News

Three Strikes: Yesterday, Today and Tomorrow

Three Strikes:  Yesterday, Today and Tomorrow

Speech to ACT Members and Supporters
Dockside Restaurant, Queens Wharf, Wellington

 

Crime is on the decline, not just in New Zealand but across the Western World. 

One simple reason is that crime is mainly committed by young people. And Western populations are getting older. A population with a smaller share of 16 to 30-year-olds is likely to have a lower crime rate.

On top of this, those few young people we still have are becoming more civilized. Contrary to media stories of binge-drinking and drug-taking, today’s youth are drinking less, smoking less, taking fewer drugs and staying at school longer. Nor do teenagers get pregnant as often as they used to.

Even if governments had done nothing about crime directly, we should be unsurprised by its decline. Yet governments have also contributed to falling crime rates.

In the UK, for example, crime rates had been climbing steadily since WWII. They peaked in the mid-1990s when John Major’s Conservative government began requiring judges to impose longer prison sentences. Tony Blair’s Labour government continued the “tough on crime” policy. Since the mid-1990s, the British prison population has doubled to 85,000 and the crime rate has more than halved. A similar story could be told for the United States.

National seeks credit for declining crime rate here in New Zealand. But they are not responsible for it. Declining crime here is caused in part by the aging and civilizing of the population, which isn’t National’s doing. And it is caused in part by a tougher sentencing. That isn’t National’s doing either.

The Three Strikes for violent crime policy is an ACT policy.

We looked at the successful three strike laws overseas and made modifications to ensure that no one convicted of stealing a pencil or smoking a joint would be sent to jail for life.

ACT’s Three Strikes policy was carefully designed to catch only repeat offenders who committed crimes of serious violence, including sexual violation.

When ACT campaigned on the policy in 2008 we met widespread hostility, not just from the political left but from a justice establishment that has swallowed the idea that the “criminals are victims too”.

The National Party now enthusiastically trumpet as their own what has become a highly successful policy. Yet in 2008 they were opposed to it. The then Justice Minister told his aides that New Zealand would have a Three Strikes law “over his dead body”. Well, we got the policy and, although Simon Power’s  body did not expire, it did retire unexpectedly from politics.

At the time, Labour politicians quoted Kim Workman’s prediction that Three Strikes would fail to reduce crime and would result in our prisons over-flowing with new inmates.

Where are we today, four years after Three Strikes became law? 

There are now over 4,000 first-strikers – aggravated robbers and rapists, very violent offenders whose crime carries a maximum sentence of at least 7 years. 4,000 is about what you would expect projecting the forward the 2010 number of violent crimes.

In accordance with the law, upon conviction, all of these first-strikers received a solemn warning from the Judge which goes something like this: You have been convicted of a “strike” offence. If you offend again you will receive a sentence to be served without parole. If you offend a third time, you will go to jail for the maximum time prescribed for the offence you are convicted of.

Here is a startling fact. Only 37 first-strikers have been convicted of a second such offence. This is a level of success that even ACT did not predict. 

Why is it working?  It is impossible to prove why offenders stop offending but the certain prospect of spending a long time in prison must be a major factor. Three Strikes for violent offending is working. The popular leftwing idea that criminals do not respond to incentives is absurd. It has been refuted so often that those persist in peddling it should be laughed out of court.

We know who the 37 second-strikers are. 46% of them have convictions for “strike” offences that were committed before the legislation came into effect, and therefore don’t count as “strikes”. 38% committed their first “strike” offence while on bail or parole. Of the first ten of the second-strikers, three committed their second “strike” offence while on bail awaiting sentence for the first. And their second strike offence was the same as their first.

These are very dangerous men. With the judge’s warning ringing in their ears, and before even being sentenced, they went out and committed exactly the same offence again. In two of the three cases the offence was indecent assault. Society is safer when such men are in jail.

Of those 37 second-strikers, nine are “on the street”.  In most cases it is because of judicial leniency for strikes one and two. 

Three Strikes was necessary because although Parliament has passed laws saying violent offenders should receive long prison sentences, the judiciary was taking no notice. Everyone deserves a second chance – even aggravated robbers. But they do not deserve five or ten chances.

Prior to Three Strikes the average offender had appeared in court eleven times before they were sent to prison. The average person never appears in court for a felony offence. These offenders had been to court eleven times and each appearance could have been for multiple offences.

Before Three Strikes dramatically changed the rules, an offender may have been convicted of 20 or 30 charges – many of them violent – before a judge finally decided to send him to jail. Violent offenders now get two chances and, if they show they cannot learn and offend similarly again, they go to jail for at least seven years.

If their third offence is an aggravated robbery or a rape, they go to jail for 14 or 20 years respectively, with no parole. This will be 14 or 20 years when law abiding members of the public can go about their business without being in danger from that particular thug.

What is the lesson?  While National now happily takes credit for a measure that they only reluctantly agreed to, the government has not asked: “Is there another area where Three Strikes could also reduce crime?”

ACT says there is. Burglary is a crime where Three Strikes would be appropriate and successful.

