ACT Auckland Campaign Closing Speech
G’day folks,
Six months ago I did a short course in Washington D.C. The course was called the Campaign Management Institute and it was about political campaigning.
I was keen to learn about the politics and campaigning there, but it turned out to be a bit simpler than I thought.
‘Elections are about choices,’ the lecturer said.
Elections are about choices. I started to wonder if they were going to tell me anything interesting. But sometimes the simplest turns out to be the best. And as we close this campaign and turn the choices over to the voters tomorrow, I can see what he meant.
ACT has played an honourable role in offering the voter choices in this campaign, and tomorrow those choices couldn’t be starker.
The first choice is purely strategic, and only in one electorate.
I happen to be a centre-right Epsom voter myself, and to us in Epsom the choice couldn’t be clearer.
I could vote for Paul Goldsmith, and get Paul Goldsmith who’s already going to be an MP off the National Party list anyway. It would be a bit like buying a Christmas present that you already know is in Santa’s sack.
But I’m going to vote for John Banks. I’m going to vote for Banksie because he’s a legend. A guy that started out sleeping under Grafton Bridge and built up his own restaurant chain, adopted three kids from the other side of the world and brought them to the greatest country on Earth, and has already had a bigger political career than almost anyone in New Zealand politics today.
Moreover, as a centre-right Epsom voter, I know that a vote for John Banks is MMP insurance. A vote for Banksie is a vote for Paul Goldsmith, John Banks, and the ACT team.
As the polls tighten up all eyes will turn to Epsom tomorrow night, and that choice will be the choice between keeping John Key as Prime Minster, or turning the Government benches over to Phil Goff supported by a coterie of borrowers, spenders, and no-hopers.
National might just make MMP history and squeak in alone tomorrow night, but they won’t do it twice in a row. Without ACT as a long term coalition partner, National will have a choice of their own. Either move dramatically to the left or spend a very long time in the political wilderness.
Inside the choice of whether to have a viable centre right, there are policy choices.
In all the candidate debates I’ve seen, those choices are crystal clear.
The Labour Party offer 1970s economic policy.
We can keep a flexible labour market where wages and jobs depend on what customers are willing to pay for what workers produce. Or, Labour could take us back to the 70s with a central government agency setting wages for entire industries.
We can keep what is internationally recognised as one of the best central banking systems in the world, a system that keeps prices stable and lets people get on with business. Or, Labour would take us back to the 70s by, as my Auckland Central opponent Jacinda Ardern likes to put it, ‘giving the Reserve Bank Governor more tools’. What she really means is letting the reserve bank play dice with our money supply, a bit like the U.S. Federal Reserve was before the Great Financial Crisis.
We can keep one of the cleanest and simplest tax systems in the world. Or, Labour would take us back to the 70s with a Capital Gains tax, a tax that raises little revenue, is difficult to enforce and comply with, and slows down investment.
We can keep raising wages by raising productivity. Or, Labour, the Greens, the Maori Party, and the Mana Party would take us back to the 70s by trying to put up wages by legislating a much higher minimum wage. You just have to ask yourself, who are all the countries in history that have legislated themselves rich?
We can keep to the consensus that governments picking winners and trying to invest your money better than you can is wrong. I thought that Muldoon’s’ Think Big’ policies had inoculated us against such misadventures. Or, we could have a Green Party Minister playing with a billion bucks worth of your taxpayer money, investing in Clean Energy, taking on the General Electrics, Siemens and Samsungs of the world. You just have to ask yourself, if you knew what the next big thing in the energy industry was, would you be working at it and investing in it or would you be standing for the Green Party?
Maori and Mana would like to have a Financial Transaction Tax. Tariana Turia says it could generate $22 billion per year. She should know that the entire revenue of the Financial and Insurance sectors combined was only $12 billion in 2009. They would be paying 183 per cent tax. We’d have no financial sector and be back to bartering overnight.
We can continue to be the only nation in the world that has made a better fist of bringing together different cultures than anywhere else, or we can go down the path of constitutional biculturalism, where there are different laws for different races, as Mana and the Maori Party would have us.
Folks, beneath the choice of giving the Centre Right a viable coalition, or giving power away to the coalition of the left for a very long time are some very significant policy choices.
But the choice is not just about whether or not we have a centre right government, but whether we have a very good one.
Between giving a party vote to National, or a Party Vote to ACT, there are more choices.
Whenever John Key ducks a hard choice he says he wants to ‘take people with him’. The thing is, I’m not exactly sure whether he knows where he’s going.
With National the Emissions Trading Scheme will soon be taking $100 per month out of a household of four to pay for tree planting and foreign carbon credits. ACT says we should put that money back into the economy and let those households spend it themselves.
With National we’ll be keeping the pension age at 65 come hell or high water. No matter that the Retirement Commissioner says we must raise it, or that half the developed world is in the process of raising theirs, or that in my lifetime there’ll be only two workers to support every superannuitant. ACT says we need to recognise demographic and fiscal reality, and would put the pension age question to a public vote.
With National we’ll be keeping Helen Clark’s election bribe spending that has drained the life from the productive sector with punishing taxes today and irresponsible borrowing to be repaid tomorrow. ACT says we need to get real about government spending.
With National we’ll be tinkering with the Frankenstein Resource Management Act legislation. The legislation that has armies of bureaucrats policing the colours people paint their houses at the ratepayers’ own expense, will remain essentially unchanged. ACT says that the RMA needs a radical overhaul so New Zealanders can get on with developing and using their property.
With National our education system will continue to operate like McDonalds, where the bureaucrats in the Ministry decide what children are taught, how, and by whom. ACT says we should return power over how schools are run to the people who know the children and the schools best. Parents, principals, and teachers.
With National there is no good reason to think that New Zealand will close the income gap with Australia, as we haven’t in the past three years. ACT says we should professionally measure that gap and relentlessly pursue its closure by 2030.
These are the choices this election.
There is the strategic choice in Epsom.
There are the broad policy choices between the left and the right.
Then there are the choices about the flavour of any future centre right government.
But beneath these headline choices is a much simpler one.
Do we think New Zealand is worth it?
If we do, then a Party Vote for ACT is a vote for sound economic management. It’s a vote for New Zealand to be a first world country that can afford first world public services and offer first world opportunity to the next generation.
If we don’t then the other parties will take us up the garden path. Some of us will try to vote ourselves rich in the short term but all of us will be poorer in the long term.
When it comes to rational economic management, I can’t think of a better champion than Don Brash.
Like John Banks, Don is a legend.
He has a PhD in Economics and both his Masters and PhD Thesis were published books.
He worked for five years for the World Bank in Washington.
He had a successful career as a private sector banker.
He was the second longest serving Reserve Bank Governor in this country’s history, and the Economist magazine called him ‘the world’s best central banker’.
I don’t think there’s anyone alive today who understands the New Zealand eonomy better than Don Brash.
I can’t think of a better voice to have in parliament during an economic crisis, while New Zealand is in a long term economic decline relative to our trading partners, than Don Brash.
That’s why, in the polling booth tomorrow you need to give your party vote to ACT.
ENDS
Closing the Gap Like We Mean It
Speech by ACT Leader Don Brash
ACT Wellington Campaign Close
Thursday, November 24 2011
Good afternoon.
Lewis Carroll once said,
‘If you don’t know where you’re going, any road will get you there'.
The question of where we need to go as a country is very much one of what you believe the most urgent problems are.
Some will say that our most urgent problems are dirty rivers, child poverty, and the possibility of some power companies being sold.
The first two of those are certainly important. But I’ve argued, and will continue to argue, that our economic decline is equally important, and much more urgent.
The reason is, looking after the environment and our most vulnerable citizens takes money. The wealthier we are, the better we can do so.
Our most urgent priority should be to retain and attract people and investment. If we fail at that challenge, then a lack of money will ensure that we cannot solve the problems other parties identify either.
As I will argue in a moment, the most important question that we need to answer is whether or not what we’re doing to close the gap between our incomes and those in Australia is working.
But if we don’t know how we’re doing, any approach will seem to work.
Anyone who doubts the urgency of lifting our economic performance should consider how our competition with Australia for people, investment, and jobs is playing out.
As reported by the 2025 Taskforce two years ago, Australians were earning 35 per cent more on average than we were in 2008. That was the best calculation possible taking into account differences in currency and the cost of living.
