07-16 08:15 - (Reply)

Recently travelled to Brisbane for the first time without Travel Insurance and for the first time had an accident. Had to pay for everything- xray, GP, chemist etc Had an operation that I did not pay for. So why can foreigners including Australians travel here and when injured have our tax paid ACC pay for their medical treatment ? Only New Zealanders should have payment. This must help our economy if ACC is kept just for kiwis.

#5 - Max Legg said:
2011-07-16 12:37 - (Reply)

You are doing a great work John, and heading in the right direction. Just one point, which is great news for those with leaky holmes built in the last 10 years but no help whatsoever for those really feeling the pain of bad Govenrment building regulations in 1991 that gave rise to the bulk of leaky homes out their today. Its great too, the help Government has given to Christchurch, and working the processes through, but it's devasting beyond comprehenson for the leaky home owners caught in 1991 till 2001 building period. You have left them to rot."How do they climb out of huge debt to fix their homes?"

#6 - hugo ryan 2011-07-16 15:00 - (Reply)

building ties with us I got over excited I thought you meant us.. the workers developers builders of NZ.. you know the ones that are not able to without consents .. payments to those that cant or dont (councils) You meant 'ties with them' The ones with the fiat money program You also should make ties with the refugees so as to replace the productive kiwis that are fed up & leaving to where they are appreciated a little. HR

#7 - Dianne 2011-07-16 17:39 - (Reply)

Keep up the good work John. I have all my confidence in you and your ministers.Great to see growth starting to appear. All the very best on your trip to the US.

#8 - Richard 2011-07-16 18:12 - (Reply)

Re America being "one of our most important partners"; it may be for National but not necessarily for NZ. To many the USA is a dinosaur that has lost its way as a nation, even though there are many individuals and groups doing good things. Their method of rule by power, money, control deceit is outmoded and becoming a liability. National needs to get up onto the cam here if they don't want to become a mini dinosaurs too, and finish off NZ into the bargain. Christchurch; my gut feeling when the firt earthquake hit was leave Christchurch where it is and build a new city. What has happened since only reinforces this. I think time will prove that National is throwing good money after bad trying too rebuild the town. Is this a political thing that keeps you focused without seeing the bigger picture? Sorry if I seem negative, I would like to say I support what you're doing, but in these issues and some others (energy), I can't.

#9 - Dave 2011-07-18 10:19 - (Reply)

Hi John I would much rather see the Govt pay any surplus from ACC off the national debt. I think it would serve the country far better than giving small reductions in levi's

#10 - Peter Bacchus said:
2011-07-18 12:16 - (Reply)

Hi John, wish you all the best on your U.S.A. visit. It is great to be on good relations with other nations. One thing that I would rather not have from there is genetic modification. I am sure we can do better than what is on offer in that department. Bon Voyage Peter.

#11 - Maxwell 2011-07-21 13:16 - (Reply)

As many nz's have donated monies to the Christchurch fund I am sure many haven't considered the plight of many pensioners. There are many who have no debt on thier home and are living on the pension only. With the cost of living including rates,electricity,home and car maintenance, petrol and food, Many couldnt afford home insurance. I know there are many who would say they were negligent but to choose between the insurance of thier car and the home the car wins as there is a greater risk. Who would have thought that the home would have been lost and without the where with all to repair or replace. Even if the home is repairable, the option of relocating is opposed by developers who won't allow older homes. There should be some consideration of the distress these people are suffering.

#12 - Scott Alexander 2011-07-25 17:09 - (Reply)

I am perplexed as to why product suppliers have got away without having to contribute to the leaky homes package.

#13 - Pom 2011-08-15 22:10 - (Reply)

Keep going J - your the best PM/leader I've seen here and Uk since Maggie! How can an 'oldie' get involved with mentoring the 'teens'?

#14 - Gary Westwood 2011-08-16 14:18 - (Reply)

Congratulations on the youth package announced last weekend. Hopefully, it is the thin end of the wedge and that we will see similar initiatives applied to adult benefits (Super and Vets excluded). It was interesting to note that a NZ Herald poll taken on Monday indicated 83% approval. I would like to comment on the absolute necessity for National to pursue an electorate win in Epsom. ACT is appearing to be an increasingly lost cause and I just do not believe that Banks can pull it off. ACT is divided, the leadership weak (another old man)and their economic policies extreme. Yes, Banks has a following amongst older residents and yes he will attract good campaign funding but to younger voters & recent immigrants he is very much yesterdays man. Their only recollection of him is as a very average mayor. A stronger National candidate should have been selected but you now need to run with what you have got. A shame. We need to win this election in our own right and bring the Maori Party in as a coalition partner at our behest and not as a necessity to govern.

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