Hide: The State Of Our Nation
act-new-zealand
Thu Mar 03 2011 13:00:00 GMT+1300 (New Zealand Daylight Time)
Hide: The State Of Our Nation
Thursday, 3 March 2011, 12:21 pm
Speech: ACT New Zealand
The State Of Our Nation
Hon Rodney Hide 'State of the Nation’ Leader’s Address; EMA Boardroom, 159 Kyber Pass, Grafton, Auckland; Thursday, March 3 2011.
These are grim times for Canterbury. And for New Zealand.
Our second largest city is devastated. The people of Christchurch are enduring the hardest of times. Our economy has taken a huge whack.
The task ahead for New Zealand is big – we have a mountain to climb.
We can do it. We have done it before.
But we need to face reality. Something kiwis are good at.
We are forced now to make hard choices, to focus intensely on only the highest priorities.
Our starting point is not good.
We already faced serious problems before the February 22 earthquake.
Our Government is borrowing $300 million a week simply to keep afloat. That’s almost $200 a week for each and every household. We are broke. And now we have Christchurch to rebuild.
It’s not just Government.
As a nation we have built up overseas debt of $162 billion, 85 percent of GDP.
We have seen the economic and social turmoil in the most highly indebted European countries. The future has arrived for them. Those in deep trouble were the countries with the highest current account deficits, the highest overseas debt levels, the highest government debt levels. If you need to know what the future holds on our present track, just look at Ireland, Greece, Portugal, Spain.
2025 Taskforce Chair Don Brash summarised our dire predicament in a speech last month:
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“Government spending as a share of GPD is now more than it was in any year of the last Labour Government, and the structural budget deficit is now bigger than it was under the Muldoon Government”.
Sobering stuff.
Our debt and deficits are symptoms of deeper problems.
We all know that in a country of just over four million people, something is terribly wrong when we have around 350,000 people permanently dependent on welfare; when one in five kids are in benefit dependent homes; when sickness and invalid beneficiary numbers have increased by 70 percent in just a decade.
This year 60,000 children started school. On our present track, 16,000, or almost 30 percent of them, will leave unable to read or write adequately for a job. That’s despite 11 years compulsory schooling and a billion dollars of spending on their education.
For Maori children, that failure rate is almost 50 percent.
That it is not just a problem – it’s a calamity. We must address that failure.
Our economy and our society can’t afford that level of failure.
The ACT Party campaigned for over a decade, and finally passed, the Three Strikes legislation. Three Strikes will get the most violent repeat offenders off our streets. I am proud of ACT’s achievement.
But it’s not enough.
It’s tough for young people these days. It’s made especially tough for those who can’t read and write and who have only ever lived in a community dependent on the state and a background of crime.
If we are to truly make our streets, our places of work, and our homes safe, we need to reverse intergenerational welfare dependency and provide every young child with the skills they need in the 21st Century to provide for themselves and their family.
It’s tough being among those who Helen Clark labelled rich too. Constituents say to me they feel government policy attacks middle income families, the families that are hard-working and self reliant, the families that do it right.
If you are on a benefit or low income, then the support keeps coming regardless how many children you have.
But if you take responsibility for yourself and your family – if you acquire skills, work hard so that your income rises, and you only have more children when you can afford them – then somehow you become the mug in the system. You pay for more than your share, and get little back in return.
Under the Working For Families system, middle income families find themselves with marginal tax rate of 53 percent (the 33 percent band plus an additional Working For Families abatement of 20 percent).
So despite all the care, all the diligence, all the hard work that has got you into the broad middle income bracket in this country, you are scarcely any better off. What then is the point of doing some overtime, of working harder or getting a promotion? You get to keep less than half of what you earn.
That is how our tax and benefit system destroys the incentive to get ahead from your own efforts.
Families that exhibit every day the traditional kiwi values of personal responsibility and self reliance – which are core values to the ACT Party – are the ones that get hammered in our tax and benefit system.
And they aren’t the rich. Not by any means. So many of them are doing it real hard.