Appropriate because burglary is out of control. It is an under-reported crime because the public knows there is a poor detection rate. Treasury estimates there are at least 115,000 burglaries a year, although only 55,000 are reported to the police – assuming police figures are honest, about which there is now some doubt. 

Over four years, that is the equivalent of every household in Auckland being burgled. Over a lifetime in New Zealand, you will be lucky to go without being burgled at some point.

Burglary is a crime that disproportionately harms the poor in our society. Those of us who are well-off usually have insurance. If we are burgled it is extremely unpleasant – our refuge from the world has been violated and items of great sentimental value are often stolen along with the TV and the iPad.

But for less well-off people burglary is a disaster. Often the poor cannot afford insurance. If someone is on a benefit, the priority is feeding and clothing their children. Imagine the impact of a burglary on a solo mum who has scrimped and saved and bought her child an iPad so she can keep up with her peers. For that household, the burglary is a disaster.

Imagine the frustration that solo mum must feel when she goes to the police to report the burglary, only to be told that they do not have the resources to  investigate the crime. The best they can offer is a claim number for her insurance – for insurance she has been unable to afford.

Burglars are a blight on our society but particularly for the poor.

Three strikes for burglary is also appropriate because a disproportionate number of burglaries are committed by professional burglars – criminals who have decided that burglary is a crime that pays. 

One burglar appeared before the court earlier this year for sentence on his 389th and 390th burglary convictions. The sentences he received for his 388 previous convictions had obviously failed to either deter or prevent him from continuing to pursue his chosen career.

Here is how Three Strikes for burglary will work. On his first conviction for burglary the offender will receive a first warning from the judge. The sentence may or may not be custodial. If he goes to jail, he will be entitled to parole.

If the burglar is convicted a second time, the Judge will give him a final warning: do this again and you go to jail for at least three years. If there is a next time, the burglar will not be eligible for parole. He will serve the full three years. 

Looking at the effects of our Three Strikes for violent crime policy and at the effects of similar policies overseas, we expect that this policy would reduce burglary by about a third: that is, by about 40,000 a year.

Perhaps you are not concerned about your own personal security. Then think of the elderly who feel unsafe in their own homes. Or the poor who cannot afford security systems or insurance and for whom burglary is devastating. They deserve your sympathy and your vote for this policy.

Those who go soft on penalties for crime because they reckon the criminals cannot help themselves show heartless insensitivity to the victims of crime. The poor woman whose home is invaded and her possessions stolen certainly can’t help it. Why should she be sacrificed to the half-baked and morally corrupt theorizing of affluent politicians?  

National and Labour are not going to tackle burglary. Only a vote for ACT can reduce this scourge on our society. 

We proved our critics wrong with Three Strikes for serious violent offences. The prison population didn’t explode. And try as they might, the journalists cannot find some poor urchin who has been locked up for seven or 10 years for stealing a chocolate bar. There never will be such a story.

Burglary has become a blight on our society because the risk for burglar is too 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. A 1% chance of spending eight months in prison is insufficient deterrent.

Tougher sentencing would have stopped Mr. 390 before he caused so much misery, either by deterring him or by keeping him out of circulation for a greater portion of his criminal career.

We believe he should have been stopped years ago.

You can stop him and other professional burglars by voting ACT on 20 September.

Don Nicolson – Speech to ACT Southern Forum

Don Nicolson – ACT Candidate  for Clutha Southland

Speech to ACT Southern Forum

July 20, 2014

Mr Chairman, thank you for the opportunity to address the ACT southern area conference today with this day being 63 days-yes 9 weeks out from the general election.

An election that will obviously not only define who is the government for the next 3 years and who will be the opposition but also define the future of the very party I am proud to represent ACT.

I want to acknowledge the presence of our party president John Thompson, our party leader Jamie Whyte and our Epsom candidate David Seymour who will win Epsom and the members and supporters here today. I note ACTs CE Lindsay Fergusson is also in attendance. But if you want a strong ACT representation in parliament you need more than David Seymour. You need him, plus at least 5 others. Then you might just get me as well!

How many party votes will that take? About 100000 is my guess; about 4 times more than last election.

Is it do-able? Well yes it is. In 1996 ACT was a new party polling less than 1% and with a hostile media. We ended up with over 6 % and 8 MP’s.

We gained about 145000 party votes that year. In fact ACT has achieved over 6% in 3 of the 6 MMP elections so far. If we could achieve 12500 party votes in the 5 electorates in this region then ACT is seriously on the road again. But we need many foot soldiers to get us there. In this region I need your help. I need you to unashamedly lobby your connections, help with localised billboard placement and oversight, and generally become much more mobilised.

ACT cannot be lackadaisical.  While money really helps, it’s those small influences you can all exert that will, collectively make a huge difference. I have been asked to talk about why ACT principles are good for regional New Zealand and also link those principles to the primary industry that I have worked within all my life.

At the outset, I need to say that ACT is unique in our political landscape. We are absolutely different from the rest.