The New Zealand Herald recently reported that the gap between workers in Auckland and Sydney was 38 per cent. Based on Australia’s faster economic growth in the past three years, we can guess that the gap is now approaching 40 per cent.
For decades, there has been a strong relationship between the exodus of New Zealanders across the Tasman and the gap between New Zealand and Australian incomes.
When the gap grows, New Zealanders leave faster.
Statistics New Zealand reports that the net loss of New Zealanders across the ditch was nearly 300,000 in the past decade. On our current path, we can expect to lose a further 400,000 New Zealanders - equivalent to the entire population of the greater Wellington region - by 2025.
The exodus is pernicious because it creates a cumulative effect.
Every time a New Zealander leaves, they take with them hundreds of thousands of dollars’ worth of healthcare and education that taxpayers have invested in them. They also take with them their future potential as wealth creators and taxpayers.
The incentive for still more people to leave increases, and we find ourselves in a downward spiral.
If we keep allowing this to happen, we will be facing a total collapse of New Zealand as we currently conceive it.
But our economic performance isn’t like bad weather. We do have the power to change it if we make the right policy choices.
Over the past three years, no party has had a better record than ACT in pushing the economic growth agenda. This is what we achieved:
First, we helped to change the government and make John Key Prime Minster.
Had ACT not contested the last election, some of ACT’s voters would likely have voted National. But given the electorates’ allergy to single party government under MMP, it seems unlikely that National would have governed alone.
Would the Maori Party have made John Key Prime Minister anyway? The simple answer is no.
Without ACT, Helen Clark would still be Prime Minister today.
Without ACT this time, it’s quite possible that Phil Goff will be Prime Minister by Sunday, supported by a coalition of borrowers, spenders and no-hopers who will accelerate our economic decline.
ACT not only helped make John Key Prime Minister in 2008, but were responsible for achieving many of the important policies to improve our economic performance passed by the Government since then.
ACT pushed for long over-due reform of the Local Government Act, improving the transparency and efficiency of councils for ratepayers.
ACT convinced the Government to extend the 90-day trial period for new employees from firms employing fewer than 20 people only, to all firms, increasing employment opportunities for people who might not otherwise have been hired.
ACT convinced the Government to start work on opening up the ACC to competition, giving employers more flexibility, choice, and reward for safer practices.
ACT supported the Government to reform the Resource Management Act, leading to improvements in compliance costs for developing and using New Zealand’s greatest resource, its land.
ACT had the Productivity Commission established so that, like Australia, New Zealand will have a government agency that actually advocates for the wealth creators in the country rather than the government sector and its direct beneficiaries.
ACT also pushed for the establishment of a new Ministerial position, Minister for Regulatory Reform, and in that role Rodney Hide was responsible for taking the secateurs to red tape for the benefit of New Zealand business.
In addition to these positive initiatives, ACT has also been the leading opponent of bad policies, such as the Emissions Trading Scheme and the refusal of the Government to reinstate a youth minimum wage.
There is no doubt that a vote for ACT in 2008 was a vote for steering the Government towards better policies for economic growth.
Unfortunately, this has not been enough to address our economic malaise.
This week, Statistics New Zealand reported a near-record net exodus of 35,000 New Zealanders across the Tasman. Over the past three years, the net exodus has averaged 25,000 per year, up on the average of 21,000 during Helen Clark’s time in office.
Similarly, the wage gap that was supposed to be closing has been reported as widening. Over the past three years, the Australian Bureau of Statistics reports Australian wage growth of 12.6 per cent compared to New Zealand wage growth of 11 per cent.
John Key meanwhile claims that New Zealand wages have grown faster because tax cuts leave Kiwi workers with more take-home pay, even as the government borrows $300 million per week to prop up its spending.
New Zealand clearly needs to do more if we’re serious about closing the income gap with Australia.
There’s no doubt in my mind that ACT is by far the most serious and credible party on the question of closing the income gap with Australia.
In my speech at ACT’s campaign launch, I announced a series of priorities that ACT would pursue in any future coalition government.
ACT would continue to pursue the passage of the Spending Cap Bill. This bill would constrain government spending to rise no faster than the rate of inflation plus population growth, aside from national emergencies. It would remove the incentive for the kind of election bribe spending practised by the Clark Government in its last three years, and reduce taxation on wealth creators.
ACT would push the Government to reduce government spending relative to the size of the economy to enable radical tax reduction, and a lower exchange rate. ACT would push for a radically lower company tax rate of 12.5 per cent, with the top personal rate as low as revenue will allow, perhaps 25 per cent.
ACT would push to sharply reduce bureaucracy, opening up more opportunity for wealth creation by cutting back the kind of bureaucracy that sees councils employing people to enforce such inane regulations as those which stipulate what colour people must paint their homes.
ACT would also push for better quality regulation through our Regulatory Standards Bill. This Bill sets out principles for responsible regulation that all proposed regulations must be measured against. Ministers or MPs wishing to pass regulations not up to standard must explain to the public why the regulation should still be passed. This public accountability would see a reduction in poor-quality regulation that currently costs our country so much.
ACT would push to axe to the Emissions Trading Scheme, saving $100 per month for the average family of four and sparing a very considerable cost for the most important export sector of all, the farming industry.
We would seek to stop the carbon price being doubled as is currently scheduled for 2013, have biological emissions written out of the legislation, and ultimately put the scheme on ice until our major trading partners catch up and implement their own equivalent schemes.
ACT would promote a multi-party consensus on superannuation, because almost everybody who thinks seriously about the subject knows that the age of entitlement must rise.
As I announced yesterday, we would push for a referendum on the age of eligibility as part of any future Confidence and Supply Agreement with the National Party.
But there’s one more elephant in the room that I’ve not mentioned so far.
I started out quoting Lewis Carroll, but I might just as well have quoted the Management 101 mantra,‘what isn’t measured isn’t managed’.
If we wish to be serious as a country about retaining and attracting people and investment by closing the income gap with Australia, then a good starting point is to have agreement about what that gap is.
Keen observers will notice that I’ve quoted several sets of figures regarding the gap.
I’ve given the 2025 Taskforce’s figure of 35 per cent in 2008. I’ve given the result of a recent New Zealand Herald study which found it to be 38 per cent. I’ve given my personal assessment that the gap is probably close to 40 per cent by now.
The reality is no one knows for sure exactly what the actual figure is.
Listening to Phil Goff and John Key making claim after counterclaim in the House about the size of the gap is tedious, or at least that’s the most polite way to put it.
The truth is that calculating the gap is not a trivial exercise.
It requires understanding living costs, tax systems, currency differences, and employment laws, among other things. Getting a proper reading on the gap is not a matter of simply looking on the websites of Statistics New Zealand and the Australian Bureau of Statistics.
In fact, performing just such an exercise was part of the Confidence and Supply Agreement between ACT and National in 2008.
The 2025 Taskforce, which I had the privilege of chairing, was designed to measure the income gap with Australia, suggest ways to close it, and report annually on progress in closing it.
John Key’s decision to axe the 2025 Taskforce earlier this year was supposedly because I had decided to seek re-election to Parliament. But while I was the chair, I was obviously not indispensible. There was no reason it couldn’t have continued, albeit with someone else at the helm – perhaps David Caygill, already a member of the Taskforce, somebody who is clearly not aligned to either the National or the ACT parties, and somebody eminently well qualified to undertake the task.
It might be that the Prime Minister thought the Taskforce’s recommendations were too extreme. He’s entitled to that opinion of course, just as he was able to ignore or accept its advice.
But I don’t think that’s what disbanding the Taskforce was about.
Whatever the reason, the most important result is that this election year, the income gap between New Zealand and Australia has not been measured by the Taskforce.
Without repeating the measure made in 2008, it’s possible for politicians of all stripes to use a variety of figures to muddy the waters on where we’re really headed.
‘If you don’t know where you’re going, any road will take you there’
For this reason, I’m announcing today that one of ACT’s top priorities in any Confidence and Supply Agreement with the National Party will be the reestablishment of an arms’ length taskforce with the mandate of measuring the gap between Australia and New Zealand and reporting on it on a regular basis.
Whether or not government statisticians know there’s a gap, New Zealanders do.
Grandparents who must visit their grandchildren overseas know it.
Young tertiary graduates who are considering joining the 24 per cent of their friends who currently live overseas know it.
