The claims by students’ associations yesterday that my Voluntary Student Membership Bill is going to decimate membership and cripple services merely highlights how poor the current services provided to students must be, ACT New Zealand VSM Spokesman Sir Roger Douglas said today.

"The only logical reason for the students’ associations’ concern must be that the services they currently provide have so little value, they know that students will not spend money on them once they are no longer forced to do so," Sir Roger said.

"Any organisation that can deliver services their customers want, at the right price, will have no trouble attracting business. If students’ associations really do provide such services - as they claim –then they should have nothing to worry about.

"The real tragedy here is that all students’ are being forced to pay for the ‘Save Our Services’ campaign, regardless of whether they actually support compulsory student membership.

"This misuse of funds is exactly the reason why students should be able to decide for themselves whether they want to be a paid up member of a students’ association or not," Sir Roger said.

ENDS

It's not surprising that the Government's initiatives to tackle truancy in schools has had no real effect on the 30,000 students cutting class every day, as truancy is the symptom – not the cause – of a broken school system, ACT MP Sir Roger Douglas said today.

“Under the current system, many students are locked into their closest school, regardless of whether it’s meeting their needs. From a school’s perspective, when difficult children are truant, it’s actually good for them – fewer problems in class, less work – so they have no incentive to care, Sir Roger said.

“Doubling the funding on a truancy initiative that has had no results is only wasting taxpayers’ dollars. Instead of investing in systems which force kids to stay in schools that are failing them, we should instead invest in initiatives that ensure schools are working hard to keep them.

“By allocating the funding to the children it changes the incentives. Schools must figure out how to keep those children or face declining school enrolments. Any school that could successfully attract all those truant children by offering them an education that suits them would suddenly be operating a very successful school.

“Creating choice and competition in our school system is the best thing we can do for our children and until the Government addresses this problem we will continue to see many of our children slipping through the cracks,” Sir Roger said.

ENDS

Sir Roger Douglas, Speech to ACT National Conference; Wellington College, Dufferin Street, Wellington; Friday, February 26 2010.

National has now been in Government for over a year, and I believe it is fair to start passing judgement. Before the last election, many Labour and Green voters believed that National had a secret agenda to slash the size and scope of the state, deliver massive tax cuts, and sell off the businesses that Labour think they are so great at running.

Today, these people should be able to sleep easy at night. National is now spending more as a percentage of GDP than Labour ever did in their nine years. Proposed tax cuts will be funded not through reducing Government expenditure, but by increasing other taxes. No state businesses will be sold off. The most courageous initiative so far seems to be the idea of mining some small sections of national parks. Any royalties or other money earned through this process will go to Government, probably increasing the level of state spending, rather than being used to reduce taxes.

New Zealand is stranded on the middle ground. Labour continue to argue for higher levels of Government expenditure, new and extravagant social programmes and, in the midst of the recession, were even calling for full-blown central planning in order to “create jobs.” National continue to respond to Labour's agenda setting – justifying their continual erosion to the left as a form of pragmatic centrism. If National's role in modern day politics is merely to slow the growth of the state, the end point is clear – bigger Government, more interference in the lives of ordinary people, and higher taxes.

The process of oscillation between Labour and National has left the nation stranded on the middle ground – a messy contradiction where we profess a belief that the individual should be free, and then proceed to steal 40 percent of their income through a multitude of taxes.

In 2008 the ACT Party, for the first time ever in our brief history, formed part of a Government. Since then, I believe that we have achieved an awful lot. Rodney is working hard to restrain the growth of regulation, as well as negotiate a possible cap on Government expenditure. Heather has been a reliable Minister with a heavy workload in defence and consumer affairs, and also did a wonderful job chairing the Inter Party Working Group on Education, which I was part of. John Boscawen is the hardest working MP in New Zealand. He has done the heavy lifting on the Emissions Trading Scheme, on Local Government reform, at the same time as running campaigns against the smacking law and against corrupt finance companies. David Garrett has steered his three strikes policy into law, and has also dealt with a heavy workload in justice and law and order.

I have had some limited success with the Voluntary Student Membership Bill, and this week my Bill – which would reintroduce youth rates – was drawn from the ballot.

However, ACT is also in real danger. The successes that we have had in Government have not been reflected in the polls or other measures of support for the party, such as membership. This is not new territory for the ACT Party, but it is certainly a place in which we would rather not be.

