As New Zealand politicians promise more taxes, the US debates reducing Company tax

The Op Ed pages of the left-leaning New York Times are full of articles by economists supporting  proposals to dramatically lower Company Taxes. These economists are urging the United States to lower company taxes and point to Canada where the lowering of company tax has increased the size of the  economy - to the extent that the tax reductions are self- funding.

New Zealand now has a company tax rate that is higher than the European Community average.  The evidence is that high company tax rates are one of the reasons why New Zealand's real wages are so low.

A 12.5 percent company tax rate could be immediately funded by eliminating corporate welfare and would grow the economy sustainably by at least an extra one percent of GDP per annum.

ACT Radio Broadcast

Played on National Radio - Saturday 23 August 2014

Promoted by Garry Mallett, 809 River Road, Hamilton.

ACT Radio Broadcast1.85 MB

ACT's plan to reduce the cost of new housing by $100,000 and it does not cost the taxpayer a cent

ACT has a plan that will reduce the cost of a new house by up to one hundred thousand dollars. 
Both Labour and National have now announced housing affordability schemes that will cost the taxpayer hundreds of millions and both parties say the other parties’ scheme will increase the cost of new houses. They are both right.

ACT’s plan will not cost the taxpayer a cent. ACT’s plan will work. ACT’s plan is based on sound economics and is endorsed by some of the country’s leading economists as the only plan that will make housing affordable again.

ACT’s plan will not only make housing affordable for the average family, it will stop the diversion of capital into increasing the cost of homes. Lower mortgages will reduce interest rate pressure and the risks taken by banks to fund housing.

*  *  *  *  *

New Zealand has some of the most expensive housing in the world. Among the 34 OECD countries, only in Greece do householders have to spend more of their income on housing than we do in New Zealand.  Despite the fact that our average incomes are well below those in the United States, our median house prices are substantially above those in the US.

This has devastating social consequences. It means that a great many people can’t afford to buy a home at all. It means that far too often both parents are obliged to seek paid employment outside the home. It means that the children of families forced to rent are too often obliged to move from school to school as their parents move from one rented house to another. It puts huge pressure on the budgets of all low and middle-income families.

It also has serious economic consequences. Because house prices have been rising strongly with scarcely a pause for more than two decades, it means that a large share of available saving is diverted into housing instead of into more directly productive activity. It means that saving itself is reduced as those fortunate enough to own a house see their wealth increasing effortlessly. Why save when wealth can be acquired by simply buying property and waiting? It means that banks are forced to borrow very large sums overseas, with our modest savings no match for our almost insatiable desire to borrow against the security of housing.

It means interest rates have to be higher than they need to be to deal with other inflationary pressures, and the exchange rate is higher than otherwise as a result – with consequential adverse effects on the ability of exporters and those competing with imports to grow and create jobs.

It even affects the risks to the banking sector, as the Reserve Bank made clear last year by imposing their restriction on the volume of loans which can exceed 80% of a recent valuation.

So the hugely high cost of housing in New Zealand is one of our most serious social and economic problems.

*  *  *  *  *

Housing affordability has become one of the main election issues.

National’s solution is to encourage people to raid their KiwiSaver schemes for a deposit on a home. If you do, National promises you another $20,000 of taxpayers’ money.

One of the problems with government retirement saving schemes is that politicians find it too tempting to use them to fund their elections.

By increasing the amount of money chasing the same supply of housing, this policy will only increase the price of housing. And it will make yet more New Zealanders, who could be self-reliant, clients of the state. National deserves some credit for other housing initiatives but this is a bad policy. 

The parties of the Left have put up even more foolish “solutions”.

The Labour Party wants to introduce a capital gains tax, exempting the family home, even though Australia has a capital gains tax, again exempting the family home, and house prices there are by some measures even more expensive, relative to income, than in New Zealand. That is not a solution at all.