Working people who see dramatically higher wages know it.
Aroha Ireland, the girl whom John Key took to Waitangi in 2008 when he was campaigning on closing the gap and who has just moved to Melbourne, she knows it too.
Perhaps most surprisingly, the 27 per cent of Year Nine students who said they wanted to permanently leave New Zealand know it too.
Why can’t our politicians get the message?
In 2008, 2025 seemed like a time frame by which we could close the gap. It gave us 17 years to do so.
Given that we have fallen further behind in the past three years, and the Prime Minister does not want to move as fast as the Taskforce proposed previously, it seems we will need more time.
And so it is with great sadness that I call for a 2030 Taskforce, to measure the gap between New Zealand and Australia, and give suggestions for closing it by 2030.
This Taskforce should publish an independent review of living standards in New Zealand compared to Australia every year. Only by doing this can the nation keep politicians honestly focused on the urgent challenge of closing the income gap.
Only by achieving that can we hope to deal with the problems that other parties identify, by having the resources to better look after our environment and our most vulnerable citizens.
Ladies and gentlemen, the ACT Party is committed to closing the income gap with Australia. We believe that doing so is essential to stemming the flow of people across the Tasman and is therefore essential to securing New Zealand’s long term future.
If you believe that good economic management requires good economic measurement, and that important challenges don’t go away just because they’re ignored, please give your party vote to ACT this Saturday.
A Party Vote for ACT is a vote for closing the gap with Australia like we mean it.
Don Brash on the NZ Herald live chat
Earlier this afternoon Don Brash participated in an online live chat on the New Zealand Herald website. Below are some of the highlights.
On ACT’s appeal in 2011:
I subscribe to most of the values that National espouses on its website - limited government, personal responsibility, equal citizenship, to name just three.
My disappointment with National is that they seem to have forgotten those values - government spending now higher, relative to the economy, than in any year of the last Labour Government and no obvious commitment to Article III of the Treaty (which commits to all NZers being equal under the law).
And low and middle income earners are those most disadvantaged by the relatively poor performance of our economy. ACT has policies to fix that underperformance.
On tackling household and government debt:
Yes, household debt is a bigger issue than government debt at the moment, though government debt is rising fast - by hundreds of millions of dollars a week. Restraining the growth of private sector debt is not straightforward, but one of the causes of it over the last 20 years has been a persistent belief that property prices always rise, and therefore borrowing against property is a riskless activity.
The rapid growth in house prices was driven in significant part by the dopey restrictions which too many local governments have placed on the availability of residential land, so that, though we are one of the most under-populated countries on Earth, our residential land prices are truly ridiculous.
On whether National can get New Zealand into surplus by 2015:
Well, the Government has projected surpluses in the medium-term future for the last several years, and so far at least those surpluses seem to constantly slip further into the future. Over-hanging those projections is an extremely threatening world economy: if that turns out to be half as ominous as seems like at the moment, getting back into surplus by 2015 will be very tough.
On what one issue he could fix right now if he could:
Excessive government spending. That's not only driving a big increase in government debt (albeit from a low starting point, as I've mentioned), it is also a significant fact in keeping our exchange rate too high - much of the borrowing to fund that spending is being done offshore, and overseas investors have to buy NZ dollars to buy the NZ government bonds. That makes life tough for exporters, and with a high level of international indebtedness that isn't what we need.
You asked for one policy; If I had a second one, I’d go for radical reform of the RMA.
On the trouble with Capital Gains and land taxes:
I used to favour a CGT, but I now believe there are more arguments against than for. They don't prevent property price bubbles (Australia and the US have both had property price bubbles, and both have a CGT), and effectively involve double-taxation of corporate income. (When a company share is sold, the value of that sale is the present value of an expected stream of future after-tax profits.)
The trouble with a land tax is that it would hit hardest the most important part of our export industry, namely farming, and perhaps indirectly jeopardise the soundness of the banking sector.
On how ACT policies help students:
ACT does not support interest-free student loans (and I well recall Bill English describing the policy as an unprecedented electoral bribe when Labour introduced it in 2005). But even under previous policy, interest did not become payable until the borrower was earning above a certain threshold.
NZ now spends quite a lot on tertiary education, but a disproportionate amount of that spending goes to students rather than tertiary institutions themselves. The danger is that, because universities are increasingly unable to compete with the best universities overseas for good staff, the degrees which our students get will be progressively less valuable, with our very best students heading overseas to better universities.
On whether governments should own certain assets:
Actually, I believe that National is using a rather weak argument for selling minority stakes in four of the SOEs. Yes, that will avoid some borrowing, but selling assets is a poor way of bridging a deficit caused by too much spending.
The real argument for selling SOEs should be that governments very rarely make good owners of commercial businesses. Yes, there are a few exceptions (most of them in Singapore!), but that's the general experience around the world. And yes, the government "had" to purchase railways because their private owners couldn't make a go of it. But then nor could the state: railways made a loss for the taxpayer in almost every year for the 20 years before it was sold.
There are a few SOEs which I would not favour selling - those operating natural monopolies like Transpower - but why government would want to run three competing generating companies is beyond me. Power generation is important - but so is food production and retailing, and nobody seriously suggests the government should run a chain of supermarkets!
On catching up with Australia:
The main reason why I'm seeking to get back into Parliament is well illustrated by your question. Far too many people are finding it very tough indeed to make ends meet now, and can see a much better future for themselves and their families in Oz.
As a fifth generation New Zealander, that makes me angry. There is no inherent reason why we can't have incomes similar to those in Australia. I was delighted when the National Government committed to closing the gap between incomes here and those across the Tasman by 2025, but I've been profoundly disappointed that so far at least they've shown no serious commitment to that goal.
On ACT’s small business policies:
First, we will strongly oppose any increase in the minimum wage (you can't raise wages by decree - if you could, why not raise it to $50 an hour and eliminate poverty at the stroke of a pen?): many small businesses are finding it tough to pay even the current minimum wage.
Second, we will make a strong attack on red tape - the RMA is a symbol of that, but there are a raft of other areas too where red tape makes life a misery for small businesses (and large businesses).
Third, we will cut the company tax rate - not to favour "our rich friends" but because the only sustainable way to raise wages and salaries to have more capital per worker, in other words more investment. Countries with a seriously low company tax rate (and we've suggested 12.5%) attract investment better than those with a high company tax rate.
On New Zealand’s relationship with Fiji:
Fiji has long been a part of the New Zealand family and I think it is a tragedy that we are gradually pushing them away (and into the arms of other countries). We have tried ostracism and is doesn't seem to be working. It's time to look at a change in direction, in the interests of both Fiji and New Zealand. After all, we already deal with plenty of governments around the world which are not remotely democratic.
On whether we should be more like Singapore:
I greatly admire Singapore, and have visited there many times. But I very much doubt that most New Zealanders would vote for that kind of regime. As John Key said once, Paula Bennett spends more than a million dollars an HOUR on social welfare; in Singapore they spend $40 million per YEAR. But there are things we should copy: their dedication to education, savings, family values - those are all things we should and can emulate.
But at the end of the day, New Zealand is unique, with our own values and own environment. There is no good reason why we can't have a country which is wealthy enough so that families are not struggling to make ends meet, and which has a social and natural environment which is the envy of the world.
On education:
I think Anne Tolley has been trying very hard to deal with the fact that, though many of our schools are extremely good by any standards, too many children still come out of school unable to read and write, or do basic arithmetic.
The ACT Party wants to go much further, and allow the money which the taxpayer provides for the education of our children to be used at any school of the parents' choosing. We'd also make available the information from SchoolSMART so that parents could make an informed choice about the best school for their child.
And we'd allow good state schools to expand, by opening additional campuses elsewhere in the country.
On Don’s overall ambition for New Zealand:
I very badly want to help set New Zealand on a path where most families can make ends meet, where everybody who wants a job can get one, where we protect the natural environment, and where every citizen is equal before the law, no matter his or her ethnicity.
That's the kind of New Zealand I would dearly like to leave to my children and grandchildren.
Speech to the Mt Vic Residents’ Association
One of the reasons why New Zealand has not had our personal freedoms totally overridden as a result of ever-larger government is because, ordinarily, National and Labour believe in different things, and implement different policies.
When Labour comes to power, they implement plans that they believe will cure some social ill, throw huge amounts of taxpayer money at it, and increase taxes.
