Free Press 30/01/2015

 

 

A New Beginning
This month is an inflection point. It begins a political year and a parliamentary term. From a front row seat in parliament, we rate the parties’ chances.

Still Scared of the Big Bad Ruth
Prime Minister John Key has won three elections. 58 seats, 59 seats, 60 seats. What a politician. Where are the policies? Last year we told the Prime Minister and Deputy Prime Minister that Ruth Richardson has accepted a role giving advice in the ACT office. It is hard to put those two off their stride, but that did it.

Administering Helen’s Legacy
Name a Labour policy National has reversed. Hints: Labour established the Cullen fund, removed competition from ACC, wiped interest on student loans while studying, then wiped interest on student loans forever, replaced the Employment Contracts Act with the union-friendly Employment Relations Act, started paying people to have children (paid parental leave), started paying people to bring up children (working for families), took the option of bulk funding away from schools, capped funding for independent schools, gave councils the power of general competence, removed the purchaser-provider (RHA-CHE) split from healthcare, raised the top tax rate above the trust and company rates…. So it goes on.

Labour
We feel obliged to say something about New Zealand’s second largest political party, but what?

Greenpocalypse
The Greens’ do have policies but they are headed for civil war over them. They are frustrated and divided. Their polling momentum has stopped. If Labour does recover it may go backwards, ending political careers. After 18 years of MMP they are still not in government. The generation gap between younger Greens who are comfortable with markets and Russel Norman, an actual Marxist, is irreconcilable.

Civil War
From Parliament, we see faces up close. We watched Russel Norman closely during James Shaw’s maiden speech. Shaw quoted Thatcher and praised free markets. Norman’s face raged. He was the last Green MP to congratulate Shaw, before storming out the back entrance of the chamber. When Shaw tries to talk down his leadership ambitions he cites Normans’ achievements up until today. This tension is unsustainable.

Climate What?
Climate change used to be the ‘moral challenge of a generation.’ It has not featured in the last two Green campaigns. The day the IPCC released its fifth report, parliament was sitting. Amazingly the Greens used both their parliamentary questions to harass the Prime Minister about his text messages. David Seymour asked one of the more respected environmentalist Greens about this. He got a feeling like the (first and last) time he repeated a feminist joke to his mum in 1992.

Where to Next?
If they can avoid Greenpocalypse they will have a good brand and a sophisticated campaign organisation. The problem is that nobody, including themselves can be sure what they stand for any more. It’s not the environment. It can’t be 1970’s economic policy. They can’t promote modern economics because the leadership are opposed to it.

Private Hell
Winston Peters is grumpy. He faces three years surrounded by people he picked because they are too boring to pose a threat. The real shame is that the otherwise liberal news media continue to report his dog whistling racism. For example. In his latest episode he (wrongly) claimed that international students get fast tracked to permanent residence. Actually they require a job. Education is New Zealand’s third largest export. When is Mr exports against exporting? When it involves Chinese and Indians buying the services on location.

What Lovely People
Last issue we pointed out that David Seymour doesn’t sell blood to raise money for ACT only because it’s illegal. Here’s what we get from the anti-partnership school campaigners. We hope the person involved is not a teacher.

We are unfazed.

 

 

Free Press 27/01/2015

Welcome to the first ever edition of Free Press, ACT’s new regular bulletin.  If you’re wondering why you’ve received this, we’ve used the same mailing list as Richard Prebble’s classic The Letter, and hope we can stimulate you in the same way.  Otherwise, feel free to exercise your freedom of association and click the unsubscribe button at the bottom of your email.

Victory for Sound Economics
Demographia has said New Zealand’s housing is unaffordable since 2006.  Former Prime Minister Clark used to say they just needed to add Europe to the report and we’d look better.  Now even the Greens accept the issue is real.  The war of ideas can be won.

Victory for ACT
The Productivity Commission (formed as a condition of ACT’s 2008 confidence and supply agreement) made the difference.  Its comprehensive reports showed that it is a shortage of land that makes housing unaffordable.  They showed Auckland’s Rural Urban Boundary makes land 8.65 times more expensive by banning development on the fringe.  In 1974 we built 28,000 homes, last year 14,000.

Dopey Alternatives
Some parties say the government should build housing, but where?  Even builders working for the government cannot build houses without land.  Others want to give first homebuyers money – completely counterproductive.  If the government showed up at an auction and gave every bidder $10,000, what would happen to the final price?