Tonight, I want to talk about the future of the ACT Party, and kick off a debate that I believe is sorely needed within the party. I don’t claim to have all the answers – indeed, some of what I say may be wrong. However, we need to engage in an internal debate to figure out what we are doing wrong, and how we can do it better.

I talked before about how New Zealand was stranded in the middle ground – that Labour are willing to massively expand the size and scope of the state, and National's willingness to move to the centre rather than fight it is seeing us move in the direction of ever-bigger Government. I also believe that ACT is at serious risk of being stranded in the middle ground.

What do I mean? Some believe that ACT's role is to be to the right of National – that our role is to deliver stable right-of-centre Government. But if National are essentially willing to move to the centre to win votes, then we are defining ourselves in reference to a moving target. Defining ourselves in that way will see us sacrificing our principles to follow National blindly as it convulses around the political spectrum trying to hoover up votes.

Moreover, if we say that we are to the right of National, then we are essentially powerless. Will National really believe that we won't support them? Our support can and will be taken for granted, leaving us in the position of supporting a party and policies that our principles tell us not to.

The Key is Differentiation

What I believe ACT needs to do is not aim for the middle ground – as Labour and National do – nor define ourselves by reference to other political parties. Instead, we need to aim for the common ground.

What is the common ground? The common ground is what we all know to be true about the state. The state spends an enormous amount on healthcare, and yet many are not healthy. The state showers the educational institutions with cash, and yet many are uneducated. The state hands out welfare wherever it sees poverty, and yet many lack genuine well being and security. This is the common ground because it is something that we all know to be true – something that is verifiable by fact.

When we are aiming at the common ground, we realise that we share the same aims and goals of pretty much all major political parties. Labour and National both know that there are enormous problems in the areas of social policy. Somehow, however, they have convinced themselves that minor tinkering will deliver massive improvements in output. Labour honestly believe that Annette King is a much better central planner than Tony Ryall, and National believe the reverse. The big difference between those parties and ACT is the means we use to solve the problems in health, education, and welfare.

When ACT had real momentum in terms of membership, but also day to day commitment, we considered ourselves – and were considered by others – to be different from the rest. We were the party of ideas, with our own slice of the political spectrum. There was National, Labour, the Greens, NZFirst, all of whom wanted to spend your money and tell you where to line up for health, education, and welfare. Amongst them, there were only differences at the margin. Then there was ACT, and we believed that New Zealanders could spend their own money better than any politician or bureaucrat.

This different world view had radical implications for policy. When Labour supported funding health through the Ministry, and National was advocating an independent health funding authority, the only real opposition to the concept of socialised healthcare was the ACT Party. The implications of devolving funding to individuals who would purchase insurance and meet day to day costs out of pocket were massive. Health providers would suddenly be competing, individuals would now control their own money and would have greater choice.

Today, some in ACT have either lost sight of that original message, or have allowed it to become so blurred that, for all intents and purposes, they consider us a faction of the National Party. We have lost sight of what makes us different.

Some may say that I’m wrong – that the public understand the ACT Party perfectly well. The public knows our policies, but they just do not like our policies. People who believe this tend to believe that the only reason we are in Parliament is because National voters think we are necessary for National to govern.

The lesson some take from this is that there’s no real point trying to sell our policy – we need to market ourselves as the key to National being in Government.

No political party will be successful if it adopts the position of not advocating its policies. It may well be true that the public does not support, for example, education vouchers. But that’s not a reason not to advocate them – in fact, it’s a reason to convince the public of the merit of vouchers.

If we continue to see ourselves as an appendix to the National Party, then we will be incapable of ever having more than, say, 5 or 6 MPs. The National Party is essentially a conservative party. They adopt the status quo and try to manage it better. The idea that we should preserve the massive state apparatus, despite the enormous harm that it is causing, is an idea with which all in ACT should feel uncomfortable.

To differentiate ourselves, we need to focus on the areas that most affect people – tax, health, welfare, and education. The overwhelming amount of Government expenditure occurs in those three areas, and any dollar Government spends is a dollar they must first tax. There can be no substantial reduction in the tax burden unless we address those areas.

Our position

The ACT Party should always start with principle. This is what makes us different. Unlike National and Labour, our policies are not formed out of the musings of a randomly selected focus group. We start with principles.

On particular occasions, it will be necessary to modify a policy position in order to create policies that have the potential to be passed, but we should never start from that position.

