Video of this speech can be viewed here.
Delivered by ACT Leader David Seymour to New Zealand Parliament,
I rise on behalf of the ACT Party in support of this Bill.
I’d like to congratulate the Minister in charge, the Select Committee, the submitters, and the officials involved in getting the bill this far. I’d also like to acknowledge the work of my ACT predecessors in improving this Bill.
Most of all I’d like to thank my fellow Epsom electors. This Bill, more than any other, has acutely demonstrated the role that the Epsom electorate plays in ensuring stable centre-right government for New Zealand. This bill has been advanced, stalled, and now advanced again, in each instance due to the presence or absence of an ACT MP from Epsom.
I can hear the Labour MP’s frustration, Mr Speaker, not only can we move toward best practice public policy without them, but ACT has total certainty about the identity of its leader.
This is also a teachable moment for public policy.
Listening to the opposition, during the latter part of this debate, they seem to assume that human relations, such as employment relations, are static. They seem to assume that they can shift outcomes by legislating the conditions under which people work, and that people will never change their behaviour in response.
An easy way for the opposition to see the fallacy might be to imagine some of this Bill’s provisions in reverse.
We might imagine that employees should not be able to abandon a so called “vulnerable employer”.
Perhaps we’d propose that an employee would be compelled to keep working for such an employer regardless of what a poor employer they turned out to be, and regardless of what other opportunities presented themselves to the employee.
Fanciful? I ask members to think carefully, what is the logical difference between that scenario and the situation in which large employers continue to be placed under this act.
Or we might imagine an Act wherein employees were thought most likely to tire of bargaining, but require them to conclude an agreement unless the ERA saw fit to absolve them of this default obligation.
Or we might imagine a world where it was the norm for employers to partially withhold payment when dissatisfied with employment conditions, and to expect no partial reduction in work effort.
Mr Speaker, this bill, even after amendment, let alone the kind of Bill the opposition would have passed, is about giving rights to employees by imposing duties upon employers.
The thought experiment of reversing the roles of employer and employee shows how misguided it is to attempt to improve outcomes by interfering in the contractual arrangements that employees and employers would otherwise enter into.
The opposition, and any sensible person, would reject these hypothetical laws.
It’s plain to see, I’m sure they’d say, that employees either wouldn’t take such jobs or would expect to be paid more in return for accepting such duties.
They might even say that such rules would be silly. Far better to relieve employees of such draconian duties and allow them to negotiate their own conditions.
Why, then, do the opponents of flexible labour markets in general and this bill in particular not see the futility in trying to legislate a different outcome in the labour market and the damage it is likely to do?
Why, indeed, has the National party compromised on the vulnerable worker clause and the requirement to conclude bargaining when these should have been removed entirely?
The answer lies in another fallacy, over 150 years old and disproven every single year since, that labour will fall in value vis-à-vis capital. It’s the failed hypothesis, most recently resurrected by a French populist, that we are heading for hyper capitalism and the revolution. In reality it is labour, not capital, that have risen in value since Marx wrote.
These economic trends have real implications for politics and policy today. They explain why the Labour Party has lost its base, and why new members of the Green Party who understand economics could make such good leaders.
But the reality is that employers in the Epsom electorate and up and down this country are fixated on the challenge of attracting and retaining staff. Competition for workers amongst employers is as aggressive, if not more aggressive, than competition for jobs amongst workers.
Those employers must look askance at the opposition’s assumption that workers have no other options, are a dime-a-dozen, and are easy come easy go.
That simply is not the reality of the New Zealand workplace in 2014. It is a market place where competition works both ways.
I say all of this as someone who entered the workforce working 60 hours per week for $7.50 an hour.
I support this bill because it is a step in the right direction towards more flexible labour markets.
Like all attempts to improve public policy, this amendment is imperfect.
Economic reality and experience suggest it should have gone further. Governments cannot legislate market outcomes, but can influence them.
Let me leave the opposition with two initiatives that might better help New Zealanders achieve better pay and conditions.
Nominal pay rates are only worthwhile to the extent that they are useful for buying real goods. The price of houses have doubled relative to incomes over the last two decades, overwhelmingly due to local authorities prescribing an urban development pattern incompatible with the housing people actually want.
Far more could be achieved for working New Zealanders by improving the responsiveness of housing market supply than by futile attempts to shift bargaining strategies in the labour market.
Another contributor to the outcomes in the labour market is the skill level of employees. Employees with greater skills earn more, and this factor is growing in importance.
Indeed, increases in inequality of market income in the western world can be attributed to increasing returns to skills – you can earn more and more if you are more literate and more numerate.
The real work achieving the opposition’s purported objectives is being done on the supply sides of the housing and education sectors, and I’m proud to support and encourage this government in this work.
