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.

ACT: The Right Partner for the John Key Government

13 NOVEMBER 2011

Ladies and gentlemen,

New Zealand needs ACT! 

New Zealand’s a wonderful country.  

We live in a country which is bigger than Britain, with more natural resources per person than almost any other country on Earth.

A country which has more fresh water per person than almost any other country on the planet.

A country which gave women the vote before any other country, and has one of the oldest democracies in the world.

A country where we can say with certainty that, no matter how vigorously we disagree with each other about politics, nobody will get shot, or beaten to death, in political turmoil.

A country which has produced Ed Hillary, and Kiri Te Kanawa, and Kate Sheppard, and Katherine Mansfield, and Jean Batten, and Apirana Ngata, and Bill Buckley, and Angus Tait, and Bill Gallagher, and Ernest Rutherford – a man ranked by some as close to Newton and Einstein in terms of his contribution to our understanding of physics.

It is a wonderful country.

But ladies and gentlemen, this country is at risk.  Far too many people are finding it hard to make ends meet.  Far too many young people can’t get a job.  Far too many people fill our jails.  Far too many children are poorly fed and poorly housed.  Far too many families break down in acrimony and violence.  Far too many young people come out of school unable to read and write.  Far too many working age adults languish on a hand-out.  Far too many towns and cities spew untreated waste into our once-clean streams and rivers.

And to a large extent these are the social costs of the under-performance of our economy.   Once, we were one of the richest countries in the world.  Our productivity was up with the best. 

But then we were hit by the loss of our best export market, and by the disastrous policy response to that.  By 1984, New Zealand was on the verge of bankruptcy.  We were rescued by Sir Roger Douglas, the Minister of Finance who went on to found the ACT Party, and for more than 10 years productivity started growing strongly again.   

But when Winston Peters became the Treasurer in 1996, and even worse when Helen Clark became Prime Minister in 1999, the momentum ended. 

She introduced the envy tax for those on higher incomes; she reversed many of the labour market reforms; she introduced legislation giving local authorities the power to do whatever they wished; and she massively increased government spending towards the end of her reign – an increase which set up the years of deficit since 2009.

Today, the Government is borrowing hand over fist; $20 billion in the last year, hundreds of millions of dollars every week, the equivalent of hundreds of dollars a week for every household. 

Productivity growth has fallen away – to an estimated 1% annually according to the Reserve Bank. 

Despite the best export prices in a generation and weak import demand, the balance of payments is still in deficit – with that deficit projected to increase over the next few years.  And as a result our debt to the rest of the world gets bigger, year by year – not yet at Greek or Spanish levels, but damned uncomfortable just the same.   

Two credit rating agencies have downgraded us, and as a former Governor of the Reserve Bank I know that that’s an ominous sign. 

The IMF projects growth in per capita income over the decade to 2016 to be half the growth they project for Australia over the same period.  In fact, 148 countries are expected to grow faster than we will over that period.  We would have been in a state of national mourning if even one other country had beaten us at rugby – we seem relaxed at being 149th in the economic growth stakes!

The gap between incomes here and incomes across the Tasman continues to grow.   When National came to power, the gap was 35%; now it’s closer to 40%.   As a result, New Zealanders leave in ever-increasing numbers; nearly 300,000 over the last decade. 

Just last week, the Herald on Sunday wrote of the Kiwi families living in Australia but longing to come home.  Couples like Adrian and Jules Paalvast, with three New Zealand-born sons – longing to return to New Zealand, but feeling unable to do so because Adrian makes three times the salary in Australia that he could make in New Zealand, thus enabling Jules to stay home with her four children.

A survey of 4,000 13-year-olds recently found that an astonishing 27% of them wanted to leave New Zealand permanently when they were old enough to do so.  

Dealing with this challenge should be the dominant theme in the election campaign – but it’s not.  The serious danger is that we could reach a tipping point, the point at which so many New Zealanders have left that it becomes a cumulative process, with each new departure easier to justify than the last one.  Some suggest we may already have reached that point. 

At this critical time in our country’s life, voters face a stark choice: do they want a centre-left government headed by Phil Goff or do they want a centre-right government headed by John Key?  There are no other options available.

We in the ACT Party are in no doubt at all about which of these two men offers the better prospect for our great country, and we have already declared publicly that we will give Confidence and Supply to a John Key-led Government.

The Labour Party is advocating policies which nobody who cares for our long-term future could support – massively more borrowing than even National proposes; employment legislation which would see a  return to the industrial mayhem which prevailed before 1991; a $15 minimum wage which would lead quite directly to more unemployment; an end to the 90-day trial period in employment contracts; a capital gains tax; a big increase in the compliance costs imposed on small businesses because of the exemption of fruit and vegetables from GST; a huge increase in the costs of the farming sector as a result of bringing biological emissions into the ETS in 2013; and an instruction to the Reserve Bank to stop worrying about inflation and start focusing on the exchange rate.  This is crazy stuff.

As an aside, I understand as well as anybody the problem which big swings in the exchange rate cause for exporters.  I spent almost 14 years of my life trying to reduce those big swings.  Alas, there are no easy ways to eliminate them, not at least if keeping inflation under control is also an objective.  The Labour Party pretended they knew what to do about this issue in 1999, when they were campaigning to win the election in that year, and promised to have the whole Reserve Bank framework put under a microscope.  When they won the election, they duly appointed a monetary policy expert from Sweden to do exactly that, and after months of study, the expert declared the New Zealand monetary policy framework world’s best practice.

It may sound good to exporters for Labour to say that they will smooth out those exchange rate fluctuations and keep inflation under control: believe me, no central bank has yet discovered how to do that.