How is that so? Well, we are the only party promoting a better future with less government weighing us down. That is, ACT promotes a better, a heathier nation through less tax or regulatory burden. No other party has the courage and fortitude ACT has. Other parties might occasionally sound similar but drill deeper and they all have command and control tendencies, with those on the eco socialist left extremely dangerous.

We want the monopolistic influences in our country diminished. They are a handbrake on success and achievement. If the current regime of tax and spend works so well, then why is it that society seems so unhappy and desire more?

I say too much money filtered through the hands of monopolists is the root cause. They cannot deliver value no matter how they sell themselves. Their dead weight cost means a significant portion of each tax dollar is wasted. By deadweight, I mean the unearned costs imposed on the production of goods and services, including the loss of opportunity or growth of businesses throughout NZ.

So let’s go to the core specifics ACT has defined the voters are concerned about most in 2014.

Our surveillance has discovered that voters are concerned about their personal and their property security, their earning, saving and spending power and they know that we are seriously over burdened with regulations that impede enterprise.

Add to that voters have a valid concern about race based laws and the division they create.

So ACT will run a campaign about being tough on crime, about the benefit of low flat taxes,  about why we need a One Country, One law ethic and how we will take the secateurs, no a machete to green tape.

How will these policies help regional New Zealand and the primary sector? It is clear that without secure property rights being upheld, criminals can run riot over the property of others and they are. It is thought about 120,000 burglaries happen each year with only about 55,000 of these reported and less than 30% have offenders apprehended. It is thought these invasions of property cost individuals over $1billion a year. ACT says it’s a core government role to have citizens feel secure and so ACT says stronger deterrents to criminals are vital.

ACT’s 3 strikes for burglary and you are ‘in’ strikes at the heart of those who wish to disrespect the property of others. For those in the pastoral heartland it has been assessed that on top of burglary stock theft costs their industry over $120 million per year. ACT wants far tougher penalties for these rural invasions too with additional powers to confiscate weapons and vehicles from offenders caught. ACT policy is a circuit breaker to crime.

And what of low flat taxes and the benefits that will bring the regions or the primary sector?

ACT says it’s too easy for the executive powers of the state to co-erce revenue from citizens under the guise of protecting those same citizens, when in fact much of the revenue desire is to mask the expansion of the Crown, the ultimate monopolist. That’s why from the day of formation ACT has promoted a low flat tax regime. We know that the dead weight cost of a government collected and spent dollar compares poorly with a dollar spent privately. ACT’s research has shown that the much desired economic growth expectation by government can be achieved much quicker with our lower and flat tax regime.

It’s not hard, and in fact won’t create hardship for anyone in mainstream, but it might affect a few surplus government servants; as it should.

In 1999 when Helen Clark came to office, total Crown revenue was $39 billion, when she was deposed in 2008 that total was $81billion, last year $86 billion. During the same periods total Crown spending went from $39 billion to $83 billion in 2008 and was $91 billion last year. Distilling these figures to each citizen is eye watering with a gross debt per head now at almost $18000. Four times greater than Turkey and six times greater than war torn Egypt!

With this level of Crown expansion you would think society would be happy, but it’s not. It seems there is never enough in the kitty for health, education or security. And worse the Crown is getting into the middle classes and business with additional welfare.

The drug of Crown welfare has them hooked, but ACT knows going  cold turkey doesn’t have to be destructive or painful as it was for the primary sector 1984/5.  Individuals in that sector, if they are true to themselves know that any privilege gained unfairly can be easily taken away. So with a low flat tax regime in place enterprise in regions and primary industry would advance on merit once again. ACT knows that; most citizens think that too, but governments of the recent past just don’t trust citizens to make smart choices.

Much is made of regional development with government financial inducements to regions or industry seen as  a saviour rather than for what they are; a bribe for the overtaxing and over regulatory effect of policy.

ACT says leave more money in the pockets of those who earn it and our regions’, towns and cities will be much better off. An example: I pay about $800 per year to Southland economic development agency. I don’t like that because I can’t refuse to pay it; I don’t get to choose how it is spent; I don’t get any dividend or even a share certificate, but the next year that same agency can come back for another $800 or more. It’s never less!

As for Green tape mixed up with red,    well,    where do I start?

I daresay first principles for regional or primary industry sustainability would be to suggest that limiting the state would actually help. Stating the bleeding obvious I expect. But there are people who think that there is protein, in fact sustenance in a silicon chip. They don’t want to understand that everything we enjoy today has its genesis from revenues generated by harvest of the environment. That’s right; it doesn’t matter whether you are Bill Gates, Tiger Woods, Roger Federer, the All Blacks or Barrack Obama, nothing occurs without resources  harvested to develop trade and currency. Everything else occurs because of, not in spite of the harvest of the land, the sea and the scenery.

The Greens would have us believe that resource rentals are required but that’s because they don’t understand rent is already paid by trade in open markets.

Those in IT might say ‘oh we don’t use resources’. Well by proxy they do because in general terms their fantastic outputs are generally used to make resource use more efficient. 