And Dopier
The capital gains tax is worse still.  All the other unaffordable housing markets (Sydney, Vancouver, LA) have CGTs.  Only the left would try to stimulate home building by taxing the sale of homes.  But what about the speculators? Well, who would speculate in a market where new homes keep getting built?

Not Greedy
Some say the problem is ungrateful kids drinking too many lattes.  Hardly.  Home prices have gone from 3x income to 8x since 1990.  We dream of buying a house for $27,000 and having the mortgage eaten by 17 per cent inflation.  What was that like?

Ending Child Poverty
The Listener reports that 130,000 New Zealand children live in poverty, not counting housing costs.  Then it rises to 285,000.  Solving housing affordability could halve child poverty.

Neo Feudalism
We have always been a frontier society where home ownership is the Kiwi dream.  More and more young New Zealanders are dependent on help courtesy of their parents’ housing gains to get on the ladder.  Helen Clark’s dream of us turning into Europe probably didn’t include hereditary property ownership, but we’re half way there.

Cost of Living
Visitors to New Zealand noticed how much everything costs even before the dollar’s surge in recent years.  Epsom electorate shopkeepers tell us rents are through the roof.  The RMA is not only a plague on developing houses, we speculate that it has driven up the price of everything.

Green Dream
The only thing the Green Party is trying to save in the housing debate is the Red Herring.  New Zealand is 0.7 per cent urbanised.  We drove from Auckland to Hawkes Bay recently and the only thing we didn’t see was a shortage of land.  “Sprawl” is a green godsend.  Most Kiwis with a back yard like to plant native plants to attract native birds.  This has got to be better for the environment than dairy farming.

NIMBYs, us?
Epsom electors are wary of intensification.  We say not in our back yard for a very good reason.  There’s already a house there.  The Epsom electorate has been infilling since the 1960s.  It had the highest population density in the country even before the Electoral Commission took the Domain off us and put it into Auckland Central.  If all of Auckland was as dense as Epsom, it could accommodate 13 million people.

The RMA is Surreal
If you are sitting down, try reading the RMA.  “Persons acting under this act must have particular regard to the intrinsic values of ecosystems.”  By definition that is impossible.  Who decides an intrinsic value? You can’t blame the meddling classes for exploiting such vagueness.  Try it here for free: http://www.legislation.govt.nz/act/public/1991/0069/latest/DLM231910.html

Where Next?
ACT will be pushing National to do RMA reform properly.  If Hon Peter Dunne wants to wallow in intransigence, let him.  Hon Dr Nick Smith should cut a swath through the vagueness and put property rights and housing supply front and centre in the RMA.  We will be working hard over the coming months.

Freedom isn’t Free
If it were legal, ACT Leader David Seymour would sell blood to fundraise for ACT.  All you need is a credit card.  www.act.org.nz/donate

Come to the Farm
We are hosting our conference on February 21.  The theme is New Zealand the Way You Want It.  Rob Muldoon won 55 seats on this slogan, and we have better policies.  The line-up is first class; the $50 ticket price is economy.  Read more here: http://www.act.org.nz/civicrm/event/info?reset=1&id=171

Tell a Friend
Our goal is 100,000 votes in 2017.  You can help by forwarding this newsletter.  They can sign up to receive it here: http://www.act.org.nz/subscribe

 

 

 

 

 

Newsletter - A year of inequality debate

Inequality and poverty issues were big news this past year.

The English version of Thomas Piketty’s book, Capital in the Twenty-First Century, was published in April.  It provided an impressive collection of historical data on trends in wealth distribution. Much less impressive was the interpretation of the data and the theory that went with it.

The book was greeted with enormous enthusiasm by the political left. No surprise there. People – on both the left and right of politics - tend to accept uncritically information or views which align with their prior beliefs.

But one of the great virtues of a free and open country, and of the democratic process, is that your political opponents will scrutinise your arguments and you theirs. It’s a contest of ideas.

So how has Piketty’s book held up? A recent lengthy review by Deirdre McCloskey described the many problems with the book, and John Cochrane (University of Chicago Business School) has helpfully provided a condensed version. It is well worth a read.

Cochrane summarises McCloskey:  the book is “wrong as simple microeconomics ….and growth economics; the evidence is contrary to its thesis…. and it advocates policies - confiscatory taxation by a centralized world government - that would turn back the trade-based betterment (a better description than ‘capitalism’, as it is innovation that drives income growth) that has saved billions from grinding poverty.”