So there’s not the slightest chance that ACT could support Labour after the election.

But like many others, we want a John Key-led Government to deal more decisively with the challenges which our country faces than has been the case over the last three years.

The Government has introduced National Standards in the school system, and some of our schools are world class.  But far too many young people are coming out of 10 or 12 years of school barely literate.  Parents who scrimp and save to send their children to independent schools are forced to pay twice for the privilege, once through taxation and a second time through school fees.  The school system remains highly centralised – with a centralised curriculum, and a centralised and bureaucratic remuneration system.

There has been a pleasing reduction in violent crime in the last three years, and the ACT Party can take some of the credit for that – we supported National in increasing police numbers, especially in South Auckland, and we were responsible for getting the Three Strikes legislation passed, so that repeat violent and sexual offenders spend longer in jail. 

But there is still far too much senseless violence, and too often the police prosecute the victim of that crime, as when Virender Singh was prosecuted a year or so ago when he tried to defend himself with a hockey stick while being attacked by five drunken youths.

Right now, the world economy is looking more ominous than at any time in my life-time.  I spent a few days visiting London and Washington late last month to get a first-hand picture of just how bad things might get.  I came home deeply worried – the Eurozone is in serious trouble because of irresponsible government spending in the countries of southern Europe; the United Kingdom and the United States are struggling under massive government deficits; and Japan seems unable to get to grips with its own massive government debt.  The scope for the world economy to endure a prolonged and deep recession is all too evident.

In this threatening global environment, we believe the Government needs to urgently focus its spending on those who most need it, to flatten and reduce taxes in order to encourage investment, and to radically reduce the bureaucracy which makes life so miserable for homeowners, farmers, and manufacturers – indeed, for anybody wanting to do something!

Realistically, ACT is the only party which can help National do what John Key and the rest of the Cabinet know needs to be done.  And Friday’s “cup of tea” shows clearly that John Key knows that.

Over the last three years, ACT has ensured stable centre-right government – indeed, we enabled John Key to announce that he was in a position to form a government on the night of the last election, because we had pledged support to National in advance, as we have done again.

Again and again, we supported National Party-initiated legislation when without our support legislation would have failed. 

We gave voice to widespread public concern about the Anti-Smacking law, the Marine and Coastal Area Act, and the Emissions Trading Scheme, though ultimately in vain.

We can claim much of the credit for the retention of the right to silence in criminal cases.

And as I’ve mentioned, as a result of our initiative, the Three Strikes legislation was passed.  As a result of our initiative, students are no longer obliged to join a union.  As a result of our initiative, the Productivity Commission was set up.  As a result of our initiative, the 2025 Taskforce was set up, and the National Party committed to promoting policies which would close the income gap with Australia by 2025.   (National doesn’t talk about closing that gap much anymore, because they know they don’t have a plan to close it.  ACT does!)

So we’ve shown we can work with National, and can deliver positive benefits for New Zealand.

But much remains to be done.

In the last few weeks, National has gone some way towards policies which we strongly support by proposing quite far-reaching welfare reform, some useful changes in employment law, and some steps in the right direction in enabling employers to take on teenagers at less than the adult minimum wage.  They’ve even made some tentative suggestions for reforming the Resource Management Act.  We support all these moves – as far as they go.

But let me set out what we would like to achieve in the next Parliament. 

There are nine policy areas we’ll be looking to work with National on to improve the lives of all New Zealanders, and perhaps especially those New Zealanders whom the major parties seem to have forgotten – those who struggle to keep small and entrepreneurial businesses alive, the farmers and those who provide services in rural communities, the self-employed taxi drivers and dairy owners (for whom earning even $13 an hour for the hours worked seems a distant dream), those struggling to cope with the burden of bureaucratic officials and senseless red-tape.  


Pass Spending Cap (People’s Veto) Bill and Regulatory Standards Bill

1)    First, we want to ensure that the two Bills introduced by Rodney Hide in the last Parliament are passed into law – namely the Spending Cap (People’s Veto) Bill and the Regulatory Standards Bill. 

The Spending Cap Bill would not require any reduction in government spending – indeed, it would explicitly allow government spending to increase as our population grows and as prices rise, and it would allow for a complete exemption from the cap to deal with a national emergency, such as the Christchurch earthquakes – but it would prevent future governments engaging in the kind of grossly irresponsible electoral bribes which the Clark Government undertook in the last three years of that Government’s life.  For this reason, we believe its passage is well overdue.

Similarly, the Regulatory Standards Bill – opposed by most government departments and supported by most people in the private sector – would raise the bar on new legislation and regulation to the considerable benefit of everybody.

Only a party vote for ACT will get these two fundamentally important pieces of legislation passed into law!


Reduce government spending relative to the size of the economy to enable radical tax reduction, and a lower exchange rate

2)    Second, we will be pushing for a faster reduction in government spending – relative to the size of the economy – than that currently envisaged.  At the moment, government spending is a larger share of the total economy than in any year of the last Labour Government.  And yet there are a number of spending programmes which National criticised strongly when in Opposition but which remain untouched – programmes which have little or no merit in terms of any concept of social justice.

Getting spending under control more quickly would have three important benefits.  

It would hasten the day when we’re no longer borrowing from our children to make life more enjoyable for ourselves.

It would enable tax rates to be reduced and flattened.  We’re especially keen to get the company tax rate reduced – that’s vitally important if we’re to see a strong increase in investment in New Zealand.  Yes, our company tax rate was reduced last year, but taken together with the change in depreciation allowances the overall effect was to increase the effective corporate tax rate.  In any event, our company tax rate remains at 28%.  That in fast-growing Singapore and Hong Kong is only 17%.