Having the State building one hundred thousand new houses will just transfer house building from the private sector to the state. When Labour’s housing spokesman was asked where the one hundred house lots would come from, he answered from Crown and local government land. The only way to get sixty thousand house lots in Auckland would be to build on Council and Crown reserves in Auckland – something Aucklanders are going to be very angry about.

Winston Peters wants to ban the purchase of New Zealand houses by “foreigners”, which is code for Chinese. This appeal to xenophobia violates the right of property owners to sell to whomever offers the best price. And it ignores the fact that increased demand for houses has no enduring effect on house prices absent a constraint on the supply of housing (of which more in a moment).

The Conservative Party – which on this issue has more in common with the Left than with the Right – wants to confiscate privately-owned land if the land-owner is slow to subdivide and develop it. Mr Craig at times seems more communist than conservative.

One of ACT’s contributions to New Zealand was persuading the National-led Government formed after the 2008 election to set up the Productivity Commission. The very first report of that Commission was on housing affordability. After exhaustive study, the Commission attributed the high cost of housing in New Zealand to four factors.

First, it is caused by the relatively high cost of building materials in New Zealand.

Second, it is caused by the cost and delay in getting through the consenting processes required by local government rules and regulations. (And I’ve heard plenty of horror stories of consents taking many years and millions of dollars to achieve.)

Third, it is caused by relatively low productivity in the building industry, occasioned at least in part by the very small scale of most home builders.

But, overwhelmingly, the main factor contributing to the very high cost of “housing” in New Zealand is not the price of houses, but the extraordinarily high price of the land the houses sit on. Once upon a time, the price of the section cost perhaps 25% of the combined cost of land and house. In our major cities it is now common for the land to be valued at 50% or even more of the combined package. Often 60% in Auckland.

Last year, there was a story in the New Zealand media  of a land-owner offering 29 hectares of land in Flat Bush – a suburb a long way from the centre of Auckland – for $112 million, though the land agent said the owner “might accept” $80 million. At $112 million, the price of the undeveloped land was nearly $4 million per hectare; at $80 million still nearly $3 million per hectare. But what attracted attention was not just the very high price of the land compared with, say, the very best dairy land at $50,000 per hectare, but the fact that the landowner had bought the land for just $890,000 less than 20 years previously. In other words, he had made a very large fortune by just sitting on land and waiting for the population pressure built up within what was once called the Metropolitan Urban Limit, and is now called the Rural Urban Boundary, to make him wealthy.

It is this artificial restriction on the supply of land which is the root cause of New Zealand’s very expensive housing. It not only directly affects the price of the land houses are built on but also undermines the productivity of the building industry by making it very difficult or impossible for builders to acquire blocks of land on which economies of scale might be realised.

The Productivity Commission found that the price of land two kilometres inside the Auckland Metropolitan Urban Limit was, in 2010, nearly nine times the price of land two kilometres outside that limit. 

American experience also makes it abundantly clear that zoning rules are the primary problem. US cities with a relaxed approach to zoning, such as Atlanta, Dallas and Houston, have median house prices around three times median household income, despite strongly growing populations. Los Angeles and San Francisco, two cities with a very restrictive approach to zoning, have median house prices some seven times median household income, despite strong net outwards migration over the last decade.

New Zealand’s unaffordable housing is a direct and inevitable result of local government zoning rules.

Just lifting the urban limit on Auckland would see the price of a new house fall dramatically.

Lifting the Auckland urban limit is not going to see huge parts of our country covered with asphalt and houses.  

New Zealand is larger than the United Kingdom but has about 7% of Britain’s population. While some 9% of the UK is urbanised, in New Zealand the figure is less than 1%. There’s not the slightest risk of running out of open spaces, farms and forests in our lifetime, or in the lifetimes of our great-great-great-grand-children.

The National-led Government has been moving in the right direction on affordable housing. Recent law changes have restricted what local governments can charge for giving consent to sub-divide, and set up 26 so-called Development Commissioners to whom developers can appeal if they believe what they are being charged is unreasonable.

