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IMPROVING OUR TAX SYSTEM




I've had lots of comment and questions about our ideas for tax reform, and I want to thank those of you who have shared your views.

Over the past eight months, the Tax Working Group has looked at our tax system and found that the mix of taxes is not ideal. We want to fix that, to improve our economic performance, help create sustainable jobs, and lift family incomes.

We'll be making some changes to the way property is taxed. Those changes will be fairer for taxpayers. We'll announce details in the Budget in May.

As part of the overall package we are also considering increasing the rate of GST to 15 per cent, together with a reduction in personal income taxes across the board, and up-front increases in benefits, New Zealand Superannuation, and Working for Families payments.

What would be the effect of this tax switch?

Prices would rise by just over 2 per cent, but at the same time people would have more money in their pockets through income tax cuts, and increases in benefits, Super, and Working for Families.

As a Government, we are working to ensure that the extra money in people's pockets would be more than the increase in prices. If we can't make sure that happens for the vast bulk of people, we won't be increasing GST.

Today, in a speech to Grey Power on the North Shore, I spoke more about our proposed tax changes and how they will lift superannuation payments.

Read and comment on my speech here.

MAKING ACC AFFORDABLE, SUSTAINABLE, AND FAIR

National is committed to ACC. We want it to be a fair and efficient 24/7 no-fault insurance scheme for all New Zealanders. But in the past four years, the cost of ACC claims has risen by 57 per cent - five times as fast as inflation. Meanwhile, unfunded liabilities have blown out from $4 billion to $13 billion.

Without changes, this would mean big increases to ACC levies for everyone - families, workers, and employers. That's why this week we passed a new law to help get levy increases under control, and make ACC more affordable, sustainable, and fair. Click here for more details.

BOOSTING DOCTORS, NURSES, AND MIDWIVES

The second intake of Nationals' voluntary bonding scheme for graduate doctors, nurses, and midwives has opened for registrations. Under the scheme, graduates who are keen to work in hard-to-staff areas and specialties for three to five years are eligible for student loan write-offs and cash incentives.

Demand last year was huge. We expected 350 doctors, nurses, and midwives to apply. We ended up welcoming 890 into the scheme. That's great news for areas with shortages of critical health professionals. This year we've added to the areas and specialties in the scheme. Registrations for graduates close at the end of April.

LIFTING ACHIEVEMENT IN OUR SCHOOLS

A few weeks into the school year, it's great to see the vast majority of teachers and schools introducing National Standards in a practical and professional way. National Standards will ensure primary and intermediate schools regularly assess children's progress in reading, writing, and maths, and provide that information to parents in plain language. The standards will help identify pupils who are struggling so that teachers and parents can give them extra help.

Last week we appointed an independent advisory group to support the implementation of National Standards. This group, which includes Professor John Hattie, will provide the Minister of Education with free and frank advice about National Standards, and any refinements that could make them better. Learn more about National Standards here.

BACKING THE BAY

Last Friday I had a really busy day in Hawke's Bay - as Prime Minister and Minister of Tourism - catching up with the locals. A big thank you to everyone I met for making the day in the Bay such a great one. See photos by clicking on the links below:

Watching the boys wharf jump and checking out the McLean Park upgrade

Meeting workers at Mr Apple in Whakatu

Visiting the Havelock North Community Centre

Getting on my bike in Hastings to support Bikes in Schools

Enjoying the Art Deco Festival

FROM MY DIARY

Today I've been in my electorate and tonight I'm opening the Asia-New Zealand Lantern Festival at Auckland's Albert Park.

On Saturday I'll be at the Helensville Show. If you live in Auckland, I hope you'll come and join us for a great day out!

Best wishes



John Key

Prime Minister

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OUR PRIORITIES FOR 2010

It’s great to be back in Parliament. Our team is getting stuck into the hard work, delivering on our promise of a brighter future for all New Zealanders – and making New Zealand the place our children and grandchildren want to call home.

On Tuesday I opened Parliament for the year by laying out the Government’s programme for 2010.

