ACT has a plan that will reduce the cost of a new house by up to one hundred thousand dollars.
Both Labour and National have now announced housing affordability schemes that will cost the taxpayer hundreds of millions and both parties say the other parties’ scheme will increase the cost of new houses. They are both right.
ACT’s plan will not cost the taxpayer a cent. ACT’s plan will work. ACT’s plan is based on sound economics and is endorsed by some of the country’s leading economists as the only plan that will make housing affordable again.
ACT’s plan will not only make housing affordable for the average family, it will stop the diversion of capital into increasing the cost of homes. Lower mortgages will reduce interest rate pressure and the risks taken by banks to fund housing.
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New Zealand has some of the most expensive housing in the world. Among the 34 OECD countries, only in Greece do householders have to spend more of their income on housing than we do in New Zealand. Despite the fact that our average incomes are well below those in the United States, our median house prices are substantially above those in the US.
This has devastating social consequences. It means that a great many people can’t afford to buy a home at all. It means that far too often both parents are obliged to seek paid employment outside the home. It means that the children of families forced to rent are too often obliged to move from school to school as their parents move from one rented house to another. It puts huge pressure on the budgets of all low and middle-income families.
It also has serious economic consequences. Because house prices have been rising strongly with scarcely a pause for more than two decades, it means that a large share of available saving is diverted into housing instead of into more directly productive activity. It means that saving itself is reduced as those fortunate enough to own a house see their wealth increasing effortlessly. Why save when wealth can be acquired by simply buying property and waiting? It means that banks are forced to borrow very large sums overseas, with our modest savings no match for our almost insatiable desire to borrow against the security of housing.
It means interest rates have to be higher than they need to be to deal with other inflationary pressures, and the exchange rate is higher than otherwise as a result – with consequential adverse effects on the ability of exporters and those competing with imports to grow and create jobs.
It even affects the risks to the banking sector, as the Reserve Bank made clear last year by imposing their restriction on the volume of loans which can exceed 80% of a recent valuation.
So the hugely high cost of housing in New Zealand is one of our most serious social and economic problems.
* * * * *
Housing affordability has become one of the main election issues.
National’s solution is to encourage people to raid their KiwiSaver schemes for a deposit on a home. If you do, National promises you another $20,000 of taxpayers’ money.
One of the problems with government retirement saving schemes is that politicians find it too tempting to use them to fund their elections.
By increasing the amount of money chasing the same supply of housing, this policy will only increase the price of housing. And it will make yet more New Zealanders, who could be self-reliant, clients of the state. National deserves some credit for other housing initiatives but this is a bad policy.
The parties of the Left have put up even more foolish “solutions”.
The Labour Party wants to introduce a capital gains tax, exempting the family home, even though Australia has a capital gains tax, again exempting the family home, and house prices there are by some measures even more expensive, relative to income, than in New Zealand. That is not a solution at all.
Having the State building one hundred thousand new houses will just transfer house building from the private sector to the state. When Labour’s housing spokesman was asked where the one hundred house lots would come from, he answered from Crown and local government land. The only way to get sixty thousand house lots in Auckland would be to build on Council and Crown reserves in Auckland – something Aucklanders are going to be very angry about.
Winston Peters wants to ban the purchase of New Zealand houses by “foreigners”, which is code for Chinese. This appeal to xenophobia violates the right of property owners to sell to whomever offers the best price. And it ignores the fact that increased demand for houses has no enduring effect on house prices absent a constraint on the supply of housing (of which more in a moment).
The Conservative Party – which on this issue has more in common with the Left than with the Right – wants to confiscate privately-owned land if the land-owner is slow to subdivide and develop it. Mr Craig at times seems more communist than conservative.
One of ACT’s contributions to New Zealand was persuading the National-led Government formed after the 2008 election to set up the Productivity Commission. The very first report of that Commission was on housing affordability. After exhaustive study, the Commission attributed the high cost of housing in New Zealand to four factors.
First, it is caused by the relatively high cost of building materials in New Zealand.
Second, it is caused by the cost and delay in getting through the consenting processes required by local government rules and regulations. (And I’ve heard plenty of horror stories of consents taking many years and millions of dollars to achieve.)
Third, it is caused by relatively low productivity in the building industry, occasioned at least in part by the very small scale of most home builders.
But, overwhelmingly, the main factor contributing to the very high cost of “housing” in New Zealand is not the price of houses, but the extraordinarily high price of the land the houses sit on. Once upon a time, the price of the section cost perhaps 25% of the combined cost of land and house. In our major cities it is now common for the land to be valued at 50% or even more of the combined package. Often 60% in Auckland.
Last year, there was a story in the New Zealand media of a land-owner offering 29 hectares of land in Flat Bush – a suburb a long way from the centre of Auckland – for $112 million, though the land agent said the owner “might accept” $80 million. At $112 million, the price of the undeveloped land was nearly $4 million per hectare; at $80 million still nearly $3 million per hectare. But what attracted attention was not just the very high price of the land compared with, say, the very best dairy land at $50,000 per hectare, but the fact that the landowner had bought the land for just $890,000 less than 20 years previously. In other words, he had made a very large fortune by just sitting on land and waiting for the population pressure built up within what was once called the Metropolitan Urban Limit, and is now called the Rural Urban Boundary, to make him wealthy.
It is this artificial restriction on the supply of land which is the root cause of New Zealand’s very expensive housing. It not only directly affects the price of the land houses are built on but also undermines the productivity of the building industry by making it very difficult or impossible for builders to acquire blocks of land on which economies of scale might be realised.
The Productivity Commission found that the price of land two kilometres inside the Auckland Metropolitan Urban Limit was, in 2010, nearly nine times the price of land two kilometres outside that limit.
American experience also makes it abundantly clear that zoning rules are the primary problem. US cities with a relaxed approach to zoning, such as Atlanta, Dallas and Houston, have median house prices around three times median household income, despite strongly growing populations. Los Angeles and San Francisco, two cities with a very restrictive approach to zoning, have median house prices some seven times median household income, despite strong net outwards migration over the last decade.
New Zealand’s unaffordable housing is a direct and inevitable result of local government zoning rules.
Just lifting the urban limit on Auckland would see the price of a new house fall dramatically.
Lifting the Auckland urban limit is not going to see huge parts of our country covered with asphalt and houses.
New Zealand is larger than the United Kingdom but has about 7% of Britain’s population. While some 9% of the UK is urbanised, in New Zealand the figure is less than 1%. There’s not the slightest risk of running out of open spaces, farms and forests in our lifetime, or in the lifetimes of our great-great-great-grand-children.
The National-led Government has been moving in the right direction on affordable housing. Recent law changes have restricted what local governments can charge for giving consent to sub-divide, and set up 26 so-called Development Commissioners to whom developers can appeal if they believe what they are being charged is unreasonable.
In the past, developers sometimes got the impression that local councils thought of a number and doubled it in deciding what to charge for a development consent. Now, the charge must be directly related to the cost of any additional infrastructure required by a new development, with the appeal process intended to give the new rules real force.
In addition, the Government has put pressure on some major councils, including the Auckland Council, to establish Special Housing Areas, within which the consenting process can be significantly accelerated.
The Government has also waived the tariffs previously charged on some imported building materials to reduce the cost of building materials within New Zealand.
ACT supports these moves as far as they go.
We were among the first to highlight the serious effect which restrictive zoning rules were having on the price of housing. We agree with recent ministerial statements criticising the restrictiveness of the rules envisaged in Auckland’s proposed Unitary Plan. We find it deeply ironic that the Auckland Council wants to compel Aucklanders to live on smaller and smaller pieces of land when most of the Councillors themselves live on spacious grounds.
ACT wants affordable housing to again become a reality for all New Zealanders. That would do more to allay concern about the growing pressure on low-income families than any other single measure – more than additional subsidies for doctors’ visits, more than increasing paid parental leave, more than higher minimum wages.
We want to ensure that cities grow according to the wants of their citizens rather than to the dreams of planners. We would reverse the notion that people can use their property only in accordance with local government plans. Instead, we believe that central and local governments should respect the wishes of property owners.
ACT wants the law to permit any residential development, provided basic environmental conditions are met. And these basic conditions would relate solely to rational requirements, such as geo-technical reports in cases of possible ground instability.
My proposition to voters is that a party vote for ACT this election is a vote for stronger property rights. It’s a vote for a party in Parliament that will put property rights high on the agenda.
It’s a vote for a party that says “this land is your land.” It’s a vote for a party that will shift the pendulum from the property-right-denying paradigm we currently have to one where we begin with the presumption that people can do what they like on their own land, provided only that it does not harm the property of others.
I have already announced that we favour scrapping the Resource Management Act and allowing property issues to be constrained by clearly targeted environmental legislation where the common law is found to be lacking.
The RMA contains the word “restriction” 61 times and the words “property right” only once, and then only in reference to another piece of legislation. It is surely no accident that the major acceleration in the cost of housing in New Zealand began in the early nineties at almost exactly the time the RMA was passed into law, in 1991.
Ultimately we would like to amend the Bill of Rights Act. Extraordinarily, that Act currently lacks any reference to property rights. It guarantees New Zealanders freedom of thought, religion, peaceful assembly, and movement, as well as the right to justice and the right to vote – but not the right to own and use property.
ACT would push to amend the Bill of Rights Act to protect the right to own and use property as the owner sees fit provided that that use does not substantially reduce others’ enjoyment of their property.
Governments would still be able to interfere with property rights, but they would have to show a good public interest reason to do so, and the question of compensation would have to be acknowledged and addressed.
The immediate result would be that much of the current planning apparatus that tightly restricts land supply would become void. Rather than forcing intensification upon existing built up areas, we would see a growth and expansion of desirable housing across the country.
The cost of housing would fall. We know that before the RMA the cost of land was 25% of the total value of homes. Now it is 50%. ACT’s proposals will mean that over time the cost of land will return to 25% of the total cost. Housing will again be affordable for the average New Zealand family.
The shift to a property rights paradigm would be a very significant one for our current legislative framework. But it would arguably be one of the most important things that New Zealand could do to reverse its economic decline.
It would free our farmers from stifling regulatory burden, and the tendency for local governments to declare any areas of private property which take their fancy as Significant Natural Areas.
It would free our businesses from much of the regulatory burden they now face.
And crucially, it would open up the supply of housing, making it affordable for all New Zealanders once again.
It would be another illustration of how you would have a better life through less government.
Ladies and gentlemen, thank you, and please remember: a party vote for ACT is a vote for property rights and affordable housing.
Speech to ACT Party Supporters, Tasca Café, Newmarket
10.30 am , 24 August 2014
End Secret Courts
The ACT Party is campaigning to end secret courts.
