The Instigator
Pro (for)
8 Points
The Contender
Con (against)
0 Points

5 point economic plan for New Zealand

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Post Voting Period
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Voting Style: Open Point System: 7 Point
Started: 3/6/2012 Category: Politics
Updated: 6 years ago Status: Post Voting Period
Viewed: 1,249 times Debate No: 21767
Debate Rounds (4)
Comments (0)
Votes (3)




Round 1: Acceptance
Round 2: Each debater outlines a 5-point plan for the New Zealand economy (no rebuttals)
Round 3: Rebuttals
Round 4: Summarising

Good luck!


It's a chance for me to learn a bit more about New Zealand. Thanks for the challenge. Good luck.
Debate Round No. 1


For voters' information, here is some useful background on the NZ economy: You might also want to see this epic graph of the New Zealand government budget:

The Lars Plan for the New Zealand economy:

1. Index tax brackets to the rate of inflation
The phenomenon known as "bracket creep" is a well-known problem in economics, and a side-effect of inflation. In the past, accountants have been reluctant to index tax brackets because of the extra hassle this would cause. My plan would be to index each year's tax brackets to the inflation rate of the previous four quarters, as reported by the Reserve Bank. The adjusted tax brackets would be published jointly by the Ministry of Revenue and the Treasury, at least one month before the relevant taxes are due. This could then be automatically updated by accountants in their spreadsheets and personal accounting software in their databases. For people filing their own personal returns, the tax brackets could be printed at the top of the physical forms by the Ministry of Revenue, and for people doing returns online, the relevant tax bracket could be automatically calculated by the computer system.

2. Increase income tax on the rich
When he became prime minister of New Zealand, John Key introduced a series of tax cuts on income tax and an increase in goods&services tax (GST). To pay for this there has been a massive increase in borrowing. The problem with this is that the very poor did not recieve a tax cut, only the very rich did, and besides that our country is in enough debt already. My plan would be to restore income taxes to how they were before the John Key tax reforms. This has the effect of making taxes more progressive, while relieving us of debt. The top 9% of earners got a 5% tax cut - the bottom 9% had their taxes increase due to GST. We have the second-lowest personal tax burden in the OECD - the rich can reasonably be expected to pay more. All the other OECD countries seem to thrive with more progressive taxes, with the only country having a lower burden being Mexico, and they're not exactly a model state of economics.

3. Swap interest-free student loans for student allowances
The problem with interest-free student loans is that the government always loses money on them - they are borrowed at interest by the government, loaned by the government to the students at no interest, and then guess who pays for the interest? The government does. But that interest isn't going to anyone - it's a deadweight loss. So rather than paying for all that interest, I would put interest back on student loans and increase the availability of student allowances. This would be coupled with the introduction of a more robust system for determining student allowance eligability, including the introduction of a "parental mandatory expenses" test, so that children whose parents are unable to support them through college due to having a large morgage or similar can be given help. Like with student loans, I would restrict the student allowance to only include students who achieve fair grades for their ability level and who don't become "lifetime students". This is all good for the economy because it means the government is spending its education budget on things that are actually going to improve New Zealand's future, and good for students as it means that those who need help can get it.

4. Abolish the New Zealand Defence Force and Ministry of Defence
I've argued this at length in previous debates - there is not one good reason for us to maintain a defence force, particulary one as crappy as the one we have now. I've done calculations that abolishing the defence force would save the government at least 3% of their expenditure every year (as it so happens, our budget deficit is about 3.3% right now), which is about $1.6 billion in US$ terms, plus all the money that can be procured from selling our crappy weapons, ships and aircraft (though I would transfer some of this stuff to departments such as Search and Rescue who can actually put it to good use). This can help our government get back to surplus faster, and helps the tourism industry as more land is freed for national parks.

5. Introduce a Capital Gains Tax
This was a major talking point at the last election. We technically have one but nobody ever enforces it, and it's easy to circumvent. We need to start enforcing our policy, and close the loopholes. A capital gains tax is good for the economy because it helps raise revenue for the government, and reduces income inequality as the rich cannot hide their wealth in assets. The tax is generally considered fair by economists and has been adopted by most other important countries. I would spend all the revenue gained from this tax on tax credits and grants to small businesses, both to encourage entrepreneurship and reduce unemployment.