Our first priority is to lift the performance of our economy. We want to make New Zealand more prosperous, so it can provide well-paid jobs and better living standards for all New Zealanders and their families, and so it can provide the world-class public services we need. Click here for a summary of our economic priorities.

Our second priority is social sector reform. We need to better equip New Zealanders – and particularly young people – for the economic challenges they face. We want to lift achievement in our schools. We want to make our neighbourhoods safer for families. And we want better, faster, more convenient healthcare for all. Click here for a summary of our social priorities.

Alternatively, read my full speech here.

I particularly want to mention four parts of the speech:

1. A Growth-Enhancing Tax System

National agrees with the Tax Working Group that our tax system has major problems with integrity, fairness, and incentives. In Budget 2010 we will start reforming the tax system.

We want taxes that create incentives to work hard, save, and get ahead. We also want taxes that are fair. That’s why we are considering personal tax cuts across the board. And that’s why we are also carefully considering a modest increase in GST, to no more than 15 per cent. We’ll maintain Working For Families and compensate low to middle income earners if there is any increase in GST.

2. Science and Innovation

Our economic future relies on new ideas. This year we will help businesses grow by connecting them with our best scientists and researchers. We’ll invest in more science and business research, drive research into agricultural greenhouse emissions, fund open-access food development facilities, and reform Crown Research Institutes.

3. Unlocking our Resources

New Zealand’s natural resources have huge potential to boost our economy and create jobs. In 2010, we’ll work to unlock that potential by reducing red tape. We’ll drive a second phase of resource management reforms, look at extending mining on Crown-owned land, remove roadblocks to irrigation, and reform aquaculture. We’ll also promote investment in capital markets while strengthening protection for investors, and look at developing New Zealand as an Asia-Pacific hub for financial services.

4. Reforming Benefits

In 2010 we’ll deliver on our promise to reform the benefit system. We want to help people who can work get back to work. We’ll adjust the benefit abatement regime to encourage them. And we’ll make sure that welfare spending gets to those who need it most.

I’ll have more to say in coming months. In the meantime, watch video of my speech here.

LIFTING ACHIEVEMENT IN OUR SCHOOLS

I’ve been blown away by the huge response to our National Standards campaign. Thanks for your comments to last week’s Key Notes. It’s clear that there’s a lot of support for our plans to assess every child’s progress in reading, writing, and maths, and report this in plain English to parents. Click here for more information on National Standards.

BUILDING THE CYCLE TRAIL

Yesterday, the Ministry of Tourism announced that 13 projects will go to stage two of the next funding round for The New Zealand Cycle Trail. The projects are in: Tauranga, Opotiki/Gisborne, Rotorua, Taupo, Ruapehu, Hawke’s Bay, Nelson/Tasman, Westport, Greymouth, Mt Cook, Queenstown, Clutha, and Central Otago. These routes were chosen from 54 applications, and promise cycle trails of spectacular beauty in some of our most breathtaking scenery. Click here for a map of these projects and the Quick Start Trails already underway.

GETTING TO KNOW PRINCE WILLIAM

Were you in the crowd who met Prince William at the opening of the Supreme Court? See video of the walkabout here.

Have you ever wondered what it’s like to have a barbeque with Royalty? Watch footage here.

See my Waitangi Day snaps here

Best wishes

John Key



Prime Minister

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Yesterday, together with the Minister of Education, I welcomed the introduction of National Standards in literacy and numeracy into New Zealand’s Year 1-8 schools.

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To mark this important milestone I’ve written to around 350,000 households to draw their attention to National Standards and to explain what they mean for young New Zealanders. The letter is accompanied by a brochure which clearly explains what National Standards are about and how they will affect children and schools.

I encourage you to read this information, to find out what National Standards may mean for your children and your local schools, and to pass this information on to anyone with an interest in New Zealand’s education system.

In addition, over the next few weeks, National Party MPs will be holding public meetings up and down the country to talk directly to parents about this important policy. I also encourage you to attend one of these meetings in your local electorate.

 

 

National Standards are a core part of National’s plan for securing the brighter future we campaigned on. Because while this country is home to some of the best schools, teachers and students in the world, New Zealand has, for too long, let too many children slip through the cracks.