A good example is minimum wages. It is pretty obvious if you think about it for two seconds that minimum wages create unemployment, harming those that they are intended to help. While there are a few rogue studies to the contrary, this is the overwhelming evidence from the body of expert opinion and analysis. That's the principle. But there's no way anyone else is going to support that. So we can, in the short term, reduce the harm of minimum wages by reintroducing a lower minimum wage for those with few skills and little experience.

However, if you start from a position of asking what is possible, you actually avoid engaging the public on the most important issues. You will never convince anyone, because you are already going down the path of accepting public sentiment as out of your control. And if you believe public sentiment is set in stone, then you are really undertaking the process that Labour and National have done in recent years – a rush to the centre in order to gain control of the state apparatus.

Some may rightly point out that the policies we support today are largely the same as the policies we supported in 1996. That may well be true – but what has changed is the way we present them to the public.

That's the problem now – that ACT sometimes thinks tactically, not strategically. Equally, we allow the socialists in National and Labour to set the agenda, while we respond in isolated ways to the issues they raise. We are constantly involved in minor battles, while the philosophical war is lost to those who support more and more centralised power. Is there really much gain, for example, if we get some competition in ACC, while the public oppose such a measure, when we need far more radical reform, and need to take the public with us?

Bootleggers and Baptists

We need to stress that we do not disagree with the goals of most other political parties. We too have soft hearts. The difference is, we have not let that softness spread to our heads. We can be caring, but also think critically about policies. The policies that are implemented to alleviate poverty or help those who are least well off often have the unintended consequences. More often than not, those policies harm those that they are intended to help.

Behind almost every law, there is a bootlegger and a baptist. Let's take minimum wages. The baptist is the guy who supports the policy out of the goodness of his heart – he genuinely wants to help out those on low incomes. The bootlegger is the person who stands to gain from the policy. In the case of minimum wages, there are two kinds of bootleggers. The first is employers who pay above the minimum wage, but compete against those who pay the minimum wage. A higher minimum wage may drive their competitors out of business. In other words, they support minimum wages because they are anti-competitive.

The other bootlegger is the unions, which are often trying to stop low wage competition with their labour. The workers who most benefit from minimum wages are those with skills – they were already earning more than minimum wage, but no longer have to compete against those with low skills who could get a job at a much lower wage. In other words, unions are interested in their own workers, not the ones who lose jobs from minimum wages or don’t get offered jobs in the first place, because their productive value to the employer is below the minimum wage.

These laws are all around us. The recent discussion of making it harder to become a lawyer will benefit all those people who are already lawyers – there will be less competition. Moves for safety regulation in taxis are a way to drive out part-time taxi drivers who do not want to equip their cars with complex security gear. Many laws that seem innocuous are often driven by bootleggers, who use the baptists as their cover.

ACT is different because we believe that intending to do good is not enough – we actually look at the effect of policies. Only ACT stands up against the harm that is perpetrated against the least well off by the State. And only ACT would implement policies which help the average New Zealander.

Our Beliefs

New Zealand has many social ills – and they cannot be solved unless we have an economy that can deliver the wherewithal to solve them.

There are seven factors that lay the groundwork for economic growth, and New Zealand does well on only two of them. We have an essentially stable monetary regime, and we largely support a policy of free trade.

The other five let us down. We need competitive markets to keep the cost of goods and services low and force businesses to respond to consumer demand. Private enterprise is a necessary element of competition, because without it you create state privilege. Private enterprise and competition drives efficient use of resources. Regulation needs to be minimal in order to allow private enterprise to exploit opportunities. When you have those four components, they deliver low taxes.

We believe in private enterprise, low tax, competitive markets, and better use of resources. We should not be ashamed of these beliefs – they are necessary in order to help the least well off.

Let's look at concrete examples.

We need the public to ask the following question: why do we keep voting for the socialists in Labour and National, who give us about $230 a week in our retirement, whereas we could vote for the ACT Party, whose system of individualised accounts would see most people retire with over $1 million in the bank? The current deal is even worse for those with low life expectancy – like Maori and Pacific Islanders,

Let's look at education. The Government administers a system which sees 20 percent of Maori leave without any formal qualification. Overall, the education system is failing about 150,000 kids. And apparently, making those kids meaningful in the system by forcing schools to compete for them, is radical. It's far more radical to give schools money and hope like hell that they educate the kids there. We know incentives work, so it surely is radical to pretend otherwise. It is radical to suggest that teachers should not be paid based on their performance – we know that if we did that in any other workplace, performance would decline.