McCloskey notes that Piketty’s definition of wealth does not include human capital - the skills and education of the workers. Add back in human capital to the accounting, and you find that workers own most of the nation’s capital, “and Piketty’s drama from 1848 falls to the ground.”

The year ended with more publicity on academic work on inequality, with the Guardian newspaper featuring a working paper from the OECD. The headline was: Revealed: how the wealth gap holds back economic growth.  This headline was enough to excite those on the political left, but the subheading was even better:  OECD report rejects trickle-down economics, noting a ‘sizeable and statistically negative impact’ of income inequality.

The political cream on top was that the report identified NZ and Mexico as the two countries whose growth was most held back by rising inequality:

Does any of this stand up?

Let's start with the Guardian’s subheading, where they ever so predictably reach for the notion of “trickle-down economics”. This expression is a pretty standard fantasy of the political left, not so much a straw man as the left’s imaginary friend.  There is no such academic theory.

What about the OECD report itself, rather than the overheated journalistic version?  Was Russel Norman’s excitement in the House justified?  Had he read it, or just the Guardian report?

As always with these matters, you need to wait a bit until other academics have tested the report – its methodology, its data analysis and conceptual coherence.

An economist at the NZ Initiative, Eric Crampton, has helpfully reviewed the OECD paper on his blog, Offsetting Behaviour. You can read it here.

Crampton notes several odd aspects of the report’s conclusions.

“They find that net inequality (after tax-and-transfer) hurts economic growth, that gross inequality (pre tax-and-transfer) doesn't hurt growth, that changes in human capital (education) do not affect growth one way or another - there's a slightly negative effect of education on growth in the set of specifications, but it's not significant; and, investment doesn't affect growth one way or another.”

As Crampton notes, these are strange results. Typically we would expect investment in capital equipment and in human capital to be important for growth.

But it gets weirder still.

Digging into the report, the results suggest that all that matters is the difference between the average income and the level just below - the 4th decile. The difference between incomes at the top (the 9th and 10th deciles) and average incomes have no influence on growth.

If you took that result seriously your policy recommendation would be to increase the tax on average earners to give money to people slightly poorer than them. An odd result. Nobody now seems to be defending the data analysis in this report.

But if you did, you would wonder what the mechanism might be for inequality to affect growth?

The report suggests it would be via reduced investment in education in the lower decile cohorts.  But remember, the report found no effect of education on growth.

The authors decided this result must be wrong, and instead made the case for increased spending on education. That judgement in turn is based on other OECD papers which do find a strong effect of education on growth. Awkwardly, many of those very papers also find that inequality increases growth.

Go figure.

Let’s be positive here. The authors cite OECD research that suggests that “across 21 OECD countries human capital has a robust, positive and significant impact on long run growth”.  Yes, it does, see the McCloskey comments on Piketty earlier.

Referring to that research the authors write:  “The evidence strongly suggests that high inequality hinders the ability of individuals from low economic background to invest in their human capital, both in terms of the level of education but even more importantly in terms of the quality of education. This would imply that education policy should focus on improving access by low-income groups, whose educational outcomes are not only worse on average from those of middle and top income groups, but also more sensitive to increases in inequality.”

Well, there is a policy that does just that. It is called Partnership Schools.

Ponder that over the holiday break, and wonder why the political left does not support this policy.

Merry Xmas!

David Seymour
Leader, ACT New Zealand

Newsletter - Partnership Schools

Partnership Schools: The Path to Quality Education
November 11, 2014

You may find this recent newspaper article on Partnership Schools of interest.

http://www.stuff.co.nz/national/education/10716336/Charter-schools-claim...

I did, and for this simple reason.

The article fairly presents the difficulties some schools are having in this early establishment phase. As common-sense would suggest, and as recent research shows, the average quality of schools improves over time (e.g. see the US National Bureau of Economic Research: The Evolution of Charter School Quality). Rome was not built in a day.

The article also fairly presents some of the undoubted successes so far in New Zealand.

For many students these schools are proving truly transformative, turning around lives, rescuing them. It is profoundly moving to read of this, even more so to be privileged – as I have – to witness it.

In my Maiden speech in Parliament I mentioned a visit to one of these schools where, as I chatted to the students about their experiences in other schools compared with their experiences at their new Partnership School, one young girl said “I didn’t know I was smart until I came here”.

