Source: Govt’s austerity Budget to cause real harm in communities
Hon SIMON WATTS (Minister of Revenue): Thank you very much, Madam Chair. Look, a very good morning, everyone. Welcome back to the growth Budget, and what a great Budget it is. I don’t mind doing a basic lesson in what depreciation is for the member because, in effect, what we are doing is increasing the rate at which people can claim a tax deduction, increasing it in the first year and the balance will be claimed for the rest of the asset life. This is a timing difference; we are bringing forward that ability to claim that tax deduction. We’re not creating some new world or new paradigm of other aspect. We are simply moving that benefit forward so that New Zealand businesses can achieve a tax deduction—from yesterday—and get the benefit of that in terms of less tax this year.
That is a significant investment and opportunity for them as a business. But it in no way has any impact on what would be a normal rate of depreciation on any economic asset over the life of that asset. So the whole premise of the question is uninformed and without basis. Our policy is very much focused on delivering that economic growth. And heck, I mean, I guess some people in the House are concerned about too much economic growth. But on this side of the House, we think a little bit differently. We sort of think economic growth is a good thing. It sort of helps us with a range of factors including higher paid jobs, better standard of living, and more tax revenue flows.
CHAIRPERSON (Barbara Kuriger): That’s true, but that’s not what the member asked the Minister, thank you.
Hon SIMON WATTS: Well, the member asked about the risks in regards to the policy and I have clarified that it is a depreciation policy which is well articulated in accounting standards.