Think about what these families are up against.
Because they care about their children so intensely, if their local school is not up to scratch they look for an alternative school.
If it is an independent school, they get little credit for the taxes they have paid, so end up paying twice.
Or they might decide to relocate into a zone with a better state school, but then they will have to pay more for their housing.
To look after their family, they might take out health insurance and again end up paying twice, by removing some of their health cost burden from the state.
As one woman said to me recently, “you do everything right, but you end up paying twice. It’s just not right.”
And she is right.
It’s not right.
It’s wrong. It’s unfair. It’s inequitable.
We need to support and reward personal responsibility. Not punish it like we do now.
In 2008, ACT set the goal with the Prime Minister of catching Australia by 2025. Our aim was to boost jobs and to boost wages. We set up a Taskforce to measure our performance and to recommend what was needed to close the gap.
That Taskforce in 2009 estimated Australian incomes on average to be at least 35 percent above those in New Zealand. They made some modest recommendations to boost our economic reforms. That National part of the Government rejected them as too politically tough. The gap has now undoubtedly widened and will continue to widen.
We should not be surprised that the ‘New Zealand Herald’ recently reported that there was a net loss of almost 22,000 kiwis to Australia last year. The Kiwi diaspora looks likely only to worsen. The second 2025 Taskforce report predicted on our present path a loss of over 400,000 over the next 15 years. We cannot afford to lose our best and brightest at the rate of a hundred per day.
We need to implement the 2025 Taskforce reforms. We simply can’t afford not to.
We pay a lot of attention to the polls in New Zealand. We need to pay a lot more attention to the kiwis voting with their feet.
We have a big challenge. Let me cover just two policies ACT is working on this year to reverse our country’s fortunes.
First is getting government spending under control.
The reason we have so much wasteful, pointless and counterproductive government spending is that politicians have every incentive to spend more, and promise too much, and no incentive to save money, cut programmes, and eliminate departments and agencies.
The middle class want free childcare. Students want interest free loans. Pensioners want pensions and gold cards. On and on it goes.
Every interest group wants their own government department or agency. Helen Clark perfected the art of spending money on key interest groups to keep and to hold power. Through Working For Families she reduced hard working kiwis to taking government handouts. National, anxious to hold the middle ground, aren’t prepared to reverse the spending promises.
To control government spending, we need to change the political dynamic. That’s what ACT’s ‘Spending Cap (People’s Veto) Bill’ does. The Bill caps real spending per capita. If any government wants to increase spending, they will have to seek the consent of the people through referendum. That’s only fair – it’s the people’s money after all.
The Bill changes the political spending dynamic. The total amount of government spending is set by the people, not by politicians bit by bit pandering for votes to a multitude of special interest groups. The general good gets to prevail over narrower self-interest and government must live within a budget set by the people.
It’s modest enough. It’s not a cut to spending. It’s just holding it in real terms.
ACT’s ‘Spending Cap (People’s Veto) Bill’ will make a huge difference to New Zealand’s economic fortunes and to jobs and to wages. As the 2025 Taskforce showed, if we had held government spending at 2004 levels (as a percentage of GDP, not even real terms) the top personal and company rate of tax would now be 20 cents in the dollar. That would be a huge boost to investment, to entrepreneurship, to jobs and to wages.
The second area ACT is focussed on is cutting red tape. Our regulatory environment is extremely low quality, and a huge barrier to growth in New Zealand incomes.
Regulation overrides commercial solutions, creates huge cost and uncertainty for business, diverts energy into political lobbying instead of market performance, reduces the competition it pretends to promote, and deters badly needed foreign investment.
ACT’s ‘Regulatory Standards Bill’ serves to change the political dynamic when it comes to law-making. This Bill has three simple ingredients: it sets out the principles that all good regulation should comply with - that’s the benchmarking mechanism; it requires Ministers and officials to tell us if their legislation breaches these principles and, if so, to explain why - that’s the transparency mechanism; and it allows private citizens to seek a declaration of incompatibility from the Courts - that’s the incentive mechanism to ensure Ministers and officials behave.
