Capital gains tax: Finance Minister Grant Robertson tells critics Government 'not bound' by recommendations

Finance Minister Grant Robertson says the "underlying fundamentals of our economy remain strong". Photo / Mark Mitchell

In his first major economic speech of the year, Finance Minister Grant Robertson has hit back at Capital Gains Tax critics.

"It's change and change is always challenging for people," Robertson said, when asked if there had been a panicked reaction to the Tax Working Group Report.

"Its a different type of tax and I'm not sure that is something that people have got their head around yet."

It was important to remember that this was not a retrospective tax, he said.

"This is not immediate, it's about realisation gains made in the future."

Speaking at the Chamber of Commerce and Massey University business breakfast at Eden Park, Robertson reminded those who had railed against the CGT that "we are not bound by the recommendations".

"It is important to note we haven't made a decision yet," he said.

He reiterated Prime Minister Jacinda Ardern's comments on Monday that by and large the New Zealand tax system works well.

He said the idea behind the Tax Working Group was to identify what would constitute a fairer system.

"The document we got did the job we asked of it," he said.

"It's now our job to go through and say does that really add to fairness."

Robertson said the Government would deliver a comprehensive response to all the points in the report when it responded in April.

Addressing concerns about the impact on productivity, if capital gains for business and shares in businesses were taxed, he noted that countries like Australia had seen productivity gains after the CGT was implemented.

Robertson also commented on New Zealand's relationship with its international partners and the state of the global economy.

He was optimistic about a European trade deal. On a UK trade deal he said there were "a lot of issues to work through".

"We're operating in a world where there is some volatility," he said.

An example of this volatility recently emerged in reports in Chinese media, which questioned New Zealand's treatment of Huawei.

Despite these concerns, Robertson said New Zealand's relationship with China remained good.

"Like all good friendships there will be issues from time to time that have to be dealt with," he said.

"There are issues for some exporters in terms of demand and some regulatory changes and clearly the trade negotiations between the US and China is having some effect on the supply chain."

This was a reference to issues some exporters - most notably salmon exporter Sanford - have had at the Chinese border.

Looking beyond international volatility and concerns about tax, Robertson stressed the "underlying fundamentals of our economy remain strong".

He said debt remained low, unemployment remained low, inflation remained low and wages were set to grow at about 3 per cent a year.