ACT on growth
Thursday 7 Apr 2005
Rodney Hide
Speeches -- Economy
(view HTML version at: http://www.act.org.nz/item.jsp?id=26818 )
Rodney Hide, Leader - ACT New Zealand, Speech to Parties for Growth
Forum, Thorndon Club, 4 Katherine Avenue, Wellington; 6.00pm, Thursday
7 April 2005
We're told the Prime Minister could call an early election.
Commentators say the economic indicators are set to get worse. Helen
Clark could go early to avoid New Zealanders waking up to the cold
hard realities of Labour's socialist policies.
Economic growth has been weaker than expected. The Reserve Bank and
economists had predicted much more than 0.4 percent of growth that was
last week reported for the December quarter.
Over the past year the pace of growth has been declining steadily.
Also falling is business confidence and household spending. The real
estate sector has definitely come off the boil.
Treasury is forecasting growth over the next four years at 2.7 percent
- one point less than what we have averaged over the last 12 years -
and well below Michael Cullen's stated goal of four percent a year.
The just released Business and Economy 2005 survey, focusing on
Auckland, concluded "Economic prospects for the 2006 carry risk. By
later 2005 and into the new year, the full impact of tighter monetary
policy, high exchange rates and receding housing market activity will
be leaning against the economy. Furthermore, the 175 basis points of
interest rate increases delivered by the Reserve Bank have yet to be
fully felt."
So we have troubled times ahead with the unions starting to flex their
muscle and vent their frustration.
Stop-work rallies and pickets are back on the agenda. The likes of
Colgate Palmolive employers and Stagecoach bus drivers are waking up
to the fact that this so-called Labour Government is doing nothing to
improve the lot of working New Zealanders.
It's no wonder Helen Clark is keen to go to the polls. She wants the
election before her policy chickens come home to roost.
Late last year Dr Cullen confirmed in parliament that the average New
Zealand household is no better off since Labour came to power six
years ago. Labour's tax hikes and inflation have wiped out any pay
rises. That's why Kiwis are feeling squeezed at a time when we're
supposed to be enjoying economic prosperity.
The leaders of the Engineering, Printing and Manufacturing Union have
got it wrong. If they want a five percent wage rise they should direct
their energy to the real "fat cats" in New Zealand - and believe me
the real fat cats are not this country's employers. The real fat cats
are the greedy Labour Government, sitting aloft an obscene $7 billion
surplus
The anger of the striking workers is misplaced. The single most
effective way that workers can get a decent pay-rise is not through
industrial action and screaming at their bosses. Rather, workers need
to turn their energy to the high-tax Labour Party. They are the ones
robbing workers' pay-packets each week.
Workers wouldn't be feeling so squeezed if Labour dialled back its
unnecessary high-tax regime which sees hard-working taxpayers not
enjoying any of Labour's record-high surplus.
Unions could get their members the equivalent of a seven percent
pay-rise for the average worker under Labour's current tax regime if
they did one thing - rally against Labour.
The surplus should be returned to hardworking New Zealanders. ACT is
proposing to drop the top personal and corporate tax rate to 25 cents
in the dollar and extend the 15-cent rate up to $38,000. For a worker
on the average wage of $40,700 that would mean a tax cut of almost
$2,000 or about $72 a fortnight. And that's not a handout. That's
working people just keeping more of what they earn.
And if there's anyone who thinks the National Party would deliver tax
cuts forget it. National's tax policy is slowly but surely. ACT's is
no compromise, no ifs, no buts, no maybes.
National is chasing Helen's votes and in the process has turned its
back on hard working Kiwis. Everything that ACT stands for represents
the hopes and dreams and aspirations of people who once voted
National.
On tax, National is as bad as Labour. They now support Helen Clark's
top tax rate of 39 cents in the dollar and staggeringly they're less
enthusiastic than Jim Anderton on dropping our corporate tax rate.
They're not going to reverse the 1 April five-cent petrol tax. ACT
would.
Back in 2002 National at least was planning to drop all tax rates to
25%, although it would take 10 years. But now National is not even
promising that. Cutting Helen Clark's 39-cent envy tax is not even a
priority.
Increasingly it's looking more like Tweedle Dumb and Tweedle Dumber.
National's strategy this election is to try to look more like Labour.
How bankrupt. How disappointing.
In 1997 the average corporate tax rate in the OECD was 37 percent. New
Zealand was four percent below this. The average OECD corporate rate
has been reducing every year, and is now 29 percent, with New Zealand
now four percent above this.
By staying static on our corporate tax rate, we are becoming
progressively less competitive. Four percent doesn't sound a lot but
New Zealand needs every comparative advantage it can get. However we
are now off officially off the radar for foreign investment.
ACT is the only party in parliament which is standing steadfast
against this high-tax government. ACT is the only party promoting
alternative policies that will ensure New Zealand's future prosperity.