Secret courts, where the name of the judge, the lawyers, the expert witness and all of the evidence and the sentence of the court are unknown by the public are the stuff of Police States. Yet they are now common in New Zealand. Sometimes there are good reasons for name suppression but there is never a good reason for the Fourth Estate not being able to tell us how the state is exercising power.
We know there are abuses of power but because it is secret we do not know what the abuse was.
One of the reasons that ACT was founded was to campaign for the rule of law – the principle that we should be governed by known and certain laws administered in the open by non-political courts.
The rule of law is an issue at this election. Political parties are putting forward proposals to weaken the rule of law. Indeed, it has already been weakened over recent years.
Voters need to send a message to parliament that we value our freedoms.
* * * * *
Being born in New Zealand in the 20th or 21st century is a great stroke of historical luck. We enjoy a degree of prosperity and personal freedom that people born in any previous period of history, and in many other parts of the world today, could hardly imagine.
Yet the prosperity and liberty we enjoy is not a matter of luck. They arise out of institutions absent from poor and violent societies. Among the most important of these institutions is the rule of law.
We cannot go about our business if we are subject to the arbitrary will of others – be they other private citizens or government officials. If a thug can beat you up and take your stuff, you are not free. Nor are you free if government officials can confiscate your property or imprison you at their discretion. Free people live under the rule of laws, not the rule of men.
The rule of law must be defended tenaciously. Any erosion of it is an erosion of the foundations of our free and prosperous society.
That is why ACT is tough on crime. The state’s first duty is to protect you from those who would use violence against you – by robbing you, raping you, assaulting you or murdering you.
Our 3-strikes for violent crime policy was made law 4 years ago. It is already helping to reduce violent crime, not by imprisoning people but by deterring violent crime. Of the 4,000 who have committed a first offence, only 41 have gone on to commit a second offence. None has committed a third strike offence.
Our new 3-Strikes for burglary policy will do much to protect the 115,000 families who are now burgled each year.
But there is more to the rule of law than effective law enforcement.
It also requires protections for citizens who find themselves embroiled with the legal system or interacting with the state. Today I want to discuss two protections that are under threat in New Zealand.
* * * * *
The first is the principle of open justice.
In a free society, the decisions of our courts must be open to scrutiny. Justice administered in secret will soon stop being justice at all. Secret courts are the stuff of communist dictatorships.
The general principle of open justice is rightly circumscribed in some special circumstances. For example, the sources of evidence used in the trial of terrorists are sometimes kept secret for fear of revealing the identity of secret agents or their evidence-gathering techniques.
But, even in these rare cases, elaborate measures are put in place to ensure that the process is open to scrutiny. And, even then, this small amount of secrecy is highly controversial.
The other common case in which the general principle of open justice is circumscribed is where there is reason to conceal the identity of the alleged culprit or of the victim. Sexual offences are sometimes thought to be such cases.
In such cases, however, nothing else about the process is concealed. Outsiders can easily discover the charges, the evidence presented, the verdict and the sentence. We can easily scrutinise the decisions of the courts. This transparency is crucially important if we are to remain confident that justice is being done.
When it comes to the youth and family courts, however, this safeguard is not being maintained.
As part of ACT’s law and order policy-making, I have had several meetings with experts on criminal sentencing in New Zealand. During a meeting convened to discuss the topic of youth crime, I asked what they could tell me about the sentencing of crimes committed by people under the age of 18 – “youths” for legal purposes. Was there any obvious problem that could be remedied by a change in the law?
They could not tell me.
This is because what goes on in the youth courts is kept secret – or, at least, very difficult to discover. It is right to conceal the names of the youths brought before the courts. But that is not all that is concealed.
Judgments of the youth court are not available to the public. We know nothing of the crime for which the court is convened, the charge the youth faces, the evidence that is submitted, the decision of the court and the sentence imposed, if any.
Nor are Judgments available to the media. The media do not report on youth court proceedings because they are not allowed to. Yet the media are the proxy of the public. If media scrutiny is prevented, public scrutiny is prevented.
Presently, all judgments of the High Court, the Court of Appeal and the Supreme Court are published within days of being made. With the passing of a Bill currently before Parliament, the District Courts will soon be subject to the same publishing rules. As they should be. Yet, the Youth Court, as well as the Family Court, are intended to remain closed courts, immune from scrutiny.
This secrecy is a bigger problem than any particular defect that the youth justice system may or may not have. It is a wholly unjustified violation of the principle of open justice. The public must have the ability to scrutinise the youth justice system. We need not know the identities of the youths involved. But we must know what they are accused of, what evidence was brought before the court and what verdict and sentence were handed out. We must be able to see how often the same youth is appearing before the court.
If we do not know such things, how can we know if the system is administering justice or if it is working to reduce crime? How can we know if it is helping those youths who have been drawn into crime or whether it is letting them down?
We know that there are abuses of power in the Youth Court that people feel powerless to do anything about. They cannot go to a journalist because the media cannot report. They cannot go to their MP because they cannot prove what they say because it is secret.
Over the last 5 years, more than 1,100 complaints have been lodged against judges or various courts. But not one has been lodged against the youth court. Either we can believe the Youth Court administers perfect justice – in which case you would expect the judges, lawyers and welfare officers to be in favour of the world knowing of this world first – or secrecy is being used to hide miscarriages of justice.
Even if the names of the youths are secret, why are the names of the Police officers, the expert witnesses and the details of the crime?
The same goes for the family courts, whose activities are also shrouded in undue secrecy. Despite the thousands of cases being heard and decided each year, no judgments of the family courts are published. Media cannot attend and report on the proceedings. Cases that may be of public interest or a cause of public concern cannot be reported on. There is no way of analysing and understanding what is going on in the family court.
There are disturbing stories that evidence in Family Court cases is unreliable. If you know that your friends, family and neighbours, people who really know you, will never hear of the evidence you give then what is to stop you from making any outrageous allegation to get custody?
In Britain, the secrecy of Family Court Cases has led to a number of scandals and terrible miscarriages of justice. This year the Chief Judge of Britain’s Family Court system has ruled that the press should have accesses to Family Court Cases, the names of officials should always be public and privacy be given only to the families and children.
Why should that not apply in New Zealand? You might say, there have been no gross injustices. How do you know? It is all secret.
Of course, the names of the families fighting out custody or property issues in the family court need not be known. But the other facts of the cases should be.
ACT wants the Youth Courts and the Family Courts opened to scrutiny. More specifically,
• All judgments of the youth and family courts should be routinely published
• Subject to reasonable reporting rules, the media should be able to attend and report on proceedings in the youth and family courts
• Access to formal court records in the youth and family courts should be subject to the same rules as the District Courts – a general right to access
• The names of judges, lawyers, government witnesses, expert witnesses and the like should always be public. We should always know the identity of those in power
• The names or identifying details of parties would remain suppressed.
* * * *
The second important principle of the rule of law, now under threat in New Zealand, is the presumption of innocence.
What does this presumption amount to in the law?
For a start, it means that the authorities may not interfere with you going about your business unless they have some reason to believe you have broken the law: they must have “probable cause”, as it is known.
This principle is violated by the powers the New Zealand police have to stop drivers and test their levels of alcohol consumption even when their driving shows no sign of intoxication. Perhaps this is a justifiable violation of the principle – perhaps the gains in road safety are worth the small cost to law-abiding drivers. This is not the topic that concerns me today.
What I want to discuss today is another legal implication of the presumption of innocence – namely, that the burden of proof rests with the Crown, not with the accused. If you are accused of a crime, you do not need to prove that you are innocent – your innocence is the starting assumption. Rather, the Crown must prove that you are guilty.
This principle is now adhered to in the criminal courts. But it will not be if the Labour Party is elected either at this election or some future election.
In rape cases, the labour party wants to shift the burden of proof from the Crown to the accused. Specifically, once it is established that sex occurred, the accused will be deemed guilty of rape unless he can prove that the sex was consensual.
In many cases, this will be an impossible task, even when the sex was in fact consensual. How could a man who had a consensual one-night-stand in private possibly prove that the sex was consensual? What might he produce as evidence?
Andrew little, the Labour Party’s justice spokesman, argues that the presumption of innocence must be abandoned in rape cases because many do not result in a conviction. He is right, of course, that eliminating the presumption of innocence would increase the conviction rate. But that can hardly justify the policy.
The point of the presumption of innocence is to stop citizens being subject to the arbitrary will of other citizens and the authorities. If Labour’s policy were adopted, almost all sexual activity would expose those involved to malicious prosecution by the other party. The proposal is utterly outrageous, and ACT will fight it to the end.
Through a number of high profile court cases we know that, even with the presumption of innocence, a number of people subsequently proved innocent have been convicted. William Blackstone famously said that being taught about our justice system it was always said “it is better that ten guilty persons escape than that one innocent suffer”.
Make no mistake. Labour’s policy is that it is better ten innocent people be convicted than that one guilty person go free.
While Labour remains out of government, our criminal courts continue to adhere to the presumption of innocence. But in other interactions between the state and citizens it has already been abandoned.
In an effort to protect children, the Government has reversed the burden of proof in cases where Child, Youth and Family (CYF) applies to the court to remove a child from parents they believe to be a danger to that child. Instead of CYF having to prove the parents are a danger to their child, the parents now have to prove that they are not.
The aim of protecting children is admirable. But it should not and need not be achieved at the cost of age-old and well-founded principles of justice. CYF can know that parents are a danger to their child only if they have evidence of this fact. If they have such evidence, they can satisfy the burden of proof. If they do not have evidence and cannot make their case, they should not be able to remove children from their parents.
Shifting the burden of proof from state agencies to the people they accuse does not merely expose citizens to injustice. It reduces government agencies’ incentive to conduct their inquiries to a high standard. It is a licence for incompetence.
ACT is concerned that National seems to have little more respect for fundamental principles of justice than Labour does. ACT will hold any government it supports to a higher standard.
In a free society, you are permitted to do anything that is not expressly illegal. You do not need to seek permission from the authorities to do something that is lawful. This principle is a close relative of the presumption of innocence.
This principle is violated in the resource consenting process. Before you can modify your house or put your land to some new use, you must gain permission from your local council, even if what you seek to do is within the law. Correcting this may be too difficult within the current “planning” regime imposed on councils by the Resource Management Act – that is the topic of a forthcoming speech.
But it is outrageous that people who seek to act within the law should not only have to obtain permission to do so but must also pay to receive that permission. It is like telling someone that, before they walk to the shops, they must call the council for permission and pay for the phone call and for the time of the council employee.
The idea behind the planning and consenting process is that our property rights must be constrained for the good of society. If the beneficiary of the process is “society”, then society should pay for it.
