Free Press 25/05/2015

We Rate the Budget Speeches
Free Press observed the Budget Speeches live.  The media underreported the Government’s momentum and the opposition’s flat-footedness.  It was one-way traffic as the opposition sat dumbfounded at National stealing their policies. 

Death by Assimilation
National have returned to their traditional governing style, managing other parties’ ideas.  Labour promised to introduce a capital gains tax and build houses, the Greens promised to deal with child poverty, New Zealand First promises to do nothing on Superannuation, and Peter Dunne promises to do nothing on the RMA.  National are now, to an extent, doing all of that.

Bill English (7/10)
Bill is the policy architect of this government.  He provides his colleagues with the alternative to government by pork barrel, and often succeeds.  He has managed to refocus the civil service on achieving outcomes instead of consuming inputs.  The biggest disappointment was that his courage cutting the $1000 Kiwisaver kickstart wasn’t matched on fixing Superannuation.  As a result, a generation is paying twice.

Andrew Little (1/10)
Free Press feels sorry for Little.  His speech has been panned as the worst ever.  Some would have sat down upon running out of material, so we are giving him one point for speaking right through his time allotment. He talked about a ‘rooster on heat’ and then about ‘fiscal gender reassignment.’ Clearly Little needs biology lessons. But he’s got bigger problems too.

What he Needed to Do
Little theoretically wants to be the Prime Minister.  His 20 minutes of rage showed he is out of touch with the country – New Zealand in 2015 is not exactly at a low point in history.  Unless he’s proposing a total revolution, he could have spent five minutes talking positives.  That would have given him fifteen minutes to lay out Labour’s alternatives.

There is No Alternative
The problem is Labour doesn’t have any.  They have abandoned most of the policies they stood for last election.  Changing the electricity market, reforming Superannuation, capital gains taxes, changing the Reserve Bank Act, all gone. What do they stand for?

John Key (8/10)
John Key delivered a tub thumping speech crowing about Little’s failure.  We give him an eight because he mentioned David Seymour and ACT twice and endorsed Partnership Schools.

Meteria Turei (4/10)
Turei mentioned sustainability once, 15 minutes into her speech.  RIP the Greens as an environmental party.  The grandstanding on child poverty was cringe worthy.  A person who got free university, lives in a remote castle and complains about urban sprawl tried to appeal to younger generations on housing and finance - priceless.  A four is generous.

Winston Peters (5/10)
You have to hand it to him.  We have no idea what he was on about (did he?) but it sounded great.  His main refrain was “I See Red” a la Split Enz, complete with his caucus holding up fire hazard signs.  Free Press understands “That was my Mistake” and “I Hope I Never (Have to See You Again)” have become more popular among Northland voters recently.

Te Ururoa Flavell (6/10)
Flavell gave a solid defence of the Maori Party’s wins for Maori in government.

Peter Dunne (6/10)
Dunne is an exceptional parliamentary speaker.  Without any notes at all he gives perfectly structured essay-like addresses.  Nonetheless we don’t know what Dunne’s end game is.

David Seymour (7/10)
Along with Little, David gave his first budget speech, certainly the best of the rookie speeches but he has room to grow.  He gave a spirited defence of Partnership Schools and the people who step up to run them and change young people’s lives.  He also pointed out that the budget lacks the kind of long-term view that younger New Zealanders need.  Where is the Superannuation reform, where is the housing market reform?  Where, in all this focus on child poverty, is the recognition of those who save, sacrifice, and delay having children to bring them up without poverty?  Where are the company tax reductions aimed at bringing capital and more interesting jobs to New Zealand in years to come? You can watch David’s speech here.

Bonus Speech
Parliament sat late to pass Budget legislation, which makes for some noisy night-time debate when MPs think no-one’s watching. But Free Press sees all. If David’s Budget speech was too proper for your tastes you might prefer this onslaught, congratulating National on their Kiwisaver action, but challenging them to show the same courage when it comes to the increasing cost of Superannuation.

Greens don’t get Dependency
Catherine Delahunty tweets: Rise in benefits welcome but extra work expectations and pressure on sole parents is punitive. No, that balance is essential if you want to reduce welfare dependence. The government’s approach is informed by the Nordic model. Nordic states expect mothers to return to work when their child is 1 to 3 years old. Employment is front and centre in the Nordic welfare strategy. It works.

Responsible Parenting
Moves to tackle child support debt and encourage parents to pay what they owe in child support are also a welcome move.

Government as Land Speculator and Land-Banker
After all the months of commentary about speculators, land bankers and foreign buyers in the Auckland property market, it now turns out that the biggest land-banker of them all was the government! The move to free up Crown land for housing development is sensible and long-overdue. But again, this is only a short term fix – we will soon use up the available 430 hectares. We still need fundamental reforms to allow the market to respond to rising demand for housing.

