Brash Hails Landmark ACT Bill

The ACT New Zealand parliamentary team are to be congratulated on a successful first reading of the Spending Cap (People's Veto) Bill in Parliament last evening, says party leader Don Brash.

The Bill would limit the annual increase in core Crown expenses by linking it to the rate of inflation and the rate of population growth.

"This is in line with the recommendations of the 2025 Task Force," notes Dr Brash, who chaired the group, charged with identifying ways of catching up with Australia by 2025.

"A spending cap is an important tool in bringing government expenditure under control, which in turn is pivotal for a lower tax burden and higher economic growth.

"As things stand, there is no legal restraint on the extent to which governments can increase their spending, no institutional impediment to governments behaving irresponsibly. This Bill provides for such a mechanism. 

"It's not intended to be a straitjacket," Dr Brash adds. "Spending increases in national emergencies are exempt, and there is provision for raising the cap by referendum. But overall it would impose a clear requirement on governments to do what households have to do: keep their spending within sensible limits.

"It could be called the Stop Governments Running Amok Bill. Historically, if implemented, it would be on a par with the Public Finance Act of 1989 in its contribution to enduring stability. I thank our National colleagues for their support at the first reading.

"I am hopeful that National, as committed on paper to less government as ACT is, will maintain this support through all stages of the Bill," Dr Brash concludes.

Spending Cap (People’s Veto) Bill - First Reading

I move that the Spending Cap (People’s Veto) Bill be now read a first time.  At the appropriate time I intend to move that the Bill be referred to the Finance and Expenditure Committee.

The Bill is a timely response to New Zealand’s challenging economic circumstances.  It will provide more certainty around the growth in government spending, greater spending restraint, and will improve the transparency of spending decisions. 

The Bill will lead to government objectives being delivered through a state sector that takes up a smaller share of the economy.  A smaller, more efficient state sector will allow a lower tax burden over time, supporting higher economic growth and higher living standards.

The Bill also responds to weaknesses in our current legislative framework.  The fiscal responsibility provisions of the Public Finance Act focus on achieving and maintaining a prudent level of government debt and on the operating balance required to achieve that.  The Public Finance Act has served us well in that regard, and helped New Zealand bring its net core Crown debt down from 56% of GDP in 1992 to 5.6% in 2008.

But the Public Finance Act has not prevented core Crown expenses from rising as a share of gross domestic product.  We have seen government expenses soar from 28.8% of GDP in 2004 to a forecast 36% in 2011.  It has been easier for governments to increase spending, than to reprioritise and drive greater efficiency within the existing base of spending.  This Bill is designed to place greater disciplines on governments, deliver greater value for the taxpayers’ money, and protect New Zealand’s growth prospects.

The Bill has two main elements.  The first is a spending cap that limits the annual increase in core Crown expenses to the rate of population growth multiplied by the rate of inflation.  The second is a requirement that any proposed spending increase above that cap be subject to a binding referendum on whether the cap is to be raised to allow for that increase.

The spending cap for a financial year beginning 1 July is based on the product of the annual percentage change in the resident population and the consumer price index.  This “rate of increase” is based on data for the twelve months ending 30 September in the year prior to the financial year for which the cap is being set. That rate is then applied to core Crown expenses from the previous financial year.

The spending cap provides for a small number of sensible exclusions.

For example, the cap is designed to allow fiscal policy to continue to play a stabilising role in response to the economic cycle and shocks.  Unemployment benefit expenses are therefore excluded from the cap so that they can continue to expand and contract through the economic cycle in a counter-cyclical way.

Borrowing expenses are excluded from the cap as these are effectively limited by the Government debt objective, required under the Public Finance Act 1989.

Similarly, capital expenditure is excluded from the cap because it is constrained by the debt objective and the fact that the operating expenses associated with capital expenditure would need to be met from within the cap

The Bill provides for national emergencies, such as natural disasters, where it is appropriate to exclude expenses incurred in responding to an emergency.