We need this Bill, because politicians have next to no incentive to legislate with proper consideration and due regard to good principles. We face enormous pressure to regulate in haste, with little scrutiny of alternatives, and few tests against fundamental principles of good government.
Let me give just one practical example. National campaigned in the last three elections on a commitment to one law for all New Zealanders. Despite that, National with the Maori Party in November 2009, gave non-elected Maori voting rights on Auckland Council Committees dealing with natural and physical resources. There was a considerable outcry when people realised what had been done.
The ‘Regulatory Standards Bill’ wouldn’t stop a Government or a Parliament doing this. The Bill does not over-ride Parliament’s sovereignty. But it would require the Minister and officials to tell the public that is exactly what they are doing and why. The Bill does ensure transparency and accountability – long overdue in law-making.
The ‘rule of law’ principle in the Bill states that laws and regulations should ensure that “every person is equal before the law”. Clearly provisions that give some members of the community – especially unelected officials – specific control rights over resource management are not compatible with the principle of equality.
Any government proposing a Maori Statutory Board, or similar arrangements, in future would need to inform Parliament and the public that their laws would be incompatible with equality before the law. And that Government would have to clearly state why violating the principle was necessary and in the public interest. Voters and other MPs would be able to make their own judgements as to whether the Government’s justification was reasonable.
I believe that we would not have had the debacle that we had with the Maori Statutory Board on the new Auckland Council if we had had the simple transparency that ACT’s ‘Regulatory Standards Bill’ provides.
The ACT Party will be working hard on these two Bills this year. They are critical to New Zealand’s future economic success.
ACT’s wider plan through to the election and beyond is very straightforward.
Our mission statement in 2005 was to survive.
Our goal last election was to ensure a centre-right government and to nudge the Government to do the right thing. That is what we have done.
ACT’s success was crucial to a change of government in 2008. That’s the nature of MMP. If ACT hadn’t succeeded in Epsom, and secured five MPs, Helen Clark would still be Prime Minister. It was the people of Epsom who ensured the John Key-led Government. On election night I was able to pledge ACT’s support for National. The Maori Party’s choice was whether to join with National or be in Opposition.
If it wasn’t for the people of Epsom the Maori Party would have backed Labour. The best we could have had would be a John Key-led Government utterly dependent on the Maori Party. That would be a far different Government to the one we have now.
ACT in the last two years has built up experience and trust working with National in Government. We our proud of the policy difference we have made. The 2025 Taskforce, Three Strikes, the 90-day trial period for all firms, sorting out Auckland’s governance, the Productivity Commission, and the work to open ACC up to competition.
That’s all because of ACT. But it is not enough.
We have a National-led government because of ACT. And we have a better Government because of ACT. But the difference ACT has made is not enough to reverse New Zealand’s economic fortunes.
That’s what this year’s election is about. This election is about the future direction of the country. It’s about jobs and wages.
And ACT’s success is essential for our country’s success.
Please reflect on this. ACT has five MPs. If ACT had just three more, not a big ask, just a couple of percentage points in the vote, there would be no ETS, no foreshore and seabed legislation, no more racially divisive and separatist legislation, and the 2025 Don Brash Taskforce would in large part be implemented, not rejected out of hand.
That’s the crucial difference a party vote for ACT makes.
That’s ACT’s mission statement for the next four years: to reverse New Zealand’s economic decline. ACT has delivered on our mission statement for the previous three years.
It’s up to us in ACT to explain and to convince New Zealanders of the importance of a party vote for ACT and then it will be up to the people whether ACT delivers for the next four years. That’s the nature of our democracy. ACT needs eight or more MPs to deliver.
This country has a big job ahead. We need to rebuild Christchurch. We need to rebuild our economy.
Each and every one of us has to step up to the challenge. We all have a vital role now to play.
ACT is stepping up to the challenge. We are on the road this year challenging kiwis to do likewise. We know kiwis can do it. So do you.
Thank you.
ENDS
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