ACT is the only one shoving it to Labour day in day out.
While the two old parties National and Labour argue over who should be
spending your money, ACT is different. We say you should be spending
your own money yourself. We say decent tax cuts across the board would
not only substantially boast workers' pay packets but what a shot in
the arm it would deliver to our slowing and stifled economy!
ACT has asked the Finance Minister questions for Treasury about what
ACT's tax policy would do for economic growth. Dr Cullen wouldn't tell
us what Treasury found so we asked under the Official Information Act.
Treasury reports confirmed that ACT's tax policy would boost annual
growth by at least one percent. That's 4% instead of 3%. Add to that
employment law reform, slashing red-tap and business compliance costs,
major reform of the Resource Management Act and our welfare system and
5% average growth is well within our grasp as a nation. The evidence
is clear and the choices are simple.
Helen Clark rejects tax cuts outright. She thinks boosting benefits
and putting more middle-class families on welfare, via Labour's
Working for the Families package, is the way to go. ACT opposes this
age old socialism. It is nothing more than the drive for
egalitarianism, which drags higher incomes down through tax and lower
incomes up through benefits.
This socialist government is removing the incentive to work and get
ahead.
For example, under Working for Families a family with one income
earning around $50,000 will keep just 11 cents of every extra dollar
they earn. The Government takes 89 cents, 33 cents tax, 30 cents loss
of family support, 25 cents loss of accommodation supplement, and 1.2%
ACC levies.
What sort of incentive is it when the Government takes nine dollars
out of every extra 10 earned?
Imagine this: A family earning $35,000 a year works hard and increases
its income by $20,000. They get to keep only $2,500 of the extra
$20,000 they earn. Why would anyone bother?
Again, National and Labour this coming election will be fighting over
one single theme: Who would spend your money better. Neither of them
will be promoting a serious growth strategy.
Labour seems to think talking about growth is some sort of substitute
to delivering the goods. Helen Clark can talk about `innovation' or
`knowledge economy' until the cows come home, but the reality is
virtually all of Labour's policies contribute to locking in a lower
growth path and add nothing to the country's GDP.
Upon coming to office Helen Clark declared that her goal was to get
New Zealand into the top half of the OECD in 10 years. Knowing
Labour's policies would never propel us up the OECD ladder, she has
dropped any ambition to improve our comparative living standards.
The Prime Minister does her best to paint a rosy picture but there are
two points we must not lose sight of this coming election campaign:
The economy is growing but Kiwis aren't seeing the benefit; and Labour
has failed to boost growth one bit despite the best economic
conditions in my lifetime.
We should be doing so much better but ladies and gentlemen it's not
just Labour's fault. Lets not forget that National pulled out of the
reforms of the 1980s and early 90s and from 1993 to 1999 did little to
improve the country's growth prospects. It was enough for them that
they were in power.
National committed endless follies and became increasingly
interventionist. Labour has not only carried on with National's
lackluster legacy but has taken us further down the
government-knows-best road.
The key to succeeding in the future is greater growth. The key to
achieving greater growth is greater freedom.
It doesn't matter what the problem is, better growth helps us deal
with it. Averaging five percent growth a year instead of two would
make us four times richer in 50 years. Being four times richer would
make us better able to care for our elderly, look after young, have a
better health and education system, even have a better rugby team!
Helen Clark pats herself on the back for our current economic growth
but it has been nothing to do with her. As Treasury has said, it was
the reforms of the 1980s and early 1990s that boosted New Zealand's
growth rate.
Helen Clark doesn't believe that. She thinks that it's government in
partnership with business that generates wealth. She hands out
millions of dollars to the favoured few including $283,000 to
successful cereal company, Hubbard Foods, to do what they were going
to do anyway.
This government sees its role as one of redistribution and
intervention - it's in the pockets and on the backs of everyone,
particularly business.
ACT believes that hardworking Kiwis should keep more of the money they
earn. We believe that they should have more choice and freedom. We
believe that government should be much, much smaller. ACT believes in
limited government with government focused on its core functions like
keeping us safe in the streets, providing national security and
ensuring basic infrastructure such as roading.
What we have now is a government spend more of our money than ever
before but completely ignoring the basics.
ACT is the only party saying the role of government should not be all
about writing out cheques to lock in political support. What really
promotes growth is the provision of sound institutions and policies,
secure property rights, economic freedom, and a government limited to
its proper functions, such as keeping citizens safe from thugs and
bullies. Those countries doing the best at the moment are the ones who
are thriving on a smaller government framework.
Alarmingly, Labour doesn't think big government harms growth. ACT
vigorously disagrees, saying New Zealand will not achieve consistent
4% plus growth until it addresses the current total government
spending at 40% of GDP.