National then come to power, remove the most wasteful aspects of policy that Labour introduced, and through fiscal prudence manage to temporarily restrain the growth in Government expenditure to deliver tax cuts.
That balance no longer exists.
National are no longer the party of limited government, lower taxes, and personal responsibility.
Let’s take a look at their record:
First, National has been unwilling to make any significant changes to the policy areas which, in the longer-term, are totally unsustainable.
A superannuitant who collects NZ Super for 20 years collects 88 per cent of all the income tax they ever paid in their lifetime.
In 1972, there were forty two working people for each beneficiary. Today there are just seven.
National is not addressing these problems.
Second, National funded personal income tax reductions by increasing GST. In other words, this was not a tax cut – it was a tax switch.
National have not delivered tax cuts.
And third, National are borrowing over $300 million a week. On a per capita basis, National have run up almost $20,000 in debt.
You’ll all have to pay that back with interest.
With debt skyrocketing, low economic growth, and stagnant wages, is it any wonder that 100,000 people left to other countries to live and work since John Key became Prime Minister? Should we be surprised that a recent poll of Year Nine pupils revealed that 27 per cent wanted to live overseas permanently?
If you want New Zealanders to earn high incomes here, not overseas, you need to party vote ACT.
ACT has a plan to stop the Government spending so much by putting politicians on a budget by passing our Spending Cap Bill. Once politicians’ spending is restrained, we will look to lower government expenditure as a percentage of GDP, allowing significant tax cuts to be implemented.
When I advocated for these policies in the last candidates' forum, National Candidate Paul Foster-Bell called me a right-wing extremist. If you, like me, believe that you spend your money better than politicians do, then I ask you to join me in believing something that National clearly no longer does.
ACT will create jobs, not through subsidies to green industry, but through private industry – entrepreneurs – developing their businesses, expanding, and employing more people.
Wage growth is driven by an increase in productivity, and producing more means expanding the size of the private sector, while ensuring value for money in public services by creating competitive markets.
Considering National’s absolute failure to make individuals more free by taking less of their money, but their purported belief in limited Government, I want to challenge Paul Foster-Bell, the National candidate, to do one simple thing.
I challenge Paul Foster-Bell to name one Government programme, or one Government department, that spends over $10 million annually, which he personally supports cutting.
If he can’t do it, then there’s only one party left that believes in individual freedom; lower government expenditure; and lower taxes.
If he can’t do it, you need to party vote ACT.
Thank you.
Note: Paul Foster-Bell said that he didn’t support cuts to any government departments or programmes, but that National would consider implementing reforms to “streamline”.
Shooting Ourselves in the Wallet
Don Brash, Leader ACT New Zealand
Bureta Park Inn, Tauranga
Monday 21 November 2011
Thank you everybody for welcoming me to sunny Tauranga once again.
Please allow me to thank in particular our Tauranga candidate, Kath McCabe. Kath is an extraordinary person. She speaks at least four languages, is a top environmental lawyer, and has been a tireless campaigner for the principles of the ACT Party.
Please also allow me to thank Bob Clarkson, or Bob the Builder as you may know him. Bob has put his all into supporting ACT’s Tauranga campaign, and I can’t think of a more formidable ally in the Bay.
Bob has been a particularly innovative advocate for housing policy. In the long term, no party is better than its policy ideas. Bob has provided us with a forward-looking policy that would allow state house tenants to buy their houses while the state retains title for the land. In addition to ACT’s policy of freeing up more land for home building across this great country, Bob’s innovation will form a major plank in our push to get more New Zealanders into home ownership at a time when the obstacles to buying a first home are dauntingly large.
Finally, can I thank all of the team here in Tauranga. I understand ACT is polling at six per cent here. Let’s hope we can replicate that across the country on Saturday.
My talk today is about the economy. It’s one of three that I’ll be giving this week as New Zealanders close in on the polls. This particular one focuses on the Emissions Trading Scheme, one of the most damaging policy choices that New Zealand has made in recent years.
New Zealand’s hyperactive adoption of the world’s only all-sectors-all-gases Emissions Trading Scheme will not save us money on international obligations, because after the Kyoto Protocol expires next year there will not be any such obligations. It will not affect the global climate because New Zealand’s emissions form an utterly trivial fraction of global emissions. It will not set an example to the world: if anything it will show the world that trying to lead on climate change policy is counterproductive. It might improve “Brand New Zealand,” but only at an unacceptable cost.
First, though, let me set some context.
Each economy speech this week fits into the following background. New Zealand is stagnating, and in a global environment where countries compete fiercely for people, investment, and jobs, we must run to stand still.
We already start from a serious handicap. We might be in a relatively good position compared to some of Europe’s basket cases, and our economic policy environment is not too bad if we compare ourselves only to them.
The problem is that we’re not really competing with them for investment and jobs. We’re competing with our neighbours across the ditch, and you’d have to say things are not going well.
As best it can be estimated, Australians were on average 35 per cent better off than New Zealanders were in 2008, taking into account cost of living differences. Today, that gap is nearer 40 per cent.
It’s no accident, then, that Australia attracted nearly 300,000 people net from our shores in the last decade. It’s no comfort to learn that on current trends we expect them to lure away a further 400,000 in the coming fifteen years.
You can see that we are behind on incomes, we’re losing people, and we face very difficult choices around taxes and spending. We need to seriously grow the pie, seriously soon.
Success over the coming decades will require making hard choices with our wits about us. Failure will require only that we carry on along our current path.
If we fail, we should expect to see the income gap with Australia head for 50 per cent and beyond, and New Zealand as we currently conceive it will no longer exist. Goodbye to the first world country with first world public services, first world jobs, and first world opportunity.
That is the backdrop against which all policy decisions should be made. We should ask ourselves, in each case: will this policy choice make the economy more efficient and more productive so that we can close the income gap with the countries we like to compare ourselves to?
It’s actually not a choice. If we try to choose bigger government over economic efficiency, we will end up with neither as our most productive people leave and those remaining find their golden geese have flown the coop.
With that backdrop in mind, let us consider the arguments for the Emissions Trading Scheme.
The first and most common is that our Kyoto commitments require that we, as a country, pay anyway. If that were true, then the people who get the most benefit from carbon emissions should pay.
But nobody seriously believes that there will be a binding international agreement after Kyoto expires at the end of next year. No agreement, no liability.
Nick Smith is on record in Parliament saying he does not believe there will be one. The British Government has said they don’t believe there will be such an agreement this side of 2020. The Japanese, Canadians and Australians do not intend to join a new Kyoto agreement. India and China are not required to make cuts under the current Kyoto Protocol. The United States is not in the current Protocol and certainly won’t be joining a new one as other countries leave the old one. No agreement, no liability.
So if we do not need an Emissions Trading Scheme to fulfil our current liabilities, what other reasons might there be?
The most obvious is that we want to mitigate climate change. I’m not going to get into an argument about climate science. Let us proceed from here using the assumptions of the most shrill believers in anthropogenic climate change. Let us assume that climate change is a real threat to our way of life, that it is primarily caused by us humans, and that we should be doing everything in our power to stop it.
Even on that assumption it is pointless for New Zealand to have an ETS. New Zealand produces 0.2 per cent of global emissions. There is no way that New Zealand could ever expect to have a measureable effect on climate change if we shut down the entire country tomorrow, let alone making the fractional changes that the ETS might achieve.
So it’s not about directly affecting the climate. We simply cannot do that no matter how hard we try.
We might believe that it’s about pulling our weight, doing our fair share as good international citizens. After all, we do like to think of ourselves as good global citizens.
But a “fair share” doesn’t mean “the lion’s share”. Why are we leading the world?
The Ministry for the Environment has a page of examples supposed to show that we’re not alone, but actually shows no other country is going as far or as fast as we are.
The European Union has a highly selective scheme that includes only so-called “major installations” in some industries and is generally riddled with exemptions.
The Japanese and Swiss have voluntary schemes.
The United States never even ratified the Kyoto Protocol and has only a few weak regional trading schemes within its borders.
There are no examples from the entire continents of South America and Asia, or the Subcontinent.
The Ministry has not updated their website to reflect the recent passing of Australia’s Clean Energy Act, but if they did they would show another country with a far less comprehensive scheme than ours. The Australian scheme rewards rather than punishes farmers. It does not include private transport as ours does. And who knows whether it will survive Australia’s next election, when a popular Opposition has “pledged in blood” to repeal it?