When a resource consent application is successful – that is, when the applicant sought to act within the law – the council should bear all the costs of the process, including the costs of the applicant. In other words, the cost should be borne by rate-payers, who are the supposed beneficiaries of the process.
Then there is the nightmare of getting involved in a dispute with the IRD.
With the IRD you are guilty until you prove your innocence. The IRD can and does make assessments which you cannot challenge until you pay the tax assessed. If you do not have the money, you never get a day in court.
The IRD bankrupts more people each year than all other bankruptcies put together.
Why do we have these Police State laws for tax? The obvious answer is that it helps the state to confiscate 40 percent of all the goods and services produced each year. If taxes were lower, the government might be able to do without Police State tax laws.
In the meantime, one measure that might help is allowing taxpayers to challenge tax assessments before having to pay them. Another is that when the taxpayer wins a case against the IRD, the Crown should pay all of the costs of fighting the ruling.
Paying tax is painful enough. No one should have to also incur costs convincing the IRD that the amount they have paid is in fact correct. There is no reason why taxpayers should bear the costs of errors or incompetence in the IRD. The IRD should bear the full cost – not only as a matter of justice but as a disincentive to sloppiness.
* * * * *
I think I have shown the rule of law is at risk in New Zealand.
This should be an issue in this year’s election.
The cost of freedom is eternal vigilance. In a democracy, we are free only so long as citizens are willing to vote for freedom.
The choice is clear this election. All of the parties to one extent or another are promising you less freedom.
One party, ACT, is promising not only to uphold the rule of law but to extend it.
Only ACT is promising New Zealanders more freedom.
National’s failure to increase the age for super and reform health is a threat to every New Zealander’s security.
Let me set out what ACT has been saying on superannuation, health and saving for retirement. Then a little on the economy, because a strong growing economy makes all these issues easier.
One of this National government’s legacies they will be seen to have failed to tackle major economic issues that will come back and bite us.
The first of these is superannuation. We have had sixty years notice of a demographic time bomb that is destroying the economies of Europe today. Like all Western countries, we have fewer working aged people and more retired people.
There are a number of answers but one is to lift the working age and lift the age of entitlement to the universal pension. Australia is moving this age to seventy.
Of course, some people would lose the ability to work before they meet the new, higher retirement age. This does not automatically arise at age 65. There are people at age 55 or even younger who, through illness or accident cannot work. The answer for those people who cannot work is access to a benefit. There is a good case to make access to a safety net easier for those over the age 60, as manual work becomes no longer viable for them.
However, all such benefits should be means tested. We cannot afford to carry able bodied adults, whether they are 18 or 65, if they can fend for themselves.
Lifting the age for universal superannuation should be a no brainer. Lifting the age helps fix the problem of the future cost to taxpayers – your children and grandchildren – and makes superannuation affordable in the long term.
No one advocates increasing the age of eligibility overnight. Adequate notice must be given. We would phase or rise from 65 to 67 in over many years. No one now close to retirement would have the deal changed on them and every one affected would have time to change their plans.
Those on fixed incomes by definition cannot change their income. So they need to be protected from inflation. This is one reason ACT favours CPI indexation rather than wages indexation.
In short, we can fix superannuation without hurting anyone who is already retired or about to retire. But that still leaves a bigger problem, where the answers are not easy: namely, healthcare.
The costs of healthcare are greatest up to the age of 5 and over the age of 65. As we age our health care costs rise. Most of our adult health care costs occur after we are 65 and are highest in the last year of our lives. There are more of us living longer lives and so health costs are going to balloon.
National’s failure to make real improvements in healthcare will come to be seen as an even greater failure than the blind refusal to touch the age of eligibility for superannuation.
The present solution is to throw more and more money at the health sector. National has increased health spending not just in real terms but also as a percentage of the economy.
This last point is important. If you draw a graph there comes a point when health spending is no longer sustainable. Treasury has been pointing this out to successive governments. The point at which the health system becomes unsustainable could be just when you need it.
Even more worrying is that the productivity of the health sector is falling. We are getting less healthcare for our money.
This is alarming. The reason we have a standard of living our grandparents could not dream of is because productivity has made things like food, cars and electrical appliances affordable.
There are huge advances in medicine, so why are we not seeing a productivity improvement?
Do not say medicine is different. The World Health Organization compares countries’ health systems. We do not come out well. We have poorer outcomes for illnesses like cancer and we spend comparatively more.
The country that comes out top or close to it is Singapore. They have a universal health system and spend less than we do.
Singapore’s health system makes more use of choice, the private sector, insurance and competition. Our monopoly, one-size-fits-all system is expensive and inefficient. Monopolies are always inefficient, wther they are private monopolies or state monopolies.
ACT wants to see much more use of all the features of the Singapore system – the private sector, insurance and competition – and less monopoly one-size-fit-all healthcare.
If you want the health system to be there when you need it, then you should be in favor of a significantly improved and more efficient health system. Simply throwing more money at it won’t result in a better health system.
Finally, a word about compulsory savings, even though this is more relevant to your children and grandchildren.
The ACT party does not favor compulsion. When you are young, investing in your education, buying a house, starting a business or providing for children may be a much better use of your money than putting it in Kiwi Saver. Money forced into Kiwi Saver is money that cannot be spent on things that may be more valuable, not only in the short term but as investments for the future. You cannot spend your money twice.
Compulsory saving may make fund managers rich but it is not the answer for your children or your grandchildren. Nothing beats personal responsibility. The evidence is New Zealanders are saving in many ways other than Kiwi Saver.
I will not waste your time discussing the other opposition parties’ absurd spending promises. National’s policies have the merit of being better than the left’s policies, but they fall far short of what we need.
New Zealand needs serious economic reform.
Our present growth is built on milk and Christchurch. In Christchurch we are just rebuilding what we had. So while it makes GDP look good, it does not make us any wealthier.
Strip out milk and the earthquake, both of which are unsustainable sources of growth, and things do not look so good.
The answer is not crony capitalism – politicians picking winners. If politicians could pick winners, they would be making millions working on Wall Street. When the likes of Russell Norman and Winston Peters tell you that they can “run the economy”, the only reasonable response is laughter – or tears.
To get the economy moving we must do the opposite of letting politicians run it. We must cut the red tape that politicians create and which strangles investment. It can take millions of dollars of expensive planning applications to start new ventures and, even then, then you may well be turned down. The cost and uncertainty means people with good business ideas often give up before they even start.
Second, we have to recognize New Zealand now has one of the highest effective company tax rates in the world, higher than the high tax European Union average. High company taxes discourage investment, growth, jobs and wages.
ACT says we should reduce the company tax rate from 28% to 12.5% to encourage investment, jobs, growth and real wages. We can pay for this cut by scrapping all the corporate welfare – the tax-funded subsidies – that favoured companies currently receive.
The economists who have modeled this say it will increase the rate of economic growth by a third. Over just 15 years, that will make us 20% richer than we would have been.
Why is that important? An economy that is a 20% larger can afford pensions and health systems that are 20% larger.
Of course, just being in favour of sustainable superannuation, a more efficient health system, personal responsibility for saving and a larger economy is not enough.
To get it you have to Party vote ACT on 20 September.
Speech to ACT Party Members and supporters
9am Monday 18 August
Dr Jamie Whyte, ACT Party Leader
ACT’s three point plan to respond to the coming global Economic Shock
New Zealand is a small trading nation. This makes us especially vulnerable to global economic shocks or downturns.
How can we ride out the coming global economic shocks? How can we avoid being thrown into recession by international events over which we have no control? This is the big question for the country.
Not that you could tell it was by observing this election campaign. From the petty bickering and name-calling of our politicians and journalists, you might think that everything is plain sailing for New Zealand. There are no serious threats to the nation’s well-being, and the only question is who should get their hands on the tiller.
This impression is reinforced by the National government’s near perfect inactivity. In six years, they have done almost nothing to reform New Zealand’s economy. They thrive on the Prime Minister’s immense popularity rather than the success of any actions they have taken.
Well, I will make you a prediction. I predict that by the next election the gossip in Mr Hager’s book will be forgotten and the real issue affecting New Zealanders will be some global economic shock. Journalists who today are fascinated by the Hager gossip will wonder why they were not asking our politicians about their plans to deal with global economic instability.
Being the bearer of bad news may not make me popular. Persian Kings used to throw the bearers of bad news down a well. That made the bearer go away but not the bad news. It won’t work in a democracy either. Voters who reject parties bringing bad news won’t prevent global economic shocks from occurring. They will just make effects of those shocks more devastating.
I am known as a “philosopher turned politician”, as the Herald recently put it. I was indeed a philosophy lecturer at Cambridge University for several years. However, I have spent a larger and more recent part of my career as a strategy consultant in the banking industry. About half of the projects I led involved advising global banks on how to measure and manage the risks they were taking.
I can assure you that the global economic situation will not provide New Zealand with plain sailing. Our bickering and steady-as-she-goes politicians are being negligent. Those of us advising the banking industry are very concerned about the risks of another economic shock that could have devastating consequences, especially to small exposed economies such as New Zealand.
The global economy is today in a precarious situation. And, since the global financial crisis that started in 2007, developments in New Zealand have made us even more vulnerable to the next crisis.
Why is the global economic situation precarious?
The short answer is that the imbalances that have built up in recent decades and resulted in the financial crisis have not been corrected.
What is an economic imbalance? It is jargon for an unsustainable position. Your personal finances would be described as imbalanced if you have borrowed to the hilt on your mortgage and credit cards so that all of your income is going to repay interest and just a minor increase in the rate of interest would mean you could not make the payments.
A growing number of countries have governments and citizens in just that position. Interest rates today are at historic lows: the European Central Bank’s overnight rate is actually negative – you have to pay to deposit money with it. But, as New Zealand itself has proved this year, interest rates must eventually rise and, if governments and populations remain highly indebted, we will see real carnage.
The global financial crisis of 2008 occurred because banks in the US and Europe lent excessively and recklessly. Why did they do that?
Government regulations designed to make banks safe actually made them take on risks. Deposit insurance and the implicit government guarantee created by banks being “too big to fail” meant they paid no price for excessive risk-taking. This created what is known as moral hazard.
The policy response to the crisis has not solved this problem. On the contrary, necessary or not, the government bailouts of insolvent banks have only reinforced this moral hazard. The banking system of the world’s major nations remains a serious threat to economic stability.
The second underlying problem is excessive government spending and unfunded government liabilities. These problems are well-known in Europe. Governments there have spent so much on their various vote-buying programmes, and promised so much to future retirees, that they are effectively insolvent. Many already have debt greater than 100% of their GDP, and no prospect of honouring their promises to future retirees. If governments were held to the accounting standards of companies, they would be wound up.
