New Zealand Economy Should Be A 'Model' For Australia Says Joe Hockey

Australian Treasurer Joe Hockey has declared New Zealand a good economic model for Australia. New Zealand’s tax system has been identified as something that Australia should emulate for economic growth.

In a column for the Daily Telegraph, Hockey wrote that New Zealand was once regarded as the “poor economic cousin of Australia” but the country has now reached a point where the New Zealand dollar has almost reached parity with the Australian dollar.

While he did not mention specific changes to the tax system, Hockey referred to the huge reforms in New Zealand in recent years. New Zealand had cut the top marginal tax rate to 33 percent while company tax was reduced to 28 percent. Australia’s neighbour also increased the goods and services tax, or GST, from 10 to 15 percent.

New Zealand has no capital gains tax, payroll tax and healthcare tax, reports New Zealand Herald. Hockey said Australia should look at how New Zealand has been able to create structural reforms to help the economy grow. “New Zealand has been busy making the difficult decisions for their future. As a result, they have falling unemployment, rising living standards and a budget that is coming into surplus,” said Australia’s Treasurer.

Hockey’s comments suggest he has not given up on plans to implement a major tax reform including an increase in GST. The treasurer said Australia’s current gap on spending and revenue has hampered efforts to reduce taxes. He added that borrowing the $100 million, the daily difference between spending and revenue, “costs money.” Hockey said the money could be used on other things like social services or national infrastructure.

Hockey announced plans to create a taskforce to fight organised crime in the financial world such as tax evasion and investment fraud, which have been recognised as a national security threat. The treasurer is expected to reveal a budget of $127.6 million in funding for four years to form the tax force.

Meanwhile, Opposition Leader Bill Shorten said Australia cannot afford a “dull” budget as promised by Australian Prime Minister Tony Abbott. He said the budget should cover plans for the next 10 years and should not be created for the survival of Mr Abbott by the end of the year.

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