Some might still say shame on them. It is those other recalcitrant countries who have got it wrong while we are on the moral high ground. The real lesson we will offer the world is that going too far and too fast on climate policy drives industry, jobs and investment away from our shores.
We will drive industry to places with worse environmental standards than ours, hurting our own economy and the environment simultaneously. It seems unlikely that many countries will be falling over themselves to follow such an example.
Finally, some will argue that we need an ETS to shore up “Brand New Zealand.” Being aggressive about climate change, the argument goes, will make our exports, including tourism, more attractive to foreigners.
The great difficulty here is that we don’t really know how much foreign customers actually value dealing with a country that has a comprehensive ETS. Considering they haven’t voted for them in their own countries, we might surmise that the answer is, not much.
The truth is that some customers for some of our products will pay more for the Climate Friendly brand, and others won’t. A much more sensible way of marketing to climate sensitive customers would be to let our export and tourist industries get on with it.
If an airline or a farmer or a manufacturer wants to pass on the additional cost of carbon offsets to their customers, nothing is stopping them. Some businesses already do this. We have many tourist operators who offer low carbon holidays in New Zealand. Why should the entire economy be implicated in their decision?
There is no good reason for the ETS. It doesn’t help with our international obligations, because after next year we won’t have any.
It doesn’t change the global climate, because four million out of seven billion people simply can’t do that.
It doesn’t show moral leadership, it shows the cost of self-defeating indulgence.
It might make us popular at international conferences, but at enormous expense to all New Zealanders.
And what exactly is that expense?
The Ministry for the Environment says it will be only $167 for the average household. That’s less than 50 cents per day. Who knew that saving the world was so cheap?
It isn’t.
The ETS is effectively a tax on energy, and our economy runs on energy. The tax is collected from electricity, oil and gas companies and therefore goes into their costs. Those costs go into all transport, all raw materials production, wholesaling, retailing, logistics, financing, etc. In Australia, they called it “a great big new tax on everything”.
Next year, ETS levies will be collected on about 23 million tonnes of CO2. At $25 per tonne, that’s nearly $600 million. Politicians trying to sell the scheme will do what politicians trying to sell expensive policies always do. They’ll claim that some of the cost will fall on business, some on foreign buyers of our exports, and some on the guy down the street. Basically, on anybody but the voter they’re talking to at the time.
The truth is that all costs eventually fall on workers, consumers, and investors, there aren’t any other types of people in New Zealand who can pay the costs, and all of us are at least one of those, many of us are all three. The cost, folks, will ultimately fall on your household.
For a household of four, we’d expect the cost to be around $600 per year. Pensioners on fixed incomes will be particularly vulnerable.
But that’s the good news, by comparison.
The bad news is that the cost is set to double because over the next three years the carbon price will double.
Costs will increase by a third in 2013, another third in 2014 and a further third in 2015. At that point, a household of four will be paying $1200 per annum – $100 each month – for the privilege of having an ETS.
Compare all this with Australia, where their Government has just enacted tax cuts and grants of almost $1800 per household to compensate them for the costs they will incur under the new carbon tax. Our Government is offering no compensation for the same costs hitting New Zealanders. And for good reason – the taxpayers simply can’t afford it.
Then the news gets even worse. What I’ve described so far is what we have before the biological emissions produced by agriculture are brought into the ETS. Labour threatens to do so by 2013, and National by 2015.
Labour’s “Fiscal Strategy” document claims that it will be taking $218 million per year. That’s a very large chunk of the net income of farmers. New Zealand farmers cannot recover these new costs from export markets, so it comes out of their own pockets. Such a massive imposition by the ETS would lead to a wave of farm foreclosures, especially amongst those younger farmers with high debt levels. And these are the exporters we rely upon to generate the foreign dollars we need to buy our imports and service our international debts.
We can only hope that Labour’s ETS figures are wildly astray, like so many of their other fiscal calculations.
The Emissions Trading Scheme is not strictly a tax in the sense that the money goes through government coffers. It is, however, a government imposed cost on workers and consumers that benefits specific groups.
The question is, who gets the money?
The most obvious and immediate beneficiaries are the foresters who can sell carbon credits for growing trees. If it was only they who benefit we might say that the following has happened:
New Zealand has chosen to take a $100 per month out of the average household of four in order to plant more trees and perhaps allow forestry companies to make windfall profits out of this new market.
However, once again, it gets worse. It’s not guaranteed that New Zealand emitters will fulfil their obligations by buying credits off New Zealand foresters. This is where the real insanity sets in.
It is quite possible, even likely, that emitters will find it cheaper to buy credits from countries with more potential to reduce emissions by adopting better technology. Ironically, these tend to be developing countries that don’t have much technology at the moment. Countries like China whose emissions are growing faster than any other countries’, and who are not bound to reduce their emissions even by the current Kyoto agreement.
We can now amend our story:
New Zealand will soon choose to take $100 per month out of the average family of four and give some of it to foresters and the rest to developing countries that are making little other effort to reduce their emissions.
As I said in the beginning of this speech, New Zealand is currently fighting desperately to remain a first world country for the next generation.
If we are to win this fight, we cannot afford poor policy choices, let alone choices that take large amounts of money out of New Zealand household budgets in order to achieve nothing but a fillip to the forestry industry and the despatch of more money overseas.
In any future government, the ACT Party will make it a priority to stop this madness. How much power ACT has after this Saturday is up to you, the voter, this week.
However it’s my job to tell you what ACT believes, and what a vote for ACT means.
Our first priority will be to take biological emissions, meaning charges on methane belched from sheep and cows, out of the ETS. Permanently. Rather than National’s approach of stalling the inclusion of biological emissions, we would give farmers assured protection from the ETS by having biological emissions out of the legislation altogether.
This would be a major step in bringing our ETS at least into line with Australia’s Clean Energy Act, and would safeguard the viability of many farms in New Zealand.
The inclusion of farmers offends the whole principle of targeting increases in emissions. Greenhouse gases are increased only when a herd or flock of livestock is being established. Maintenance of an established farm causes no net change to the composition of the atmosphere. Our farms are not only long-established, our livestock numbers are decreasing, and net biological emissions per unit of output have fallen steadily since 1990.
Excluding livestock emissions would be a major step in bringing our ETS at least into line with Europe and Australia. No other country has even considered taxing food production at a time when the world’s greatest challenge is to feed 9 billion people by 2040.
Our second priority would be to ensure that the coming price rise in Carbon Units is delayed indefinitely. The current $600 cost for a household of four is a major impediment for the recovery of our economy. Doubling it would be a death blow. ACT will push to keep the carbon obligations frozen where they are now.
Our final priority will be to have the ETS scrapped completely, at least for the time being. It should be held on ice until the majority of our key trading partners adopt schemes which are equally draconian and impose comparable costs on their citizens. This is clearly a very long way off.
ACT will push to bring New Zealand back into line with the rest of the world, removing the bureaucracy and cost from our entire economy, and boosting our economic recovery.
Try putting it another way. ACT has a policy that will put $100 per month into every household, and remove the threat to the viability of farming by 2014. It’s simple: Scrap the ETS.
Speech to Wesley Methodist Church
Good evening everyone, I’m Stephen Whittington, ACT’s Candidate for Wellington Central. I was born in Wellington, grew up in Paparangi, a suburb in North Wellington, went to Wellington College, studied at Victoria University, and now work in this city. I’m 25, most of my friends are also fairly young, and most of them sincerely want to live and work in this country.
The candidates up here on stage tonight have been doing these candidate forums for weeks now. I have heard all their stump speeches at least 10 times. And, after a while, it becomes quite concerning. Because none of what the other candidates say tonight will have any significant impact on the long-term issues facing New Zealand.
If you look at a country like Greece, it is the failure to deal with long term issues which require sudden and harsh measures in order to correct path. New Zealand has a proud historical tradition of actually thinking about the long term, and making the required changes. The fourth Labour Government realised that providing privilege to a select number of businesses in the form of trade tariffs, quotas, or subsidies, was not a path to prosperity. People like Sir Roger Douglas realised that government-run businesses were losing that taxpayer billions of dollars, and needed to be corporatized or privatised. That Government was part of a reforming trend that, in the longer term, enabled New Zealand to have strong economic growth through the 1990s and early 2000s.