Impairment losses on assets (such as student loans), which are recorded as an expense, are also excluded from cap. These tend to be volatile from year to year and hard to forecast, and therefore difficult to manage within the cap.

The Bill fits with the annual budget cycle by requiring that the spending cap for a coming fiscal year be publicly announced in the Budget Policy Statement ahead of the Budget. Indicative caps for the following two financial years must also be disclosed.

The Minister of Finance would be subsequently required to state, when presenting the annual financial statements of the government to Parliament, whether expenses were within the cap for that year. If not, the Minister must explain why expenses were incurred in excess of the cap, and what measures will be taken to ensure compliance in future.

The Government may, at any time, initiate a binding referendum on a proposal to increase the spending cap for a specified financial year. The Bill requires any referenda to be held under the provisions of the Referenda (Postal Voting) Act 2000.
The question put to electors requires a simple “yes” or “no” response and is specified in the Bill.  If a majority of votes cast in a referendum favour the proposal to increase the spending cap, then the cap is raised by the specified amount.

A referendum may be held on a proposal to increase the spending cap for the financial year ahead, or to increase the indicative spending cap for a subsequent year. It is envisaged that a referendum on the latter proposal would fit better with the budget cycle. In such case, a referendum could be held twelve months before the start of that subsequent financial year, allowing time for the result to be reflected in the Budget strategy and process relating to that financial year.

The Spending Cap (People’s Veto) Bill has its origins in the Taxpayer Rights Bill, which I had drafted as a private member’s bill during the previous term of Parliament.  

The National-ACT confidence and supply agreement provides for the Taxpayer Rights Bill to be referred to the Finance and Expenditure Committee as a government bill.

That Bill has been refined so that it focuses solely on limiting the growth in expenses, thereby allowing for future taxation to be lower. It has also been renamed the Spending Cap (People's Veto) Bill to better reflect its intent – capping the annual growth in spending and allowing people a direct say over any higher increase.

New Zealand is grappling with the hangover of too much spending and too much debt.  Putting New Zealand back on to the right path will require restraint and a determination to never again allow excessive public spending to drive up interest and exchange rates, and to drive out growth.  The Spending Cap Bill will help provide that restraint, and will support that determination.

I commend the Spending Cap (People’s Veto) Bill to the House.

Qualified Brash Bravo For Goff

Sensible New Zealanders will be hopeful that recent comments by Labour leader Phil Goff about the availability of new sections in earthquake-ravaged Christchurch herald the end of his latter-day lurch leftward, says ACT New Zealand leader Dr Don Brash. 

"Mr Goff has expressed fears of a likely sky-rocketing of house prices in Christchurch as home-owners unable to rebuild on their existing properties seek out new sections," Dr Brash notes.

"He observed that one of the solutions was to ensure the resource consent process didn't unduly restrict the availability of new sections.

"I applaud that observation. I have been arguing for some time that consent procedures and zoning constraints under the RMA are distorting residential land prices all around the country. In Christchurch the situation is hugely exacerbated by the surge in demand for new sections in the wake of the earthquakes.

"Unfortunately the wisdom of Mr Goff's remarks is subverted by his talk about knocking the heads of insurers together. He is blaming them in part for the upsurge in demand because of their reluctance to insure rebuilt homes on existing sections. Is he saying they should be bullied or coerced by law into doing so? Does he want in effect to nationalise the insurance industry? That would indicate a serious relapse in his recovery from Kremlinomics. 

"The willingness or otherwise of insurers to insure is a key signal of the viability of any project in an open market - and as Mr Goff himself acknowledged, the market should be allowed to work.

"The only heads that should be knocked together are those of government, the Canterbury Earthquake Recovery Authority and the Christchurch City Council. Among them they must make sure that zoning restrictions do not needlessly limit the availability of new sections and drive prices up artificially. Red Zone home-owners who've already lost huge amounts of equity don't deserve such a double-whammy," Dr Brash concludes.