Let's look at minimum wages. Many of those who leave school with no skills go out to find a job. But, currently, the Government bans employers from employing someone who does not produce more than $12.75 an hour. They say it's because they care. And yet, those who do not produce that much value end up on the unemployment benefit – a benefit that pays $3 an hour.

So, the Government stops someone from voluntarily working for $400 a week, and therefore forces them to earn $120 a week. How ruthless – how heartless.

Let's look at the proposed GST rise. Now, I don't buy into the rubbish that suggests GST is regressive – all the data shows that it is proportional. Regardless, it is unnecessary to increase GST.

It is estimated that GST will raise 2.2 billion. Then there’s automatic benefit changes, reducing it to $1.9 billion. After any compensation for those on low incomes – probably through Working for Families - we're down to around $1 billion. Now, $1 billion represents less than 1.5 percent of expenditure. Is National really claiming it can't find that much to cut? Nonsense. As Milton Friedman once said, “if you choose any three letters of the alphabet randomly, put them in any order you want, you will have an acronym denoting a Government agency which we do not need.”

Conclusion

I just want to make a few concluding remarks.

First, politicians exist in a market just like any one who sells something. We sell ideas. People buy what they want. If we dedicate ourselves towards tactical wins through our relationship with National, we will go out of business unless we also dedicate ourselves to convincing voters that our ideas have merit. That is our most important role. That role cannot be left to the 5 MPs.

Second, I also want to stress that the ideas I have for how to advance the ACT Party cause can no doubt be improved – but that is precisely why we need to have an open exchange of ideas and debate, rather than ignoring the reality. I believe that we need to sell ourselves better – we need a change of focus. I have outlined what I think we need to do. I am happy for my ideas to be critiqued and developed. I will be disappointed if once again we put off debating the key issues because we are worried about offending a few people.

Third, it seems to me that the electorate is willing to hear what we have to say. After nine years of Labour and now one year of National, it is time to differentiate between sound economics and nonsense spouted by other parties. That means taking the message to the streets to the streets.

ENDS

23 February 2010

Open Letter To Union Representatives And All Those Opposed To The Reintroduction Of Youth Wage Rates.

Re: Youth Unemployment

The Facts
Since the 1st quarter of 2008 until the last quarter of 2009, youth unemployment amongst Maori has increased by 4,000 (over 50 percent). The unemployment rate now sits at 38.7 percent for Maori youth – almost 2 out of 5 are out of a job.

The figures for all youth are also horrific. Almost 20,000 more young people are out of a job compared to the 1st quarter of 2008, and overall the unemployment rate sits at 26.5 percent.

A simple model of the relationship between youth unemployment and overall unemployment created by the economist Eric Crampton shows that there was a sudden increase – far beyond previous differences between the model and actual unemployment – from the 1st quarter of 2008 – the time at which youth rates were abolished.

The Theory
The idea that unemployment amongst those groups which have the fewest skills and the least experience may be caused by high minimum wages is not new. Standard economic theory suggests that, by mandating a minimum wage above the equilibrium price for wages, some people will lose their jobs. A leading textbook in economics (Greg Mankiw’s Principles of Micro-Economics) presents survey data that shows that 79 percent of all economists agree with the statement: “A minimum wage increases unemployment among young and unskilled workers.”

While there are occasional studies that challenge the mainstream view (such as that undertaken by Card and Krueger), they are typically subject to ongoing criticism for their method. They have also clearly failed to convince a majority of economists – those who are experts at analysing such studies.

The Implications
What this means is that excessive minimum wages for youth workers is unnecessarily locking them out of the labour market, and leading to de facto discrimination against them by employers who are choosing to go with skilled and experienced employees. This will have ongoing effects, because those 16 and 17 year olds then become the 19 and 20 year olds who have never worked, and they will struggle to find jobs at that point as well.

Moreover, many of those who are seeking employment may have left school. Failure to get a job denies them the opportunity to get on-the-job training, to get experience, and to develop a work ethic. Given the higher level of unemployment amongst Maori, this will disproportionately affect Maori job prospects in the future.

This is why I have introduced my Minimum Wage (Mitigation Of Youth Unemployment) Amendment Bill – so that employers have an incentive to hire young people over their older and more experienced counterparts and invest the time and money needed to train them. It will bring our abnormally high rate of youth unemployment back to normal levels. Young people will be given a greater chance of gaining employment, benefitting from the work experience gained and helping them build a strong work ethic for the future.