That's my five points on a very broad level - I actually have many more ideas but these are the ones I'm most comfortable arguing. I look forward to reading con's alternative policy.


I've learned a lot about New Zealand in the last few days, but I'm sure I'm still at a huge disadvantage to my opponent. New Zealand seems to be in much better economic shape than the U.S. at the moment. I've tried to develop a 5 point economic development plan for New Zealand. I hope the readers find it thought provoking.

1. Monetary Reform
Engage monetary reform to restructure the roles of the Reserve Bank of New Zealand (RBNZ, the central bank) and the Treasury. Under the new system, the government will keep internal accounts for record keeping but will no longer have any accounts at the RBNZ. All spending will be conducted with newly created money. Taxes will simply un-create money. The RBNZ will no longer conduct domestic market operations and thus will no longer be the primary issuing body for the NZ$. The RBNZ may issue bonds backed by the Treasury in order to set interest rates. Operationally this results in no change in the way the NZ$ is issued and government securities are sold, it's really just a different way of structuring the same transactions.

The reason I propose this, however, is it will help people stop thinking that there are fiscal solvency constraints on the government. Thus, rather than thinking in terms of how much government can we afford, people should start thinking in terms of how big of a government do we want? How many teachers, or bridges do we need? Then the government can just build what is needed and periodically adjust tax rates to maintain low inflation.

2. Establish an employer of last resort program
The government will offer a job at 10% below minimum wage to anyone who wants it. This is more efficient than current unemployment benefits, because the people in this program will contribute to the betterment of the country through work. Also, it keeps people in an employable state (potential employers know the employees show up on time, shower, etc.), so it is a benefit to private sector employers as well since there will be a pool of workers available when private sector hiring starts up again after the economy improves. Additionally it prevents family breakdown and other anti-social side effects of unemployment for a lot cheaper than enhanced policing. A similar program called "Jefes de Hogar" was instituted in Argentina to great success until the government decided it couldn't afford it anymore (see point 1). NZ has previously had zero unemployment ( and it can again.

3. Free university education for students in science and engineering
Invest in developing a population that can drive tomorrows industries. Even if you don't buy my monetary reform idea, creating a population that earns more means they can pay more taxes (at a lower rate) in the future.

4. Development grants for high tech (Think Big for the 21st centruy)
The productivity of tomorrow is determined by what we build for future production today. While NZ is already one of the best countries to start a business in, they should issue grants to start up companies (or provide financing) to develop vibrant software, engineering, and biotechnology industries. NZ can help create a population that attracts foreign companies to do their intellectually intensive activities in NZ, as well as fostering an environment in which domestic startups can flourish. It's time to create an antipodal silicon valley. Think Celtic Tiger but with beaches.

As a side note, in the original Think Big, the government financed it with foreign debt. I am not proposing to do that again. There are sufficient resources in NZ that overseas purchases are unnecessary for either this or point 3.

5. Create a domestic development bank
The private sector has a large and growing foreign debt. The private sector banking system is (for some reason) not keeping up with the credit needs of the NZ private sector. The government should create a nationally chartered devalopment bank to do just that.

Debate Round No. 2


I thank my opponent for opening his case. I recognise that I am at a significant advantage in this debate, so I appreciate my opponent's courage for taking me on! Because of various time constraints I'm going to post my rounds fairly quickly. Let me now move on to rebuttal.

1. Monetary Reform
Last round, my opponent gave you four points (2-5) that are different ways the government could be spending more money, and one point (1) that enables them to spend unlimited money without taking any taxes. More money flowing into the economy, coupled with no extra money coming out, means that the New Zealand dollar is less scarce, without any real increase in production. That's bad for us because it means that prices will increase. Inflation is like the Darth Vader of economics. And if you think adjusting taxes will work, then think again. Firstly, having arbritary taxes every year means that money really has no guarenteed value, so people will lose faith in the dollar every time the government does anything. That's bad because you'll get several runs on the banks every day as they try to protect their savings by buying capital. It's also bad for our balance of payments, as most of the capital goods we consume come from overseas. Secondly, when you're taxing not to provide a service or a public good, you are well and truely meeting every definition of the word "stealing". Taxation is theft if the government gives you nothing in return. I don't think many New Zealanders will appreciate the introduction of serfdom in our country. Sure, serfs had low prices - but they were taxed so heavily they couldn't spend a dollar of it.