National has no real ambition to bring down government spending. It
has always been a big spending party and there are no signs it would
limit its tax take and spending. No wonder Dr Cullen is taunting them
to produce an alternative budget! He knows it won't add up! National's
latest plan to cut the number of public servants is nothing more
fiddling while Rome burns. It would not have any fiscal impact
whatsoever.
As I've said, Labour is ideologically opposed to tax cuts for any hard
working New Zealanders. It commissioned the McLeod report but ignored
its recommendations of a lower, flatter tax scale. It's not interested
in advice.
Labour is also ideologically opposed to any privatisation. Despite all
the global evidence that in general private ownership is more
effective and efficient, Labour continues to nationalise. Despite the
potential gains of privatisation in New Zealand being estimated at
adding an additional $1billion of GDP, National is afraid to argue for
it. ACT is the only party that believes the New Zealand public would
be better served with less state ownership and more competition.
On employment law Labour has taken New Zealand back to collective
bargaining, unionisation, employment protection laws, and expect more
if Labour's re-elected. National plans to retain Employment Relations
Act of 2000. ACT is the only party this election standing against the
ERA.
On superannuation, Labour likes Kiwis to think it has found the silver
bullet, all while refusing to grapple with the real issues that would
boost our country's future and better enable working New Zealanders to
save and make more of a provision for their retirement independent of
the state.
The Cullen Fund sucks up $2 billion a year - money that would be far
better in working people's pockets. $2 billion a year is another
$1,400 a year on top of what's already being squeezed out of the
average household budget. The Cullen Fund does nothing to boost New
Zealand's growth potential or our ability to pay for pensions.
Sir Robert Muldoon wrecked Labour in 1975 over its nationalised
savings plan. Now the National Party is agreeing with it! Sadly,
National hasn't signed up to the fund because they think it's a good
idea. It has done so solely for political expedience.
Also for purely political expedience, National will continue with Jim
Anderton's crazy Kiwibank and has flip-flopped on Labour's policy of
four-weeks annual leave.
So where does this leave us? It leaves voters with a stark choice come
Election 2005, but the contrast is not between the two old parties.
The stark contrast will be found pitting ACT against the Labour and
National parties.
Our country deserves a credible alternative to Labour. National is not
taking the lead, is not a contrast, is not a real alternative.
Instead, National has repackaged itself as `Blue Labour'.
National is running scared of the real issues. Engaged more in trivial
pursuit, its focus seems to be on establishing more camping grounds,
fiddling with fringe benefit tax, and sacking a few civil servants.
That's not going to boost New Zealand's growth chances. National is
afraid to stand up for its own philosophy. It's afraid to argue the
case for tax cuts, free enterprise and less government.
That job has been left to ACT.
While National accepts at face value what Labour has done, ACT does
not. We believe the status quo will not make New Zealand
internationally competitive. It will only see use slide further.
Our enterprising country can do much better. In the 21^st century our
size and remoteness is no barrier to growth nor are there any great
mysteries to achieving growth. We just need to get real. We just need
to drop the socialism.
The likes of Hong Kong, Singapore, and Ireland demonstrate the
benefits of smaller, better government. The Progressive Democrats in
Ireland are the equivalent to ACT and have been a big influence on
Ireland's economic liberalisation and transformation. ACT in
government would be a big influence in liberalising and transforming
our economy.
Labour returned to government would offer more business welfare,
selective tax measures, more union-driven employment law, more
centralisation of health and education, and more Kyoto-style measures
- all resulting in our growth prospects receding even further.
This socialist Labour Party is anti-worker and is not delivering to
those who put it into office - those bus drivers and factory workers.
Now National is talking the language of Labour voters, compromising
everything that they once stood for. The time has come to recognise
that ACT is the party for all thinking Nats. The alternative is to
vote for Labour policies wrapped in a blue blanket. That's not a
choice.
ACT is the only party now for people who once voted National given
their own party has turned its back on them.
There's only one party that stands up for those who work and produce.
There's only one party shoving it to Labour. There's only one party
that's truly interested in changing the direction of this country, and
growing the pie for all workers, and there's only party that wants all
taxes cut - not increased.
ACT's return to parliament is vital if New Zealand is to boost its
growth chances to benefit all. Party Vote ACT will get us there.
Thank you.
Ends
Rodney Hide MP
rodney.hide@parliament.govt.nz
Phone: 04 470 6630 / 021 772 385
Fax: 04 473 3532
Cameron Brewer, Senior Communications Advisor
cameron.brewer@parliament.govt.nz
Phone: 04 470 6648 / 021 828 016
For more information visit ACT online at http://www.act.org.nz or
contact the ACT Parliamentary Office at act@parliament.govt.nz.
© Copyright; Foundation for Economic Growth and various authors. Individual authors retain their own copyright.
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