Regards,

Hon Sir Roger Douglas

The drawing of my Minimum Wage (Mitigation Of Youth Unemployment) Amendment Bill today is a step toward mitigating the high rate of youth unemployment, which has soared since Labour abolished the youth minimum wage in 2008, ACT New Zealand MP Sir Roger Douglas said today.

"Prohibiting employers from paying, for example, $10 per hour to young people often forces those young people onto the Independent Youth or Unemployment Benefits. The hourly rate on those benefits is around $3-$4 – why would we force our young people to accept $120 a week when they could be earning $400?" Sir Roger said.

"Only a ‘caring’ Labour Party politician would tell young people they’re better off being dependent on the state with $120 a week than self sufficient on $400 a week.

"Since youth rates were abolished, youth unemployment for 15-19 year-olds has almost doubled. Our young people have been priced out of the market – they can’t get jobs or work experience, and cannot contribute to our economy. What effect is this having on them?

"While the recession is also impacting on youth unemployment, this alone cannot explain the surge. More than 75 percent of economists agree that high minimum wages result in job losses – with those hit hardest being young and unskilled workers. After all, as an employer who would you pick if the cost were the same: a young person with no skills or an older person with experience?

"My Bill will give the Government the capability to set different rates for youth workers. It will ensure that young people do not have to compete against more experienced and skilled workers at an equal wage for the same job, providing them with more job opportunities", Sir Roger said.

ENDS

Prime Minister John Key claims to believe in the power of tax cuts - so it seems odd that he is only willing to decrease taxes on income if we increase taxes on consumption, ACT New Zealand's Finance Spokesman Sir Roger Douglas said today.

"I asked him today why he wasn't willing to reduce Government expenditure by $1 billion - the amount expected to be raised by hiking GST to 15 percent, after taking into account the planned benefit and compensation package changes - in order to pay for personal income tax reductions," Sir Roger said.

"Unfortunately for us all, the Prime Minister confirmed what has become increasingly obvious: there will be no reduction in the real size of Government under National.

"The reality is that $1 billion amounts to approximately 1.5 percent of Government expenditure. The idea that it is too difficult to reduce expenditure by that much is nonsense. Half of that amount would be raised by scrapping the ETS, and other revenue could be raised by scrapping nonsense agencies like the Charities Commission, the Ministry of Youth Affairs, the Ministry of Women's Affairs, and many other bogus entities.

"In fact, we could secure massive tax cuts if we ended welfare programmes like Working for Families, which the Prime Minister again today called communism by stealth. Why he's not willing to do anything about it is puzzling," Sir Roger said.

ENDS

If the Government is ‘always willing to listen to good ideas’ over youth unemployment, as Minister of Labour Kate Wilkinson said yesterday, then I expect the Government to support my Minimum Wage (Mitigating Youth Unemployment) Amendment Bill and put a stop to soaring youth unemployment rates, ACT New Zealand MP Sir Roger Douglas said today.

"The statistics speak for themselves. Since Labour abolished youth rates in 2008, unemployment for 15-19 year-olds has almost doubled. Almost two out of five young Maori are out of jobs. Our young people cannot get jobs, cannot get work experience and cannot start contributing to our economy as they are priced out of the market. It’s criminal," Sir Roger said.
"My Bill will reintroduce the capability for the Government to set different rates for youth workers. This will ensure that young people do not have to compete against more experienced and skilled workers at an equal wage for the same job. It will provide them with more job opportunities.

"Many employers were only willing to hire youth workers at lower rates because it was necessary to train them. Today, that is not happening, and many young people are not developing a work ethic. This will likely create further problems later on down the track."

"The idea that high minimum wages cause job losses isn’t new – in fact, surveys reveal that over 70 percent of economists agree with that statement. Who are you going to trust, the experts in their field, or Labour Party politicians whose main interest is votes, not jobs?

"National knows that the abolition of youth rates has hurt young people – that is why they voted against it. The question is: does National have the guts to fix it now it is in Government?" Sir Roger said.

Find the bill here

ENDS

Dr Alan Bollard
Governor of the Reserve Bank of New Zealand
Reserve Bank of New Zealand
2 The Terrace

10 February 2010

Dear Dr Bollard,

I write to you regarding the comments you made about the possibilities of New Zealand matching the level of economic output of Australia on a per capita basis, which you made on ‘Q & A’, Sunday 7 February.

