Last Updated: Mar 25th, 2013 - 16:46:15 Newsletters : 2006 Newsletters : 17 March 2006 Thought for the Day Peter Dunne and Michael Cullen are working this year to revamp our tax system. If you would like to live in a wealthy country competing happily with Australia then please send this newsletter to a friend and ask them to write to Peter and Michael. They have a chance to do something very beneficial for the people of New Zealand. A packet of chewing gum in 2008 doesn't cut the mustard. Mar 17, 2006, 11:56 Newsletters : 2006 Newsletters : 17 March 2006 Economic Outlook - speech to Masterton business breakfast. Our government has embarked on a "charm" offensive to assure us that the economy is in fine shape with perhaps a small dip coming up but that next year it will be up and running again at full speed. This begs the question; "If our economic settings are all OK for higher growth next year and we haven't changed anything, how come we are having a slow-down now?" "If it is some external factor, what is it?" Dr Cullen says, . . . "the downturn is occurring at a time of strong global economic growth" . . . "So it is not surprising that global growth forecasts for 2006 and 2007 suggest a continuation of above-average growth." If this is the case, why are we slowing down? Isn't the world boom in commodities and that is what we sell? Perhaps this is even more worrying - that we should be slowing down in the middle of a boom in our economic strong point! Dr. Cullen also comments, "We have seen our economy operating at full throttle in recent years. This has been fascinating to watch; . . .". If we have been going full throttle then we are in trouble because Australia has been averaging 0.9% better growth than we have and they are now 33% ahead! We are slowing down and Australia is still forging ahead. When Dr. Cullen talks about our improving infrastructure he can only point to increasing the spend by 100% - no mention of what has been achieved, which is rather curious. Here is what Dr. Cullen had to say to the Masterton business people recently so you can judge for yourself how "charmed" you are: Mar 13, 2006, 15:34 Newsletters : 2006 Newsletters : 17 March 2006 The Detroit of Europe Slovakia leads the way. Kiwis fiddle while the competition goes for flat tax - in Slovakia's case 19%. What will happen when Australia goes for a flat tax. Mr Howard is just about in a position to make this significant step. The Slovak government projected that it would maintain its current level of revenues despite the cuts in tax rates. It did even better: Tax collections soared by 36 percent . . . This curious phenomenon has occured in other countries. We need to spend more time looking at the success stories overseas instead of our usual round of navel gazing. We are now down to number 38 in the world. How far do we have to fall before we really get our act together? Mar 10, 2006, 19:05 Newsletters : 2006 Newsletters : 17 March 2006 Flat tax - For Growth One of the issues that provokes a lot more heat than light when opened for debate is the question of tax rates. A hundred years ago we had zero income tax. It didn’t exist. No tax! The country worked. The people worked. You kept your money. In a study of New Zealand somewhat similar to studies done by Richard Vedder and Lowell Gallaway (1998) and by James Gwartney, Robert Lawson, and Randall Holcombe (1998), Gerald Scully (1996) concluded that New Zealand would have to cut its taxes roughly in half to maximize the rate of economic growth. This study was well publicized but ignored. Do we want high growth and more money for health and education or don't we? We have been losing ground to the Aussies since the 1970s and their real GDP per capita is now a third more than New Zealand's. On average they earn $36,000 per head and we earn $27,000 per head. In equivalent purchasing power and after tax the Aussie on the unemployment benefit gets $NZ10,000 and the Kiwi gets $NZ8,200. Growth is obviously good for ALL sections of the community. May 22, 2004, 16:25