No bureaucrat can say they don’t use resources; they do and worse, those same bureaucrats never replace anything that they consume. Think about that? They do not replace anything they consume. Which means ladies and gentlemen that what the bureaucrat consumes, must be replaced by the private sector? Can anybody come up with a better reason for voting for a light handed Government delivering only what is required.

So why do we let them regulate and add cost to individuals and enterprise the way they do?

I could talk at length about regulations and rules and the effect on local communities or primary industry.

Immediately I think of the Resource Management Act and how it damages communities by impeding aspiration or why it doesn’t have a full compensation for takings clause, or how I think the Local Government Act is applied and more especially why the funding of local government is crooked. I think of road funding on a less than fair entire network basis and I think of the explosion of health and safety compliance police numbers. I think of the very politicised water quality discussion and how one sided and destructive those with agendas have become and I think of how ACC should be opened to competition and so much more.

But I want to talk about the biggest nonsense of all; climate change or, as I like to call it, climate variation and the wasteful New Zealand response. It doesn’t matter whether it’s an Emission Trading Scheme (ETS) or a Carbon Tax, neither can achieve anything useful. That is unless one makes their livelihood out of promulgating the lie.

My first brush with a prospect of carbon dioxide trading prospect goes back to about 1990 when a farm forestry magazine mentioned the concept and that was about the time of the first Rio Conference. It might pay to remember that in early 1980’s global cooling was the issue as was the ozone hole over Antarctica. Fast forward to about 2002 and my role in Federated Farmers, we learn that Helen Clark was serious about signing up to the Kyoto Protocol.

That led to me leading the largest farmer rally in 2003 where we fought and won against the Clark governments intention to enact an animal burp, belch and pee tax emission tax humorously called FART ( fight against ridiculous taxes). The Labour party did not desist and pushed for a carbon tax. They failed again but by 2008 they were able to enact an ETS. The National Party was in huge opposition, or that’s what it seemed.

But while the nats have modified the impact on all citizens the cost of the current ETS is still with us. For all the rhetoric about being fast followers we are still ahead of every other nation and so we find ourselves today in a very lonely international club of one with our, all sectors all gases, ETS.

While our neighbours Australia have just killed off their Carbon Tax we still have our ETS. I find it abhorrent that the promoters of such schemes have played with citizens minds by promoting a fear of the future, any future. Dictators would be proud. The merchants of fear said that increasing carbon dioxide would become catastrophic and that any international inaction would result in irreversible climate change.

Well in spite of their assertions and with atmospheric CO2 rising well past the magical 350ppm mark evidence shows that the world has not warmed for the last 17 years. Evidence enough to say man made emissions of CO2 is not a dangerous causal factor to global temperatures.

Further climate models never predicted this ‘stop’ in temperature rise. The models are worthless, only good for the doomsayers. Sea level rise is small and not in acceleration mode.

I could go on but ACT says that until all the unanswered questions are answered without political bias or scientific corruption then any money spent attempting to alter climate is wasteful and doing nothing is more appropriate. 

Leave citizens to make their own choice about where they live and work and further, leave them the resources to adapt and build their own resilience to whatever is ahead. 

ACT would want the ETS ‘gone by lunchtime’ and any idea of a carbon tax dismissed for the nonsense it would be.

But I will leave the last word to a political columnist from Australia, Dan Aitken who last week wrote as that country repealed its carbon tax: 
First, no country can have a sensible policy on climate by itself, because climate is not governed by national boundaries. Second, not even the UN can have a sensible policy, because climate is not governed by laws and regulations. Third, we can do something about the effects of weather, which is much more concern to everyone because weather is local, and affects our daily life. Fourth, but we can’t stop weather, or even predict it with any great success, because we lack deep knowledge about the basic components of weather (and climate). Fifth, it may be that we will never possess such knowledge. Sixth, the evidence continues to mount that carbon dioxide is not, after all, the control knob of the planet’s temperature, and if it is not, then the preceding reasons become overwhelming.

Fantastic lines that help me rest my case.

So back to the question the chairman asked me to talk about. Is regional New Zealand different than metropolitan NZ? Is Primary industry sector different? Should ACT have policy for each?

Absolutely not!

ACT principles, if widely adopted would not discriminate against any sector, any region, any city, any colour, any religion or any creed. ACT is sector neutral economically and colour blind socially. ACT vision is about giving individuals equal opportunity through less government. Opportunity where an individual can make their own choice about how they can control their destiny; not have it controlled for them by the executive.  

As a farmer I controlled stock by using dogs, quad bikes and fences. So I used overt coercion over a weaker species to gain control and then income.

That’s what our current governance model is too; putting individuals into herds or flocks, weakening their resolve or enterprise and then managing their daily requirements by offering welfare inducements to maintain power.

It’s shameful, it’s unacceptable but it is happening in front of our eyes.

Why do voters like the herd mentality? Why do they like the coercive power of the executive over their own liberty and freedom?

One wonders why our forebears fought so hard for liberty, freedom and the property right when their children haven’t appreciated their quest.