In the past, developers sometimes got the impression that local councils thought of a number and doubled it in deciding what to charge for a development consent. Now, the charge must be directly related to the cost of any additional infrastructure required by a new development, with the appeal process intended to give the new rules real force. 
In addition, the Government has put pressure on some major councils, including the Auckland Council, to establish Special Housing Areas, within which the consenting process can be significantly accelerated.
The Government has also waived the tariffs previously charged on some imported building materials to reduce the cost of building materials within New Zealand.

ACT supports these moves as far as they go.

We were among the first to highlight the serious effect which restrictive zoning rules were having on the price of housing. We agree with recent ministerial statements criticising the restrictiveness of the rules envisaged in Auckland’s proposed Unitary Plan. We find it deeply ironic that the Auckland Council wants to compel Aucklanders to live on smaller and smaller pieces of land when most of the Councillors themselves live on spacious grounds.

ACT wants affordable housing to again become a reality for all New Zealanders. That would do more to allay concern about the growing pressure on low-income families than any other single measure – more than additional subsidies for doctors’ visits, more than increasing paid parental leave, more than higher minimum wages. 

We want to ensure that cities grow according to the wants of their citizens rather than to the dreams of planners. We would reverse the notion that people can use their property only in accordance with local government plans. Instead, we believe that central and local governments should respect the wishes of property owners. 

ACT wants the law to permit any residential development, provided basic environmental conditions are met. And these basic conditions would relate solely to rational requirements, such as geo-technical reports in cases of possible ground instability.
My proposition to voters is that a party vote for ACT this election is a vote for stronger property rights. It’s a vote for a party in Parliament that will put property rights high on the agenda.

It’s a vote for a party that says “this land is your land.” It’s a vote for a party that will shift the pendulum from the property-right-denying paradigm we currently have to one where we begin with the presumption that people can do what they like on their own land, provided only that it does not harm the property of others.

I have already announced that we favour scrapping the Resource Management Act and allowing property issues to be constrained by clearly targeted environmental legislation where the common law is found to be lacking. 

The RMA contains the word “restriction” 61 times and the words “property right” only once, and then only in reference to another piece of legislation. It is surely no accident that the major acceleration in the cost of housing in New Zealand began in the early nineties at almost exactly the time the RMA was passed into law, in 1991.

Ultimately we would like to amend the Bill of Rights Act. Extraordinarily, that Act currently lacks any reference to property rights. It guarantees New Zealanders freedom of thought, religion, peaceful assembly, and movement, as well as the right to justice and the right to vote – but not the right to own and use property.

ACT would push to amend the Bill of Rights Act to protect the right to own and use property as the owner sees fit provided that that use does not substantially reduce others’ enjoyment of their property.

Governments would still be able to interfere with property rights, but they would have to show a good public interest reason to do so, and the question of compensation would have to be acknowledged and addressed.

The immediate result would be that much of the current planning apparatus that tightly restricts land supply would become void. Rather than forcing intensification upon existing built up areas, we would see a growth and expansion of desirable housing across the country.
The cost of housing would fall.  We know that before the RMA the cost of land was 25% of the total value of homes. Now it is 50%. ACT’s proposals will mean that over time the cost of land will return to 25% of the total cost. Housing will again be affordable for the average New Zealand family.

The shift to a property rights paradigm would be a very significant one for our current legislative framework. But it would arguably be one of the most important things that New Zealand could do to reverse its economic decline.
It would free our farmers from stifling regulatory burden, and the tendency for local governments to declare any areas of private property which take their fancy as Significant Natural Areas.

It would free our businesses from much of the regulatory burden they now face.

And crucially, it would open up the supply of housing, making it affordable for all New Zealanders once again.

It would be another illustration of how you would have a better life through less government.

Ladies and gentlemen, thank you, and please remember: a party vote for ACT is a vote for property rights and affordable housing.