Where’s Maurice Williamson Going?
Betting site iPredict has opened up stocks for a by-election in Pakuranga, and for incumbent Williamson to be the candidate by 2017.  The interesting thing is the opening odds, respectively 30 and 25 percent likely.  iPredict’s operators, who have deep political connections, set these odds.  Something’s up.

ACT’s Board has unanimously rejected an approach by the hapless Don Brash (no joking, this is too good for us to have made up) for Williamson to join ACT’s caucus.  “My own party don’t want me no more” is not an attractive pitch. For similar reasons, what poor country would accept him as ambassador?

Which New Zealanders, Bill?

Bill English can't claim to speak for all New Zealanders on the future of NZ Super, says ACT Leader David Seymour.
"Bill English has accepted that Superannuation costs will balloon by a billion dollars extra each year but says New Zealanders are ok with this.  What he won’t say is, which New Zealanders?
"Surely it can’t be those entering the workforce who just lost their Kiwisaver kickstart in the budget but got no relief on the taxes they’ll pay towards Superannuation for the next 45 years?
"Surely it can’t be those under 35, who’ll retire with the government in debt by 198 per cent of GDP on historic trends?
"Surely it can’t be their grandparents who built this country and would be horrified to know they’ve left it on such a track?
"Australia has announced a plan to gradually raise its retirement age through to 2035. If there’s one thing New Zealanders all have in common it’s the need for such long term perspectives in Wellington."

ACT responds to Key’s RMA backdown

The Prime Minister’s backdown on the RMA is disappointing but not surprising, says ACT leader David Seymour.

“If we’re serious about councils allowing the next generation to build homes, we need to get some guts. We cannot have an act of parliament preoccupied with telling councils that building houses is inappropriate.”

In his Budget speech Mr Seymour pointed out, “The words inappropriate subdivision appear 156 times in the Resource Management Act, three of them in the principles sections.”

“Unfortunately, this backdown is not surprising,” said Mr Seymour today.

“The political class have focused on immigration, foreigners, tax, interest rates, government building programs, basically everything but fixing the RMA’s anti-development bias – the vital thing central government could easily change with a little political will.

“ACT will continue campaigning to free up land supply through essential RMA reform.”

ACT offers Labour a way out of NZ Super gaffe

ACT leader David Seymour today welcomed Labour engaging the debate over NZ Super’s future, but says they need to change tactics.

“Andrew Little appeared in The Herald to endorse means testing for superannuation before distancing himself from the idea within hours.

“He has shown why an issue with such important long term implications might be better handled under ACT’s referendum proposal.

"All parties can put aside their political positions, join together to form a cross party working group – like the flag committee – and appoint an expert group to identify workable options for the long term sustainability of NZ Super.  These options, including no change, could then be put to referendum for the voters to decide.

“It’s to Andrew Little’s credit that he notes these pressures arising from an aging population, calling superannuation ‘a looming issue requiring $30b by 2030’, and highlighting the government’s silence.

“If we don’t address this issue now, New Zealanders will be forced to pay higher taxes or face harsh service cuts in order to fund Super in the decades to come.

“I have confidence in the common sense of voters to support an option which would ensure the fiscal sustainability of NZ Superannuation, an option which is fair across the generations of taxpayers.”

ACT welcomes Budget's focus on poorest families

ACT Leader David Seymour welcomes the moves to focus spending on the poorest families.

“One of the problems with government is the pointless churning of income, taxing middle income families and then returning it to them with government spending,” said Mr Seymour.

“A good example of that is the $1,000 Kiwisaver kick-start, which I am pleased to see axed.

“The move to boost core benefit rates is a welcome move, in combination with the welfare reforms to date and the tougher work tests proposed.

“With superannuation linked via a floor relationship to wage rates, core benefit rates have fallen well behind other income support measures linked to wages.

“Moves to tackle child support debt and encourage parents to pay what they owe for their children are also a welcome move to encourage responsible parenting.”

Four hundred and thirty hectares? How about 27 million

“After all the fuss over property speculation and land banking, it turns out the biggest land banker is the government,” says ACT Leader David Seymour.

“The move to free up Crown land for housing development is sensible and long-overdue. But again, this is only a short term fix – we will soon use up the available 430 hectares.

“The good news is there is approximately another 27 million hectares in New Zealand, and only 0.7% of that is developed.

“We can free up this land by removing the anti-development bias of the Resource Management Act and encouraging councils to ease damaging land supply restrictions.

“The consequences of these restrictions are dire, as shown by the huge disparity of land prices inside compared with outside the Auckland rural-urban boundary.

“We need strong action in this area if we are to avoid locking an entire generation out of home ownership.”

Budget could have cut company tax

The Budget should have provided a vision of progressively lower taxes for business, says ACT Leader David Seymour.

“The best thing the government can do to create job opportunities is forecast a welcoming environment for business and investment.