Nix NAIT Says Nicolson

ACT New Zealand Agriculture Spokesman Don Nicolson is applauding today's decision by the ACT caucus to oppose the remaining stages (2nd and 3rd readings) of the National Animal Identification and Tracing (NAIT) Bill.

The Bill will require all dairy and deer farmers to tag their animals electronically and register them online as from July 1 next year.

"It's a lemon," says Mr Nicolson, former Federated Farmers president and ACT's #4 list candidate.

"NAIT supporters claim it is the ultimate biosecurity measure, the ultimate guarantee against an outbreak of something like foot-and-mouth here. But since tens of millions more ruminant livestock will be out of it than in, that's a joke. Ultimate bureaucrats' dream, more like it.

"This Bill won't improve on what the industry already has. The existing national animal-tracing system (paper- and tag-based) is sufficient. If there were a market advantage to an electronic system it could be made a condition of supply without any need for regulation.

"New Zealand dairy companies are already recognised for quality assurance programmes for livestock management.  Our trading partners have exhibited no particular concern about New Zealand’s existing traceability procedures. Yet National and Labour want to railroad farmers, stock agencies and truckers into wasting thousands of dollars in administration time on something they don't need, with threats of $10,000 fines for failure to comply.

"If this legislation is to be passed, there should be a farmers-only referendum attached to it so that those who would have to pay get to have their say. And its implementation should be delayed till 2017, to coincide with the rolling out of improved broadband. The ACT Party will push for these changes in Parliament after the election.

"NAIT is a further illustration of why farmers should party-vote ACT and ensure a strong voice in Parliament against such unnecessary, draconian and anti-farmer legislation," Mr Nicolson concludes.

Brash Goes In To Bat For Auckland Restauranteurs

ACT Party Leader Don Brash says local council officials in Auckland should embrace the World Cup spirit and show some Kiwi camaraderie by easing up on restrictive bylaws and giving restaurant owners not based in ‘Party Central’ a fair crack.

Dr Brash was responding to New Zealand Herald reports that bar and restaurant owners anxious to extend World Cup hospitality have been warned they could face prosecution.<?xml:namespace prefix = o />

“Local officials need to get into the spirit of things and start getting behind local businesses, not making life hard for them”, Dr Brash said.

“I’ve had first-hand reports from several of these small business owners, and all they really want is to make the most of a once-in-a-lifetime opportunity.

"Pubs and restaurants close to Eden Park have already had to pay thousands of dollars just for approval to operate on match nights, unlike their counterparts in 'Party Central' on Queen's Wharf.

"No one wants to see the law being broken," says Dr Brash, "but Council officials need to loosen up and show some flexibility.

“Not all Rugby fans and tourists want to be corralled into ‘Party Central’ – Auckland’s got a lot more to offer.

“Restauranteurs and publicans have a great, one-off opportunity to showcase the rich array of great Kiwi hospitality the city has to offer, both in the inner city and on the outskirts.

"A lot of enterprising people, just keen to provide a great kiwi experience, have had their ideas knocked back.

"I've been told of one restauranteur being refused permission to allow buskers outside his establishment. Resource consent has been refused for street stalls. A proposal to hold a street festival in Kingsland has been turned down, notwithstanding enthusiastic support from the locals.

"Kingsland is one area where there are likely to be thousands more seeking food, drink and entertainment than existing establishments are legally permitted to cater for. But requests for flexibility have fallen on deaf ears. Some silly bureaucrats are treating the World Cup more as a Civil Defence emergency than a celebration.

"To those officials I say, lighten up and help us get out the welcome mat. ACT will champion the cases of any business being stymied by bureaucrats from trying to make this the best Rugby World Cup ever," Dr Brash concluded.

RMA is biggest obstacle

Act views top-class infrastructure as being a cornerstone of future economic growth. If New Zealand is to prosper we need great transport and power networks and great allocation of our water resources.