New Zealanders are right to be afraid of burglars

“A poll in a major morning newspaper shows New Zealanders are afraid they will be burgled. They are definitely right about that,” said Dr. Jamie Whyte ACT Leader. 
“Official Police statistics report less than half of the burglaries that actually take place."
"We have all been burgled or know someone who has been. The Treasury says the real number of burglaries per year is around 120,000.”
“Burglary has become a blight on our society. That is because the risk for burglars is astonishingly low."
"Less than 3% of burglaries result in a conviction. Less than 1% result in a prison sentence. And the average prison sentence is only 15 months, half of which is served.  There is no way a 1% chance of spending eight months in prison is a sufficient deterrent.”
“ACT’s 3 strikes for violent crime has seen violent crime fall. So far no one has incurred a 3rd strike. 3 strikes for burglary will also be successful. In Britain when a Labour government introduced 3 strikes for burglary, then later a mandatory prison sentence, burglary dropped by one third."
"Burglary is an offence that is suffered mostly by the poor who cannot afford security systems, insurance and fencing. They resort to keeping dogs to protect themselves against burglars but that doesn’t work out too well sometimes. Dogs have higher running costs than a burglar alarm,” said Dr Whyte.
"I think MPs would fix burglary tomorrow if they thought their families were at risk of being burgled," said Dr Whyte.
"I tell voters if you have been burgled get even, party vote ACT.  If you do not want to be burgled,party vote ACT,” said Dr Whyte

The Letter - 25 August 2014

26 days to go

In October 2011 NZ First, ACT and the Conservatives were all polling around 1 percent.  In a month NZ First broke the threshold, the Conservatives tripled their vote and ACT won Epsom.  ACT’s support has risen strongly in five of the six campaigns ACT has run and this campaign will be no different.  


ACT big winner in Compass poll

Over 200,000 people have completed the TVNZ Compass poll and the Letter understands that ACT is relatively the biggest winner.  If the Compass poll reflects ACT’s own attitudinal survey then 17% of those surveyed are learning that ACT shares their values and has the policies that they prefer.  By Election Day up to 80 thousand voters will have discovered that ACT is either closest or second closest to their values.  Many of those who do the survey will decide to use one of their votes for ACT. 


The media’s obsession with Nicky Hager

Readers are asking why the parliamentary press gallery is continuing to parrot Nicky Hager’s absurd claims. The media has invested so much of their credibility in the story – printing silly statements like “National hacked Labour’s website” (No they did not, Labour left it open).  “John Key is lying”.  (Key  is telling the truth say the head of the SIS, the Ombudsman and John Key’s diary showing the PM was in Hawaii).  All the dump of emails and texts show is why Judith Collins is called Crusher.  Labour has Trevor Mallard, National has Judith Collins.  It is now too much for reporters to say “Actually there was no story.  The emails show how clean New Zealand politics is.  There was nothing wrong with Judith Collins telling the name of a civil servant and his government supplied telephone numbers.   Journalists ask politicians for the name of the person in charge and their contact numbers every day.  In an open society we are entitled to know”   Having said for 10 days “This is very damaging to John Key” the media feels they must make sure it is damaging.  Q&A even put up Winston Peters to say it is “a new low”.  You have run out of credible commentators when Winston of Owen Glenn and missing donations fame is your authority.


Mob psychology

The press gallery all follow the same line for the same reason that birds fly in flocks, safety in numbers.  No journalist is going to be fired by his editor for having been wrong about the Hager book when every other journalist is wrong.  To step out and say “Judith Collins does not run National’s strategy.  There is nothing here to implicate John Key” would take courage.  If some smoking gun was found it might be career threatening.  So it is safer not to point out the media is being manipulated.  Who believes no Labour MP has ever emailed Whale Oil?  Who believes that politicians are not the source of many news stories? Apparently just press gallery journalists.

Who needs a campaign?