“New Zealand has one of the highest company tax rates in the OECD, even compared to famously egalitarian nations like Denmark and Sweden. We need to step up our game if we are to attract job-creating business and investment.

“ACT proposes a long-term programme of cuts in company tax – from 28% to 20% over eight years. This sends a simple message: ‘New Zealand is open for business’.”

Tax burden continues to rise

“The Government missed a golden opportunity to end stealth tax increases by indexing tax brackets,” says ACT Leader David Seymour.

“The average household is $1036 worse off since the tax changes of October 2010 – a figure that’s increasing each year.

“This Budget was the perfect moment to index tax brackets. With inflation bordering on zero, the effect on government fiscal plans would be relatively small.

“Taxes on New Zealand households will increase when inflation resumes. Ending bracket creep now would force governments to be honest about any future tax increases.”

National’s Budget ignores elephant in the room

The Budget’s focus is too short-term and ignores intergenerational issues, says ACT Leader David Seymour.

“National is denying the demographic realities behind rising Superannuation costs,” said Mr Seymour.

“New Zealanders are living longer than ever, a trend which won’t go away any time soon. As life expectancy rises by about a year each decade it would be fair to raise the age of eligibility for Super by about the same.

“Otherwise, today’s young people will be forced to fund NZ Super through higher and higher taxes, with no guarantee of receiving the same benefits when needed.

“The longer we wait the more drastic will be the inevitable adjustment. We must recognise the need for more intergenerational fairness.”

Budget for the Future

Next week's Budget will show continued steady progress away from the massive deficits associated with the aftermath of the global financial crisis and Christchurch earthquakes. The National government will continue to make incremental gains, albeit from a firmly centrist political position.

For every halting step forward, there will continue to be the occasional step backwards.

New Zealand doesn’t need a policy revolution, but we need much more than this tentative incremental change.

Here’s what ACT would like to see in the Budget.

A clear message to investors, entrepreneurs, and the business sector that New Zealand is on the path to a much more favourable business environment.

A willingness to confront big fiscal issues like the structure of NZ Superannuation.

A promise to households that their tax rate won’t be sneakily lifted each year.

A pledge to provide education opportunity to all children; the current monopolistic state education system, while serving most children quite well, fails all too many children.

Recognition that, with 20% of children born in 2014 being dependent on a benefit by the end of the year, more must be done to reform welfare, thereby reducing child poverty.

A commitment to wind back corporate welfare, using the funds to cut the tax rate on all businesses, not just subsidise a few.

The guts to tackle the housing market malfunction at root through substantive reform of the RMA. That means removing the anti-development bias and, with it, excuses for councils to restrict the supply of land for building.

Our specific proposals for Budget 2015 focus on the following priority areas.

The fiscal elephant in the room is NZ Superannuation. Life expectancy continues to rise. In 2006 we had five working people for every one person over 65 years of age. By 2050 we will have just two people for every one person over 65. In just 15 years’ time NZ Super costs, as a percentage of GDP, will rise by 50%. We are just fiddling with the fiscal levers if this is not addressed.

Most people understand that we need to make some changes. NZ Superannuation is one of the simplest retirement income systems in the developed world. So long as we make the necessary changes to keep it affordable and fair across the generations, it is an effective pension system. But it is also a political football, and politicians have proven incapable of making these vital adjustments.

An ACT budget would signal that the future structure of NZ Superannuation would be decided by referendum. An expert committee would be formed to consult with the public and come up with reform options which, together with a no-change option, would be decided by the voters. I am confident that common sense and a sense of fairness would see the public support changes allowing NZ Superannuation to remain a sustainable pension system for all New Zealanders through this century. Oddly enough we have a process for this, but we are only using it to decide on a flag design.

Next, we need to signal the future environment for investors and the business sector. We would foreshadow an eight year programme for reducing the company tax rate by one percentage point each year, until we reached a 20% tax rate. That would signal New Zealand as open for business, stimulating investment and allowing companies small and large to create new jobs and boost wages.

To fund much of this we wouldn’t have to cut core services. Instead we would allow the lapse of programmes that are simply targeted corporate welfare – bureaucrats picking winners and distorting competition through unjustifiable business subsidies.

For households, we would index tax thresholds to inflation, putting an end to the ongoing stealth increase in tax rates. If government wants to increase your tax rates, they should do it openly.

We would make genuine reform of the RMA a priority. Substantive changes here could hugely boost investment, jobs, incomes and the welfare of all New Zealanders. Ensuring that councils focus on allowing development of land would return affordable housing to our major cities, making a huge dent in inequality and poverty.

And for a genuinely brighter future for our children, we would expand the Partnership Schools policy by allowing state school conversion to a Partnership School funding model, whenever school boards choose to do so. This would be a visible manifestation of a core empowering principle for ACT - choice.

These advances would create jobs and reduce poverty by fostering a thriving, innovative economy.

David Seymour
ACT Party Leader