By how much could tax rates be reduced?  The 2025 Taskforce showed that, if government spending could be reduced to the same share of GDP that it was in 2005, at the end of Labour’s second three-year term in office, then the top personal tax rate and the company tax rate could both be reduced to 20%.  I’m not confident that that’s still possible, but a radical reduction of both rates could certainly be achieved. 

Because of the crucial need to raise wages and salaries by increasing investment, we favour accepting that there will need to be an ongoing gap between the company rate and the top personal rate (as there is currently) by introducing a radically lower company tax rate at 12.5%, with the top personal rate as low as revenue will allow, perhaps 25%.  We don’t doubt that that would have a very dramatic effect on investment, and therefore on wages, salaries and jobs.

Another substantial benefit of getting government spending reduced more quickly is that it would help reduce the exchange rate – vitally important if farmers and other exporters are to generate the strong growth in exports that our high level of overseas debt demands. 

This is partly because much of the borrowing being undertaken by the government is being done by selling bonds to foreigners – and of course those foreigners have to buy New Zealand dollars to buy the government bonds. 

It’s also partly because tighter restraint on government spending would almost inevitably prompt the Reserve Bank to further reduce the Official Cash Rate, and that too would reduce the upward pressure on the exchange rate.  Yes, the OCR is lower now than at any time in our history, but it’s also higher than in any other developed country except Australia.  There can’t be much doubt that if the OCR were, say, 1% rather than 2.5%, the exchange rate would be lower and export growth would be stronger.

Only a party vote for ACT will get government spending back under control quickly, and take the pressure off exporters!


Radically reduce bureaucracy

3)    Third, we will be pushing for a strong attack on bureaucracy.  And by that we don’t simply mean a reduction in the number of bureaucrats, though that would no doubt be part of it.  We mean taking an axe to some of the more ridiculous rules and regulations which those bureaucrats enforce:

· The rule which enables Auckland Council planners to tell a home-owner to paint her white house black or brown because it’s near the Kaipara;

· The rule which requires a retailer of farming equipment in Masterton to get approval before erecting a sign on his own property;

· The rule which requires a farmer to get approval before building a hay-barn on his own property;

· The rule which enables local authority planners to designate a farm as having outstanding landscape value, without any suggestion of compensation for the loss of value which that designation involves;

· The rule which requires a farmer to get a building consent to replace his home after it’s burnt down;

· The law which enables local authorities to tightly constrain the supply of land, with disastrous consequences for housing affordability for most young New Zealanders.

Fixing these frustrating and expensive rules would almost certainly require a fundamental reform of both the RMA and the Local Government Act, and quite possibly an amendment to the Bill of Rights Act to ensure that the right to peaceful enjoyment of one’s own property is enshrined in law.

Only a party vote for ACT will make a serious dent in the inane bureaucratic rules which cost us a fortune and ruin our lives!


Take an axe to the Emissions Trading Scheme

4)    Fourth, we also want to take an axe to the Emissions Trading Scheme.  Whatever you believe about the causes of climate change, it makes no sense at all for New Zealand, producing just 0.2% of global greenhouse gas emissions, to have the only all sectors, all gasses, ETS in the world.

No other country penalises farming for its production of greenhouse gases, and yet that is a major part of the ETS in New Zealand. 

Yes, National proposes to defer the inclusion of agriculture into our ETS until 2015; Labour proposes to include it from 2013. 

But even now agriculture is hurt by the effect of the ETS on the price of electricity, petrol, diesel, and coal.  If biological emissions were to be included in the ETS on the basis proposed by the Labour Party, it would have an absolutely devastating effect on the viability of a great many farms.  Even the deferment proposed by the National Party would at best leave farmers paying thousands of dollars for their use of on- and off-farm energy.  New Zealand’s farming sector – the most efficient producer of food in the world – doesn’t deserve that kind of punishment.

Indeed, there’s a strong argument that biological emissions don’t add to greenhouse gases at all: every unit of carbon emitted by pastures, crops and animals was first absorbed from the atmosphere.

Only a party vote for ACT can protect farmers – and the rest of us – from the ETS!


Give parents effective control over their children’s education

5)    Fifth, we want taxpayer funding to “follow the child”, to give parents an opportunity to send their children to any school willing to take them, as already happens with Early Childhood Education.  This would enable parents to send their child to an independent school if that was their preference, or to an “integrated school”. 

And to enable parents to make an informed choice about which school is best suited to their child, we would open up SchoolSMART, a website run by the Ministry of Education which holds information about schools, about pupils’ performance, about teacher performance and about other indicators.  National once campaigned to make this information available to parents.  In Government, they haven’t done it.

We would recognise long-established and well run state schools, such as Auckland Grammar, Epsom Girls, McLean’s College, Rangitoto College, Wellington College and Christchurch Boys High School, as “trust schools”, and allow them to operate substantially free from bureaucratic control – including giving them the ability to establish other campuses, perhaps by acquiring schools which might be losing pupils.

Only a party vote for ACT will give parents a chance to choose the school which best suits their child, and boards of trustees and principals a chance to run their schools free from the stifling hand of Wellington bureaucrats!


Promote a multi-party consensus on changes to New Zealand Superannuation

6)    Sixth, we will push for a multi-party consensus on changes to New Zealand Superannuation to ensure its long-term viability as our population gradually ages. 

The Labour Party has recently announced their support for a gradual increase in the age of eligibility, as we proposed months ago.  They’ve adopted the proposal of the Retirement Commissioner, which would see the age of eligibility reach 67 by 2033. 