 The media is stealing the voters’ right to have an election.  It is Labour that needs a campaign.  In every campaign the PM usually goes down and the Opposition Leader goes up as the media gives equal time.  Phil Goff with his absurd claims took away a week of Labour’s campaign. We were surprised Mr. Goff wanted to remind us that he had claimed that he had never been briefed by the SIS over the Israeli “spy scandal” when the OIA revealed Goff had been briefed “at length”.   But then Phil Goff may not be too upset that David Cunliffe’s campaign is failing.     


No texts or emails from ACT

Jamie Whyte has stuck to ACT’s core messages.  Yesterday he made a substantive speech on the need for the rule of law and for justice to be seen.  National and Labour are promising to spend hundreds of millions of taxpayers’ dollars on housing which will increase house prices.  Jamie Whyte has a plan that will cost the taxpayer nothing and will reduce the cost of housing.  Watch this space.


Our fascist broadcasting rules

New Zealand has a handicapped election system devised by the two major parties. If we had UN international monitors they would say our elections are not fair. Television and radio time is allocated by a government agency called the Electoral Commission. The Commission gives nearly all the time to National and Labour.  Parties are prohibited from buying advertising so it is illegal to get equal time. It gets worse.  The Electoral Commission selects when the Party Opening Broadcast is to air.  Only a bureaucrat would broadcast at the same time as a rugby test.  It is proof that state funding of political parties is a waste of taxpayer money.    


Who won?

Visually Labour: Politically National.  Labour clearly put a lot of effort into their unwatched broadcast. Politically it failed as it featured unknown caucus members and ended up in a stream of impossible to remember promises.  National’s just feature John Key and a message the country is going OK, an easy message to remember.  For the minor parties there is not enough time to win any votes but more than enough time to lose votes.  The worst broadcast?  A bizarre cartoon from Internet/Mana.  The Conservatives brought a court case on Friday demanding ACT’s broadcast time be reduced and their’s increased. There are few things more boring than a film of a politician addressing a meeting so Colin should be pleased he did not have more time.  Jamie Whyte’s wife Zainab is absolutely stunning in ACT’s broadcast.  It is now must watch You-tube.   Check it out for yourself – of course you are just looking to see what the Conservatives did not want you to see

The Kiwisaver Homestart Grant will drive housing prices even higher

"National's plan is slightly better than Labour's but both parties plans do not tackle the real problem, a shortage of land," said Dr Whyte.

"Subsidising demand for houses in short supply because of the RMA and the Auckland urban limit will drive housing prices even higher. That is Economics 101," said Dr Jamie Whyte today.

"More money will be chasing a largely fixed supply of land, so prices must go up," said Dr Whyte.

"This paper over the cracks policy on housing affordability from John Key today is something we would expect from Labour or the Greens," said Dr Whyte.

"The solution to high house prices is freeing up the supply of land. Land just inside the Auckland urban limit is nine times the price of that just outside it.

"Only ACT is proposing reforms that will make housing affordable again. This starts with repealing the RMA and restoring the freedom to build," said Dr Whyte.

End Secret Courts

Speech to ACT Party Supporters, Tasca Café, Newmarket
10.30 am , 24 August 2014

End Secret Courts

The ACT Party is campaigning to end secret courts.

Secret courts, where the name of the judge, the lawyers, the expert witness and all of the evidence and the sentence of the court are unknown by the public are the stuff of Police States. Yet they are now common in New Zealand.  Sometimes there are good reasons for name suppression but there is never a good reason for the Fourth Estate not being able to tell us how the state is exercising power.

We know there are abuses of power but because it is secret we do not know what the abuse was.

One of the reasons that ACT was founded was to campaign for the rule of law – the principle that we should be governed by known and certain laws administered in the open by non-political courts.

The rule of law is an issue at this election.  Political parties are putting forward proposals to weaken the rule of law. Indeed, it has already been weakened over recent years.
Voters need to send a message to parliament that we value our freedoms.

*  *  *  *  *

Being born in New Zealand in the 20th or 21st century is a great stroke of historical luck. We enjoy a degree of prosperity and personal freedom that people born in any previous period of history, and in many other parts of the world today, could hardly imagine.