The problem is just as bad in the US, where federal government debt is now $18 trillion and, according the American economist Laurence Kotlikoff, its unfunded liabilities created by entitlement programmes exceed $200 trillion. Not $200 billion. $200 trillion.
The government of the USA can continue paying its bills only because the rest of the world keeps lending it money. We do that because the USA has the world’s reserve currency. But reserve currency status is not permanent. Not very long ago Sterling was the world’s reserve currency. Some countries are trying to challenge the dollar’s reserve status. It will not be easy but the challenge itself may lead to instability.
Then there is China. China’s explosive economic growth has been carrying much of the world with it. New Zealand and Australia have benefitted greatly from it. Much of China’s growth has been based on structural economic reforms – notably, on the shift from a planned economy to a market economy. The gains from these reforms are sustainable.
However, some of the growth has also been based on a reckless government-backed expansion of bank lending. Much of this lending has been to poor-quality businesses. The solvency of Chinese banks is imperilled and dependent on their government’s backing. Indeed, if Western accounting standards were applied to Chinese banks, many would now be declared insolvent.
Over the long run, the systematic misallocation of capital in China cannot be sustained. Chinese banks will eventually either fail or contract their lending or suck-up economic resources through more and more government subsidy.
Commentators used to say that Japan had found a new economic paradigm. Japan was going to be bigger than the USA. Japan was different and its imbalances did not matter. Well, Japan has now been in recession for over a decade.
China must at some point tackle the imbalances in its banking system. This will slow China’s economic growth. The knock-on effects for the global economy will be severe, especially when so many other governments’ finances are on a knife-edge. The knock-on effect of a recession in China for New Zealand will be severe. China is now our most important market.
We cannot fix these problems from New Zealand. We can only manage our own affairs, making ourselves less vulnerable to the effects of a global downturn from these sources or the others that may blind-side us.
How can we do that?
ACT has a 3 point plan to prepare for the coming global economic shock.
1. Reduce government debt
2. Liberalise economic regulation
3. Eliminate corporate welfare and economic planning.
Why will these measures make New Zealand more resilient to economic shocks?
Resilience to economic shocks is weakened by three things. The first, and most obvious, is debt. The more indebted you are when things go wrong, the harder it is to ride the storm. We all know this from our personal lives. If you lose your job, your situation is far worse if you are maxed-out on your credit cards than if you have savings.
The same goes for governments. A government that is highly indebted when a downturn strikes will find it expensive or even impossible to borrow the money it needs to keep functioning – to continue providing the education, healthcare, unemployment insurance and other services that governments now supply. This is what happened to Greece in 2011.
The New Zealand government’s debt has increased from about $30 billion in 2007 to $65 billion today, which is 36% of GDP. That is not high by comparison with the US, Japan and European countries. But that is nothing to be proud of. Those governments are outrageously over-indebted. What’s more, small countries have been shown to be able to sustain lower levels of debt, not just in absolute terms but as a proportion of their GDP.
Reducing government debt should be a priority. Even now that New Zealand has emerged from recession, the National government’s efforts in this area have been feeble. No debt will be repaid in 2014.
ACT recommends selling the government’s stake in all state owned enterprises, such as Landcorp (a government owned farming business), the energy generators and Air New Zealand. This would immediately reduce government debt by a third: that is, by $20 billion. And there would be no material loss in government revenue because the government’s portfolio of commercial assets delivers a return of less than 1% on capital – the kind of return that would get any portfolio manager fired.
Risk is also exacerbated by concentration: that is, by having all your eggs in one basket. Again, we all know this from our personal lives. Most of us have just one client: namely our employer. If our employer goes broke or turns against us, we lose our entire income. By contrast, a company with many customers can lose one or two of them without a dramatic loss of income.
The fortunes of a country that produces only a few goods, or supplies only a few services, is more vulnerable than one, such as the US, that produces a vast array of goods and services.
New Zealand’s economy is quite concentrated compared to the many other countries – most obviously, on agricultural output and, for now, on dairy in particular. Alas, such concentration is more or less inevitable for small economies. Divide the US into many little 4.5 million people regions, and you will find that most have more concentrated economies than New Zealand. Taking advantage of comparative advantage means that high-performing small economies will tend to be quite concentrated.
Which brings me to the third factor that exacerbates risk: namely, rigidity. When demand for what you produce falls, you need to start producing something else. Suppose the international price of dairy falls dramatically, perhaps because the Chinese economy goes into recession.
The current concentration on dairy production in New Zealand will not be a big problem if dairy farmers can quickly and cheaply switch production to something where demand has not collapsed. But if dairy farmers are effectively stuck with dairy, then they are in big trouble. And so are the other New Zealanders whose earnings depend on the success of the dairy sector.
The point is not specific to dairy farming. Anything that makes our economy less responsive, less able to adapt rapidly to changes in demand or in the cost of inputs, makes if far more vulnerable to changes in the global economy.
This is where governments do most to exacerbate economic risk – all around the world and here in New Zealand. The most obvious way they do it is through regulation. Governments impose rules that make it difficult to respond quickly and cheaply to changes in the economic situation.
Employment regulations make it difficult for firms to get rid of newly unsuitable staff or to change their terms of employment. And, on account of these restrictions, firms are reluctant to take on new staff. Employment law thus limits firms’ ability to respond to new circumstances. That’s one of the reasons ACT has proposed significant liberalisation of employment law in New Zealand.
Resource consenting also impedes our ability to respond to economic shocks or even to slow-motion developments. It can take many years and hundreds of thousands of dollars to get permission to put your land to a new use. The consenting process is so arduous and uncertain that many people give up before even embarking on it. Good ideas don’t get off the ground. This is one of the reasons that ACT proposes major reforms of the Resource Management ACT. The RMA is an enormous legislative wet blanket lying across the New Zealand economy.
Other political parties seem blissfully or, more accurately, dangerously unaware of the problem. Rather than seeking to diminish the role of the government in the economy, they seek to expand it. For example, Labour has become entranced by forestry. They plan to subsidise an increased production of trees. The Greens, of course, want to subsidize an expansion of “green” businesses. Even National have edged back towards the economic planning of Rob Muldoon, dispensing $1.7 billion a year in corporate welfare for their favoured firms and setting a target of doubling agricultural exports by 2025.
All such interventions simply make our firms less responsive to economic reality. They produce not what there is real demand for, but what the government is willing to subsidize. And the government’s willingness to subsidise certain things and tax others (as it must to fund the subsidy) responds not to economic reality but to political reality.
Politicians are aiming to get re-elected. Unsubsidized businesses are aiming to produce what people are willing to buy. A subsidized and government-directed economy will not respond properly or quickly to changes in the global economy. This is one of the reasons ACT rejects National’s corporate welfare and the other parties’ proposed return to central economic planning. By eliminating all corporate welfare, we could reduce the company tax rate from 28% to 12.5%.
Like other Western economies, New Zealand’s is becoming “sclerotic”: slow to respond to economic shocks and changes in patterns of demand. This is not because people are lazy and dull-witted. People are always ambitious and they are now better educated than ever before.
The recovery from the recent global recession is so slow compared with previous recoveries not because people have slowed down but because governments are impeding them. If New Zealand is to thrive in a risky world, the government must spend and borrow less, it must tax less, it must regulate less and it must not try to decide what we should produce.
ACT is the only party in New Zealand that takes the risks we now face seriously. And ACT is the only party that understands that the answer is not more government, but less.
The current political “debate” in New Zealand – the accusations and bickering and name-calling – reveals a political class who have become obsessed with their own affairs and oblivious to the real risks to the population.
My message to the voters is “ask National and Labour what is their plan to deal with the coming economic shock?”
Then vote the party that has a three point plan. Vote for ACT.
Contact Ph 02102481006
Shea Terrace, Takapuna
7.30am, 15 August, 2014
Same problems, same failed solutions
Extract from speech to North Shore Rotary
“At this election National is promising more of the same. The other parties are suggesting even more of the same. What we need is far less of the same,” said Dr Jamie Whyte this morning.
“Brian Fallow of the Herald wrote a column yesterday pointing out similarities between this election and the 2005 election. Not only do we have an incumbent party trying to win a third term, but the economic situation is similar."
Dr Whyte said, “Fallow could have gone further. In 2005 Labour’s most valuable asset was the Prime Minister and in 2014 National’s most valuable asset is the Prime Minister John Key, who is even more popular.”
“To make his case about the economic similarities with 2005, Fallow points to a number of economic indicators, such as unemployment, wage rises and house prices."
“But Brian Fallow misses the important point. The economic situation is the same as 2005 in a more fundamental sense. After six years in power, National has made no serious changes to the structure of the economy they inherited from Labour in 2008. We have the same excessive level of government spending and taxation. The same over-populated central and local government bureaucracies. The same burdensome regulations. Even more corporate welfare,” said Dr Whyte.
“At this election National is promising more of the same: tax, spend and regulate. The other parties are suggesting even more taxation, even more spending and even more regulation.
“Only ACT is saying we need less taxation, spending and regulation.
“ACT says we need a fresh new approach after nine years of Labour-lite spending followed by six years of National-lite spending,” said Dr Whyte.
"We need an economy that is dynamic, resilient to shocks and quick to adapt to changes in global demand. That requires the government to play a smaller role and reduce the burdens it places on enterprising New Zealanders. We need lighter regulation, lighter tax and an end to corporate welfare – or government cronyism, as it is less politely called.
"ACT has put forward a positive practical solution: eliminate corporate welfare and slash the corporate tax rate from 28% to 12.5%. This one measure, which is self-financing, will do more to promote investment, growth, jobs and real wages than all the policies being put forward by the all the other parties put together."
Contact : Dr Jamie Whyte 021 02481006
Public Meeting at De Canta Tapas Bar, Devon St, New Plymouth
Yesterday I published the speech that I gave to the ACT Party Waikato Conference on Saturday. It concerned a fundamental principle of Western civilisation.
I said that all citizens should be equal before the law.
I realise that in some countries, such as Afghanistan, that might be a controversial idea. Many people in Afghanistan reject the idea that women should have equal rights.
And at earlier times in history the idea was rejected across the Western world. Up to the mid-20th century, laws that privileged men, whites and gentiles were common.
But in New Zealand today, you might expect the principle of equality before the law to be uncontroversial. You might expect that a declaration of commitment to it would be greeted with quiet equanimity, perhaps even a yawn.
Not so. My declaration has triggered vitriolic hostility.
Maori Party co-leader Tariana Turia has accused me of "harking back to the same old racism that people before him thought would win them votes".
She says my comments are "straight racism".
"He thinks it's attractive to New Zealanders, but New Zealanders actually know we have to work together,"
"It's old politics, it has no place in New Zealand."