Who could fail to be affected by that?

Now, consider these accounts of lives being transformed, and weigh that enormous positive against some of the negative comments in this article and elsewhere by opponents of these new schools. For opponents to describe Partnership Schools as part of an “ideological drive to disestablish public education” is not just wrong, it’s childish and daft. Most of our public schools provide excellent educational opportunities - just not to all children.

I am sure these opponents are good people, committed educators, but some of their attitudes are appalling.

Fancy giving parents options; giving them choices which might dramatically improve their children’s chances in life. We should be doing everything possible to facilitate this, not block it.

The opposition to Partnership Schools reflects politics and ideology. Opposition political parties would close down these schools no matter how good they might be. And just tough luck for the kids caught in the crossfire of politics.

That can reasonably be described as an extreme ideological view, one that is hard to defend on any moral or fair-minded basis.

Would those politicians be prepared to visit these schools, and tell the children and their parents, face-to-face, that they intend to close the school? And tell them why.

David Seymour
Leader, ACT New Zealand

Newsletter - Stocks and Flows

Social Housing: Stock and Flow Confusion
November 7, 2014

This is the first issue of what will be a regular newsletter, commenting on and reacting to political and other issues. On this occasion, the topic is the debate over social housing reform, one where opposition politicians and many commentators seem hopelessly confused over what is, and is not, important.

It’s been interesting watching the responses to National’s planned reform of social housing. The political responses are not just steeped in ideology, but almost drunk on it. Nobody seems interested in debating the real issue – of how best to provide for the housing requirements of those most in need.

One tactic is to try and frame it as a case of asset sales, as if that is some sort of gotcha – pretty feeble from an ACT perspective, of course.

Governments are always selling things – used cars, old office equipment, farms, and even surplus houses – so it’s hardly a big deal; and of course governments are always buying and investing in things, typically far more than they should.

But secondly, and most importantly, nobody seems to have a clue about the distinction between stocks and flows; between assets and their income flow (or financing cost).

For example, your term deposit is a stock; the interest income is a flow. If the term deposit interest rate is 5%, and I promise to give you five dollars a year for ever, you are in the same position as if you had a $100 of your own to deposit.

When you reach retirement age and start receiving NZ Superannuation payments, you receive a “flow” of income for the rest of your life. Instead, and equivalently, the government could borrow and give you a one-off (a “stock”) payment sufficient for you to buy an annuity giving the same flow of income. Either approach has exactly the same expected outcome.

Stocks can be converted to flows, and vice versa.

It’s the same issue in housing. The government can buy a house (it will be borrowing a “stock” of cash to do so, to buy the asset) and let you live in it at a subsidised rate, giving you a “flow” of rental subsidy.  Or the government could sell a house it already owns (an asset that is effectively funded by a “stock” of debt) and just pay you a “flow” of rental subsidy to rent from some provider on the market, whether a purely commercial or a social provider.

What matters is access to the housing: whether that is done via government owning a stock of assets or funding a flow of rental subsidy is entirely a second order consideration, essentially just a financing decision.

Another confusion that springs from not understanding stock and flow distinctions is to argue that the cash from any houses that are sold, should immediately be spent. Absolutely not. Selling the stock and spending that as a flow would be wildly irresponsible. Spending just the flow equivalent of that stock (roughly the interest income, or debt servicing cost of it) would be broadly neutral.

The real issue here is how to get the most effective structure of social housing assistance to those most in need.  To start shifting from a system overwhelmingly dominated by the government owning a massive stock of houses, and move at the margin to increase the proportion funded by a flow of rental income support, seems like a total no-brainer.

A healthy system is one where we try lots of approaches, where there is experimentation, competition and a range of options.  That is why markets are so effective, because it is a relentless process of experimentation to find out what works best.

We need more of this in social housing, in education (which is why partnership schools are so important) and in the health sector.

When you see responses to these social housing proposals that focus obsessively on whether or not they represent asset sales, you know that the response is entirely ideological – that person is not thinking, not interested in the real issues.

The same applies when people complain that a property developer might make a profit out of building or providing social housing.

That represents another form of ideological ignorance – in fact one even worse than not understanding stocks and flows.