I am simply not prepared to tolerate up to one in five New Zealand children leaving our schools without the literacy and numeracy skills they need to succeed.

National Standards will ensure that all parents, not just the lucky few, can expect their school to regularly test their children against national benchmarks in reading, writing and maths. They will ensure all parents have this information reported to them in plain-language. And they will ensure all parents are properly informed about what is being done to support their child’s progress.

New Zealand deserves a future with more highly-skilled citizens, who have better job prospects, greater life choices, and, in turn, who live in a society with less dysfunction, unemployment, welfare dependence and crime.

I see our education system as one of the fundamental tools for delivering this brighter future.

That’s why this Government is working hard to ensure National Standards deliver for the benefit of our young people, our economy and for the future of New Zealand.

If you have any further questions you want answered about National Standards don’t hesitate to e-mail us on nationalstandards@parliament.govt.nz.

Best wishes


John Key
Prime Minister

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CLICK HERE TO WATCH MY LATEST VIDEO

It’s great to be back on deck after a few weeks’ break. I hope you managed to get a bit of time off over Christmas and find some decent weather.

We’ve had a busy start to 2010 with our first Cabinet meeting of the year, and the visit of Prince William.

I really enjoyed meeting the Prince and spending some time with him at official events while he was here. His visit provided a tangible sense of our ongoing links to the monarchy, and a great chance for New Zealanders to see and get to know this fine young man. And it really added to the official opening of the Supreme Court.

See photos from Prince William’s visit here.

THREE STRIKES – SAFER COMMUNITIES FOR KIWI FAMILIES

Click here to watch my policy update video.

On Tuesday I announced that National and Act have agreed on law changes that ensure the country’s worst repeat violent offenders will receive the maximum allowable sentence for their crimes.

The new sentencing regime in our Sentencing and Parole Reform Bill includes a “three-strikes” policy. This will target violent offenders who show continued disregard for the law. 

The first offence will bring a standard sentence and warning. The second offence will bring a jail sentence, in most cases, with no parole and a further warning. The third offence, will result in the offender being given the maximum sentence in jail for the crime, with no parole.

The new regime will help keep the worst repeat offenders behind bars for longer. It will also deter criminals from committing further crime by escalating the severity of their sentences.

National is determined to make our communities safer for Kiwi families. We are determined to reduce the number of crime victims. And we are determined to make life tougher for violent criminals. The Sentencing and Parole Reform Bill is an important step towards that goal.

BUILDING A WORLD-CLASS TAX SYSTEM

Last year National managed to guide New Zealand through the global recession while living up to our election commitments. In 2010, we’re focused on unleashing New Zealand’s potential for growth, and lifting the wages of New Zealanders.

On Wednesday, the Tax Working-Group issued its report on New Zealand’s tax system. The report identifies several issues with the structure, coherence, and sustainability of the current tax system. It also puts forward some options to fix them.

Tax policy can play an important role in lifting economic growth and productivity. We want to make sure our tax system rewards effort, encourages savings, and helps families to get ahead. Fairness is a big part of that. We will carefully consider the Working-Group’s report as part of our decision-making for Budget 2010.

BOOSTING TOURISM IN OUR REGIONS

Yesterday I announced that eight tourism marketing groups around the country will share $5 million in tourism funding to market their regions. This will be matched with funding from Regional Tourism Organisations (RTOs) and the private sector to create a $10 million marketing fund, aimed largely at Australia.

This joint venture fund will see RTOs and Tourism NZ working together to maximise their marketing impact. It’s a great opportunity for our regions to use their distinctive selling points to attract Australian visitors, while tying their marketing in with our 100% Pure brand.

FROM THE DIARY

I really enjoyed spending some time in Christchurch yesterday, officially opening AMI Stadium. Stadium Christchurch – as it will be known for the 2011 Rugby World Cup – is the first of New Zealand’s major stadiums to complete redevelopment for the tournament.

I also visited QEII stadium one year out from the 2011 International Paralympic World Championships. As patron, I’m looking forward to the Championships and to watching our disabled athletes compete with the very best paralympians in the world.