How have the socialistic tendencies of the herd become so oppressive, so stifling to those of us who know there is a better way, those of us who value freedom?

Well I know; it’s about the constant diminution of the common law property right. But that’s for discussion another day.

But why are policies that almost had Dr Brash as Prime Minister in 2005 for the National party now not talked about by that same party?

It’s clear to me they have allowed themselves to be so corrupted, so scared of the eco socialistic and extreme left they cannot stay true to themselves. They have been pulled so left only ACT can save them, save us all.

Predominantly it is any two tick Nat whose heart and mind ACT has to influence and wrest back our lost support. There’s little chance of winning over any voters of the more predatory left.

We need to get them ( National voters that is ) to understand their smarter and more powerful voting strategy would be to split their vote because it would allow the National Party to be held closer to its core values rather than be pulled further into socialistic mire. 

ACT wants a better way and so do the Nats.

ACT knows the better way.

ACT can be a powerful influence for making this fine country better

A Party vote for ACT is the influential choice- the right choice.

I implore you to help make it happen. Be proud to tell your mates to Party Vote ACT September 20th and make New Zealand a better place.

Thank you.

 

Two bribes for the price of one!

The Greens yesterday announced a plan to extend the early childhood education subsidy to 2 year olds. This will be worth $95 a week to those parents. We have become so used to such policies that we no longer notice how peculiar they are.  

If the Greens want the parents of 2-year-olds to be made $95 a week better off at the expense of taxpayers, why not simply give them $95 a week in cash? Why make receipt of taxpayers' money conditional on spending it on early childhood education? If that is how the parents want to spend the $95, they can.

If they have something better use for $95 a week, such as saving it for their child's future university education, they can use it for that instead. Why push your intended beneficiary around in this way?

The answer is that by forcing your beneficiaries to spend the taxpayers' money you are offering them on something in particular, you make it a more effective election bribe. Not only will the parents of toddlers become more inclined to vote for you, so will the early childhood educators who are going to be on the receiving end of all this spending. Two bribes for the price of one!  Now that's a Smart Green economy for you.

ACT announces Jamie Whyte as Pakuranga candidate

ACT is pleased to announce Dr Jamie Whyte as its candidate in Pakuranga.

Dr Whyte was elected ACT Leader in February. Since then he has been travelling around the country meeting New Zealanders and talking about ACT’s key messages of low, flat tax, cutting green tape, getting tough on crime, and “one country, one law.”

“ACT’s policy of three strikes for burglary, which would put serial burglars in prison for at least three years, will particularly appeal to Pakuranga residents,” says Dr Whyte.

“While I am campaigning strictly for the party vote, ACT’s policies will go a long way to making Pakuranga more prosperous, and its streets and homes safer.”

Dr Whyte has close ties with Pakuranga, having attended Mellons Bay Primary, Bucklands Beach Intermediate (BBI) and Pakuranga College. 

Until returning to New Zealand from London last year, Dr Whyte was the Head of Research and Publishing at Oliver Wyman Financial Services. He is a fellow of the Institute of Economic Affairs and a senior fellow of the Adam Smith Institute. His opinion piece, arguing that the Greens’ emissions policy was about moral grandstanding rather than reducing emissions, was published last week in the Wall Street Journal.

Dr Whyte recently also won the Institute of Economic Affairs’ Seldon Award for his publication Quack Policy – Abusing Science in the Cause of Paternalism.

“No other candidate – or party leader in New Zealand, for that matter – can lay claim to being regularly published in the Wall Street Journal or winning awards for their writing,” says ACT President John Thompson.

“ACT is very proud of its leader and Pakuranga candidate.”

The Letter 21 July 2014

All tax and spend
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All the political parties have now outlined their tax policies.  NZ First has just released a “game changer” tax policy to make caviar tax free. It is very depressing.  Other than ACT’s, every party’s tax policy is based on redistribution and the belief that they can pick winners.  ACT has half of the political spectrum to itself.    

 

Do not add up
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Other parties’ tax policies don’t add up.  Most are not even pretending to cost their policies. They require voters to wait until after the Election for this vital information. But The Letter won’t wait that long, so here are some pertinent numbers:  removing GST on food would leave a $3 billion hole in tax revenue, the equivalent of cutting GST by three percentage points overall. Colin Craig’s Conservative Party wants a flat tax rate to be accompanied by a tax-free threshold set at $20,000. The threshold would cost something like $6.8 billion in lost revenue; alarmingly, for those tax cuts to be revenue neutral, everyone earning above about $36,000 would face a tax rise because the Conservative’s flat tax rate would have to be set at 34%! Moving on, the Green’s massive increase in corporate welfare and social spending is deficit-creating. Labour’s promises are not nearly as expensive as their would-be allies. The Internet/Mana party cannot see a problem that spending will not fix and say “the rich can pay”. Jamie Whyte’s comments on the Conservative policy are at http://www.act.org.nz/?q=posts/craig-what-will-the-flat-rate-be

 