In the longer term, it might be contested that some of the projects con describes as financing with monetary reform may yield some benefit for New Zealand, its people and its businesses. Firstly, that's never happened in the past with printing money. Just ask Zimbabwe, who instituted many similar reforms in the 1980s. Secondly, that presumes that the citizens will actually use their expertise here. Skilled workers leaving for overseas is already a big enough problem, with our unemployment rate and all, but my opponent plans to give them all the more incentive to emigrate, by raising their inflation rate to the point that their cost of living is such that you have to run off overseas to survive. That's no good for businesses either, because they're not going to be able to increase output until the long-term comes around. Until then, they cannot increase employee wages. So even if New Zealand does see some benefit from these plans (which I don't think they will), those that see the benefit will be those living in abject poverty.

But what of the benefit? What is beneficial about thinking about what we want rather than what we can do with what we have to achieve something we want? Scarcity is a fact of life. No government can give an ordinance saying "Henceforth scarcity shall be illegal", because everyone will go to jail. Therefore we need to use our scarce resources, not the infinite hypothetical resources we wish for.

2. Employer of last resort program
My opponent's plan is completely silly because nobody would be dumb enough to sign up to his program. Depending on the number of hours per week and the person's individual circumstances, the position is very likely to pay less than the unemployment benefit. More importantly, if your time is occupied building new infrastructure, you're not going to have a lot of time to apply for jobs. Anybody who has ever switched jobs will tell you that it's a very time-consuming process.

I take a rather different approach to encouraging employment. Rather than forcing the government to hire all the people the private sector doesn't want, I think it's good that the government instead aims to employ the best and most qualified, just like everybody else, and only employs as many people as they actually need, giving the rest money to live on through the unemployment benefit. My approach to encouraging employment, however, is to encourage skilled people, who are likely to be the types that start businesses and provide employment, to stay in the country are study, with my fair tax policy that makes it easier for people just starting out to get by. I also help make a fairer tax system for those on lower incomes, which is unfortunately where most of our unemployment is. When the government starts making surpluses again, then we can start talking about how we can create jobs in this country - until then, let's create the best possible environment for the private sector to make jobs for us.

3. Free sci/eng education
The problem with this is that the government has to pay for this education instead. This creates two perverse incentives. The first is for students to become lifetime perpetual students and refuse to enter the workforce. The second is for universities to simply increase their prices to however much they want to be paid. The second is the worst, since the ridiclious inflation caused by con's model will mean that only those who write their own paychecks will be able to afford anything - but by writing their own paychecks they cause further poverty and inflation. So there's this big massive cycle that nobody really benefits from except this new class of academic elitists. Besides this, the plan is completely inflexible. Why only science and engineering if he wants to encourage business - surely it should be the commerce degrees that should be made free?

That's where my plan is better. Make students take responsibility for their learning. If we have a skill shortage, let the market create the incentive with higher wages. No government debt. No inflation. More money for students. Fairer policies for all. Everybody wins.

4. High-tech development grants
More spending, no cuts, no taxes. The government already does give substantial R&D grants, and makes benefit payments to those from disadvantaged backgrounds who are starting up a business. And they're already doing a lot to help the high-tech sector, for instance with their recent roll-out of ultra-fast broadband internet. There are other things more in need of attention.

This is an un-necessary project because all the incentives con talks about are already being created, and furthermore the project will run us into the sort of debt the US has. Rather than throwing money at our problems, my plan will get the government books in order, and when government is making a surplus, they can use that money to build our economy.