We think that that’s too slow, not affecting in any material way the baby boomer generation. 

The Australian Labor Government has announced that the age at which Australians will become eligible for their taxpayer-funded pension scheme will reach 67 by 2023, 10 years earlier than the Labour Party has proposed here.  

But whether by 2023 or 2033, this issue needs to be put on the agenda.  Most other developed countries are gradually increasing the age at which their citizens become eligible for taxpayer-funded retirement income, and for the same reason.  We’re all living longer.  It’s totally irresponsible to pretend that no increase will be needed.

Only a party vote for ACT will ensure that this issue is addressed in a timely way!


Promote a safer, more secure, society

7)    Seventh, we will push to make New Zealand a safer and fairer place by ensuring that the victims of crime are not subject to unfair scrutiny by the police when they try to defend themselves, and ensuring that young offenders are appropriately dealt with before their criminal activities escalate.

The statute books already entitle people to use reasonable force to defend themselves and their property.  But in practice it’s all too common for the police to charge people who defend themselves – in other words, for the police to treat victims as criminals. 

I mentioned the case of Virender Singh a moment ago.  I could have mentioned the case of Greg Carvell, charged with shooting and wounding an intruder who was threatening him and two of his staff with a machete.  Or the case of Paul McIntyre, charged with shooting and wounding one of three men who were trying to steal his property in a remote location in the dead of night.  There have been far too many similar cases. 

While clearly the use of force in defence of person and property must be reasonable – it would clearly be absurd to use lethal force against a teenager retrieving a ball from your front lawn – the present policy needs to change.  We believe there’d be merit in enshrining the right to self-defence in the Bill of Rights Act.

In respect of youth offending, there’s a lot of evidence that to the extent young people get away with minor offending, there’s an increased chance of their engaging in further and more serious offending.  We will ensure that all young people know that breaking the law has consequences, in order to ensure our young people stay on the straight and narrow.  Ensuring that young people receive a decent education, and can find a job when they need one, will also help keep young people out of trouble.

Only a party vote for ACT will protect your right to self defence, and make it clear to our young people that every crime has a consequence!


Push for equal legal status for all New Zealanders, irrespective of race

8)    Our eighth agenda item is to give effective force to Article III of the Treaty of Waitangi – the clause which asserts that all New Zealanders have equal status at law.  We reject the notion that the Treaty established a “partnership” between “the Crown” (on behalf of all New Zealanders) and a subset of New Zealanders defined by their ancestry.  If Article III is taken seriously, it leaves no room for separate Maori electorates in Parliament, no room for Maori wards in local government, and no room for requiring consultation with Maori over and above the obligation to consult with any other New Zealander.

We believe that, except where already in private ownership, the foreshore and seabed should belong to the Crown, on behalf of all New Zealanders.  Because we are a party which believes in the rule of law, and in particular the right of all New Zealanders to have access to the courts, we also believe that those who think they have a customary right to certain parts of the foreshore should be allowed to have their claims tested in court.  And we mean tested in court: we don’t regard negotiating such claims with a minister, within an intensely political environment where Parliamentary votes are at stake, as at all a substitute.

We favour the enactment of a simple piece of legislation providing that nothing in any statute or regulation, whether passed by Parliament or by any other regulation-making body, should confer any benefit, preferment or special status on anybody by reason of the ethnicity of that person. 

Only a party vote for ACT will move New Zealand forward to a state where all New Zealanders – those of Maori ancestry, those of European ancestry, those of Asian ancestry, those of Pacific Island ancestry – all of us have equal rights under the law!


Re-establish a constructive relationship with Fiji

9)    Finally, we will push to rebuild our relationship with Fiji. 

The ACT Party has long been in broad agreement with the thrust of New Zealand’s foreign policy: in particular, we favour the drive for building new relationships with China, India and other emerging countries in Asia, and for working hard to bring the Trans Pacific Partnership to a successful conclusion.  We have supported the Government in its determination to fulfill New Zealand’s commitments in Afghanistan until next April.  We continue to regard a close relationship with Australia, the United Kingdom, the United States and Canada as fundamental to our security.

But we’ve come to the conclusion after extensive talks with Fijians now living in New Zealand, and New Zealanders with long experience in the Pacific, that our present policy of holding the Bainimarama regime at arm’s length is not working for New Zealand or for Fiji. 

Fiji has long been family: many New Zealanders holiday there and a significant number have business interests there.  Many New Zealanders were born there. 

We need to rebuild a positive relationship with that country – encouraging the regime towards its professed aim of building a vibrant colour-blind democracy, based on one vote one person.

Only a party vote for ACT will lead to a re-examination of our relationship with Fiji!


So there you have a summary statement – the ACT Plan for the next Parliamentary term if you like – setting out what we will be aiming to achieve in the next Parliament. 

All of our policies are motivated by a concern for those New Zealanders who, like Adrian and Jules Paalvast, want to return to their homeland, but feel that they can’t do so in fairness to their children.  And for those who still live in New Zealand but feel deeply torn between what this country has to offer and the much higher living standard which, for the foreseeable future, they could enjoy abroad.

And when we look at the policy positions being adopted by other potential partners of the National Party, we’re convinced that ACT is the most logical partner for National.

The parties of the left – Labour, Mana, Maori and Green parties – are in a competition over who can come up with the most economically irrational policies.  They are in a race to increase the minimum wage – in the process, destroying jobs and consigning those they claim to represent to the unemployment benefit.  So much for compassion!

Their other policies would be just as destructive.  The Maori Party wants to exempt the first $25,000 of income from tax; to make teaching te reo compulsory in secondary schools; to scrap the 90 day probationary period; to write Treaty of Waitangi principles (whatever they are!) into employment law; and to give iwi a veto over foreign investment.

