Election 2023: ACT's alternative budget highlights tax, prison bed policies

By Anneke Smith of RNZ

The ACT Party is proposing to condense income tax brackets, slash the number of public servants and increase prison beds in its alternative budget.

The document, titled 'A Time for Truth' sets out the party's priorities ahead of what recent polling predicts will be a tight race between the left and right blocs in Election 2023.

It broadly covers the party's economic plan including opposition to the size of the public service, law and order measures and co-governance arrangements.

While it included no new policies, it did include costings and gives a sense of what the party could prioritise in any potential coalition negotiations post-election.

Fiscal initiatives include a two-rate income tax system to phase the five existing thresholds into two by 2025/26, with those earning up to $70,000 paying 17.5 percent income tax and those earning anything above paying 28 percent income tax.

It also includes a carbon tax refund that redirects government revenue from the Emissions Trading Scheme to taxpayers instead of being reinvested into climate-focused policies, estimated to give each person roughly $200 over the years 2024-2027.

Other policies include introducing a low- and middle-income tax credit, abolishing the bright-line test, reversing the interest deductibility changes, and abolishing the income insurance scheme.

In the justice area, ACT wants to increase the adult prison system capacity back to its 2017 levels by resourcing Corrections to incarcerate a further 2000 adults by 2026/27.

On health, it wants to increase capitation grants paid to GPs for every patient under their care by around 13 percent. In education, ACT would introduce a $250 million fund for principals to reward teachers.

The party would also increase operating defence spending to 2 percent of GDP.

In a speech delivered in central Auckland today, ACT leader David Seymour said his party's alternative budget would cut taxes by $34 billion over four years.

"The net result is a simpler, cleaner tax system with only two rates, and every taxpayer better off. More importantly it sends a message: we are not here to punish success," he said. "We don't assume everything in life is luck. We do believe that your efforts should make a difference, not be sapped away by ever increasing taxes."

Seymour said increased spending on teachers, defence, GPs and prisons could be funded by reducing "tax welfare churn", "corporate welfare" and "wasteful government expenditure" in Wellington.

"There are whole departments that no government would establish today, but no government has had the courage to stop funding. Just ask yourself, what has the Human Rights Commission actually achieved for human rights lately?"

He said Labour and National's "endless sparring" would not deliver the real change New Zealanders had been asking him for.

"In short, our Alternative Budget is a real alternative to the Labour-National duopoly. It is what a government with courage and determination to make New Zealand a wealthier society would do if their rhetoric came true."

ACT has consistently polled about 10 percent in the past year; coming in at 10.8 percent of the general vote - up 0.1 percent on the previous survey in January - in the latest Newshub-Reid figures.

On these numbers, the party - National's natural coalition partner - could return about 14 MPs to Parliament after Election 2023; four more than the current caucus.