5. Create domestic development bank
The reason the private sector has a large foreign debt is because most of our banks are foreign-owned, so all the debt we hold is foreign if we bank with one of those. A development bank, nationally chartered, would fulfil the precisely the same function as a regular bank, just publically owned. In fact, such a bank already exists. It's called Kiwibank. Even better, it's not only available for the private sector, but the public sector can use them too. So essentially we have all our credit needs covered.

Why do we then still have a large foreign debt? Because the other banks are competitive with Kiwibank. Many businesses prefer to source their credit from one of those overseas banks, such as the deceptively-named Bank of New Zealand, ASB and The National Bank. That's good because it encourages competition, which means lower bank fees and more competitive interest rates for consumers. Establishing ANOTHER domestic charter bank with the aim of encouraging development will only be an extra burden on the taxpayer in setting up the infrastructure required.

For all these reasons I am proud to propose.


I thank my opponent for his arguments against my proposal and look forward to responding to them in the next round. Prsuant to the rules, I will only comment on his plans here.

While all none of my opponent;s proposals are bad on their own, collectively they do nothing to improve the economy of New Zealand. Because there are similarities between many of his points, I hope the reader will indulge me in responding out of order.

1. Index tax brackets to the rate of inflation
2. Increase income tax on the rich
5. Introduce a capital gains tax

Three of my opponent's proposals are tax changes the first appears to be a reasonable change to prevent bracket creep. However, in the context of the other proposals, we can see that this is clearly a set of proposals designed to shift tax burden up the income ladder. Increasi taxes on "the rich" and creating an entirely new capital gains tax to raise net income and shift the burden to higher income workers. I take no position on whether the current tax burden is distributed fairly, too much at the low end, or too much on the high end. However, this is a debate over proposals on how to improve the New Zealand economy, and I am aware of no evidence that the economy of New Zealand is suffering from being under-taxed.

To this end, my opponent introduced no arguments suggesting that more taxes would improve the economy. He has suggested that the government might need revenue, although as I have shown in my proposals, government spending does not rely on taxation. For the size of government in New Zealand, the population is over-taxed, not under-taxed.

3. Swap interest free student loans for student allowances
This proposal changes nothing about the macro-economic state of New Zealand. Somehow, my opponent argues that the government cannot afford to lend students money at no interest, but can afford to give it to them. Moreover, he suggests that the government is losing money by borrowing money at interest to lend it out for free. This is false. New Zealand is not on the gold standard. The government does not need to borrow to spend, it just spends. As a matter of record keeping, the governmetn choses to issue bonds equal to it's deficit, and then buys some of them back through the RBNZ. When the bonds are held by the RBNZ the government pays interest to itself (i.e., not at all). Since the RBNZ decides how much government debt to leave in the private sector to hit an interest rate target, the publicly held debt and the government spending are operationally disconnected. The treasury and RBNZ together issue enough governmetn bonds to hit the target rate and the rest of the deficit is financed through invented money. Whether you approve of this system or not, it is what we have. Thus, increasing loans to students does not in any way impact government "borrowing". The government is not taking a "loss".

4. Abolish the Military
I am not in a position to argue whether New Zealand needs a military, however, this is not a debate on whether the defense force (NZDF) is a strategic necessity. This is a debate about how to improve the economy of New Zealand. The NZDF is unbelievably small compared to other countries. However, laying off 12000 New Zealanders is hardly beneficial to the economy. Even if the 1% of GDP that is spent on the military could be put to other use (although my opponent has proposed no other use) this would be a miniscule change. However, what change there is would be poor for the economy.

Since he offers no better use for the military, my opponent's plan would put 12000 people out of work. In addition to the added strain they cause to society, that would be 12000 fewer consumers of other goods and services. This would have a cascading effect causing job loss throughout the economy.

For these and the many forgooing reasons, my opponent's proposals would not improve the New Zealand economy.

Debate Round No. 3


I thank my opponent for his case. I'm glad to have faced such a serious challenger! Now to my summary.

In this debate I raised five points. First, I proposed that New Zealand indexes tax brackets to the inflation rate. My opponent was so impressed by this point that even he conceded it was "reasonable", with no further rebuttals.