Of particular importance is rebuilding Christchurch's infrastructure and relieving the transport bottlenecks in Auckland and Wellington. Act strongly supports investment in infrastructure whenever and wherever a comprehensive cost-benefit-analysis stacks up.

We realise that such developments will be expensive. Serious consideration must be given to economic pricing for road usage. Act supports phasing out petrol tax and road user charges, where possible, in favour of congestion charges and tolls. Such changes will not always be popular but when the alternative is decades of gridlock, politicians should have the courage to do what is right.

Act fully supports the National Infrastructure Three Year Action Plan goal to encourage demand management and pricing in infrastructure sectors.

Private sector investment in road construction, both through direct ownership and through public private partnerships with central and local government should be encouraged.

All new infrastructure projects should be subject to rigorous cost-benefit-analysis. The Labour Government's disastrous buy-back of KiwiRail is a prime example of what happens when such an analysis is not carried out. 

The Government has committed to partial sale of some state assets if given the mandate after the November election. Act welcomes this and believes the scope should be extended to Government-owned infrastructure projects such as KiwiRail.

We are also aware that there will be a need to further expand our electricity lines network over the coming years. We support such upgrades.

The biggest obstacle to infrastructure development is the Resource Management Act.

We support the provisions in the Resource Management Act that provide for expedited consent processes for projects of national significance. However, we are concerned that the amendments introduced by the Government in this regard do not go far enough insofar as they still allow objectors who are not directly and tangibly affected by projects to raise objections. The RMA should be reformed so that only those whose property rights are directly and tangibly affected by a project can raise an objection.

Act is concerned that New Zealand's water resources are not being used optimally and that our water infrastructure leaves much to be desired. Tradable water markets have created exceptional efficiency gains in Australia and should be given serious consideration in New Zealand.

This article was first published in the New Zealand Herald on 9 August 2011.

Toothpaste Controls Given A Root Canal

New medical regulations which will come into force on Monday 1 August 2011 will lead to greater choice of sanitary products for consumers, and cut unnecessary costs for businesses, says Regulatory Reform Minister Rodney Hide.

“Under the Medicines Regulations, everyday products like fluoride toothpastes, anti-dandruff shampoo, barrier creams for nappy rash and acne creams will no longer be subject to the same burdensome controls applied to prescription medicines.  Because of the costs and slowness of these controls, many sanitary products freely sold in other countries have not been available in New Zealand in the past. 

“Other regulatory changes will allow 'general sale' medicines like cough and cold remedies and travel sickness products to be sold through vending machines.
 
"This is a great example of what 'better regulation and less regulation' means. More options for New Zealanders, lower costs, and less unnecessary hassle for business.  Everyone wins.

"Health regulation obviously needs to control risky substances.  But the old controls were ridiculous.  New Zealand treated toothpaste like medicines’.  Clearly, this had to change," Mr Hide said.

Anti-Smoking Bill An Affront To Basic Rights

ACT MPs Hon Heather Roy, Sir Roger Douglas and Hilary Calvert are taking the rare step of issuing this joint press release explaining why they voted against the Smoke-free Environments (Controls and Enforcement) Amendment Bill on Thursday.  They do so because they believe the constitutional implications of the Bill are greater than its content would suggest.  They note that the Bill violates the basic right to freedom of expression.

“Section 14 of the New Zealand Bill of Rights Act protects the right to freedom of expression. This Bill violates that right.  The right to display legal products in a store is basic,” Hon Heather Roy said.

“The fact that the Bill of Rights has been ignored by Parliament is a disgrace.  That the transgression was ‘minor’ is irrelevant.  Either we uphold the basic rights of all New Zealanders or we descend toward a society where rights have little meaning.  It’s no surprise that among recent international attempts to ban or restrict smoking is that spearheaded by North Korea’s Kim Jong-Il.  We are hardly keeping good company,” Ms Calvert said.

“The law is yet another tedious example of nanny-statism and political correctness.  Parliament is interfering in the lawful activities of ordinary New Zealanders to advance the agenda of anti-smoking activists.  That is a travesty of what Parliament is supposed to be about. I fear the activists won’t stop till they’ve achieved complete prohibition,” Sir Roger added.