Bad economics
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There are two objections to crony capitalism: it is corrupting to have politicians pick industries to receive taxpayer subsidies and, second, subsidies don’t work.  There is overwhelming evidence that corporate welfare does not work.  Economic growth and prosperity would have been greater if the market had allocated the money instead of politicians.  Apart from Jamie Whyte, no politician - including John Key - is willing to say to the electorate “you are better at deciding where to spend your money”.  We have our would-be leaders making a claim we know is false, that by taxing us more and spending our money on their pet schemes the economy will grow faster.  National is promoting building roads as the way to faster growth, Labour has picked forestry, the Greens R&D, and NZ First “exports” etc.  Like all great heresies there is some truth to these claims. Yes, roads promote growth, forestry has potential, companies need to invest in R&D and we need to export. But not one of these solutions answers the big question, “How do we get the biggest bang for our bucks?”  The answer is simple: markets allocate between these and other priorities better than any government.      

 

We have moved to the left

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The NZ Herald ran an article saying David Cunliffe is trying to move to the center and that the Green’s advocacy of R&D subsidies is “centrist”.  If that is center where is left?  As National has adopted the Clark/Cullen programme they have moved the whole political spectrum to the left.  Labour has moved leftward to differentiate itself, which in turn has pushed the Greens/Mana parties even further left.   No one is even talking about catching up with Australia.   

 

Being in government was a mistake
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Readers may not have noticed, and if so we are sorry to be the bearers of bad news, but ACT is struggling in the polls. This would seem surprising as the party now has the whole of the right/center to itself.  The Letter thinks there is an organisational issue here.  ACT joining National in government has compromised the party.  In the last five years, what have we heard from ACT on the advantages of low flat tax to increase investment, growth and jobs?   How many speeches have you heard on the advantages of free markets?   It has taken having a leader outside Parliament to get ACT back to advocating the party’s core policies. Those policies remain ACT’s bedrock. Yet, it is a big ask to expect a new leader in five months to overcome five years of being too close to government.    

 

TVNZ to the rescue
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Just as we are despairing of the quality of political coverage we have learnt of TVNZ’s plans to use a new technique to cover the election.  We do not want to break any embargo so we will let TVNZ announce their new “worm” for this election.  We think it is the best new idea for covering an election.  Put simply TVNZ has got the rights to a technique that will enable the channel to place all the parties on the political spectrum.  Using the Internet in an interactive way, voters can determine what values policies are important to them and discover what parties best represent them.  It will be a revelation.  We are constantly meeting people who say things like “I am thinking of voting for the Greens” when we know as a sole trader they do not agree with anything the Greens support.  ACT’s polling shows 17% of voters’ values are closest to ACT.  The TVNZ new “worm” is great news for ACT and could be the game changer.     

 

First we build our buildings

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Jamie Whyte is announcing what is the first and only truly original policy of the 2014 election.   It is a modest proposal but it could have far reaching impact.  All around the Western World politicians are spending their governments to bankruptcy.  Electorally there is no downside to spending more.   ACT has a proposal that will force MPs and local councilors to spell out how spending is going to be paid for.  Before any spending proposal can be implemented the proposer must say “but for this proposal, your income tax rate would be X percentage points lower”. These “constitutional” changes are very important.  The Fiscal Responsibility Act has changed government finances and is part of the reason New Zealand escaped much of the GFC.  “Honesty for Taxpayers” is an excellent speech and can be found at http://www.act.org.nz/?q=posts/honesty-for-taxpayers

 

Going to Wellington

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Jamie Whyte and Richard Prebble are campaigning in Wellington this week.  Auckland maybe the biggest city where elections are won but Wellington is the centre of politics, where the political opinion leaders live.  This Wednesday (23 July), Jamie, Richard and ACT Candidate Sean Fitzpatrick are holding a function at Dockside, Queens Wharf at 5-30pm. All are very welcome to attend.

Craig, What Will The Flat Rate Be?

Page 9 of The Press today is an advertisement for Colin Craig’s Conservative Party and their policy of having two rates of income tax: 0% up to $20,000 and a flat rate thereafter. But the ad does not specify the flat rate. Will it be 20%, 30% or 40%?

How can anyone evaluate the policy without knowing what the flat rate will be?  

As I have previously explained, if no reduction in income tax revenues is planned, the flat rate above $20,000 would need to be 34%. This would entail a tax increase for everyone earning over $36,000, with those earning between $40,000 and $70,000 hit hardest.

It is amazing that Craig thinks he can proceed in this way. Imagine a bank approached you and said they had a great deal for you on your $200,000 mortgage on which you are now paying 6%. Transfer it to them and you will pay two rates: 0% on the first $100,000 and some other unspecified rate on next $100,000.

Without being told what the rate charged on that second $100,000 is, only an idiot would even consider taking the offer. And only a company banking on the stupidity of its customers would make such an offer.

On TV3’s The Nation on Saturday morning, Colin Craig said that ACT and the Conservatives were not chasing the same voters. He is right. Whereas he seeks votes from the terminally gullible, we seek votes from the economically literate.