The National Government from 1990 – 1993 was similarly concerned about the long-term, and so made our superannuation system more affordable by moving the age of entitlement from 60 to 65, and restraining the growth in government to ensure that job growth was driven by the private sector.
Those reformers left and set up the ACT Party. And the other parties on stage do not even care to look at the long term issues facing New Zealand. Tonight I want to outline the problems, and then I want you to seriously consider whether any of the other parties are even talking about these issues.
Let’s start with superannuation. Our age of eligibility for superannuation is the same age as it was when the system was first set up – in 1940. Despite 71 years of improved medicine, bringing a massive increase in life expectancy, the age of eligibility is the same. And that simple fact is what drives its unsustainability.
If you turn 65 today, and live for a further 20 years, you will collect in superannuation payments alone, 88 per cent of all the taxes you ever paid in your life. Considering that those taxes also had to pay for all the services you received throughout your life – education, police services, other welfare services, and healthcare – it doesn’t take a genius to figure out that the system is unsustainable.
If we make changes now, we can make the system affordable. If we delay the inevitable, as John Key has staked his job on doing, the changes will be swift and harsh. Labour, to their credit, have recognised the problem. But they are timid. They changes would only effect the post-baby boomer generation – too late to actually make the system sustainable. We need to move the age to 67 a lot sooner.
Let’s move on to welfare. In 1972, there were 42 working people for every person of working age receiving a benefit. Today, there are just seven. And if you include superannuitants, there are just two people working for every person receiving a benefit from the state.
Where’s the tipping point in this process, where people decide it’s no longer worth working, because they are taxed to support so many others? New Zealand has grown far wealthier as a country in the last 40 years – so how come so many rely on income support?
There are many people who are unable to work, and they deserve our support. But those who can work need to be in a job. National’s plan on welfare mainly seems to involve changing the name of the benefits the government provides. The only way out of this welfare problem is faster economic growth, and faster job growth.
Let’s talk now about Government debt. Most of you will know that the Government is today borrowing over $300 million a week. But what does that mean? It’s difficult to comprehend on that level. To give you an indication, if the Government sent each and every one of you a bill for the debt it has run up in the past three years, it would amount to almost $20,000 each. Do you have $20,000 to pay it? Does the prospect of paying taxes over the coming years to repay your share of the debt, plus interest, make you more or less likely to stay in New Zealand?
This isn’t theoretical. We do have to repay this debt.
So why has Government debt grown so quickly? The simple answer is that the Government spends significantly more money than before. Back in 2005, after six years of big-spending Labour Government, the Government spend 29 per cent of GDP. Today, the Government spends 36 per cent of GDP.
Now, there’s only two ways to balance the books. One way is through higher taxes. Labour and the Greens want the Government to spend even more, but they are also planning to introduce new taxes to help pay for part of it. Few countries have sustained high rates of economic growth with high levels of government expenditure and high taxes to pay for it – although some of those that have typically relied on exploiting their natural resources to sustain it – something both Labour and the Greens oppose. Higher government expenditure and higher taxes will come at the expense of a growing economy.
The other way to balance the books is to lower Government expenditure. And on this count, National have been an absolute failure. Government expenditure has surged under National. Why is this?
The answer is very simple. The National Party of today does not actually believe in anything. They’re a true conservative party, seeking to conserve what exists. That explains why, in opposition, they opposed Working for Families and interest-free student loans. They wanted to conserve the other programs that existed.
It also explains why, once those programs have been introduced, National have done nothing to change them in any significant way. The long-term outcome of this political process is as follows: Labour and the Greens will expand the size and scope of Government. At the time, National will oppose those expansions. When in Government, National will defend those expansions. The result will be ever-larger Government, paid for with higher and new taxes.
If that’s what you want for New Zealand, then vote for any of those three parties, because that’s what you’ll get. But if you want a Government that is forced to live within a budget; a Government that cannot simply increase expenditure and figure out how to pay for it later; if you want lower taxes and a vibrant private sector, then the only option is to party vote ACT.
Thank you.
Labour’s ‘Roadmap’ A Tax And Spend Dead End
ACT New Zealand Leader Dr Don Brash today described Labour's 'Roadmap for the Economy' as a dead end policy of yet more spending, more borrowing, higher taxes, and more unemployment, saying it was exactly what got the economy into its current state, and that it would do nothing to improve living standards for hardworking New Zealanders.
"Labour's 2005 election bribes saw government spending skyrocket, leaving New Zealand completely unprepared for the global financial crisis. They have failed to learn from their mistakes and have today reiterated their promise of more of the same," Dr Brash said.
"The policies to raise the envy tax on top earners back to 39 percent and impose a capital gains tax is nothing new from Labour, and neither are the inevitable consequences. Higher taxes scare away investment, drive down productivity and growth, and export jobs overseas.
"Equally destructive is Labour's proposal to raise the minimum wage to $15 an hour. When Labour abolished youth rates it was a disaster. The Department of Labour estimates that, as a direct result of this policy, up to 9000 youths were priced out of the job market. Canterbury University economist Eric Crampton estimates the impact to be as high as 12,000 jobs. This will be replicated en masse under Labour's $15 minimum wage policy.
"ACT knows that growth is the key to raising incomes and that to grow the economy we must bring spending under control. ACT will put politicians on a budget by pushing for the passage into law of its Spending Cap Bill and will reduce spending as a portion of GDP to the level it was in 2005.
"Both National and Labour have tried the tax and spend approach and it has not worked. ACT has a plan to get the economy back on track, because in uncertain times New Zealand needs a real roadmap for growth, not Labour’s dead end," Dr Brash said.
ENDS
A More Equal and Innovative Education System
Speech by ACT Leader Don Brash at ACT Education Policy Launch, Corelli School, Browns Bay, Auckland
Let me start by thanking David Selfe and all of the good people here at Corelli for hosting this speech in this wonderful auditorium.
Often when I talk about a more equal and innovative education system, people find it hard to picture exactly what I mean.
In the picture around us though are many thousands of words. They are in the eyes and the musical voices of the children who have a very different schooling experience to what the bureaucrats in Wellington would tell you all children need.
This school is a both a haven and a beacon for children who embrace music and drama, whose aspirations are not served by the one-size-fits-all approach that dominates education in New Zealand.
Their story might be epitomised by a woman whom I’m sure many people in this room will know. The story of Gillian Lynne, as told by British creativity expert Sir Ken Robinson, is the story of what a more flexible and diverse education system can do for any and every individual student.
Lynne was a so-called underachieving student whose concerned mother took her to visit a child psychologist. In a diagnosis that now seems advanced for the 1930s, the psychologist told Lynne’s mother that she was not an underachiever but a dancer. ‘Take her to a dance school,’ he said.
Gillian Lynne went on to be a star of the Royal Ballet and London’s West End. She teamed up with Andrew Lloyd Webber where she choreographed the hit musicals Cats, and Phantom of the Opera.
As Sir Ken summarises it, she made millions of dollars and gave pleasure to millions, but our current approach to education system would probably ignore her potential, put her on Ritalin, and tell her to get on with it.
Gillian Lynne’s story shows that a different educational setting can be the difference between potential realised or lost forever. I fear that in today’s education system in New Zealand, too many Gillian Lynnes are lost to all of us.
But not here.
Earlier this week, the Kiwi music sensation Hayley Westenra rehearsed for two days here. This is a place where the students’ dreams of tomorrow and the reality of today’s achievers come together.
Some might think that I am suggesting a musical education is the only kind of education suitable for our children.
It is true that music has a lot to offer. The ancient Greeks saw the value in a musical education and taught it on an equal basis alongside mathematics. But to put all our eggs in the musical basket would be to precisely miss the point.
The real point is that all of our children are different and special. Let me give another example: Around 500 kilometres south of here is quite a different school that also offers a unique and tailored approach to education.
Tū Toa is a school just outside of Palmerston North. Two ACT candidates, Hayden Fitzgerald and Andrew Sharrock, are here today, and both volunteer as tutors at that school.
Tū Toa is special school whose mission is to educate students with a special interest in Maori culture. They place emphasis on sport, as Corelli places an emphasis on music. What they have in common with Corelli is that their students achieve exceptional academic results.
Tū Toa is a school of 50 students that has won the National High School Netball Championship. It is a school that has broken the mould and, like Corelli, shown what is possible when principals and teachers are able to tailor education to the specific needs of their students, rather than run the lines given to them by the Ministry of Education.
