Labour offers $200 million for regions and calls National's plan as reckless

Summary

• Labour announced a $200 million fund, a replacement for $3 billion Provincial Growth Fund (PGF), to support economic development plans in the regions, as part of its election manifesto.
• Any PGF funding that has been allotted to sectors but is not labelled to a specific project will be evaluated with a view to reallocating it to the regional plans.
• National Party promised about $4.7 billion in tax cuts which will be paid from the $41 billion Covid response fund.
• Labour has criticized National's strategy as reckless and unaffordable stating that the policy will raid the Fund which must be available for nation's Covid recovery.

Labour leader Jacinda Ardern has revealed a $200 million Regional Strategic Partnership Fund to be established to drive economic development plans in the regions as part of its election manifesto. The Fund is a trimmed-down version of the Provisional Growth Fund (PGF) which was a $3 billion project spread over three years and is nearing completion.

The unallocated money in the $3 billion PGF is planned to be redistributed to other projects. The Fund was one of the vital achievements of NZ’s First and regional development minister Shane Jones.

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Prime Minister Jacinda Ardern stated that the Fund had helped in improving regional growth. She also added that the approved projects stand at different phases of implementation at present and will take some time to get completed. Labour has conveyed its commitment to look after the completion of independently verified projects.

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According to media reports, on 18 September, Jacinda Ardern and regional development spokesperson Phil Twyford summed up the elements on the policy. Key points are mentioned in the figure below.

*PDU: Provincial Development Unit

Labour party intends to support the regions on the basis of five key principles, i.e. investing in human resources, creation of jobs, assisting small businesses, protecting the future of New Zealand economy and global positioning of New Zealand.

Labour's investment plans

Labour stated that the government had made a real improvement in investing and has a substantial channel of investment across regions in education, transport, health and housing infrastructure.

A key aspect of the party's strategy is to carry out the initiatives undertaken in their first term comprising:

• Allotted $3 billion PGF fund to infrastructure, training and jobs
• Created an $8 billion national infrastructure channel of schools, clean energy, housing, hospitals and transport projects through the NZ Upgrade Programme
• Financed $3 billion of shovel-ready infrastructure projects to produce and keep jobs as part of the response to coronavirus
• $750 million Allotted for new and upgraded water infrastructure
• Investment in hospitals, local schools, environmental work and job creation, including through the $1.1 billion Jobs for Nature fund

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The $200 million Regional strategic partnership Fund of the Party is planned to emphasize on critical investments in initiatives or services that encourage the growth of new and innovative industries, provide viable job opportunities and support the economic development of a region.

Labour calls National's tax cut plans as irresponsible

The National Party has announced a short-term package of tax cuts worth about $4.7 billion to be paid from the remaining $14 billion in the COVID-19 response fund. Judith Collins, National Party leader, stated that the tax cuts would save about $3000 in a year or $50 in a week for a middle-income earner.

Leader Judith Collins and finance spokesperson Paul Goldsmith made announcements on the policy on 18 September. They stated that the reforms would be made by major increases to the income tax limits, but would only be in effect for 16 months, from December 2020 to March 2022.

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Other core features of National's plan included amended debt repayment target, more generous tax write-offs for new company holdings and a tighter budget for new expenditure. The National Party also promised that no cuts would be made to health, education or social spending.

However, Jacinda Ardern called the tax cuts as irresponsible and asserted that it is not the right time to raid the COVID-19 recovery fund. She added that the voters would be able to conclude what is right and what is wrong by looking at both National and Labour's tax policies.

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Labour's finance spokesperson, Grant Robertson also slammed the policy calling it as reckless and desperate. He cautioned that the plan was more about promoting their terrible poll numbers than accelerating the economy.

He also stated that National is putting the economic recovery of the country at risk with a string of desperate and ill-thought-out policies while kiwis need a steady and sensible route to coronavirus recovery.

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Disclaimer: $ denotes New Zealand Dollar unless stated otherwise.