In particular, I was shocked at the following comment:

"I don't think we can catch up with Australia, Australia's a most unusual country, Australia has been blessed by God sprinkling minerals across the top of the surface in very easily accessible areas in places where it doesn't annoy people to mine them. China's there buying all that, it's not rocket science, they've run the economy well, but we just don't have those advantages, but that's all good news for New Zealand because there's a lot of crumbs come off the Australian table that we can take advantage of."

The idea that the lack of mineral wealth will stymie economic growth is simply wrong. Consider the success of Hong Kong during the fifty years it was a British crown colony. In 1960, Hong Kong’s per capita income was 28 percent that of Great Britain’s. By 1996, it had risen to 137 percent of Great Britain’s. Within four decades, Hong Kong – a tiny portion of overcrowded land, with no real resources to speak of except human ingenuity and a port - was able to increase its level of economic output so that it topped the level achieved in the birthplace of the industrial revolution.

In fact, if large resource wealth was a prerequisite for economic success, then many countries that have had much faster growth rates than us should be doing quite poorly – Singapore, Ireland – and countries like the Democratic Republic of the Congo would be doing well. Mineral wealth is clearly neither a necessary nor sufficient condition for economic wealth.

A far more potent factor in driving economic growth are the institutions we develop – the nature of our constitution, the policies the Government adopts, and the social norms that develop. Economic wealth in Hong Kong has been created by, amongst others: freedom of exchange, both national and international; low taxes that reward productivity and reduce deadweight loss; and a Government that fulfils its core roles – to protect our freedoms, enforce contracts, and help create a framework for competitive markets.

There is no doubt that if we continue to maintain the status quo, then we have no hope of catching Australia. To blithely suggest that we can never catch Australia because of the minerals they have is to ignore the lesson of economic history – that policy matters.

Regards,

Hon Sir Roger Douglas

Prime Minister John Key’s belief that we should strive for a more efficient tax system without implementing constitutional restraints against excessive Government spending is stupid, ACT New Zealand Finance Spokesman Sir Roger Douglas said today.

"We’ve all played this game before. One Government will give us a more efficient taxation system, then another will come into power and all those taxes will increase. Government spending will soar. That will lead to deficits, which will create a need to make the tax system more efficient again, thus repeating the cycle," Sir Roger said.

"The spending cuts must come first. Once we have cut spending, then we can cut taxes. If we want to make the tax system more efficient, we need constitutional restraints against excessive levels of Government expenditure. It is only when we have stopped the Government from exploiting the taxpayer that we can aim for efficiency.

"It seems that Labour always come into Government with grand visions for more state spending and massive social programs. If National think its role is to only temporarily freeze the growth in state spending, then it’s no wonder we are sacrificing more and more of our resources to bureaucrats and politicians in Wellington,"Sir Roger said.

ENDS

Tomorrow Labour Leader Phil Goff is planning to deliver a speech on behalf of Prime Minister John Key. I thought that it might be a good idea to jot down some notes for what I would say if I were Phil Goff speaking on behalf of the Labour Party. I thought it best to start the apology by detailing all that he should be sorry for in the nine years he served in the 5th Labour Government, and then to move on to apologising for his attempts to gain media attention through populist trash talk since becoming Leader of the Opposition.

“The most general apology that I need to make on behalf of the Labour Party is for confusing the intention of a policy with the outcomes it produces. I am sorry for thinking that the mere intention of helping those who were least well off actually did help them. I have now come to realise that, more often than not, those most harmed by a policy are those it was usually intended to help.

“First, let me apologise to the thousands of young people who have lost their jobs because of our support for abolishing the youth minimum wage. If it was easy to lift wages without creating job losses, then we would set an extraordinarily high minimum wage. Unfortunately, wage increases which are not driven by increases in productivity merely exacerbate unemployment.

So, to those 13,000 young people who have lost their jobs because of what we did, I am sorry. I am responsible for your inability to find a job, I am responsible for holding back your opportunity to gain skills and experience. In particular, I wish to apologise to the 39 percent of Maori between the ages of 15 and 19 who are now unemployed. If only National had the guts to do what’s right and get rid of the minimum wage legislation, you would have an opportunity to get ahead.