Here is ACT's Alternative Budget

Honesty for Taxpayers

Speech to the Scenic South Conference
Dr Jamie Whyte
20 July 2014

Click here for a downloadable version of this policy.

ACT has a new proposal to make our democracy more accountable. The proposal may seem small but it could be the most significant idea in this election.

Policies such as the one I am announcing today, which change the behaviour of politicians, have greater long term effects than any particular proposals for this or that government activity, such as giving school children laptops, subsidising solar panels and the rest of the little tax-funded bribes the other parties trade in.  

A proposal to reform New Zealand’s government accounts was hardly noticed in the 1993 election campaign. Yet the Fiscal Responsibility Act of 1994 has had a profound effect on how New Zealand is governed. Government accounts are now transparent and neither Labour nor National wants to be responsible for a deficit. The Fiscal Responsibility Act is probably the real reason why the government books will be back in the black by next year. 

ACT’s fresh idea could be as influential as the Fiscal Responsibility Act.

*  *  *  *  *

Sir Geoffrey Palmer famously opined that the New Zealand parliament is the fastest lawmaker in the West. He was referring to the absence of checks and balances: the lack of a written constitution or second chamber of review. Laws can be introduced and passed in minutes. And they have been. An unsurprising example was a 1987 law to increase MPs’ superannuation. It passed through all stages of the legislative process, from introduction to becoming law, in seven minutes flat.

Had Sir Geoffrey not been of a socialist bent he might have pointed out that this legislative ease also made New Zealand lawmakers the fastest spenders in the West. In no other Western democracy is it so easy to spend taxpayers’ money. New spending proposals go through with minimal scrutiny or public debate.

Helen Clark’s Labour government increased government spending by 35%. In 1999 government spending was $15,500 per person. By 2008 Clark’s labour government had increased this to $21,000. (Both figures expressed in 2014 dollars.)

Do you remember any great obstacles being put in their way? Did Clark and her cabinet struggle to get their spending proposals past constitutional barriers or a sceptical parliament, media and public?

When government spending is being increased by 35% over a 9 year period, you might hope that political alarm bells would be ringing, lights flashing and barriers coming down. But nothing of the sort happened.

Increasing government spending by 35% was politically easy.

It shouldn’t be. Because, beyond a certain low level, government spending is a bad thing.

The most obvious reason is that government spending must be funded from taxation. Taxation transfers money from private individuals to the government. That transfer in itself costs society nothing. The taxpayer loses a dollar; the government gains a dollar. Nevertheless, taxation imposes a massive costs on society because it makes many productive activities unprofitable (by adding costs to them) and makes many unproductive activities profitable, such as employing a tax lawyer to rearrange you company’s affairs to reduce your tax bill.

This deadweight cost of tax is difficult to estimate but, for a country with a tax code like New Zealand’s, it is probably in the range of 25% to 50%. For every dollar transferred from taxpayers to the government, economic output is reduced by 25 to 50 cents. A less taxed population would be a richer population, before tax as well as after tax.

The second problem with government spending is that it usually replaces private spending. When you spend your own money on yourself you are likely to buy only what you value and only when you think it worth the price. When a government buys goods and services for you, these outcomes are unlikely.

Indeed, taken to extremes, profligate government spending can wreck an economy. Greece is the most obvious recent example. But several other European countries are struggling to get out of the holes dug for them by over-spending governments. After decades of governmental largesse, the French and Italian economies have near-zero growth and high unemployment rates, especially among the young. Youth unemployment in France is 24%. In Italy it is 35%. In their low-tax, low-spending, light-regulation neighbour, Switzerland, youth unemployment is 3%.

Nor is the problem restricted to national governments. After decades of over-spending administrations, California is almost bust. The excessive taxes it must now charge are driving businesses to other states – often to low-spending, low-taxing Texas. Here in New Zealand, Len Brown is spending Auckland City into a fiscal crisis.

*  *  *  *  *

Why then is there so little public resistance to increased government spending?

One reason is misrepresentation of the costs.

Whether from duplicity or economic ignorance, politicians never discuss the deadweight cost of the taxes entailed by government spending. They never make the point I have just made – that, beyond a very low level, taxes do not merely shift money around but reduce total output.

Nor are the costs of government spending described in a way that most people can understand. The policy of not charging interest on student loans costs about $670 million a year.

In the grand scheme of things, is that a lot? Most people wouldn’t have a clue, even if they knew the $670 million figure.

The problem with such numbers is not only that they are incomprehensibly large but they seem distant, almost unreal. They are merely book-keeping entries in the accounts of the government.

But they are not really distant issues. Such spending is the cause of our taxes, which is real money that we no longer have to spend as we choose. For example, if not for interest-free student loans, the top rate of income tax could be reduced from 33% to 30%. Or the 17.5% rate could be 16%. Or the corporate tax rate could be reduced from 28% to 25%. That is a remarkably big difference made by just one apparently trivial spending policy.