“Smokers have rights too.  We support their rights.  We don’t like smoking, but we don’t believe it is for us as MPs to say whether people should smoke or not, much less whether they may display a legal product or not.  That our Parliament deems it fit to interfere in people’s personal lives, as it did on Thursday, saddens us,” the MPs concluded.

Farming Leader Announced As ACT Candidate

ACT New Zealand leader Don Brash today said that he was delighted to announce former Federated Farmers President Don Nicolson would be standing as an ACT candidate in the 2011 general election.

“Don is highly respected, not just among farmers but throughout the business and political sectors. He’s been a strong and tireless advocate for property rights in particular and for much less government intervention in the lives and businesses of all hard-working New Zealanders, so I think he is an ideal candidate for ACT,” Dr Brash said.

Mr Nicolson said he identified strongly with ACT’s core principles of individual freedom, choice and personal responsibility, and that he was particularly concerned about spiralling government spending and the costs and constraints on economic growth imposed by the Resource Management Act.

“I’m very pleased to be standing for the party that will hold the government to account over its borrowing and spending. I look at it like this: I’ve spent my working life paying back my borrowings out of earnings, but now find the government is borrowing around $4,000 a year for every New Zealander.

“If bigger government is good – and the total crown cost has multiplied by a factor of 2.5 in 11 years to almost $100 billion – then why is it that health, policing and education never seem to have enough money?

“With the government having more than doubled its spending I ask: do we feel twice as well served by the state? The answer is an emphatic no. So we have to cut back state spending and meddling and allow free enterprise and innovation to flourish.

“As a farmer, probably the worst example of state interference we face is the Resource Management Act, so it’s fitting I’m standing for the ACT Party whose policy is wholesale reform of the dysfunctional RMA.

“I’ve worked hard over the years representing farmers and I’m very excited about what could be a fantastic opportunity to represent not just farmers’ interests, but the interests of all owner operators, and indeed all New Zealanders,” said Mr Nicolson.

Mr Nicolson farms sheep, cattle, bloodstock and forestry in Waimatua, 12km east of Invercargill.

 

Private initiatives are the way to go

A group of business leaders have teamed together to create and fund a new group called Pure Advantage. Pure Advantage is dedicated to helping New Zealand make the most out of green growth opportunities. I think this is a great example of how private initiatives respond to both opportunities and community needs.

The launch of this group is simply another reminder that the Government doesn’t have to do everything for New Zealand. We are a country populated by people both willing and able to think and act for themselves. We can cope just fine without an all-encompassing nanny state.

Pure Advantage is a group of leading New Zealanders who saw an opportunity to improve New Zealand’s environment, economic prospects, and living standards. They have seized this opportunity - I think that is commendable.

The advantage of private initiatives like Pure Advantage, vis-à-vis Government initiatives, is that participation is optional. Not all New Zealanders will agree with Pure Advantage’s aim and because it is private they can make this clear by not participating. They can vote with their feet. Compare that with Government initiatives such as the Emissions Trading Scheme (ETS) where participation is compulsory; the only way New Zealanders can vote with their feet on the ETS is by voting ACT this election.

A further advantage of private initiatives is that they only work if they have community buy-in. This encourages competition of ideas and competition between groups trying to meet society’s needs, making it more likely that an efficient solution will be found. Compare this with Government initiatives such as the ETS: a small group of people in Wellington get to force a futile scheme onto all New Zealanders regardless of whether it is efficient and regardless of whether those forced to participate want it.

I wish Pure Advantage all the best in their endeavours – I have just one request: please don’t be tempted to lobby the Government for more regulation.

To the Government, I say the vast majority of Kiwis are capable of looking after their own interests and organising themselves voluntarily to deal with the problems and opportunities that exist in the world. We don’t need you to do it for us.

You can find out more about Pure Advantage at www.pureadvantage.org.

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