Yet the prosperity and liberty we enjoy is not a matter of luck. They arise out of institutions absent from poor and violent societies. Among the most important of these institutions is the rule of law.

We cannot go about our business if we are subject to the arbitrary will of others – be they other private citizens or government officials. If a thug can beat you up and take your stuff, you are not free. Nor are you free if government officials can confiscate your property or imprison you at their discretion. Free people live under the rule of laws, not the rule of men.

The rule of law must be defended tenaciously. Any erosion of it is an erosion of the foundations of our free and prosperous society.

That is why ACT is tough on crime. The state’s first duty is to protect you from those who would use violence against you – by robbing you, raping you, assaulting you or murdering you.

Our 3-strikes for violent crime policy was made law 4 years ago. It is already helping to reduce violent crime, not by imprisoning people but by deterring violent crime. Of the 4,000 who have committed a first offence, only 41 have gone on to commit a second offence. None has committed a third strike offence.
Our new 3-Strikes for burglary policy will do much to protect the 115,000 families who are now burgled each year.

But there is more to the rule of law than effective law enforcement.

It also requires protections for citizens who find themselves embroiled with the legal system or interacting with the state. Today I want to discuss two protections that are under threat in New Zealand.

*  *  *  *  *

The first is the principle of open justice.

In a free society, the decisions of our courts must be open to scrutiny. Justice administered in secret will soon stop being justice at all. Secret courts are the stuff of communist dictatorships.

The general principle of open justice is rightly circumscribed in some special circumstances. For example, the sources of evidence used in the trial of terrorists are sometimes kept secret for fear of revealing the identity of secret agents or their evidence-gathering techniques.

But, even in these rare cases, elaborate measures are put in place to ensure that the process is open to scrutiny. And, even then, this small amount of secrecy is highly controversial.

The other common case in which the general principle of open justice is circumscribed is where there is reason to conceal the identity of the alleged culprit or of the victim. Sexual offences are sometimes thought to be such cases.

In such cases, however, nothing else about the process is concealed. Outsiders can easily discover the charges, the evidence presented, the verdict and the sentence. We can easily scrutinise the decisions of the courts. This transparency is crucially important if we are to remain confident that justice is being done.
When it comes to the youth and family courts, however, this safeguard is not being maintained.

As part of ACT’s law and order policy-making, I have had several meetings with experts on criminal sentencing in New Zealand. During a meeting convened to discuss the topic of youth crime, I asked what they could tell me about the sentencing of crimes committed by people under the age of 18 – “youths” for legal purposes. Was there any obvious problem that could be remedied by a change in the law?

They could not tell me.

This is because what goes on in the youth courts is kept secret – or, at least, very difficult to discover. It is right to conceal the names of the youths brought before the courts. But that is not all that is concealed.

Judgments of the youth court are not available to the public. We know nothing of the crime for which the court is convened, the charge the youth faces, the evidence that is submitted, the decision of the court and the sentence imposed, if any.

Nor are Judgments available to the media.  The media do not report on youth court proceedings because they are not allowed to.  Yet the media are the proxy of the public. If media scrutiny is prevented, public scrutiny is prevented.

Presently, all judgments of the High Court, the Court of Appeal and the Supreme Court are published within days of being made.  With the passing of a Bill currently before Parliament, the District Courts will soon be subject to the same publishing rules.  As they should be.  Yet, the Youth Court, as well as the Family Court, are intended to remain closed courts, immune from scrutiny.

This secrecy is a bigger problem than any particular defect that the youth justice system may or may not have. It is a wholly unjustified violation of the principle of open justice. The public must have the ability to scrutinise the youth justice system. We need not know the identities of the youths involved. But we must know what they are accused of, what evidence was brought before the court and what verdict and sentence were handed out. We must be able to see how often the same youth is appearing before the court.

If we do not know such things, how can we know if the system is administering justice or if it is working to reduce crime? How can we know if it is helping those youths who have been drawn into crime or whether it is letting them down?