Here is a woman who leads a party with an explicitly race-based agenda, who represents an electorate in which only people of one race are permitted to vote, and she accuses me of being racist. And what racist thing did I do? I suggested that the law should pay no heed to race!
But it is not just political beneficiaries of New Zealand’s race-based laws who display contempt for the principle of equality.
Since publishing my speech I have been exposed to hitherto unimagined absurdity from journalists – unimagined by me, at least. A reporter from Radio NZ asked me if I realised how “offensive” my commitment to equality before the law is.
Equality before the law is a fundamental principle of liberal democracy. Since when is it offensive to defend such principles?
Other journalists have accused me of “playing the race card”.
Suppose you meet two politicians. One says the law should not differentiate between people on the basis of race. The other one says it should. Which politician is playing the race card?
This issue has been turned on its head in New Zealand. Those who want the state to be racially impartial are accused of racism by politicians who openly promote race-based favouritism. And journalists endorse this intellectual perversion.
The most notable thing about the reactions to my speech is that no one has even tried to explain where my argument goes wrong. They ignore the content altogether – except when they are misrepresenting it – and instead bandy about accusations of racism, “dog whistling”, old-fashioned politics and all the rest.
It is pathetic.
By tackling the man rather than the ball, they reveal their inability to show where my argument goes wrong. If they could identify my error they would readily reveal it. But, because they cannot, they instead try to shut me up with accusations of wickedness.
This is a predictable response from people such as Tariana Turia who have built their political careers on playing the race card. But it is dispiriting, indeed alarming, to see journalists playing the same game.
Journalists have an important role to play in a democracy. They are supposed to provide the public with facts and informed analysis that help them to hold politicians to account. They are not supposed to shut down debate with accusations of racism and offensiveness. They are not supposed to be thought police.
* * * * *
I am a new boy in politics. I was warned that it is impossible to have an intelligent discussion about New Zealand’s race-based laws. You are just shouted down or personally attacked.
Maybe that is true. But, perhaps because I am new, I refuse to accept this. I refuse to accept that we cannot discuss certain topics. Democracy cannot work unless we debate the issues.
Equality before the law is too important for its violations to be ignored.
Equality before the law is a fundamental constitutional principle. As I explained in my speech in Hamilton – which I hope you will read in the original rather than its media-mutilated versions – it is the foundation of a just and flourishing society.
Set aside all the fear and loathing. Set aside the accusations of racism, and of being out of tune with modern New Zealand. Ask yourself a simple question: Are you in favour of legal equality or not?
You cannot be in favour of it for just some people. That doesn’t make sense. If that is your answer, then you are not in favour of equality before the law.
If you believe in equality before the law, then you need to make a stand.
What we have in New Zealand today is not equality before the law.
For some obvious examples, we have a Maori roll and Maori electorates. Iwi have special rights in the resource consenting process. State funded and directed universities guarantee admission to certain courses on the basis of race. We have such things as Maori wardens, with powers over Maori that they lack over Pakeha.
The political left grew out of a struggle against the legal privileges of the landed aristocracy in Europe. ACT is a descendent of that tradition, especially of the English Liberal Party of the 19th century. That is one of the reasons I often baulk at the party being labelled as right-wing. At the heart of ACT is a rejection of legal privilege.
Alas, the parties that continue to wear the left wing label have now rejected legal equality. Some of them have made this transition within their own life-times.
John Minto famously fought for legal equality in South Africa. Now he stands for a party that is promotes legal inequality in New Zealand.
One of the journalists who called me since my Hamilton speech to abuse me – or interview me, as he preferred to call it – told me that legal privilege for Maori is justified by material inequality: by the fact that Maori on average earn less and die younger than Pakeha and Asians.
I addressed this issue directly in my Hamilton speech.
Most Western countries have developed social “safety nets”: state housing, unemployment benefits, public hospitals, state schools and the rest. If one racial group is disproportionately in need of such help, they will disproportionately receive it without any explicit racial provisions in the law.
Add racial provisions and you get a quite different result. The well-educated child of a high-earning Maori will gain admission to law school with a C, possibly pushing out the disadvantaged child of a poor Indian family who got a B.
Truly disadvantaged Maori do not even get a sniff at law school or at a seat on the Auckland City Council Maori Advisory Board. These “compensations” go to those Maori in no need of compensation. It is no wonder that the most vitriolic opposition to ACT’s policy of legal equality comes from those in the Maori elite who get access to these privileges.
* * * * *
I came back to New Zealand because my wife and I think this is the best country in the world to raise a family.
I am white but my daughters are not. I want them to live in a country where that is legally irrelevant. I do not want the law or the government to treat my daughters differently from any other citizens. And, although she is only 11, I think my elder daughter would be bewildered and appalled by the idea that the law would treat her differently on account of her skin colour.
That is not to say that her skin is unimportant. My wife hopes our daughters will come to understand their African heritage, and that it will enrich their lives. But that is a matter for our family, not for the state.
Similarly, I know Maori who have learned to speak Maori in their adulthood. It has meant a lot to them. They already felt an attachment to their ancestry and to places in New Zealand that I envy. I welcome the resurgence of interest and pride in Maoritanga. But, again, that should be a matter of no significance to the law or the government.
Nor are the settlements made by the Waitangi Tribunal relevant to my point about legal equality. The Treaty of Waitangi gave Maori property rights over the land they occupied. Many violations of these rights followed. The remedies provided by the Waitangi Tribunal are not a case of race-based favouritism. They a recognition of property rights and, therefore, something that we in ACT wholeheartedly support.
In short, the importance of Maori culture and the legitimacy of Treaty claims are red-herrings. They cannot justify abandoning the principle of equality before the law.
* * * * *
I know enough about New Zealand politics to be unsurprised by the difficulty of defending the principle of legal equality. But I am still disappointed by it.
It is shocking that so many people are willing to abandon a foundational principle of our liberal democracy.
And it is yet more shocking that instead of arguing about the issues, defenders of legal privilege attempt to shout down those who disagree with them with accusations of racism.
I invite voters to ask every candidate where they stand on this issue.
If those who seek office say they are not in favour of legal equality, then how can we expect them to respect the rule of law? How can we expect them to defend our liberal democracy?
In the end, if you believe in democracy, you must vote for it to support it. If you will not vote for it, then you will not get it.
On 20 September it is over to you, the voters, to decide if democracy is important to you.
Speech to the Waikato Conference: 26 July 2014
Race has no place in the law
Jamie Whyte, ACT Party Leader
David Cunliffe recently apologised to a Women’s Refuge symposium:
“I don't often say it – I'm sorry for being a man … because family and sexual violence is overwhelmingly perpetrated by men.”
The Prime Minister accused Cunliffe of being insincere. Maybe he was.
Or maybe not. The apology conforms to Labour party thinking. Whereas we in ACT believe in personal responsibility, the Labour party believes in collective responsibility.
Those who believe in collective responsibility see people not so much as individuals but as members of groups: men and women, gays and heterosexuals, the rich and the poor, Maori and Pakeha.
For example, the Labour Party has a rule that half the people on their list must be women. This is intended to ensure equal parliamentary representation for women.
Labour believes that a man cannot represent a woman in parliament, even if she votes for him. And that a woman automatically represents other women, even if they did not vote for her or disagree with her. All that matters is group membership.
Similarly, Cunliffe believes he is responsible for sexual violence, even though has never perpetrated any, simply because he is a man.
This “identity politics” comes easily to many people. It is a way of thinking with ancient roots in mankind’s tribal history.
Nevertheless, it is ugly. It is the mindset that lies behind such obscenities as collective punishment and clan feuding.
Overcoming this way of thinking has been one of the great achievements of modern civilisation. The most important part of this achievement is the principle that everyone is equal before the law.
* * * * *
Everybody knows the image of Lady Justice in her Grecian robes holding the scales of justice while blindfolded. But many do not know what the blindfold is supposed to stop her seeing.
The answer is the identity of the person being judged. Justice requires that she pay no heed to who it is she is judging – she will make the same decision whether you are a man or a woman, a lord or a peasant, black or white.
Alas, the principle that the law should be impartial has never been fully embraced in New Zealand. Even today, after any number of equal rights movements, New Zealand law makes a citizen’s rights depend on her race.
The reparations made to iwi by the Waitangi Tribunal are NOT an example of this. The Treaty of Waitangi gave Maori property rights over the land they occupied. Many violations of these rights followed. The remedies provided by the Waitangi Tribunal are not a case of race-based favouritism. They are recognition of property rights and, therefore, something that we in ACT wholeheartedly support.
Nevertheless, there are many areas where New Zealand law fails to be properly blind to race.
The most obvious example is the persistence of the Maori electoral roll and Maori Seats, which guarantee parliamentary representation on the basis of race. This mistake is now being repeated in the Auckland Super City, where council decisions must be run past a Maori advisory board.
Many people have opinions about what other people should do with their property. Under the Resource Management Act, how much weight your opinion carries depends on your race. If you are Maori, you have a say on these matters that others lack.
Some state run or state directed organisations openly practice race-based favouritism. I know a woman who has raised children by two fathers, one Pakeha and the other Maori. If her Pakeha son wants to attend law school at Auckland University, he will have to get much higher grades than her Maori son.
I will not go on. There is no question that the law in New Zealand is not racially impartial.
The question is why race-based laws are tolerated, not just by the Maori and Internet-Mana Parties, but by National, Labour and the Greens.
I suspect the reason is confusion about privilege.
Maori are legally privileged in New Zealand today, just as the Aristocracy were legally privileged in pre-revolutionary France.
But, of course, in our ordinary use of the word, it is absurd to say that Maori are privileged. The average life expectancy of Maori is significantly lower than Pakeha and Asian. Average incomes are lower. Average educational achievement is lower.
Legal privilege offends people less when the beneficiaries are not materially privileged, when they are generally poorer than those at a legal disadvantage.
Of course, many Maori are better off, better educated and in better health than many Pakeha. And these are often the Maori who take most advantage of their legal privileges, especially those offered by universities and by political bodies.
Alas, people are inclined to think in generalities, and they fail to notice that it is the materially privileged individuals in the legally privileged group who capture the benefits. They think of Maori as generally materially disadvantaged; and they see their legal privileges as a form of compensation.
But the principle of legal equality is far more important than any redistributive or compensatory impulses that people may have. It is not some philosophical nicety to be discarded because you feel guilty about what people with the same skin pigment as you did 150 or 200 years ago.
* * * * *
Why is the principle of legal equality so important?
Many people will feel no need to have it explained. To many of us, it seems no more than obvious that the law should not privilege people from one race over people from other races.