If the education system was the restaurant industry, these would be the specialist suburban eateries faithfully serving their unique local markets.
The rest of the education system would be McDonalds, serving the same stuff consistently across every location. The head office being the Ministry of Education, sets the menu being the curriculum, the performance standards, being the exams, the décor, being the bricks and mortar of the school, the pay rates, being the national teacher pay scale, and the way customers are served, being the teaching style.
It’s my firm belief that our children deserve better than McEducation.
The problem is not from a lack of innovative education in New Zealand. Corelli and Tū Toa prove it exists. The problem is one of equality.
Considering the benefits that Corelli and Tū Toa deliver to their students, you might be forgiven for thinking that the New Zealand Government would be falling over itself to fund children into these kinds of opportunities. You might be forgiven for thinking that the New Zealand education system would support the choices of children to pursue their musical, sporting, and academic potential, and transfer those children’s share of government funding for education to the schools they choose.
Sadly, you could not be more wrong.
Innovative schools exist and succeed in spite of, not because of, New Zealand’s education policy.
Many parents of students here at Corelli make tremendous sacrifices to send their children here. They get little or no government support. When they take their children out of a state school, the state does not respect their decision. Instead, it forces them to sacrifice the government funding afforded their child and effectively pay twice. Once in taxes, and again in school fees.
The ACT Party says that parents should be able to use their child’s share of taxpayer education funding at the school of their choice, be it independent, integrated, or state - not state only.
Worse still, is that many students’ parents cannot afford to even contemplate such sacrifices. You might be forgiven for thinking that the New Zealand education system would be even more willing to support their choices, but alas it is not.
What we have is a system that promises equality of opportunity and delivers the opposite. The ACT Party says that’s wrong.
The ACT Party says that education should be first, second, and third, about serving the child.
As part of any future coalition government, the ACT Party would demand a more innovative and equal education system for all New Zealand children.
We will push as hard as we can to ensure that the opportunities offered to children at schools such as Corelli and Tū Toa cease to be the exception and become the norm.
As I said in my speech at our campaign launch, ACT would push for three key changes to empower parents and students.
The first and most important is that the money the New Zealand government puts towards a child’s education does not belong to any particular school, or schooling system, it belongs to the child.
That child should be able to take that funding to any school of their choice, be it state, integrated, or independent. It is time for those who currently pay twice to get a break, and those who can only pay once to get a chance. Attending a school such as Corelli or Tū Toa should not be a rare privilege, but a normal right.
The second priority is to make sure that school choices are informed choices. Under Julia Gillard’s Australian Labor Party, Australian parents are able to visit a website called My School. It is administered by the Australian Government and allows parents to compare the performance of almost 10,000 Australian schools.
The New Zealand government has similar information. It is simply absurd that a supposedly centre-right government in New Zealand is unwillingly to do what Julia Gillard is willing to do. If you go to the SchoolSMART website hosted by the Ministry of Education, you are asked for a username and password.
What an insult to New Zealand parents. The government says to Kiwi parents and their children, ‘yes, we have information on your school’s performance, but, dear citizen, we needn’t share it with you.’
A vote for the ACT Party is a vote to give New Zealand parents the same standard of information as Australian parents expect by opening up SchoolSMART to the public.
The third priority is to allow successful and established state schools such as Auckland Grammar, Epsom Girls, Rangitoto, McLeans, and Christchurch Boys’ to become Trust Schools. Such schools would be exempt from the usual constraints of Ministry management and given control over their own affairs.
Such freedom would allow them to make the most of the resources and the knowledge they have for the benefit of their students.
But that autonomy should not be limited to those schools as they stand. Those schools should be able to expand. If there are students who desire their particular style of education in areas they do not already serve, then they should be able to set up satellite campuses. This already happens in the tertiary sector.
Massey University, which started in Palmerston North, now has campuses in Albany and Wellington. Why should there not be an Auckland Grammar campus in Porirua? If there are sufficient students in the Porirua area who desire that kind of education, then the management of Auckland Grammar should have the opportunity to set up such a satellite campus and collect those students’ share of the funding.
In addition, there should be no reason why educational entrepreneurs such as David Selfe, let’s call them edupreneurs, should not be able to set up completely new schools to attract government funding.
These proposals may seem radical, but in fact the danger is not that New Zealand might stray too far from orthodoxy by adopting choice, competition and entrepreneurship in education. The real danger is that we will be left behind.
In the Canadian province of Alberta, teachers can apply to set up special charter schools where they believe there is a need not served by the mainstream system. These schools attract the kind of funding that conventional schools attract, but use those funds in the way that ACT proposes.
The result? In Alberta, schools of special character are not a curiosity, but accepted as normal. Alberta now boasts the Calgary Arts Academy, which emphasises arts immersion. It has the Calgary Science school, which has its own special approach to teaching according to scientific principles. It has the Mother Earth Children’s charter school, which emphasises the teachings of Canada’s indigenous first nations. It has the New Horizons School, which aims to serve gifted children. All in all, Alberta has over a dozen charter schools which can access government funding.
What’s more, according to the OECD, Alberta, if it were a separate country, would be the top performing academic jurisdiction in the English-speaking world.
David Cameron’s government in Britain is rolling out a similar regime of ‘Free Schools’ where groups of teachers can set up schools and access government funding without having to be managed by the one-size-fits-all vagaries of the British Ministry of Education.
Since 1992, Sweden has had a regime of school vouchers. There, government funding for a child’s education follows the child to any school the parents choose. Public or private, for profit or not for profit. The result, as in Alberta, is a flourishing of schools such as Kuskapsskolan, which has grown into a franchise of 25 schools serving 10,000 students with its own unique style. Such an innovation could not exist in New Zealand today, but it could under ACT policy.
The Swedes put the child first and so should we.
Ladies and gentlemen, the ACT Party presents a clear choice on education this election.
We can choose to continue with the status quo. We can choose to ensure that there is limited choice, limited innovation, and that only the few can access it. If that’s what you want, then any other party will deliver it.
Alternatively, you can vote for ACT. A party vote for ACT is a vote for more of the kind of educational opportunities such as you see around you today.
It is a choice to be able to see your child’s share of the education funding go to the school that you choose.. You needn’t pay twice, and those who can’t afford to pay once would have choice too.
It’s a choice to at least have Australian standards of information about schools online and accessible, instead of the Ministry telling you to accept what you’re given while they keep the information on SchoolSMART to themselves.
It’s a choice to let successful schools manage themselves as trust schools.
It’s a choice to let groups of innovative teachers set up new schools like Corelli and Tū Toa.
If you favour an education system that is more equitable and more innovative, then I ask that you give your support to ACT, and we will support you.
ENDS
Reducing Govt Spending Crucial For Exporters
Excessive government spending - and the borrowing to fund it – is partially to blame for the high New Zealand dollar that is hurting our exporters, ACT Leader Don Brash said today.
“Today, the Official Cash Rate (OCR) in New Zealand is higher than in any other developed country in the world except Australia,” Dr Brash said.
“The relatively high OCR affects our domestic interest rates, driving them up, resulting in more overseas investors buying up New Zealand dollars to invest in New Zealand. It’s this demand for our dollar that’s keeping it so high.
“The New Zealand Manufacturers and Exporters Association estimate that each one per cent rise in the New Zealand dollar costs exporters $200 million per annum. Over the past two and a half years the dollar has skyrocketed 38 per cent, costing exporters approximately $6.6 billion. This is a massive and unfair burden to bear, and is hugely damaging to the overall economy.
“Right now, we need to be assisting our exporters, not penalising them. If National showed greater fiscal restraint and reduced government spending, it would inevitably prompt the Reserve Bank to reduce the OCR, which would boost export growth.
“That’s why it’s so important for National to agree to pass ACT’s Spending Cap Bill immediately after the election. This would cap government spending, limiting any increases to inflation and population growth. It would inhibit future Governments from irresponsible ‘Labour-like’ spending binges.
“Getting government spending under control is crucial and ACT is the only Party in Parliament with a serious policy to do that,” Dr Brash said.
Freedom to build – Housing for the next generation
Few things run as deep in our culture as the dream of home ownership. Our country used to allow more people to live that dream than almost any other, but our Kiwi dream is under threat. It seems unlikely that ACT Auckland Central Candidate David Seymour’s generation will find home ownership anywhere near as accessible as mine did, and as my adult children did.