The Green Party wants to protect the environment, as of course we in ACT do also, but has a totally unworldly view of how economies work and has no understanding what a devastating impact on our living standards the implementation of their core policy platform would have.  For a party that talks up their opposition to big business, they seem intent on delivering massive subsidies to big businesses that promise to create so-called “green jobs” – despite policies of that kind leading to massive job losses in countries such as Spain which have gone down that path.

By contrast, ACT shares much the same basic philosophy as the National Party – a belief in freedom, in individual responsibility, in limited government, in equal citizenship, a belief that New Zealanders’ lives would be better by having less government – less government taxation, less government spending, less government borrowing, less government bureaucracy.  And we actually mean it!

Of course, we have differences of opinion with National too.  We want to see much more vigorous action to deal with our problems than National has felt able to deliver over the last three years. 

But we haven’t the slightest doubt that we could again work constructively with National, to the benefit of all New Zealanders – high income and low income; young and old; urban and rural; Maori, Asian, Pacifika and European.

And that’s my message to all New Zealanders.  ACT is the only party with the experience and the commitment which can help a John Key-led Government deal with the challenges which our country faces. 

And those challenges are huge. 

In a world getting tired of countries which can’t live within their means, we’re still borrowing like there is no tomorrow.

In a world where our people are getting steadily greyer, we’re not confronting the challenges posed by the increasing cost of New Zealand Super, of care for the aged, and of healthcare.

In a world where people find it easier and easier to move countries, we’re drifting off the pace, and seeing too many of our young people deciding to make a better life for themselves somewhere else.

A party vote for ACT at this election is your best way to ensure that we meet those challenges, for the benefit of all New Zealanders.


Speech to Rural Policy Launch

Speech to Rural Policy Launch
Hamilton November 10th

Thank you for attending today.

My name is John Thompson. I am placed at number ten on the ACT Party List and I am part of the rural group in the Top 12 Caucus.

I will get the electioneering part over now as I am asking you you for your Party Vote to ACT and I hope to enter Parliament by way of getting there via the list ranking that I have.

Latest polling shows that while this is still possible, it is not probable at this stage. I am working very hard to turn this around and trying my best to make it a very real possibility.

New Zealand is a great Primary Producer and has a well earned and deserved reputation around the globe. Whether it is meat and wool, dairy, horticulture, seafood, or wine, we are considered as a safe producer and people can buy our product without fear.

Innovation that accompanies this is also as impressive – the electric fence being a classic example – and today of course are in Hamilton, home of Gallagher Industries and the Hamilton Jet to name just two.

However many seem to want to make it difficult for our primary industries, and most often this is seen in regulations that pass through Parliament.

Private property rights is something that ACT New Zealand staunchly stands for. We believe that intellectual property, bricks and mortar as well as private land under is under attack from all sides – most often from well-meaning but deluded self-important bureaucrats from both central and local government. This creep into the erosion of private property rights must not only be stopped, it must be reversed.

ACT’s view of the Resource Management Act is that it should not be tinkered with – it should be radically overhauled. This was originally meant to be an enabling piece of legislation that would enable business to be done. Again, thanks to the bureaucrats, the RMA is not enabling but in fact is a disabling piece of legislation. An overhaul is long overdue.

To talk more about this and our other rural policies I would now like to introduce Dr Don Brash, Leader of ACT.

Labour Party Fun Police To Destroy Fun In Wellington

ACT Wellington Central Candidate and Youth Affairs Spokesman Stephen Whittington today called Labour MP Grant Robertson the self-anointed head of the ‘Fun Police’, due to his support of policies that would make having fun in Wellington far more expensive.

“Mr Robertson supports a cap on the number of taxis operating within Wellington, which will reduce competition and increase the price of catching a cab.  Worse it will place those who can no longer afford a safe ride home at greater risk,” Mr Whittington said.

“Today, Mr Robertson released a health policy which includes plans to legislate a minimum price for alcohol.  Labour MP Lianne Dalziel has previously suggested a minimum price of $2 per standard drink. This will mean that the cheapest bottle of wine will cost a minimum of $15, and a bottle of gin $60.  Who knows how much a beer in a bar will cost?

“If you stay at home, alcohol will be more expensive.   If you go to a bar, alcohol will be more expensive.  When you try to get home, you’ll struggle to find a taxi, and those you do find will cost you more. 

“I don’t know why Mr Robertson supports interfering in people’s lives to this degree.   It’s clear that a vote for Labour is a vote to make having a good time in Wellington considerably more expensive, and will destroy Wellington’s vibrant nightlife. 

“Only a party vote for ACT will ensure that government does not get into the business of regulating people’s lives,” Mr Whittington said. 

Mr Whittington is running against Mr Robertson in the Wellington Central electorate, and hopes that Mr Robertson is willing to distance himself from his previous statements, and those of his party, to ensure that Wellington night life is kept alive. 



Getting Real About Resource Management Act Reform

Speech to Whangarei Rotary Club

Ladies and Gentlemen, thank you for the invitation to speak today.  It’s great to be here. 

I believe that there is no other region of the country with more potential to grow over the next generation than Northland.

Worldwide, people are choosing to live where the best climate and the best lifestyles are, and those are two things Northland has in abundance. 

I returned to politics as Leader of the ACT Party out of a deep concern for our country’s economic future.

Over the last century New Zealand’s incomes have free fallen. 

As best it can be measured, we were the wealthiest country on earth in 1900.

By 1950 we were a very respectable sixth.

Today our incomes have fallen to a much less respectable 36th.