Businesses are funded by a mix of debt and equity: the business pays interest to the owners of their debt (that might be to a bank, or to those who have purchased the business’s bonds in the debt markets); and it distributes profit (the residual, high risk part) which is paid to the owners of the equity in the firm.

Would you seriously expect people to provide equity for no return? Profit is just the label for that highly uncertain return, just as interest is the label for the more secure (because it gets paid before equity owners see anything) stream of interest income from a business.

The proposed reforms show that the government is doing some serious thinking about how best to provide social housing to those most in need. It’s time opposition politicians started thinking too.

 

David Seymour
Leader, Act New Zealand

Submissions needed for reduction of red tape

Dear members and supporters,

One of ACT's goals is the reduction of "red tape" in local and central government. I recommend that all members complete the questionnaire in the following Government post on the internet.

https://www.govt.nz/browse/housing-and-property/renovating-and-building/rules-reduction-submissions

Kind regards,
John Thompson
President

Open letter from ACT President John Thompson

To all members and supporters,

Today, Parliament opens and the new Government gets down to work. We will be providing confidence and supply to the new Government, in return for their support for our policies in education and regulatory reform. We will be working to persuade the Government to also support our other policies on the economy and on law and order.

While we are disappointed that we couldn't get Jamie Whyte into Parliament, we held Epsom, and have David Seymour as an ACT MP in Parliament, and as Undersecretary for Education and Undersecretary for Regulatory Reform. David will also be a member of the important Finance and Expenditure select committee and a member of the Appointments and Honours committee. We are confident that David will be promoted to Ministerial rank in the not too distant future.

Within the Party, the Board has appointed David as Leader, following Jamie Whyte's resignation from that position. Understandably, Jamie has to focus on his career and family now that he will not be in Parliament. However, he intends to remain involved with ACT and I am sure he will continue to make a valuable contribution to the future of the Party.

We will also be working hard to continue rebuilding the ACT brand and the Party, lead by David Seymour. We have recently held a major candidate forum and will shortly begin member forums on what we can learn from Campaign 2014, and our strategy going forward to 2017 and beyond. We will be continuing our support for members and candidates in your electorates as we work towards a more successful outcome in 2017.

Thanks for your support with Campaign 2014, whether as a candidate, a volunteer, or a donor. As result of your efforts ACT is in good heart and we are not going away. We want to earn your continued support and we encourage you to contribute to candidate and member forums in the coming months, and help us to regroup and rebuild for the future.

Regards,
John Thompson
ACT Party President

David Seymour's Maiden Speech

David Seymour will be making his maiden speech as an MP on Tuesday, 21 October at about 4.45pm during the Address in Reply debate in Parliament. David's maiden speech will be broadcast from Parliament on the following digital television channels:

Freeview 22
Sky 86
Vodafone 86

It can also be accessed as a webcast and a choice of audio via the Parliamentary website: http://www.parliament.nz/en-nz/about-parliament/see-hear/ptv

The Letter - 4 August 2014

12.5% company tax rate
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Cutting the company tax rate to 12.5% will boast GDP growth by 1%.  As New Zealand’s best estimated long term growth rate is 3% this is a huge increase.  It is close to an economic silver bullet.  It is the best new idea any party has come up with for years.  Jamie Whyte and ACT’s policy team have reviewed the international research.  There is now case after case showing firstly how damaging high company tax rates are to growth.  A high company tax rate discourages investment.  Lower investment results in less employment.  New Zealand’s relatively high company tax rate is a large part of the reason New Zealand’s real wages are low.  When the company tax rate is reduced investment increases, (projects that were uneconomic become viable), increased growth leads to increased employment.  The higher real wages come largely because the increased investment leads to a productivity improvement making higher real wages viable. 

 

It is a global economy
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New Zealand is competing for capital against the world.  When we have a high tax on investment the capital just goes elsewhere.  It is not just Ireland that has shown the economic benefit of a low company tax rate. Ireland’s present woes came from an unrestrained banking sector, property bubble and poor public financial management, yet the country’s low company tax rate is helping its rapid recovery. We can observe how high company tax rates damage growth in federal systems, such as USA and Canada. Conversely, examples from those countries show how cutting the Company Tax rate increases growth, jobs and real wages. French economic growth is stunted by a complex, high tax regime.

