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Steven Joyce lining up tax thresholds but warns of overseas threats to rosy economic

tax_time.jpgIt pays to have a bit of luck as finance minister, even when you're on top of your game.

So even when Steven Joyce is cleaning up yours truly in a game of pool for our Summer "hidden talents" series, and the black fails to drop, it doubles back and sinks at the other end of the table.

Played for, he claims. And in the spirit of Christmas he forgives the statutory "down-trou" for a white-wash at the table. Apparently I made him look better at pool than in anything I'd written over the years.

Where John Key was self-deprecating, Joyce prefers gentle mocking.

There's a stuffed trophy head on the pub wall above him, but it seemed unseasonal to mention it, given the healthy economy and Government accounts he has inherited.

Because when it comes to the outlook for 2017, he is playing cautiously despite Treasury's tip of annual growth above three per cent and surpluses at $8.5 billion by 2021.

While the country may be having a golden run, boosted by high immigration and a construction boom, there are international clouds that could put us behind the eight ball.

"Let's not go on a spending spree because the economy is growing at three, 3.5 per cent. It's not a good idea to max out your credit card whether you are a country or a household just because things are going reasonably well."


There is, he warns, "plenty to keep economists awake at night" around the world.

So the man who has been disparaged, especially by critics from the Right for his readiness to splash the cash, on what they call, "corporate welfare", is cautious about spending.

"As a country we have to keep our feet in the ground.

"New Zealand is doing well and there is no obvious presenting reason why we shouldn't continue to do so, but the world is still actually a quite fragile, if anything possibly more fragile, [place] than it was 12 months ago."

Yet he seems more enthusiastic about tax cuts than there were under Bill English or John Key before the leadership change.

Key had referring to a "tax and family package" to help to low and middle income households that could not benefit greatly from tax cuts alone.


Joyce does not dismiss other ways to help those struggling, but clearly favours lifting the tax thresholds - the level at which the various tax rates cut in - thought perhaps not the rates themselves.

The current rates are 10.5 per cent on income up to $14,000 a year, 17.5 per cent between $14,000 and $48,000 and 30 per cent above that until you hit $70,000, when the top 33 per cent rate cuts in.

He is, he says, particularly interested in ensuring incentives to work stay strong,

"That means you tend to look at thresholds and things, but it's not as simple as that because we've got the interplay of tax and transfers. So we need a bit of time to look at that."

He mentions in particular the pressures at the $48,000 level, where the 30 cent rate kicks in and where wage rises push people into the higher bracket.

In broad terms he expects voters in 2017 to want a continuation of the current economic direction

And he warns against politicians focussing on spending, because their departments are pressing for it.

Joyce says politicians needed to remember that others in the community have their their spending priorities too.

"It's the job of the minister of finance, to some degree, to make sure that is presented as well as all the other internal priorities."

But listing his fiscal priorities as a new finance minister, "tax and thresholds" come fourth.


Top billing goes to infrastructure "with a focus on resilience as well as capacity - partly as a result of [the earthquake near] Kaikoura".

Next is funding public services in a growing economy that is attracting migrants "but always looking for not just adding resources, but getting an understanding of what improvements we are going to see from adding them".

Third is paying down debt "particularly as a percentage of GDP" suggesting nominal debt repayment will play second fiddle to allowing the economy's growth in order to shrink the proportion of debt on the Government's books.

"Whether we can do all four next year - well that's something we have got to work our way through."

In the meantime he has given Treasury a list of things he wants explored that focus on his priorities.

"And they were thrilled," he deadpans, right on cue.
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