Worse, nobody seriously believes that our free fall will stop, let alone reverse, if we carry on with the policies we currently have.

Two questions that you might ask are; one, does it matter and; two, can we fix it?

It matters because losing ground on incomes and living standards means losing people. 

Over the past decade we’ve lost 280,000 people to Australia alone.  The New Zealand Institute of Economic Research forecasts that if we continue on our current path we’ll lose another 412,000 people or almost one New Zealander in ten by 2025.

When New Zealanders leave, they take with them their economic potential.  They take their taxpayer-funded education, as well as their potential to be future taxpayers.  It creates a vicious circle where every person that leaves creates one more reason for another person to go.  

So what can we do about it?

One only need look at history to see that poor economic performance can be changed.  All it takes is the right policy choices.

If natural resources were the key to prosperity, Nigeria would be rich and Singapore poor.

If large populations mattered, Russia would be wealthier than Switzerland.

If being close to world markets was essential, then Central American countries should be more prosperous than Australia. 

In all of these cases, it was not what they had, or the location, that made a difference, but the policy decisions they made which lead to prosperity. 

We can and we must turn New Zealand’s economic performance around through better policy. 

It is better policy that will create the environment for people up and down this great country to use the resources we have today.  They must be able to take those resources and create more wealth tomorrow. 

The courage to make good policy decisions is the challenge that we must boldly embrace if we are to thrive in 2020, 2030, 2040, and beyond.

One particular policy which it is crucial that we improve is the Resource Management Act, and that is what I want to focus on today. 

The 2025 Taskforce – which was set up to advise on how we could close the wage gap with Australia – reported ‘that the RMA continues to be one of the most important regulatory barriers to higher rates of growth in New Zealand’.  It recommended that urgent attention be given to further reform of the RMA.

As the Scottish poet Robbie Burns famously said, ‘The best laid plans of mice and men often go awry’.  I cannot think of a better description for the RMA.

Legislated in 1991, the RMA was intended to make it easier for New Zealanders to develop and use their property. 

It was supposed to usher in a new era of development that would get the best out of our resources for the purpose of economic development, in balance with the environment.

Looking back 20 years to 1991, the plan has certainly gone askew.

Instead of being an effects-based scheme that presumes development should go ahead so long as there are no adverse effects on the environment, it has instead given license for planners in local government to impose huge costs on land use and development.

The 2025 Taskforce reported that ‘the RMA encourages local government to see the changed use of private land as a privilege that they bestow, rather than a right which might be modified only in narrow and well specified predictable ways.’

By asking council staff to identify the effects of developments, the RMA has created a breeding ground for interfering behaviour.  It has created a not-so-minor industry of planners and pontificators whose role in life is to tell others what they can do with their property, despite bearing no personal costs for doing so.

Let me give you an example from RMA expert Owen McShane.  Owen talks about RMA DURT, which is, Delays, Uncertainty, Regulation and Taxes.

He cites the rural chapter of just one Operative District Plan.  It is 271 pages long, which he points out is not untypical.

If an activity breaks some rule in the Plan it becomes subject to 13 pages of ‘assessment criteria’ for land use consents, and 19 pages for subdivision consents. 

At about 12 criteria per page, that’s about 400 opportunities for both the public and the decision-makers to obstruct a project.

Many of these assessment criteria, he continues, are highly subjective and clumsily worded.  Developments might be  subject to questions such as whether:

 (i) the activity removes or reduces a high ratio of open space to buildings, where such a ratio existed previously;

One might reasonably ask what a ‘high’ ratio is.  But no sooner could such a question be asked before the plan asks whether:

(iv) the activity introduces building sizes and densities of an urban nature and scale;

Whatever an urban nature and scale is? Who knows whether they were thinking of an urban centre like Manhattan, or one like Kaitaia?

g) Whether the activity will adversely affect the visual and landscape values of the surrounding area.

Of course, this condition means there is no chance of justice or accountability.  By this point the council staff have the carte blanche to decide whether or not they personally think a project should go ahead.

The list goes on with ‘assessment criteria’ such as:

 (b) Whether buildings are sensitive to the rural landscape and visually unobtrusive.

 (d) Whether the design of the subdivision and jointly owned access is appropriate to:

(i) achieve visual and cultural benefits from retaining views of rural production activities from adjoining rural roads;

And remember, this is just the rural chapter of a single district plan.  For the council in question, it was one of thirteen such chapters.

At this point it should become clear that the Resource Management Act is a piece of Frankenstein legislation.  It has grown out of the control of its creators and become a danger to us all.

It has given rise to planning documents that restrict development to the narrow and predictable ways hinted at by the Taskforce.

These restrictions are often absurd.  Colour restrictions on painting buildings provide a symbolic example of the irritation that the RMA forces on people trying to use and develop their land.

The recent case of the Cotton family is just one. 

The Cottons bought an Epsom villa and moved it to overlook the Kaipara Harbour. 

They had always wanted a big white house on a farm.  Hardly an offensive image, you might think. 

But they had a year-long battle with the local council who insisted that the house must be painted in a dark colour to blend in with the country side.  It is as if houses are not a part of the landscape.

The eventual compromise that has been reached is to paint the villa dark cream.

Such colour regulations occur up and down the country.   It is tempting to write them off as a nuisance, but the fact that they are even possible shows how bad the regulatory burden placed on land use and development has become.

However, there are much more serious costs imposed upon New Zealanders through our RMA.  One very pointed example is the Metropolitan Urban Limit in Auckland.   This planning feature imposes serious costs on everybody in the city of Auckland who wishes to own a home. 