 

ACT has published the research
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Jamie Whyte has released the international research that supports cutting the Company Tax Rate.  It is on ACT’s website and is worth a read www.act.org.nz . ACT has also put out how to fund it. Company Tax does not raise very much. Eliminate all corporate welfare, which is just crony capitalism, politicians picking ‘winners’, and get rid of the ETS, which even the Greens admit is having no effect on global warming – just gesture politics.       

 

TV debate tonight Native Affairs Maori TV 8.30pm

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Jamie Whyte has been issuing a series of background papers most of which have been ignored by the media.  A proposal that we should have equality before the law, posted three days after the speech was given to no media coverage, has produced a media storm.  Jamie Whyte has not retreated and has shown he is made of strong stuff.  Jamie tells The Letter that many of the journalists who have rung him clearly have not read the speech.  Not having read the speech is the only charitable explanation for the Race Relations Conciliator’s intemperate personal attack.  Nowhere in the legislation Dame Susan Devoy is paid $220,000 a year to administer does it say it is part of her job to publicly attack a candidate for office who having said he is against racial discrimination.  Dame Susan is debating Jamie Whyte tonight on Native Affairs Maori TV at 8.30pm and we look forward to hear why equality before the law is wrong.

 

Media bias
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We have had a look at what the journalists attacking Jamie are saying.  Very few address what he has said.  The Australian Fairfax group has resolved the issue by pretending it has not happened.  (Print media blackouts used to be effective, but now, in the age of Facebook and talkback radio, newspapers  are just made to look irrelevant or biased.  Not one commentator has defended the example of discrimination Jamie gave.  AT our universities today there are students from state house backgrounds who have been refused a place on courses in favour of students from privileged private schools because the state house student’s parents are the wrong race.  We are also waiting for a media outlet to publish what Jamie Whyte actually said.  We said to one journalist who was attacking Jamie as a racist “Have you read his speech?”  Answer “No.  I do not read what racists write”.  Have a read yourself and you be the judge www.act.org.nz    

 

Epsom is the key
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The reason John Key said last week “I am encouraging Epsom voters to support he ACT candidate” is because in the latest Roy Morgan poll ACT winning Epsom makes John Key PM.   It is the same reason Internet Party leader Laila Harre and John Minto have urged their supporters to vote National to defeat David Seymour.  After wondering why John Key has not done a deal with the Conservatives, Colin Craig  then tries to help Labour in Epsom.  John Key did look hard at an accommodation with the Conservatives but decided the fruit loops are unelectable. If Colin Craig had door knocked on 10,000 doors in East Coast Bays, like David Seymour has done in Epsom, the answer might have been different.  If Colin had not told us all that it is a “no brainer” Christine Rankin would stand in Upper Harbour against Hon Paula Bennett, then we might not think it is brainless for her to stand in Epsom.  By Writ Day she will be the candidate for Mangere.   

 

A Labour MP in favour of productivity

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Last week Parliament heard a record number of valedictories.  The best was from someone many MPs had never heard give a speech, the long serving assistant Speaker Ross Robertson, MP for Manukau East. Being working class and socially conservative Ross would never be selected by today’s Labour party.  It is years since the whips have let him ask an oral question.  While overlooked in this country for promotion MPs around the world elected Ross the chairman of their international association.  Ross’s speech covered issues no Labour MP talks about: the importance of productivity, ethics and why the Official Information ACT should be extended to Parliament and MPs’ spending.  Readers interested in a fine example of Parliamentary speaking should view the YouTube clip.  We will never see a speech like that from a Labour MP again. Go to http://www.parliament.nz/en-nz/pb/debates/debates/drafts/50HansY_20140730/draft-transcript-wednesday-30-july-2014

 

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The Letter - 4 August 2014

12.5% company tax rate
http://client.minervamail.com/images/act/linesmall.gif
Cutting the company tax rate to 12.5% will boast GDP growth by 1%.  As New Zealand’s best estimated long term growth rate is 3% this is a huge increase.  It is close to an economic silver bullet.  It is the best new idea any party has come up with for years.  Jamie Whyte and ACT’s policy team have reviewed the international research.  There is now case after case showing firstly how damaging high company tax rates are to growth.  A high company tax rate discourages investment.  Lower investment results in less employment.  New Zealand’s relatively high company tax rate is a large part of the reason New Zealand’s real wages are low.  When the company tax rate is reduced investment increases, (projects that were uneconomic become viable), increased growth leads to increased employment.  The higher real wages come largely because the increased investment leads to a productivity improvement making higher real wages viable. 

