Rt Hon Winston Peters: Perspectives On Politics
new-zealand-first-party
Fri Feb 23 2007 13:00:00 GMT+1300 (New Zealand Daylight Time)
Rt Hon Winston Peters: Perspectives On Politics
Friday, 23 February 2007, 4:49 pm
Speech: New Zealand First Party
An address by Rt Hon Winston Peters to the Canterbury Club on Friday 23 February 2007 in Christchurch at 12 noon
Perspectives On Politics: How Politicians Derailed An Essential Idea
The greatest challenge facing NZ today is our economy.
While on the surface it appears to be performing well, much of this is a façade which hides deep, fundamental, structural weakness. A sad condition which comes from a 20 year obsession with micro economics, while ignoring macro economics and the big picture.
We cannot sustain the policy mix of a high dollar, high interest rates and a massive current account deficit and expect to have the growth we want. We never could, and after 22 years we should have learnt that.
We have been lulled into the false sense of security that comes when results have been average, when they should have been great.
In 2007, however we shape the rhetoric or couch the numbers, the reality stands stark – we are hugely indebted to the rest of the world and the greatest capacity we have to remedy that situation, dramatically growing our exports, is alarmingly undermined by, First: a high dollar and high interest rates and, Second, our appalling savings record.
The huge amount of effort going into export Year 2007, which is a very positive New Zealand First initiative, could potentially fail due to our high dollar.
The worrying thing about so many NZ economists is that they have so little imagination – they simply apply the rules and the orthodoxy they know to any given situation. Same prescription regardless of malady.
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And our Reserve Bank Act demands the Bank's Governor be no different.
The “recent wisdom” of two decades has given him a blunt instrument and that is all he can use. Raise interest rates in a vain attempt to change consumer behaviour.
In 2007 politicians must show leadership on this issue, by changing the law and giving the Reserve Bank Governor the tools to embrace a macro economic focus specifically designed for New Zealand's economy.
We, and he as a result, must consider the impact on growth, particularly export growth, wages, employment as well as inflation when considering interest rate policy settings.
It is parliament which must deal with the consequences of not doing so and only parliament can remedy this problem.
New Zealand’s conundrum of debt is not confined to the national aggregate, but is also a huge problem at the household level.
Put simply too few of us are saving too little for our futures.
Again – this is not sustainable.
Now we have reached an important juncture in this debate.
We have the incredulous situation of National’s Bill English trying to find a solution to our capital market drought.
What a tragedy – this is the same party that in 1997 turned from the gift horse when it was staring them in the face – compulsory savings.
Oh how those who rejected this idea a decade ago, including many in Parliament today, must be wondering how much depth our capital markets would have if we now had a decade of compulsory savings.
Let us consider a few sobering statistics.
Since 1999 superannuation funds in Australia have grown from $300 billion to $736 billion. During the same period New Zealand's superannuation funds have fallen backwards from $19.8 billion to $19.3 billion.
And we wonder why Australians are taking over so much of our country. They literally have billions of dollars floating around looking for investments, often here in New Zealand.
In 2007 parliament must put aside its’ petty politics and show leadership on this issue. We are now in a position where we have no choice – we must have compulsory savings.
This is a matter where we have been something of a lone voice and the time has come for others to listen.
It is long since time NZ addressed its terrible savings record.
It is long since time we admitted that we are living on credit and this cannot be sustained.
It is long since time that we recognised that our lack of savings is a fundamental structural weakness in our economy.
The present Government has put huge store in the term “sustainability”, yet it’s economic prescriptions don’t match its rhetoric when it comes to savings.
Either we save more, much more, or we slowly erode the sustainability of our economy.
You see overseas banks have been quite happy to prop up our economy by lending us as much money as we have asked for.
But they are now at the stage of wanting us to make good those debts.
Household debt has risen from 30% of GDP in 1995 to 100% in 2005.
Basically – we have no spare cash to pay.
What is frightening about this is that the type of debt has shifted from being primarily mortgage debts to credit card debt and other discretionary spending.
In other words we aren’t investing the money we are borrowing – we are frivolously spending it on consumer items.
Compulsory savings is now like the cough medicine we hated as children but knew we had to take.
We know we should save – but it is easier to look the other way and spend instead.
Well the consequences of this can no longer be ignored.
It is time to take the medicine – institute compulsory savings –and deal with the long standing blemish on our economy.
The government has taken the positive steps of KiwiSaver and the Cullen fund.
KiwiSaver has the potential to deliver the right outcome and the Cullen fund already has the capacity for individual accounts.
The mechanisms are in place – we just have to have the courage to use them.
Compulsory savings is a great idea whose time has long since come.
In 1975 an incoming National Government won primarily because in the election campaign, it misrepresented Prime Minister Kirks’ compulsory savings scheme, and then in government, repealed it.
The scheme had it’s defects but none that could not have been fixed by Parliament in the following years.
National depicted the scheme as some giant socialist plot and promised that their “pay as you go” scheme, National Super, would deliver more. It couldn’t, and it hasn’t.
Then in 1997 the public was offered a referendum on compulsory savings for Superannuation.
The savings would be offset by tax cuts for the purpose.
Tragically the Labour Party decided to portray the scheme as anti-poor and anti-women.
Sad really, when those two groups stood to gain more in real terms than any other group.
Meanwhile across the House, amongst National Party members of Government, a group of MPs conspired with others outside to manipulate the referendum against it’s then leader, Jim Bolger, arguing freedom of choice and the promotion of Jenny Shipley.
Two observations can be made here. One, the proportion of tax going to superannuation was not voluntary but compulsory. Two, Jenny Shipley with in two years took the National Party to it’s worst election result since the formation of the party in 1936.
For Labour the triumph of politics over the public good could have been no more satisfying in 1999 than it was for National who did the same in 1975.
A sort of slow moving tit for tat where reason, logic and patriotism was tossed out the political window.
But in the National’s case it was much more disturbing.
The people that organised that opposition to a positive referendum outcome in 1997, and Jenny Shipley’s promotion, were the same people outside of Parliament that backed the Douglas, Richardson revolution.
These were the same few over mighty subjects who, post July 1984, used both the old political parties to conspire against the long term public good.
If you disbelieve this, read ‘The Hollow Men’.
It is a book that was written by National Party e-mails and other correspondence.
An eye in to a political party’s operations without parallel in western political history.
It reveals the tragedy of a once great political party being dragged through a sordid trough of political skulduggery.
All the clandestine meetings and secret deals that the National Party I once joined would have rebelled against, but was soon, some of us learnt to our dismay in the late ‘80’s, its’ modus operandi.
All the secret money and shonky dealings.
Imagine the shear hypocrisy of National, by December 1990 revealing it had a secret agenda which became immediately apparent in Ruth Richardson’s mini budget of that year.
An agenda that was written by outsiders.
And again, since 2004 having those same outsiders crafting and manipulating National’s policies, and worse having their ideas shaped by former Labour cabinet ministers – and not even good ones at that.
It is really the ultimate betrayal.
In 2007, National has an opportunity to clear the deck and clean up its act – only time will tell.
Across the divide of politics it is clear modern Labour has learnt it’s lesson but boldness is needed now to rectify 32 years of near atrophy and inertia on the issue of savings.
Labour has started down the right track and it is to be hoped that they will have the courage to properly complete the job.
The paradox of recent politics is how the two old parties could have on the one hand, discarded the interest of the poor and economic minorities, and on the other hand abandoned a centuries old fundamental principle of conservative thought.
ENDS
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