By restricting residential development to within the Urban Limit, the plans seriously restricted the supply of residential land and drove up its cost.   This restriction has meant that land within the limit costs eight to thirteen times more than land outside the limit. 

There is no shortage of land, just land that one is allowed to build upon, and this shortage is putting home ownership out of reach for an entire generation of New Zealanders.

One more example of RMA sabotage is the case of Dan Riddiford, who farms six and a half thousand hectares of rugged land on the southeast coast of the Wairarapa. 

His family has farmed the land since 1843.

Dan once had ambitious dreams of diversifying his farm into land based aquaculture and making it a much more productive enterprise than the rugged sheep and beef country it had been until then. 

You might think, ‘Great!  That is exactly the kind of value added, export driven activity this country needs.  It might create new jobs that would keep New Zealanders here.’ 

You’d be right.  But the local council didn’t think so.
He was not allowed to build additional farm houses, as if he was supposed to manage his entire venture himself.  In one of the most absurd episodes his traditional family house burned down and he was forced to apply for a Discretionary Resource Consent to rebuild it.

Dan was forced through years of torment as he tried to get his projects consented.  He eventually got so fed up about the restrictions on his property that he took himself to law school to learn how to fight such incursions on his property rights. 

The last twenty years of the RMA have provided a myriad of such examples, each one with its own cruel rebuke of wealth creation by bureaucracy.

Imagine a New Zealand where entrepreneurs like Dan could just get on with it.

If New Zealand is to have a fighting chance of getting on top of its economic malaise then we must stop shooting ourselves in the foot with policies that destroy wealth for no good reason other than that our legislation has gotten out of control.

But the deeper problem is not so much the policy but the lack of political will to deal with it. 

It is true, that over the past three years, with ACT’s pressure and support, some progress towards has been made towards simplifying and streamlining the RMA. 

However, the National Party appears to have nearly declared victory on the RMA, pointing to faster consent processing times over the past three years, conveniently ignoring the fact that the economic slowdown has meant fewer consents to process.

Their latest policy announcement amounts to restraining the RMA Frankenstein with the frilly ribbons of an under-cooked and oversold policy reform.

The announcement that mid-size projects will now be processed within six months is weak on several levels.

First, six months is a long time. 

A developer borrowing $20 million at ten per cent cost of capital will pay one million in interest costs over this period.  That’s money that New Zealand’s economic future can ill-afford.

Second, it’s unlikely to achieve even that time limit in practice.  As ACT’s RMA Spokesperson and practicing environmental lawyer Kath McCabe has pointed out, councils routinely 'stop the clock' while they request further information; under section37 time frames can be doubled and hence six months becomes a year. 

What’s more, councils routinely refuse to lodge consents, or ‘start the clock’ on a number of bases - further reports or information, approvals from other organisations, payment of front-loaded council 'costs', written approvals from iwi, and neighbours are just some examples.

Third, it’s in line with National’s wrong-headed assumption that the RMA remains essentially good legislation that needs only minor tweaking. 

Their policy document even states that they remain committed to the underlying principles of the RMA, despite it having severely hampered our economic development over the past two decades.
They are effectively saying: ‘you must jump through the same hoops, but you must now jump through them faster.’

That is why, in any future coalition with National, ACT would push the government to move faster and deeper on RMA reform. 

Faster and deeper RMA reform would be a high priority for ACT in any coalition negotiation because faster and deeper RMA reform is a priority for New Zealand’s economic future.

We would push for the following reforms to shift the balance of the RMA back in favour of economically productive activities, and away from the interferers who stymie so much wealth creation in New Zealand.

ACT’s first step would be to separate the planning functions of councils from decisions on applications for resource consent.  

This would stop the current situation which sees the same people who make the rules interpret the rules.  The current potential for abuse is rife.

Our second step would be to limit the fees that councils can charge for consents. 

Currently, we have something of a Stockholm syndrome for people who want to use and develop their land.  Not only must they be interfered with by bureaucrats, they must pay for the privilege. 

Restricting fees would mean that councils would be using ratepayers’ money for challenging development.  They would come under greater pressure to interfere only when they were defensibly serving the public interest;

ACT’s third step would be to 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.

Currently, the thought of objections from third parties puts a chill on land use and development.  Those who seek to develop face the prospect of large losses when their developments fail.  Our intention is to put a similar chill on those who would make frivolous objections.

Our fourth step would be to increase the right to compensation for those whose land values are reduced by council planning decisions.  

We regularly see property owners finding that their property is devalued by restrictions on how they can use it. 

Consider the example of a farmer who planted 6,000 trees on his land and fertilised pruned and cleared around them.   His intention was to mill them when his children were married.  He estimated that he spent about $120,000 on his trees.  But when the trees were 12 years old, he was told by the council that he could no longer mill them as they formed part of the water filtration system leading to a very large rural water supply. 

It may be that in some cases the environmental benefits of such a regulation are beneficial.  However it is not clear why the farmer in question should bear the cost for the entire society. 

In such cases, we will push to make compensation easier, with the effect of making councils think twice before implementing frivolous restrictions on land use.

Finally ACT would seek to clarify that the only harms and benefits that should be considered are those that relate to human welfare, and that ‘intrinsic values’ are not to be considered. 

Much of the difficulty in the RMA comes from the fact that it allows interference on the basis of aesthetic, even spiritual values.  These are difficult because they are impossible for anyone to prove or disprove in a just and transparent way.

Restricting the RMA’s concern to tangible effects on the air, soil and water is the most important change that ACT will push for in the next government.

So the power to bring about this change is now up to you.

If you agree that economic decline is a serious threat to our nation then you must act.