We know that there are abuses of power in the Youth Court that people feel powerless to do anything about.  They cannot go to a journalist because the media cannot report.  They cannot go to their MP because they cannot prove what they say because it is secret.

Over the last 5 years, more than 1,100 complaints have been lodged against judges or various courts. But not one has been lodged against the youth court.  Either we can believe the Youth Court administers perfect justice – in which case you would expect the judges, lawyers and welfare officers to be in favour of the world knowing of this world first – or secrecy is being used to hide miscarriages of justice.

Even if the names of the youths are secret, why are the names of the Police officers, the expert witnesses and the details of the crime?

The same goes for the family courts, whose activities are also shrouded in undue secrecy. Despite the thousands of cases being heard and decided each year, no judgments of the family courts are published. Media cannot attend and report on the proceedings.  Cases that may be of public interest or a cause of public concern cannot be reported on.  There is no way of analysing and understanding what is going on in the family court.

There are disturbing stories that evidence in Family Court cases is unreliable.  If you know that your friends, family and neighbours, people who really know you, will never hear of the evidence you give then what is to stop you from making any outrageous allegation to get custody?

In Britain, the secrecy of Family Court Cases has led to a number of scandals and terrible miscarriages of justice. This year the Chief Judge of Britain’s Family Court system has ruled that the press should have accesses to Family Court Cases, the names of officials should always be public and privacy be given only to the families and children.

Why should that not apply in New Zealand?  You might say, there have been no gross injustices.  How do you know?  It is all secret.

Of course, the names of the families fighting out custody or property issues in the family court need not be known. But the other facts of the cases should be. 
ACT wants the Youth Courts and the Family Courts opened to scrutiny. More specifically,

• All judgments of the youth and family courts should be routinely published
• Subject to reasonable reporting rules, the media should be able to attend and report on proceedings in the youth and family courts
• Access to formal court records in the youth and family courts should be subject to the same rules as the District Courts – a general right to access
• The names of judges, lawyers, government witnesses, expert witnesses and the like should always be public.  We should always know the identity of those in power
• The names or identifying details of parties would remain suppressed.


  *  *  *  *

The second important principle of the rule of law, now under threat in New Zealand, is the presumption of innocence.

What does this presumption amount to in the law?

For a start, it means that the authorities may not interfere with you going about your business unless they have some reason to believe you have broken the law: they must have “probable cause”, as it is known.

This principle is violated by the powers the New Zealand police have to stop drivers and test their levels of alcohol consumption even when their driving shows no sign of intoxication. Perhaps this is a justifiable violation of the principle – perhaps the gains in road safety are worth the small cost to law-abiding drivers. This is not the topic that concerns me today.

What I want to discuss today is another legal implication of the presumption of innocence – namely, that the burden of proof rests with the Crown, not with the accused. If you are accused of a crime, you do not need to prove that you are innocent – your innocence is the starting assumption. Rather, the Crown must prove that you are guilty.

This principle is now adhered to in the criminal courts. But it will not be if the Labour Party is elected either at this election or some future election.
In rape cases, the labour party wants to shift the burden of proof from the Crown to the accused. Specifically, once it is established that sex occurred, the accused will be deemed guilty of rape unless he can prove that the sex was consensual.

In many cases, this will be an impossible task, even when the sex was in fact consensual. How could a man who had a consensual one-night-stand in private possibly prove that the sex was consensual? What might he produce as evidence?

Andrew little, the Labour Party’s justice spokesman, argues that the presumption of innocence must be abandoned in rape cases because many do not result in a conviction. He is right, of course, that eliminating the presumption of innocence would increase the conviction rate. But that can hardly justify the policy.
The point of the presumption of innocence is to stop citizens being subject to the arbitrary will of other citizens and the authorities. If Labour’s policy were adopted, almost all sexual activity would expose those involved to malicious prosecution by the other party. The proposal is utterly outrageous, and ACT will fight it to the end.