 

It is a global economy
http://client.minervamail.com/images/act/linesmall.gif
New Zealand is competing for capital against the world.  When we have a high tax on investment the capital just goes elsewhere.  It is not just Ireland that has shown the economic benefit of a low company tax rate. Ireland’s present woes came from an unrestrained banking sector, property bubble and poor public financial management, yet the country’s low company tax rate is helping its rapid recovery. We can observe how high company tax rates damage growth in federal systems, such as USA and Canada. Conversely, examples from those countries show how cutting the Company Tax rate increases growth, jobs and real wages. French economic growth is stunted by a complex, high tax regime.

 

ACT has published the research
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Jamie Whyte has released the international research that supports cutting the Company Tax Rate.  It is on ACT’s website and is worth a read www.act.org.nz . ACT has also put out how to fund it. Company Tax does not raise very much. Eliminate all corporate welfare, which is just crony capitalism, politicians picking ‘winners’, and get rid of the ETS, which even the Greens admit is having no effect on global warming – just gesture politics.       

 

TV debate tonight Native Affairs Maori TV 8.30pm

http://client.minervamail.com/images/act/linesmall.gif
Jamie Whyte has been issuing a series of background papers most of which have been ignored by the media.  A proposal that we should have equality before the law, posted three days after the speech was given to no media coverage, has produced a media storm.  Jamie Whyte has not retreated and has shown he is made of strong stuff.  Jamie tells The Letter that many of the journalists who have rung him clearly have not read the speech.  Not having read the speech is the only charitable explanation for the Race Relations Conciliator’s intemperate personal attack.  Nowhere in the legislation Dame Susan Devoy is paid $220,000 a year to administer does it say it is part of her job to publicly attack a candidate for office who having said he is against racial discrimination.  Dame Susan is debating Jamie Whyte tonight on Native Affairs Maori TV at 8.30pm and we look forward to hear why equality before the law is wrong.

 

Media bias
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We have had a look at what the journalists attacking Jamie are saying.  Very few address what he has said.  The Australian Fairfax group has resolved the issue by pretending it has not happened.  (Print media blackouts used to be effective, but now, in the age of Facebook and talkback radio, newspapers  are just made to look irrelevant or biased.  Not one commentator has defended the example of discrimination Jamie gave.  AT our universities today there are students from state house backgrounds who have been refused a place on courses in favour of students from privileged private schools because the state house student’s parents are the wrong race.  We are also waiting for a media outlet to publish what Jamie Whyte actually said.  We said to one journalist who was attacking Jamie as a racist “Have you read his speech?”  Answer “No.  I do not read what racists write”.  Have a read yourself and you be the judge www.act.org.nz    

 

Epsom is the key
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The reason John Key said last week “I am encouraging Epsom voters to support he ACT candidate” is because in the latest Roy Morgan poll ACT winning Epsom makes John Key PM.   It is the same reason Internet Party leader Laila Harre and John Minto have urged their supporters to vote National to defeat David Seymour.  After wondering why John Key has not done a deal with the Conservatives, Colin Craig  then tries to help Labour in Epsom.  John Key did look hard at an accommodation with the Conservatives but decided the fruit loops are unelectable. If Colin Craig had door knocked on 10,000 doors in East Coast Bays, like David Seymour has done in Epsom, the answer might have been different.  If Colin had not told us all that it is a “no brainer” Christine Rankin would stand in Upper Harbour against Hon Paula Bennett, then we might not think it is brainless for her to stand in Epsom.  By Writ Day she will be the candidate for Mangere.   

 

A Labour MP in favour of productivity

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Last week Parliament heard a record number of valedictories.  The best was from someone many MPs had never heard give a speech, the long serving assistant Speaker Ross Robertson, MP for Manukau East. Being working class and socially conservative Ross would never be selected by today’s Labour party.  It is years since the whips have let him ask an oral question.  While overlooked in this country for promotion MPs around the world elected Ross the chairman of their international association.  Ross’s speech covered issues no Labour MP talks about: the importance of productivity, ethics and why the Official Information ACT should be extended to Parliament and MPs’ spending.  Readers interested in a fine example of Parliamentary speaking should view the YouTube clip.  We will never see a speech like that from a Labour MP again. Go to http://www.parliament.nz/en-nz/pb/debates/debates/drafts/50HansY_20140730/draft-transcript-wednesday-30-july-2014

 

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