Second, let me apologise to all those who receive a Government benefit. I now realise that the structure of our welfare system is ensnaring those who most need help by creating perverse incentives that punish success. In particularly, I humbly apologise for the Working for Families package. Most recipients of Working for Families now pay effective marginal tax rates in excess of 50 percent. Some pay in excess of 100 percent. We did that to you – trapped you in poverty by no longer rewarding hard work – and I apologise to all those who are struggling against Government to get ahead.

Third, let me apologise to all those school students who would desperately like to escape from their failing local school. I want to apologise to the 22 percent of students this year who will leave school unable to read or write. Many parents would like to enrol their kids in schools out of zone – in schools that are more likely to meet their needs. I apologise for thwarting the choices that thousands of parents would like to make, by introducing strict zoning requirements for schools. Most of all, I am sorry for the fact that wealthy people do have school choice, while the poorest are the ones who have none. I am sorry for creating two classes of pupil.

Fourth, I want to apologise to all those who die on waiting lists. By having a public health system, we have effectively stripped individuals of choices and control over their own health spending, and have allowed the Ministry to decide who is worthy of having an operation. I am sorry to those individuals and the suffering that their families have endured. Moreover, I, Phil Goff, want to apologise for perpetuating the myth that we have “free” healthcare. The cost of healthcare now amounts to 54 cents in every dollar of personal tax paid by individuals. I’m sorry that our health system costs so much and doesn’t deliver for those in need.

Fifth, I am sorry to all taxpayers, because I thought that the Government could pick winners. I am sorry for supporting tax subsidies for the racing and film industry. I forgot that that kind of economic planning was the hallmark of Muldoon’s time, and I apologise for repeating his errors.

I am sorry for misleading the New Zealand public and trying to justify these programs on the basis that they “create jobs.” The tax subsidy merely sees resources used in racing or film as opposed to a more commercially sound project. For the jobs it creates somewhere, there are jobs lost elsewhere. At best, it is neutral on the job front. In reality, it is worse than that, because politicians tend to be poor investors.

Sixth, I am sorry to every superannuitant in this country. When the state controls your entitlement to superannuation, we effectively discriminate against those groups which have shorter life expectancy – and so I apologise to Maori and Pacific Islanders in particular. More generally, I am sorry for continuing with a pay-as-you-go system. I know that the effect of compound interest sees every dollar invested by an 18 year old today return 10 dollars on retirement – and although we could all retire with $1 million in the bank, I am sorry that most end up with a measly $240 a week. The Labour Party apologises to you all.

Seventh, I am sorry that Government monopolies are so expensive, when I know that the solution was competition. Monopolies are never good – be they public or private. Monopolies are always arrogant, controlling, and expensive. I am sorry that I did not force Government run schools and hospitals to compete against each other.

Eighth, I am sorry for populist vote buying. I am sorry that we sold out the New Zealand taxpayer to pay for election bribes like the Supergold Card and interest free student loans. I am sorry that middle New Zealand now pays for these benefits, most of which are consumed by the wealthy, not the poor. Those students who receive a benefit today will be forced to pay for that benefit over the next 45 years. That hardly seems interest free at all.

Ninth, I am sorry for how we treated Maori. While my Government fostered an environment that focussed on historical grievance, we created more problems when we stripped Maori of the right to seek title to the seabed and foreshore. I am sorry for that modern day land grab. I am also sorry that we did nothing to improve the education that Maori get. I am sorry just last week for saying I would govern for the “many, not the few,” which has the implication that I will continue to sell-out Maoridom when it does well in the polls.

Tenth, I apologise for Government ownership of commercial assets. I apologise for this because the absence of commercial ownership has seen these businesses underperform. I realise, as I understood in the 80s, that politicians are just not good at driving performance in private industry. That is why this year the Government will be forced to hand out more money to the failing railroads. I am sorry for hitting you all with that bill.

Most of all, though, I am sorry for convincing many of you that the way to help the poor was through Government. I, Phil Goff, on behalf of the Labour Party, am sorry that those with the lowest incomes are forced to pay to send the children of wealthy parents to University, to pay for superannuation which they often will not collect, and are forced to send their children into schools that fail to educate them.

I am sorry that this will continue as well. We have a National Government whose decisions in the coming year will be done on the basis of the latest polling they have undertaken, which likely means more middle class welfare, more state control, more failure. I am sorry that your latest political masters are continuing a tradition of doing what is easy, rather than what is right. I am sorry that there is no change on the horizon.”

If Phil Goff was being honest with himself this is the speech that he should give. You will be able to judge tomorrow if he is going to continue down the populist path or face up to the problems that New Zealand faces.