Indeed, many on the left of New Zealand politics once held this position. John Minto once led a movement devoted to fighting the legal privileges of whites in South Africa. He is now a candidate for the Internet-Mana Party, an organisation dedicated to extending racial privilege in New Zealand. If he ever believed in the principle of legal equality, he has abandoned it now.
And not just John Minto and the Internet-Mana Party. As I have said, National, Labour and the Greens – the biggest three parties in New Zealand – all support explicitly race-based laws.
Apparently, many people do need to be reminded why the principle of legal equality is important.
It is important because, without it, society becomes a racket.
When people are equal before the law, they can get ahead only by offering other people goods or services that they value. We are all playing to the same rules, and we do well only if we “deliver the goods”. This promotes not only economic growth and prosperity but civility. It forces people to attend to the preferences of others.
Where people enjoy legal privilege, by contrast, they can get ahead without doing anything of value for other people. Because the system is rigged in their favour, they don’t need to “deliver the goods”.
Suppose, for example, that the government decided that Japanese women deserved a legal privilege. They should be allowed to erect barriers across the roads they live on. Anyone wanting to proceed down the road must negotiate with these women to get the barriers lifted.
This would provide Japanese women with an opportunity to make easy money by charging people a fee to lift their barriers. It would thereby divert them from productive occupations. It would drive up the cost of travelling around the city, as people either took longer routes or paid the fees. And it would create feelings of resentment towards Japanese women.
This may sound fanciful. But it is precisely the situation that the Resource Management Act (RMA) has created with regard to resource consents and iwi. If you want to proceed with developing land near iwi, you may well have to pay iwi for permission to proceed. That easy money diverts Maori from more productive activity, drives up the cost of developing land and creates resentment towards Maori.
* * * * *
Nor does legal privilege do Maori any good over the long-run.
Allow me another analogy. Imagine that SANZAR, the body that administers the Super 15, decided that the Blues deserved a legal privilege. Whereas all the other teams will continue to earn 5 points for a try, the Blues will earn 10.
This would benefit Blues players over the short-term. They would win many more games than they now do. But giving the Blues this advantage in the rules would reduce their incentive to work hard on their skills and fitness. After a while, standards of play at the Blues would decline. Fewer Blues players would be selected for the All Blacks.
Return to those half-brothers I mentioned earlier: one Pakeha who will need an “A” to get into law school, one Maori who will need only a “C”. Which one is more likely to work hard at school? Which one is more likely to make the most of his potential?
Many Maori identify strongly with their culture. I have Maori friends who have learnt to speak Maori as adults, and they have been enriched by the experience. I see in them, and in other Maori I meet, a connection with their ancestry and with places in New Zealand lacked by many of us whose ancestors came here more recently – a connection that I envy.
But this should be a matter of complete indifference to the law. There are many cultures in New Zealand. People identify with all sorts of things. Some New Zealanders identify with their sexuality, some with their profession, some with their religion, some with their political beliefs and some – perhaps most – with nothing in particular.
The government should not select some of these “identities” as special and confer legal advantages on them. Culture should not be nationalised.
It is not only those in the non-favoured cultures who have reason to resist. Those in the nationalised culture have the most to lose.
Healthy cultures are dynamic. They evolve and adapt to the changing world. Becoming an “official”, government-sponsored culture is stultifying. What counts as Maori culture and worthy of state protection or promotion must be decided by politicians and bureaucrats under the influence of those who lobby them.
Just as Maori students do not benefit from being given an easy ride, Maori culture risks being crippled by its entanglement with the state. It risks becoming a quaint relic of the 19th century, good for tourists and “Maori leaders” on the take but of no relevance to young Maori of the 21st century.
* * * * *
Race-based favouritism is doing Maori no real good.
But even if it were, ACT would still oppose it. Because society should not be a racket, no matter who the beneficiaries are – be they men (who continue to enjoy legal privilege in many countries), the landed nobility or people of indigenous descent. Law-makers must be impervious to the special pleading of those who wish to set aside the principle of legal equality.
Alas, politicians from the other parties have not merely listened but acquiesced. New Zealand is awash with race-based law.
After the coming election, ACT’s MPs will work to have all race-based laws repealed. The precise mechanism or process must be decided once a government is formed. But the particular process followed is not as important as the goal.
There is no place for race in the law.
And there is no place for race-based laws in New Zealand.
Three Strikes: Yesterday, Today and Tomorrow
Speech to ACT Members and Supporters
Dockside Restaurant, Queens Wharf, Wellington
Crime is on the decline, not just in New Zealand but across the Western World.
One simple reason is that crime is mainly committed by young people. And Western populations are getting older. A population with a smaller share of 16 to 30-year-olds is likely to have a lower crime rate.
On top of this, those few young people we still have are becoming more civilized. Contrary to media stories of binge-drinking and drug-taking, today’s youth are drinking less, smoking less, taking fewer drugs and staying at school longer. Nor do teenagers get pregnant as often as they used to.
Even if governments had done nothing about crime directly, we should be unsurprised by its decline. Yet governments have also contributed to falling crime rates.
In the UK, for example, crime rates had been climbing steadily since WWII. They peaked in the mid-1990s when John Major’s Conservative government began requiring judges to impose longer prison sentences. Tony Blair’s Labour government continued the “tough on crime” policy. Since the mid-1990s, the British prison population has doubled to 85,000 and the crime rate has more than halved. A similar story could be told for the United States.
National seeks credit for declining crime rate here in New Zealand. But they are not responsible for it. Declining crime here is caused in part by the aging and civilizing of the population, which isn’t National’s doing. And it is caused in part by a tougher sentencing. That isn’t National’s doing either.
The Three Strikes for violent crime policy is an ACT policy.
We looked at the successful three strike laws overseas and made modifications to ensure that no one convicted of stealing a pencil or smoking a joint would be sent to jail for life.
ACT’s Three Strikes policy was carefully designed to catch only repeat offenders who committed crimes of serious violence, including sexual violation.
When ACT campaigned on the policy in 2008 we met widespread hostility, not just from the political left but from a justice establishment that has swallowed the idea that the “criminals are victims too”.
The National Party now enthusiastically trumpet as their own what has become a highly successful policy. Yet in 2008 they were opposed to it. The then Justice Minister told his aides that New Zealand would have a Three Strikes law “over his dead body”. Well, we got the policy and, although Simon Power’s body did not expire, it did retire unexpectedly from politics.
At the time, Labour politicians quoted Kim Workman’s prediction that Three Strikes would fail to reduce crime and would result in our prisons over-flowing with new inmates.
Where are we today, four years after Three Strikes became law?
There are now over 4,000 first-strikers – aggravated robbers and rapists, very violent offenders whose crime carries a maximum sentence of at least 7 years. 4,000 is about what you would expect projecting the forward the 2010 number of violent crimes.
In accordance with the law, upon conviction, all of these first-strikers received a solemn warning from the Judge which goes something like this: You have been convicted of a “strike” offence. If you offend again you will receive a sentence to be served without parole. If you offend a third time, you will go to jail for the maximum time prescribed for the offence you are convicted of.
Here is a startling fact. Only 37 first-strikers have been convicted of a second such offence. This is a level of success that even ACT did not predict.
Why is it working? It is impossible to prove why offenders stop offending but the certain prospect of spending a long time in prison must be a major factor. Three Strikes for violent offending is working. The popular leftwing idea that criminals do not respond to incentives is absurd. It has been refuted so often that those persist in peddling it should be laughed out of court.
We know who the 37 second-strikers are. 46% of them have convictions for “strike” offences that were committed before the legislation came into effect, and therefore don’t count as “strikes”. 38% committed their first “strike” offence while on bail or parole. Of the first ten of the second-strikers, three committed their second “strike” offence while on bail awaiting sentence for the first. And their second strike offence was the same as their first.
These are very dangerous men. With the judge’s warning ringing in their ears, and before even being sentenced, they went out and committed exactly the same offence again. In two of the three cases the offence was indecent assault. Society is safer when such men are in jail.
Of those 37 second-strikers, nine are “on the street”. In most cases it is because of judicial leniency for strikes one and two.
Three Strikes was necessary because although Parliament has passed laws saying violent offenders should receive long prison sentences, the judiciary was taking no notice. Everyone deserves a second chance – even aggravated robbers. But they do not deserve five or ten chances.
Prior to Three Strikes the average offender had appeared in court eleven times before they were sent to prison. The average person never appears in court for a felony offence. These offenders had been to court eleven times and each appearance could have been for multiple offences.
Before Three Strikes dramatically changed the rules, an offender may have been convicted of 20 or 30 charges – many of them violent – before a judge finally decided to send him to jail. Violent offenders now get two chances and, if they show they cannot learn and offend similarly again, they go to jail for at least seven years.
If their third offence is an aggravated robbery or a rape, they go to jail for 14 or 20 years respectively, with no parole. This will be 14 or 20 years when law abiding members of the public can go about their business without being in danger from that particular thug.
What is the lesson? While National now happily takes credit for a measure that they only reluctantly agreed to, the government has not asked: “Is there another area where Three Strikes could also reduce crime?”
ACT says there is. Burglary is a crime where Three Strikes would be appropriate and successful.
Appropriate because burglary is out of control. It is an under-reported crime because the public knows there is a poor detection rate. Treasury estimates there are at least 115,000 burglaries a year, although only 55,000 are reported to the police – assuming police figures are honest, about which there is now some doubt.
Over four years, that is the equivalent of every household in Auckland being burgled. Over a lifetime in New Zealand, you will be lucky to go without being burgled at some point.
Burglary is a crime that disproportionately harms the poor in our society. Those of us who are well-off usually have insurance. If we are burgled it is extremely unpleasant – our refuge from the world has been violated and items of great sentimental value are often stolen along with the TV and the iPad.
But for less well-off people burglary is a disaster. Often the poor cannot afford insurance. If someone is on a benefit, the priority is feeding and clothing their children. Imagine the impact of a burglary on a solo mum who has scrimped and saved and bought her child an iPad so she can keep up with her peers. For that household, the burglary is a disaster.
Imagine the frustration that solo mum must feel when she goes to the police to report the burglary, only to be told that they do not have the resources to investigate the crime. The best they can offer is a claim number for her insurance – for insurance she has been unable to afford.
Burglars are a blight on our society but particularly for the poor.
Three strikes for burglary is also appropriate because a disproportionate number of burglaries are committed by professional burglars – criminals who have decided that burglary is a crime that pays.
One burglar appeared before the court earlier this year for sentence on his 389th and 390th burglary convictions. The sentences he received for his 388 previous convictions had obviously failed to either deter or prevent him from continuing to pursue his chosen career.
Here is how Three Strikes for burglary will work. On his first conviction for burglary the offender will receive a first warning from the judge. The sentence may or may not be custodial. If he goes to jail, he will be entitled to parole.