Such revelations will mean something to people. If you know that interest-free student loans are adding 3 percentage points to the tax rate you pay, you get a sense of what it costs – a much better sense than telling you that it costs $670 million, if you ever get told even this.   

ACT believes that taxpayers should know the price of any spending policy of the national government or a local council in a metric that is relevant to them.

*  *  *  *  *

To this end, ACT proposes an Honesty for Taxpayers policy.

On this policy, regulatory impact statements, cabinet submissions and ministers’ introductory speeches for Bills in parliament will need to state clearly that “but for this proposal, your income tax rate would be X percentage points lower”.

When taxpayers visit the website of any government agency or local council and any programme of that agency, they should have a clear idea of the price of that agency in their taxes or rates.

Government departments and agencies should be required to declare on their home webpage “but for this agency, your income tax rate would be X% lower”.

Similar rules should apply to local governments. They should be required to reveal how much lower rates would be if not for a particular new policy proposal or existing service of the Council.

If a minister, department, agency or local council believes that the programmes it administers do indeed offer value for money to taxpayers, they should be proud to say how they are putting taxes to work in the clearest way taxpayers can understand.

For example, the government should be keen to alert taxpayers that, without Working for Families:

·      the 17.5% income tax rate would be 12.5% OR

·      the 10.5% income tax rate would be 3.5%.

The Minister for Tertiary Education should be keen to remind everyone that, if not for interest-free student loans

·      the 17.5% income tax rate be would 16% OR

·      the 28% company tax would be 25% OR

·      the 33% top income tax rate would be 30%.

The Minister for Business, Innovation and Employment (MBIE) should be keen to announce that, if not for its policy of dispensing corporate welfare

·      the 28% company tax rate would be 21% OR

·      the 33% top income tax rate would be 27% OR

·      the 17.5% tax rate would be 14.5%.

If you do not know what something costs, you cannot know if it is worth the price. Good decision-making depends on good information. In a democracy, this means that voters must be reminded of how much they are paying for government activities.

Politicians from the big spending parties will oppose this policy. That shows what a good idea it is. The bureaucracy will also resist it, because voters will be surprised to realise that much new spending is generated by bureaucrats. MPs and councillors will be more reluctant to just wave through spending when the information is publicly available.

By using the tools of the information age ACT seeks to make our elected representatives more accountable and allow citizens to participate in a more meaningful way.

I am pleased to lead a party with fresh ideas and practical solutions to the real issues.

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The Greens favour company tax rate increase

The Greens plan to give $1 billion to companies if they use it for research and development (R&D).

This reminded me of the quip attributed to the U.S. Senator Everett Dirkson, “a billion here, a billion there, pretty soon you’re talking serious money”.

New Zealand is a small country. A billion is serious money all on its own. In fact, each billion of annual government spending adds 4 percentage points to the company tax rate.

The Greens really plan to increase spending by $500 million a year (the billion they boast of is spent over the first three years). This means they would make the company tax rate 2 percentage points higher than it otherwise needs to be. Individual companies would then get their hands on taxes paid by other companies if they can convince Green politicians or their appointed bureaucrats that they are good children and deserve an R&D grant.  I foresee some very nice lunches for the “experts” the Greens will appoint to dispense this $1 billion.

Next time the Greens complain about crony capitalism, I hope everyone will enjoy a jolly good laugh, even if they miss out on a jolly good lunch at the taxpayers’ expense.

Economic ignorance on display again by Winston Peters

Economic ignorance on display again by Winston Peters 
Blog: Jamie Whyte, ACT Leader
16/07/2014

Jenny Shipley, a former prime minister of New Zealand, has accepted a position on the board of CCB New Zealand, a wholly owned subsidiary of the China Construction Bank.

According to Winston Peters, this is “economic treachery”. He thinks Ms Shipley should not be “allowing us to be used in this way” – by which I presume he means that she should not be helping a foreign bank operate in New Zealand.

About 1 in 6 New Zealanders work for a foreign owned company. I wonder if Mr Peters thinks they are all treacherous. Or is it only ex-politicians who work for Chinese companies who are treacherous? Mr Peters’ constant hyperbole is becoming boring.

So are his incessant displays of economic ignorance.

The idea that foreign firms harm us by offering their goods and services here is nonsense. No one will be forced to work at CCB New Zealand. No one will be forced to rent their office space to CCB. No one will be forced to borrow from CCB. Anyone who decides to do such things must consider CCB better than his alternative employers, tenants or lenders. CCB must be making him better off. No one is being “used” as Mr Peters puts it.

The only bank in New Zealand that “uses” people is Kiwibank. Unlike the other banks in New Zealand, Kiwibank’s capital was not contributed by voluntary investors. It was extracted from taxpayers with no choice in the matter. Bailouts of financial and other companies also “use” people.

But companies who enter the New Zealand market without any taxpayer funding or government guarantees are taking all the risk. They invest in New Zealand because they see a country rich in promise. They bring their capital, skills and entrepreneurial acumen. We should welcome them. And Winston Peters should stop peddling his ugly and ignorant economic nationalism.

ENDS

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