Finance Minister Bill English has thrown cold water on several of the Treasury's suggestions of ways he could improve New Zealand's economic performance - including its hints at cutting superannuation, hiking up GST and introducing a capital gains tax for property owners.
Treasury's advice to the new Finance
Minister said the Government's primary focus would be on the immediate impact of the global economic downturn, but warned it should not take its eye off the medium term or New Zealand would lag behind its OECD partners.
Its recipe for boosting productivity included a capital gains tax on property to encourage people to invest in other areas such as savings. It also said reducing the top personal tax rate to the same as the company tax - 30 per cent - would attract skilled workers and investment to New Zealand. It said the ageing population would put greater pressure on the public purse, and that superannuation might have to become "less generous" in the future.
Mr English said its priority was income-tax cuts to help people through the recession and capital gains tax or hikes to GST did not form part of those plans. He said reducing the top personal tax rate and reducing tax on investment income were "long-term goals" for National but were currently unaffordable. Cuts to superannuation would not happen.
Other aspects were more in line with National's policies, including its call for the public service to be made more "efficient" and criticism of "unwarranted" staff increases and little requirement for departments to show value for money.
Labour leader Phil Goff said the list amounted to an "ideological wishlist" and he would watch National to ensure it did not break any of its campaign promises to follow Treasury advice.