If the burglar is convicted a second time, the Judge will give him a final warning: do this again and you go to jail for at least three years. If there is a next time, the burglar will not be eligible for parole. He will serve the full three years.
Looking at the effects of our Three Strikes for violent crime policy and at the effects of similar policies overseas, we expect that this policy would reduce burglary by about a third: that is, by about 40,000 a year.
Perhaps you are not concerned about your own personal security. Then think of the elderly who feel unsafe in their own homes. Or the poor who cannot afford security systems or insurance and for whom burglary is devastating. They deserve your sympathy and your vote for this policy.
Those who go soft on penalties for crime because they reckon the criminals cannot help themselves show heartless insensitivity to the victims of crime. The poor woman whose home is invaded and her possessions stolen certainly can’t help it. Why should she be sacrificed to the half-baked and morally corrupt theorizing of affluent politicians?
National and Labour are not going to tackle burglary. Only a vote for ACT can reduce this scourge on our society.
We proved our critics wrong with Three Strikes for serious violent offences. The prison population didn’t explode. And try as they might, the journalists cannot find some poor urchin who has been locked up for seven or 10 years for stealing a chocolate bar. There never will be such a story.
Burglary has become a blight on our society because the risk for burglar is too low. Less than 3% of burglaries result in a conviction. Less than 1% result in a prison sentence. And the average prison sentence is only 15 months, half of which is served. A 1% chance of spending eight months in prison is insufficient deterrent.
Tougher sentencing would have stopped Mr. 390 before he caused so much misery, either by deterring him or by keeping him out of circulation for a greater portion of his criminal career.
We believe he should have been stopped years ago.
You can stop him and other professional burglars by voting ACT on 20 September.
Don Nicolson – ACT Candidate for Clutha Southland
Speech to ACT Southern Forum
July 20, 2014
Mr Chairman, thank you for the opportunity to address the ACT southern area conference today with this day being 63 days-yes 9 weeks out from the general election.
An election that will obviously not only define who is the government for the next 3 years and who will be the opposition but also define the future of the very party I am proud to represent ACT.
I want to acknowledge the presence of our party president John Thompson, our party leader Jamie Whyte and our Epsom candidate David Seymour who will win Epsom and the members and supporters here today. I note ACTs CE Lindsay Fergusson is also in attendance. But if you want a strong ACT representation in parliament you need more than David Seymour. You need him, plus at least 5 others. Then you might just get me as well!
How many party votes will that take? About 100000 is my guess; about 4 times more than last election.
Is it do-able? Well yes it is. In 1996 ACT was a new party polling less than 1% and with a hostile media. We ended up with over 6 % and 8 MP’s.
We gained about 145000 party votes that year. In fact ACT has achieved over 6% in 3 of the 6 MMP elections so far. If we could achieve 12500 party votes in the 5 electorates in this region then ACT is seriously on the road again. But we need many foot soldiers to get us there. In this region I need your help. I need you to unashamedly lobby your connections, help with localised billboard placement and oversight, and generally become much more mobilised.
ACT cannot be lackadaisical. While money really helps, it’s those small influences you can all exert that will, collectively make a huge difference. I have been asked to talk about why ACT principles are good for regional New Zealand and also link those principles to the primary industry that I have worked within all my life.
At the outset, I need to say that ACT is unique in our political landscape. We are absolutely different from the rest.
How is that so? Well, we are the only party promoting a better future with less government weighing us down. That is, ACT promotes a better, a heathier nation through less tax or regulatory burden. No other party has the courage and fortitude ACT has. Other parties might occasionally sound similar but drill deeper and they all have command and control tendencies, with those on the eco socialist left extremely dangerous.
We want the monopolistic influences in our country diminished. They are a handbrake on success and achievement. If the current regime of tax and spend works so well, then why is it that society seems so unhappy and desire more?
I say too much money filtered through the hands of monopolists is the root cause. They cannot deliver value no matter how they sell themselves. Their dead weight cost means a significant portion of each tax dollar is wasted. By deadweight, I mean the unearned costs imposed on the production of goods and services, including the loss of opportunity or growth of businesses throughout NZ.
So let’s go to the core specifics ACT has defined the voters are concerned about most in 2014.
Our surveillance has discovered that voters are concerned about their personal and their property security, their earning, saving and spending power and they know that we are seriously over burdened with regulations that impede enterprise.
Add to that voters have a valid concern about race based laws and the division they create.
So ACT will run a campaign about being tough on crime, about the benefit of low flat taxes, about why we need a One Country, One law ethic and how we will take the secateurs, no a machete to green tape.
How will these policies help regional New Zealand and the primary sector? It is clear that without secure property rights being upheld, criminals can run riot over the property of others and they are. It is thought about 120,000 burglaries happen each year with only about 55,000 of these reported and less than 30% have offenders apprehended. It is thought these invasions of property cost individuals over $1billion a year. ACT says it’s a core government role to have citizens feel secure and so ACT says stronger deterrents to criminals are vital.
ACT’s 3 strikes for burglary and you are ‘in’ strikes at the heart of those who wish to disrespect the property of others. For those in the pastoral heartland it has been assessed that on top of burglary stock theft costs their industry over $120 million per year. ACT wants far tougher penalties for these rural invasions too with additional powers to confiscate weapons and vehicles from offenders caught. ACT policy is a circuit breaker to crime.
And what of low flat taxes and the benefits that will bring the regions or the primary sector?
ACT says it’s too easy for the executive powers of the state to co-erce revenue from citizens under the guise of protecting those same citizens, when in fact much of the revenue desire is to mask the expansion of the Crown, the ultimate monopolist. That’s why from the day of formation ACT has promoted a low flat tax regime. We know that the dead weight cost of a government collected and spent dollar compares poorly with a dollar spent privately. ACT’s research has shown that the much desired economic growth expectation by government can be achieved much quicker with our lower and flat tax regime.
It’s not hard, and in fact won’t create hardship for anyone in mainstream, but it might affect a few surplus government servants; as it should.
In 1999 when Helen Clark came to office, total Crown revenue was $39 billion, when she was deposed in 2008 that total was $81billion, last year $86 billion. During the same periods total Crown spending went from $39 billion to $83 billion in 2008 and was $91 billion last year. Distilling these figures to each citizen is eye watering with a gross debt per head now at almost $18000. Four times greater than Turkey and six times greater than war torn Egypt!
With this level of Crown expansion you would think society would be happy, but it’s not. It seems there is never enough in the kitty for health, education or security. And worse the Crown is getting into the middle classes and business with additional welfare.
The drug of Crown welfare has them hooked, but ACT knows going cold turkey doesn’t have to be destructive or painful as it was for the primary sector 1984/5. Individuals in that sector, if they are true to themselves know that any privilege gained unfairly can be easily taken away. So with a low flat tax regime in place enterprise in regions and primary industry would advance on merit once again. ACT knows that; most citizens think that too, but governments of the recent past just don’t trust citizens to make smart choices.
Much is made of regional development with government financial inducements to regions or industry seen as a saviour rather than for what they are; a bribe for the overtaxing and over regulatory effect of policy.
ACT says leave more money in the pockets of those who earn it and our regions’, towns and cities will be much better off. An example: I pay about $800 per year to Southland economic development agency. I don’t like that because I can’t refuse to pay it; I don’t get to choose how it is spent; I don’t get any dividend or even a share certificate, but the next year that same agency can come back for another $800 or more. It’s never less!
As for Green tape mixed up with red, well, where do I start?
I daresay first principles for regional or primary industry sustainability would be to suggest that limiting the state would actually help. Stating the bleeding obvious I expect. But there are people who think that there is protein, in fact sustenance in a silicon chip. They don’t want to understand that everything we enjoy today has its genesis from revenues generated by harvest of the environment. That’s right; it doesn’t matter whether you are Bill Gates, Tiger Woods, Roger Federer, the All Blacks or Barrack Obama, nothing occurs without resources harvested to develop trade and currency. Everything else occurs because of, not in spite of the harvest of the land, the sea and the scenery.
The Greens would have us believe that resource rentals are required but that’s because they don’t understand rent is already paid by trade in open markets.
Those in IT might say ‘oh we don’t use resources’. Well by proxy they do because in general terms their fantastic outputs are generally used to make resource use more efficient.
No bureaucrat can say they don’t use resources; they do and worse, those same bureaucrats never replace anything that they consume. Think about that? They do not replace anything they consume. Which means ladies and gentlemen that what the bureaucrat consumes, must be replaced by the private sector? Can anybody come up with a better reason for voting for a light handed Government delivering only what is required.
So why do we let them regulate and add cost to individuals and enterprise the way they do?
I could talk at length about regulations and rules and the effect on local communities or primary industry.
Immediately I think of the Resource Management Act and how it damages communities by impeding aspiration or why it doesn’t have a full compensation for takings clause, or how I think the Local Government Act is applied and more especially why the funding of local government is crooked. I think of road funding on a less than fair entire network basis and I think of the explosion of health and safety compliance police numbers. I think of the very politicised water quality discussion and how one sided and destructive those with agendas have become and I think of how ACC should be opened to competition and so much more.
But I want to talk about the biggest nonsense of all; climate change or, as I like to call it, climate variation and the wasteful New Zealand response. It doesn’t matter whether it’s an Emission Trading Scheme (ETS) or a Carbon Tax, neither can achieve anything useful. That is unless one makes their livelihood out of promulgating the lie.
My first brush with a prospect of carbon dioxide trading prospect goes back to about 1990 when a farm forestry magazine mentioned the concept and that was about the time of the first Rio Conference. It might pay to remember that in early 1980’s global cooling was the issue as was the ozone hole over Antarctica. Fast forward to about 2002 and my role in Federated Farmers, we learn that Helen Clark was serious about signing up to the Kyoto Protocol.
That led to me leading the largest farmer rally in 2003 where we fought and won against the Clark governments intention to enact an animal burp, belch and pee tax emission tax humorously called FART ( fight against ridiculous taxes). The Labour party did not desist and pushed for a carbon tax. They failed again but by 2008 they were able to enact an ETS. The National Party was in huge opposition, or that’s what it seemed.
But while the nats have modified the impact on all citizens the cost of the current ETS is still with us. For all the rhetoric about being fast followers we are still ahead of every other nation and so we find ourselves today in a very lonely international club of one with our, all sectors all gases, ETS.
While our neighbours Australia have just killed off their Carbon Tax we still have our ETS. I find it abhorrent that the promoters of such schemes have played with citizens minds by promoting a fear of the future, any future. Dictators would be proud. The merchants of fear said that increasing carbon dioxide would become catastrophic and that any international inaction would result in irreversible climate change.