Auckland Mayor Len Brown’s Auckland Plan looks to fit another million people into Auckland, three-quarters of them in the current urban footprint. It looks increasingly likely that they will be forced to live in high density housing, tower blocks and multi-family dwellings quite unlike what we are today.
However, we should not lay all the blame on Len Brown. As a nation, we now have the second most unaffordable housing in the English-speaking world. According to the respected Demographia International Housing Affordability Survey, housing is more affordable, relative to income, in the United States, the United Kingdom, Ireland, and Canada. The only English-speaking country where housing is less affordable than ours is Australia.
For most of our post-war history, houses have typically cost three years’ income. Since the early 1990s, prices have shot through the ceiling and affordability through the floor. Today in Auckland the median house costs 6.4 times the median household income.
As a result, the home ownership rate is falling fast. In 1936, only half of us lived in a home we owned. By 1986, it was up to three quarters. In every census since then, the home ownership rate has fallen. It was down to two thirds in the 2006 census. The tragedy in Christchurch has denied us a census this year, but there is little reason to think that home ownership rates will have stopped falling, let alone improved.
Some would say that it doesn’t matter. That dense urban living is superior to the traditional Kiwi dream anyway, and that we would be better off seeking to turn Auckland into an antipodean version of Amsterdam or Paris.
This alternative dream appeals to a lot of people, including me. I’ve lived in an apartment on Princes Wharf, and I currently live in another apartment on the corner of Khyber Pass Road and Symonds Street.
But, to paraphrase Voltaire, whether or not I like the housing that other people build, I will defend to the death their right to build it.
Younger people do want the Kiwi dream. Earlier this year, a United Nations survey of 8,000 18-35 year olds in 20 countries found that young New Zealanders’ greatest fear is being trapped into apartment living.
But there are more important reasons to make housing more accessible to the next generation. One is equality of opportunity. A lack of buildable land, and therefore affordable housing, creates a society of haves and have-nots. The haves are those who can afford housing, or whose parents can afford to help them into the housing market.
The have-nots are those who will never achieve the Kiwi dream. Those people will find themselves disenfranchised from our society. They will feel that New Zealand society does not include them. Urban geographer Joel Kotkin has called this exclusion-by-urban-planning ‘neo-feudalism’.
For those who want an inclusive and equitable society, housing affordability should be a top priority. It certainly is for me.
Another negative effect of unaffordable housing is the impact on our national competitiveness. As one economist, Rodney Dickens, has asked: ‘How can a small, export orientated country facing huge disadvantages because it is half a world away from some of its major markets be competitive when housing costs 30-43 per cent more than in the U.S.?’
The practice of bidding against each other to secure an artificially limited number of houses means that we must borrow, often overseas, and pay interest to the very economies with whom we’re competing as exporters.
The availability of housing also affects immigration flows. Many New Zealanders and their ancestors came here precisely because they wanted the dream of affordable land. The entire opening up of the new world for our cousins in Canada, the United States, and Australia was similarly motivated.
American urban geographer Wendell Cox has reported that over the past decade severely unaffordable housing markets lost 3.2 million people through internal migration to more affordable markets.
It may well be that opening the tap on the supply of buildable land would offset some of the other disadvantages New Zealand has vis-à-vis Australia in terms of income per head, and help to stem the flow of people across the Tasman.
The question we need to ask is why? Why has the dream of home ownership become so far beyond the reach of so many Kiwis? Let me deal to a few of the red herring excuses that have been popular in the media and amongst our political opponents.
Labour and the Greens will tell you that we have a housing bubble because there is no tax on capital gains in New Zealand. But even a cursory look around the world shows that they are plain wrong. Australia has worse affordability than we do, and they have a capital gains tax. The United States and Canada both have nation-wide capital gains taxes, yet have also had some of the most pernicious housing bubbles, especially in urban housing markets where the availability of land has been tightly constrained.
Some say that it’s the rising cost of building houses and infrastructure. One only has to ask the obvious question: have the last 20 years of technological advances made it harder or easier to build infrastructure and housing? It should be clear that there is no good reason for the price of infrastructure and housing to be higher than it was when home ownership was at its peak.
Others say that a new generation simply is not interested in home ownership, even as those who do achieve it pay higher prices than ever.
Still others will say that the state has abandoned the housing business, and that the solution is for the government to build more houses. There may well be a role for the state to assist low income New Zealanders into housing. But when affordability is at an all-time low across the entire economy, it is not obvious why government should be able to build housing any more cheaply than the private sector can.
Still others will tell you that there is a general shortage of land in New Zealand. In one of the most sparsely populated countries in the world, where less than one per cent of our land mass is urbanised, and when Auckland is the second most densely populated city in Australasia, behind Sydney, this is the most preposterous explanation of all.
The real problem can clearly be seen in the numbers, and it’s the shortage of buildable land. Since 1992, the price of sections has nearly tripled. Even since 1999, the median price of a section in New Zealand has risen by 120 per cent. The price of construction has risen by only 60 per cent over the same period.
New Zealand does not have a shortage of land, only of land that urban planners will let you build on. It is they who are threatening to take the Kiwi dream away from a generation. If you doubt that you need only look at the old Metropolitan Urban Limit which surrounded Auckland. This was a boundary around Auckland that effectively said to urban New Zealanders, the land outside this boundary is not your land. You may not build residential properties outside it.
The totally predictable result was a shortage of buildable land. According to a report by respected economist and Reserve Bank chairman Arthur Grimes, the scarce land just inside the MUL cost eight to thirteen times more than the land just outside. There is no shortage of land, just land you’re allowed to build on.
Of course, Len Brown’s draft Auckland plan has changed the name of the Metropolitan Urban Limit to the Rural Urban Boundary, but the result will be the same. It will be the end of the Kiwi dream for tens of thousands of young New Zealanders as they are thrust into tower blocks downtown in order to satisfy the planners’ dream.
What’s more, it’s not clear that long term comprehensive land use planning will actually deliver the kind of romantic European urban environment that its proponents promise.
It’s worth noting that the kind of urban environments we most cherish, the Mt Eden Villages, the Parnells, and the Ponsonbys of this city, all evolved naturally and organically before comprehensive long-term urban planning as we know it today evolved. It seems that our planners are forever seeking to create what has otherwise emerged without them.
Urban plans can only change the shape of cities by saying no, by stopping people from building what they would have built otherwise. As such, their net result can only be to reduce the supply of housing, and perhaps prevent the urban forms that future generations would romanticise from ever emerging.
ACT says this is wrong.
We should acknowledge that land use planning and city infrastructure are the territory of local councils. However, it’s also true that local councils exist because of central government laws and carry out their business according to those laws. There is much that central government can do to improve New Zealanders’ access to buildable land and therefore affordable housing.
Last week I gave a speech on the RMA. I said that our priority would be for faster and deeper RMA reform over the coming years.
I said, specifically, that we would look to separate the planning activities of councils from the consenting activities, as letting those who make the rules interpret and enforce them is a recipe for the abuse of power.
We would cap the fees that councils can charge for consents, reducing the revenue for vexatious interference in how people use and develop their land.
We would widen the scope for the Environment Court to award costs against councils and other objectors to resource consents when their objections were not sustained by the Court..
We would increase the right to compensation for those whose land values are reduced by council planning decisions.
We would pare the Resource Management Act back to its original intention of assessing environmental impacts on the air, soil and water, rather than being a tool for councils and other objectors to development to impose their aesthetic preferences on other peoples’ property.
No doubt RMA reform would go a long way towards removing restrictions on the supply of buildable land, and make it possible for the next generation to live the Kiwi dream.
In addition to that, we are committed to supporting the Productivity Commission. Established at the behest of ACT in the current parliamentary term, the Productivity Commission has made housing affordability its first area of enquiry.
ACT will support the Productivity Commission to continue its work, and provide a framework to go forward in making housing affordability a reality for another generation of New Zealanders.
Ladies and Gentlemen, home ownership is the Kiwi dream, but we are fast losing it. If we are to get it back, then we must understand why we are losing it, and seek to get it back. If we don’t, then our future as a socially inclusive, economically productive society is at stake.
A Party Vote for ACT at the next election is a party vote for the next generation to achieve the Kiwi dream.
ENDS