Secondly, I said that income tax on the rich should be reverted to pre-John-Key levels. Con objects that there is a lack of evidence that our economy is currently undertaxed. First of all, it's not so important how much tax revenue is received, it's more important who's giving it - the idea is to reduce inequality. Secondly, I actually provided such evidence in round two, when I explained that all other more successful economies around the world have higher personal tax burdens, and indeed the only one that has a lower personal tax burden is Mexico. Third, it's theoretically bad for the economy if the government keeps spending money it doesn't have, running up a deficit year after year, both because that causes inflation, and because that bankrupts us.

Thirdly, I said interest-free student loans should be swapped for student allowances. Con countered that the government does not need to borrow to spend. That's factually incorrect, especially the part about invented money - the government's books are audited and the money all comes from somewhere. The New Zealand government had over $71 billion of debt at the end of 2011 ( Since the RBNZ never prints money, the government cannot conjure money out of nothing. If it's money being "held" by the RBNZ, they need to get it off them by borrowing from them to their account (which is held by Westpac bank). The other option is to use bonds. How much is borrowed from the RBNZ and how much sold in bonds is not determined by the RBNZ but a unit in the Treasury called the New Zealand Debt Management Office. The crucial thing about this system is that the RBNZ reserve is separate from the government's account. That would be like saying the assets of a bank are equal to the money that all of their clients have banked with them. So when the government pays interest to the RBNZ (at the OCR), that's a deadweight loss. No student gets a benefit from that, and neither does any taxpayer. When the government uses bonds there's interest on that bond - bonds are like a "give me $100 and I'll pay you $110 in a year" kind of deal. Either way, there is a deadweight loss when the government has to spend all this extra money to keep student loans interest free. Why not give that money directly to students? That would seem like a more fair system, even if the government wasn't losing money off it (which they are).

Fourth I said New Zealand could save a lot of money by abolishing the military. Con says that's laying off 12,000 people (actual number 13,795 plus 1608 bureaucrats, of which about 2500 are part-timers with other full-time jobs - see Excellent! Right now the rest of the country are short on many areas of skilled labour that military people are trained to provide, such as engineering and ICT, and particularly for the civilian units, doctors ( It's not like they'll leave the military and become beneficiaries for life - these are people who are likely to help fill our crucial shortage of police officers, or our shortage of skilled mechanics. It's better for the economy if they fulfil that for the market than that we spend the money and they don't really provide a service for anybody in return.

Fifth I said that we need a capital gains tax. Con uses exactly the same objections as for my second point, which I have already rebutted.

It seems, therefore, that my points will overall lead to a fairer and stronger economy for all.

Con also gave you five points. First he proposed "monetary reform", that is, arbritary tax rates and unlimited government spending. This has been tried and has failed so often (Zimbabwe, communist China etc) that it's surprising anybody still advocates it. Most dangerously, it means the government stops guaranteeing the value of money. That's bad because the financial system collapses. Secondly he said the government should be an employer of last resort. I showed that this comes with the opportunity cost of looking for real jobs. Thirdly he advocated free engineering in in-demand faculties, which creates all sorts of perverse incentives, making my far superior. Fourth we heard about more hi-tech grants, which the government already does, except more of it. That's essentially a promise the government cannot afford to keep. Fifth he talked about establishing a charter development bank, which we already have.

So as voters you have two alternatives. One is a stronger economy. One is worse. The choice is simple.

Vote pro.


Mimshot forfeited this round.
Debate Round No. 4
No comments have been posted on this debate.
3 votes have been placed for this debate. Showing 1 through 3 records.
Vote Placed by PARADIGM_L0ST 6 years ago
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Total points awarded:60 
Reasons for voting decision: Pro made clear and concise arguments. While I thought Con admirably attempted to bridge the gap, I could not help but to notice it seemed Con was talking out of his @ss for much of it, and did sufficiently debunk Pro's well-reasoned, well-articulated economic plan. Pro gets the nod.
Vote Placed by Zaradi 6 years ago
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Total points awarded:10 
Reasons for voting decision: Off the FF. May edit later to account for arguments made.
Vote Placed by airmax1227 6 years ago
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Reasons for voting decision: Conduct for FF