Well in spite of their assertions and with atmospheric CO2 rising well past the magical 350ppm mark evidence shows that the world has not warmed for the last 17 years. Evidence enough to say man made emissions of CO2 is not a dangerous causal factor to global temperatures.
Further climate models never predicted this ‘stop’ in temperature rise. The models are worthless, only good for the doomsayers. Sea level rise is small and not in acceleration mode.
I could go on but ACT says that until all the unanswered questions are answered without political bias or scientific corruption then any money spent attempting to alter climate is wasteful and doing nothing is more appropriate.
Leave citizens to make their own choice about where they live and work and further, leave them the resources to adapt and build their own resilience to whatever is ahead.
ACT would want the ETS ‘gone by lunchtime’ and any idea of a carbon tax dismissed for the nonsense it would be.
But I will leave the last word to a political columnist from Australia, Dan Aitken who last week wrote as that country repealed its carbon tax:
First, no country can have a sensible policy on climate by itself, because climate is not governed by national boundaries. Second, not even the UN can have a sensible policy, because climate is not governed by laws and regulations. Third, we can do something about the effects of weather, which is much more concern to everyone because weather is local, and affects our daily life. Fourth, but we can’t stop weather, or even predict it with any great success, because we lack deep knowledge about the basic components of weather (and climate). Fifth, it may be that we will never possess such knowledge. Sixth, the evidence continues to mount that carbon dioxide is not, after all, the control knob of the planet’s temperature, and if it is not, then the preceding reasons become overwhelming.
Fantastic lines that help me rest my case.
So back to the question the chairman asked me to talk about. Is regional New Zealand different than metropolitan NZ? Is Primary industry sector different? Should ACT have policy for each?
ACT principles, if widely adopted would not discriminate against any sector, any region, any city, any colour, any religion or any creed. ACT is sector neutral economically and colour blind socially. ACT vision is about giving individuals equal opportunity through less government. Opportunity where an individual can make their own choice about how they can control their destiny; not have it controlled for them by the executive.
As a farmer I controlled stock by using dogs, quad bikes and fences. So I used overt coercion over a weaker species to gain control and then income.
That’s what our current governance model is too; putting individuals into herds or flocks, weakening their resolve or enterprise and then managing their daily requirements by offering welfare inducements to maintain power.
It’s shameful, it’s unacceptable but it is happening in front of our eyes.
Why do voters like the herd mentality? Why do they like the coercive power of the executive over their own liberty and freedom?
One wonders why our forebears fought so hard for liberty, freedom and the property right when their children haven’t appreciated their quest.
How have the socialistic tendencies of the herd become so oppressive, so stifling to those of us who know there is a better way, those of us who value freedom?
Well I know; it’s about the constant diminution of the common law property right. But that’s for discussion another day.
But why are policies that almost had Dr Brash as Prime Minister in 2005 for the National party now not talked about by that same party?
It’s clear to me they have allowed themselves to be so corrupted, so scared of the eco socialistic and extreme left they cannot stay true to themselves. They have been pulled so left only ACT can save them, save us all.
Predominantly it is any two tick Nat whose heart and mind ACT has to influence and wrest back our lost support. There’s little chance of winning over any voters of the more predatory left.
We need to get them ( National voters that is ) to understand their smarter and more powerful voting strategy would be to split their vote because it would allow the National Party to be held closer to its core values rather than be pulled further into socialistic mire.
ACT wants a better way and so do the Nats.
ACT knows the better way.
ACT can be a powerful influence for making this fine country better
A Party vote for ACT is the influential choice- the right choice.
I implore you to help make it happen. Be proud to tell your mates to Party Vote ACT September 20th and make New Zealand a better place.
Speech to the Scenic South Conference
Dr Jamie Whyte
20 July 2014
Click here for a downloadable version of this policy.
ACT has a new proposal to make our democracy more accountable. The proposal may seem small but it could be the most significant idea in this election.
Policies such as the one I am announcing today, which change the behaviour of politicians, have greater long term effects than any particular proposals for this or that government activity, such as giving school children laptops, subsidising solar panels and the rest of the little tax-funded bribes the other parties trade in.
A proposal to reform New Zealand’s government accounts was hardly noticed in the 1993 election campaign. Yet the Fiscal Responsibility Act of 1994 has had a profound effect on how New Zealand is governed. Government accounts are now transparent and neither Labour nor National wants to be responsible for a deficit. The Fiscal Responsibility Act is probably the real reason why the government books will be back in the black by next year.
ACT’s fresh idea could be as influential as the Fiscal Responsibility Act.
* * * * *
Sir Geoffrey Palmer famously opined that the New Zealand parliament is the fastest lawmaker in the West. He was referring to the absence of checks and balances: the lack of a written constitution or second chamber of review. Laws can be introduced and passed in minutes. And they have been. An unsurprising example was a 1987 law to increase MPs’ superannuation. It passed through all stages of the legislative process, from introduction to becoming law, in seven minutes flat.
Had Sir Geoffrey not been of a socialist bent he might have pointed out that this legislative ease also made New Zealand lawmakers the fastest spenders in the West. In no other Western democracy is it so easy to spend taxpayers’ money. New spending proposals go through with minimal scrutiny or public debate.
Helen Clark’s Labour government increased government spending by 35%. In 1999 government spending was $15,500 per person. By 2008 Clark’s labour government had increased this to $21,000. (Both figures expressed in 2014 dollars.)
Do you remember any great obstacles being put in their way? Did Clark and her cabinet struggle to get their spending proposals past constitutional barriers or a sceptical parliament, media and public?
When government spending is being increased by 35% over a 9 year period, you might hope that political alarm bells would be ringing, lights flashing and barriers coming down. But nothing of the sort happened.
Increasing government spending by 35% was politically easy.
It shouldn’t be. Because, beyond a certain low level, government spending is a bad thing.
The most obvious reason is that government spending must be funded from taxation. Taxation transfers money from private individuals to the government. That transfer in itself costs society nothing. The taxpayer loses a dollar; the government gains a dollar. Nevertheless, taxation imposes a massive costs on society because it makes many productive activities unprofitable (by adding costs to them) and makes many unproductive activities profitable, such as employing a tax lawyer to rearrange you company’s affairs to reduce your tax bill.
This deadweight cost of tax is difficult to estimate but, for a country with a tax code like New Zealand’s, it is probably in the range of 25% to 50%. For every dollar transferred from taxpayers to the government, economic output is reduced by 25 to 50 cents. A less taxed population would be a richer population, before tax as well as after tax.
The second problem with government spending is that it usually replaces private spending. When you spend your own money on yourself you are likely to buy only what you value and only when you think it worth the price. When a government buys goods and services for you, these outcomes are unlikely.
Indeed, taken to extremes, profligate government spending can wreck an economy. Greece is the most obvious recent example. But several other European countries are struggling to get out of the holes dug for them by over-spending governments. After decades of governmental largesse, the French and Italian economies have near-zero growth and high unemployment rates, especially among the young. Youth unemployment in France is 24%. In Italy it is 35%. In their low-tax, low-spending, light-regulation neighbour, Switzerland, youth unemployment is 3%.
Nor is the problem restricted to national governments. After decades of over-spending administrations, California is almost bust. The excessive taxes it must now charge are driving businesses to other states – often to low-spending, low-taxing Texas. Here in New Zealand, Len Brown is spending Auckland City into a fiscal crisis.
* * * * *
Why then is there so little public resistance to increased government spending?
One reason is misrepresentation of the costs.
Whether from duplicity or economic ignorance, politicians never discuss the deadweight cost of the taxes entailed by government spending. They never make the point I have just made – that, beyond a very low level, taxes do not merely shift money around but reduce total output.
Nor are the costs of government spending described in a way that most people can understand. The policy of not charging interest on student loans costs about $670 million a year.
In the grand scheme of things, is that a lot? Most people wouldn’t have a clue, even if they knew the $670 million figure.
The problem with such numbers is not only that they are incomprehensibly large but they seem distant, almost unreal. They are merely book-keeping entries in the accounts of the government.
But they are not really distant issues. Such spending is the cause of our taxes, which is real money that we no longer have to spend as we choose. For example, if not for interest-free student loans, the top rate of income tax could be reduced from 33% to 30%. Or the 17.5% rate could be 16%. Or the corporate tax rate could be reduced from 28% to 25%. That is a remarkably big difference made by just one apparently trivial spending policy.
Such revelations will mean something to people. If you know that interest-free student loans are adding 3 percentage points to the tax rate you pay, you get a sense of what it costs – a much better sense than telling you that it costs $670 million, if you ever get told even this.
ACT believes that taxpayers should know the price of any spending policy of the national government or a local council in a metric that is relevant to them.
* * * * *
To this end, ACT proposes an Honesty for Taxpayers policy.
On this policy, regulatory impact statements, cabinet submissions and ministers’ introductory speeches for Bills in parliament will need to state clearly that “but for this proposal, your income tax rate would be X percentage points lower”.
When taxpayers visit the website of any government agency or local council and any programme of that agency, they should have a clear idea of the price of that agency in their taxes or rates.
Government departments and agencies should be required to declare on their home webpage “but for this agency, your income tax rate would be X% lower”.
Similar rules should apply to local governments. They should be required to reveal how much lower rates would be if not for a particular new policy proposal or existing service of the Council.
If a minister, department, agency or local council believes that the programmes it administers do indeed offer value for money to taxpayers, they should be proud to say how they are putting taxes to work in the clearest way taxpayers can understand.
For example, the government should be keen to alert taxpayers that, without Working for Families:
· the 17.5% income tax rate would be 12.5% OR
· the 10.5% income tax rate would be 3.5%.
The Minister for Tertiary Education should be keen to remind everyone that, if not for interest-free student loans
· the 17.5% income tax rate be would 16% OR
· the 28% company tax would be 25% OR
· the 33% top income tax rate would be 30%.
The Minister for Business, Innovation and Employment (MBIE) should be keen to announce that, if not for its policy of dispensing corporate welfare
· the 28% company tax rate would be 21% OR
· the 33% top income tax rate would be 27% OR
· the 17.5% tax rate would be 14.5%.
If you do not know what something costs, you cannot know if it is worth the price. Good decision-making depends on good information. In a democracy, this means that voters must be reminded of how much they are paying for government activities.
Politicians from the big spending parties will oppose this policy. That shows what a good idea it is. The bureaucracy will also resist it, because voters will be surprised to realise that much new spending is generated by bureaucrats. MPs and councillors will be more reluctant to just wave through spending when the information is publicly available.
By using the tools of the information age ACT seeks to make our elected representatives more accountable and allow citizens to participate in a more meaningful way.
I am pleased to lead a party with fresh ideas and practical solutions to the real issues.