I’m in Ratana today with several Cabinet ministers and National MPs, to celebrate the life of Tahupotiki Wiremu Ratana and the birth of the Ratana movement.

On Sunday I’ll be at the Aotea Centre in Auckland to mark the 60th anniversary of India’s Republic Day with some of our Indian communities, before heading to the Trans-Tasman Touch Rugby tournament at Waitakere’s Trusts Stadium.

Best wishes

John Key
Prime Minister

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Happy Christmas

It’s been a busy year. National has worked hard to protect New Zealanders from the sharpest edges of the recession and prepare for future growth, while delivering on our election promises in law and order, health, and education.

Treasury’s half-yearly fiscal update shows that we’ve come through the recession better than many people thought. And we’re seeing some strong signs of recovery. That’s great news, but the pressure on government finances is still tight.

2010 will be another big year. We’ll be working to unleash New Zealand’s potential for growth and lift wages. We’ll also stay focused on the issues that matter – making our communities safer for families, lifting achievement in our schools, and providing better healthcare for all New Zealanders.

Thanks very much for your support this year and for reading Key Notes. I hope it’s given you a sense of where we are taking New Zealand. This is the last issue for 2009. I’ll be back in your inbox in January.

And thanks for your comments. They give my staff and I a good idea of what concerns you. Please keep them coming.

I hope you and your family take some time off and relax over the holiday season. Have a very Merry Christmas and a happy New Year.

Tackling Greenhouse Emissions

I’m in Copenhagen this week for the United Nations Climate Change Conference. Yesterday we announced that New Zealand will invest $45 million over four years in the Global Research Alliance on agriculture greenhouse gases. The Alliance brings together researchers to find solutions to emissions from farm animals and horticulture. Twenty countries so far – including the United States, Canada, and India – have joined the Alliance.

Fourteen percent of the world’s greenhouse gases and almost half of New Zealand’s emissions come from agriculture. The Alliance has huge potential to help our farmers cut emissions and help global food supply keep up with the world’s growing population.

Lifting Achievement in Schools

This week the Education Review Office released a report into reading and writing in Years 1 and 2 at primary schools. It found that almost two out of three school leaders aren’t properly monitoring how well their pupils achieve. It also found that 30 percent of teachers aren’t teaching reading and writing effectively. Children – and parents – deserve better.

The report goes some way to explaining why one-in-five young New Zealanders leave school without the basic skills they need. And it shows just how crucial our National Standards policy is. Under National Standards, primary and intermediate schools will be required from next year to assess each child’s progress in reading, writing, and maths, and report this in plain English to parents. We want to work constructively with teachers and principals to introduce National Standards. And we’re providing extra funding to roll them out and help children who are falling behind.

Improving our Highways

On Tuesday the Government gave the go ahead for Transmission Gully – a project to improve State Highway 1 north of Wellington. This is part of the Wellington Road of National Significance, which will see a four-lane expressway built in stages between Wellington Airport and Levin over the next 10 years.

Earlier this year we identified seven initial Roads of National Significance around the country. With our announcement of $11 billion in new State Highway investment over the coming decade, National wants to significantly improve our road network and help unclog New Zealand’s growth arteries. In coming months, we’ll have more to say about our progress on the Roads of National Significance.

Reining in Electricity Prices

Under Labour, electricity prices rose about three times faster than inflation. That’s just not on. And that’s why we’ve introduced a new bill into Parliament to put in place many of the recommendations of the Ministerial Review Group into the electricity market.

The changes are designed to improve the security of our electricity supply, boost competition in the market, and rein in increases to the family power bill. Since the review began, price rises have flattened. I hope that trend will continue.

Celebrating Waitangi Day

National wants a harmonious New Zealand where all Kiwis respect each other. That’s one of the reasons why Cabinet has approved the flying of a national Maori flag from Auckland Harbour Bridge, Premier House, and some other sites on Waitangi Day. The Maori flag won’t replace the New Zealand flag. It will fly alongside it, to celebrate Waitangi Day and recognise the partnership which the Crown and Maori entered into when they signed the Treaty of Waitangi.

Best wishes

John Key
Prime Minister

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