Through a number of high profile court cases we know that, even with the presumption of innocence, a number of people subsequently proved innocent have been convicted. William Blackstone famously said that  being taught about our justice system it was always said “it is better that ten guilty persons escape than that one innocent suffer”. 

Make no mistake. Labour’s policy is that it is better ten innocent people be convicted than that one guilty person go free.

While Labour remains out of government, our criminal courts continue to adhere to the presumption of innocence. But in other interactions between the state and citizens it has already been abandoned.

In an effort to protect children, the Government has reversed the burden of proof in cases where Child, Youth and Family (CYF) applies to the court to remove a child from parents they believe to be a danger to that child. Instead of CYF having to prove the parents are a danger to their child, the parents now have to prove that they are not.

The aim of protecting children is admirable. But it should not and need not be achieved at the cost of age-old and well-founded principles of justice. CYF can know that parents are a danger to their child only if they have evidence of this fact. If they have such evidence, they can satisfy the burden of proof. If they do not have evidence and cannot make their case, they should not be able to remove children from their parents.

Shifting the burden of proof from state agencies to the people they accuse does not merely expose citizens to injustice. It reduces government agencies’ incentive to conduct their inquiries to a high standard. It is a licence for incompetence.

ACT is concerned that National seems to have little more respect for fundamental principles of justice than Labour does. ACT will hold any government it supports to a higher standard.

In a free society, you are permitted to do anything that is not expressly illegal. You do not need to seek permission from the authorities to do something that is lawful. This principle is a close relative of the presumption of innocence.

This principle is violated in the resource consenting process. Before you can modify your house or put your land to some new use, you must gain permission from your local council, even if what you seek to do is within the law. Correcting this may be too difficult within the current “planning” regime imposed on councils by the Resource Management Act – that is the topic of a forthcoming speech.

But it is outrageous that people who seek to act within the law should not only have to obtain permission to do so but must also pay to receive that permission. It is like telling someone that, before they walk to the shops, they must call the council for permission and pay for the phone call and for the time of the council employee.

The idea behind the planning and consenting process is that our property rights must be constrained for the good of society. If the beneficiary of the process is “society”, then society should pay for it.

When a resource consent application is successful – that is, when the applicant sought to act within the law – the council should bear all the costs of the process, including the costs of the applicant. In other words, the cost should be borne by rate-payers, who are the supposed beneficiaries of the process.   
Then there is the nightmare of getting involved in a dispute with the IRD.

With the IRD you are guilty until you prove your innocence. The IRD can and does make assessments which you cannot challenge until you pay the tax assessed.  If you do not have the money, you never get a day in court.

The IRD bankrupts more people each year than all other bankruptcies put together.

Why do we have these Police State laws for tax?  The obvious answer is that it helps the state to confiscate 40 percent of all the goods and services produced each year. If taxes were lower, the government might be able to do without Police State tax laws. 

In the meantime, one measure that might help is allowing taxpayers to challenge tax assessments before having to pay them.  Another is that when the taxpayer wins a case against the IRD, the Crown should pay all of the costs of fighting the ruling.

Paying tax is painful enough. No one should have to also incur costs convincing the IRD that the amount they have paid is in fact correct. There is no reason why taxpayers should bear the costs of errors or incompetence in the IRD. The IRD should bear the full cost – not only as a matter of justice but as a disincentive to sloppiness.

*  *  *  *  *

I think I have shown the rule of law is at risk in New Zealand.

This should be an issue in this year’s election.

The cost of freedom is eternal vigilance. In a democracy, we are free only so long as citizens are willing to vote for freedom.

The choice is clear this election. All of the parties to one extent or another are promising you less freedom.

One party, ACT, is promising not only to uphold the rule of law but to extend it.

Only ACT is promising New Zealanders more freedom.

ACT Party Opening Broadcast


Authorised by Garry Mallett, 809 River Road, Hamilton.

John Key's Endorsement of Epsom Candidate David Seymour

Authorised by Garry Mallett, 809 River Road, Hamilton.