If you agree that the RMA is a serious impediment to our economic growth then you must act.

If you agree that the ACT Party is the only party that is serious about tackling the RMA head on, then you must give your party vote to ACT.

This is a representative democracy and ACT seeks to represent you.  Ultimately the decision about our future prosperity lies in your hands.  

But remember, it is only once we start making the right policy decisions that we will see an improvement in our living standards, our wages and our quality of life.   ACT is the only party committed to getting it right. 

Thank you. 

ACT Announces RMA Reform Policy

ACT Leader Don Brash today announced the Party’s Resource Management Act (RMA) policy which would dramatically reform the Resource Management Act, reduce bureaucracy and create a more prosperous New Zealand.  

“The Resource Management Act has been identified as one of the most important regulatory barriers to higher growth rates in New Zealand,” Dr Brash said.

“Its original intention was to make it easier for New Zealanders to develop and use their property.  Instead it has created a breeding ground for interfering behaviour where bureaucrats can tell you what to do with your property, despite bearing no personal cost in doing so.”

ACT’s policy focuses on five key areas of reform.  These reforms would:

  • Separate the planning functions of councils from decisions on applications for resource consent
  • Limit the fees that councils can charge for consents 
  • 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
  • Increase the right to compensation for those whose land values are reduced by council planning decisions|
  • Clarify that the only harms and benefits that should be considered are those that relate to human welfare, and that ‘intrinsic values’ are not to be considered

Dr Brash said much of the difficulty with the RMA comes from the fact that it allows interference on the basis of tenuous or aesthetic values. 

“These are impossible for anyone to either prove or disprove in a just and transparent way, which removes any right of response or argument.

“It has also meant that councils view the use of private land as a privilege that they bestow, rather than a right of the land owner. 

“Restricting the RMA’s concern to tangible effects on the air, soil, and water is the one of the most important changes that ACT will push for as part of the next government,” Dr Brash said. 

The Devil Is In The Detail - Goff light on policy in his latest photo-op

ACT New Zealand’s Labour spokesman Chris Simmons today said he isn’t surprised that Labour Leader Phil Goff was light on policy detail during his recent photo opportunity.

Mr Simmons was responding to the article in today’s ‘Dominion Post’ on Mr Goff’s visit to engineering firm A. E. Tilley yesterday.

“In light of Labour’s policies on raising the minimum wage to $15 an hour – and even higher for some industries – Phil Goff visiting small businesses is akin to Daniel entering the Lion’s Den,” Mr Simmons said.

“The factory owner, 78-year old Don Tilley, stated he didn’t know what Labour’s policies were. I suspect if Phil Goff had informed him, he would have been aghast.

“Mr Tilley specifically stated that he doesn’t like laying staff off. He still pays double-time when his guys work overtime, and his workers are supporting him currently by taking unpaid leave during the current hard times. For 89 years the Tilley family has run this business – it is hard to think he needs the government telling him how to do anything. Yet, here is Labour promoting Labour policies that would leave him no other choice – and would likely mean that we will not see 100 years of A.E. Tilley.

“The business environment is hostile enough already. Statistics show that more small businesses closed in 2010 than in any other year over the last decade. When one considers that small businesses employ most of our workforce, and drive our economy, this is very bad news indeed.

“Last year, almost 98 percent of new businesses started with between zero and five employees. Such businesses are the most vulnerable to failure. Under National that has proven particularly so – and Labour’s plans will drive many more entrepreneurs out of business.

“The only Party that recognises the potential of business entrepreneurs is ACT. ACT knows that business entrepreneurs drive our economy. For everyone’s sake we need an economic environment in which they can survive, then thrive.

“With 18 years of running my own management consulting business, working with entrepreneurs around the world, and networking with leaders in the field of entrepreneurship, I know how important it is to have a regulatory environment that supports business owners.

“ACT is the only Party with a vision to create an entrepreneurial economy that supports and attracts entrepreneurs to build businesses from a New Zealand base,” Mr Simmons said.

Brash Says the Poor and Young Will Lose Under Auckland Council Plan

ACT Party Leader Don Brash today labelled the Auckland Council’s proposal to change the ‘Metropolitan Urban Limit’ into an even tighter ‘Rural Urban Boundary’ ridiculous and discriminatory, saying it would lock the young and the poor out of housing in Auckland for the next 30 years.

“The Auckland Council is effectively ensuring that unless people are wealthy, the Kiwi dream of owning their own home will always be out of reach. This will be a massive blow to a generation of Aucklanders trying to get ahead.

“Housing affordability for our young people is a real concern. They are the very people we are desperately trying to keep from abandoning New Zealand and this is just one more strong incentive we're giving them to leave,” Dr Brash said.

The new boundaries, which will ban urban development outside the rural-urban line, will see 75 percent of new housing over the next 30 years built within the existing already built-up areas, and Dr Bash says this could have a devastating effect on housing affordability. 

“According to research by respected economist Arthur Grimes the existing limit has already made land immediately inside the MUL between eight and 13 times more expensive than land immediately outside the completely arbitrary line.

“It defies belief that instead of rectifying some seriously poor public policy, the Auckland Council is planning to make the situation worse. The ACT Party believes we should be introducing policy to make housing more affordable not less,” Dr Brash said.

Dr Brash identified the Resource Management Act as another huge nation-wide obstacle to housing affordability.  He points out that, relative to incomes, house prices have doubled since the introduction of the RMA in 1991, and says that this staggering increase has seen home ownership decline in every census since 1986.

“A major priority for ACT in the next Government will be to make housing more affordable for all New Zealanders by eliminating arbitrary restraints on the availability of land for residential development” Dr Brash said.

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.