In conclusion I am proud to support this bill and hope that this government will one day pursue best practice policy by confronting the fallacies that underlie too much of our labour law legislation.
The duty to enter into and conclude bargaining should be gone.
The duty to retain staff under Section 6A almost unconditionally dependent on the type of employee, and now the type of business, should be gone.
Doing so would put us in touch with the labour market of the 21st century, whose businesses succeed or fail based on their ability to attract and retain workers.
Video of this speech can be viewed here.
Delivered by ACT Leader David Seymour to New Zealand Parliament, 21/10/2014:
I rise on behalf of the ACT Party in reply to His Excellency’s speech.
“I never knew that I was smart until I came here.” For the avoidance of doubt I’m not referring to this house, Mr Speaker, but quoting from a student I met last week at the Vanguard Military School, a Partnership School, or Kura Hourua.
There could not have been a better entre to my first speech in this house than meeting that student.
Before I return to that quote, allow me to visit some of the journey to that meeting and to this house today.
I represent the communities of Epsom, Mt Eden, Parnell and Remuera.
A look at our electorate might explain why we collectively made this choice. Epsom is typecast as wealthy, and that may be true in many cases, but it is not universal.
The largest industry in our electorate is education. Our 30 schools including many of the largest in the country. We host one large tertiary campus and are adjacent to three more. Education is aspiration.
You can tell everything you need to know about a person’s politics by acquiring their sincere answer to a simple question: Is it possible for anybody to create new wealth?
Unfortunately, the sincere answer of many in this house would be no. They lay a litany of elaborate excuses and set about constructing an even more elaborate web of rules to reallocate finite wealth to the most deserving. In practice that means those whose special pleadings resonate loudest in the theatre of politics.
My answer to the question is yes. My fellow Epsom voters elected me, if not in full support of my philosophy, then certainly with knowledge of it. It’s because we are aware of the dangers that the zero-sum game brigade present.
Our communities are leafy and our schools prestigious. If people want more Epsom the answer should be to create more Epsom. More good schools, more good suburbs.
But the opposition would cram more people into smaller denser dwellings, changing the character of our communities and putting intolerable pressure on burgeoning school zones.
When it comes to wealth, for too many the answers are higher tax rates, and taxing the same dollars one more time with an envy-fuelled capital gains tax.
When many of us voluntarily invest our time and talents in helping others, those who think there’s only so much to go ‘round want to crowd out even these efforts for their tax-funded schemes.
Small wonder then, Mr Speaker, that we voted the way we did.
The people of Epsom did not vote for a mere abstraction, or even a political strategy. Not many, if any, of those who say I’m here due to the latter can say they came to this house by way of 13,000 doorsteps, 85,000 personally addressed letters, nearly 1,000 attendees of private house meetings, or 300 hours of waving signs at traffic.
Most of that was done by my extraordinary team who accompanied, delivered, hosted and waved. I acknowledge many of you who are on the floor, in the Gallery, and those who couldn’t be in Wellington today. In each and every case, thank you.
Those people supported me because their answer to the great dividing question of politics is yes.
Those of us who believe that wealth creation is a positive sum game are interested in a different question: Under what conditions can individuals best create wealth?
The answer lies in the use of knowledge in society. Since the total inventory of that knowledge is never given in its totality to a single mind or group of them, it must be grown and applied through a widespread process of conjecture and refutation.
This is the creative power of a free society. The power to try new things and find what works. This power is greatest when the role of government is not ‘whatever the government defines it to be,’ as one former Prime Minister put it, but clearly defined to maximise individual freedom.
That definition relies heavily on an understanding of the strengths and weaknesses of government as an institution.
Governments have the extraordinary power to legally coerce. In some cases this power brings great goods.
Chief among them is an environment where we can safely go about our business in our various communities. That in turn requires rule by law rather than arbitrarily rule by men.
We meet at the pinnacle of several centuries of progress towards that goal.
We have moved towards the light of liberty by removing distinctions in law that once treated people differently depending on their religious conviction, gender and race. Most recently, this house decided to remove sexuality from the Marriage laws.
Many countries have never achieved that. But it is extraordinary that, as if engaged in some form of historic shuttle run, we who were first to touch the cone are now rushing back to create new distinctions in law.
I refer to those who claim that the only way to achieve material equality between the Maori side and the British side of my family is to create more legal inequality. No doubt they have noble intentions but public policy should be measured by results.
Beyond the rule of law, there are other public goods that a good government might employ its extraordinary powers to provide.
Believe it or not, the outcome of private action is sometimes inefficient, and government regulations can improve matters. We see this in our fisheries and our atmosphere, where well-crafted regulations protect us from the ruin toward which all men would otherwise rush.
Insurance against genuine misfortune, of birth or catastrophic events is another role that a good government might cautiously assume. Funding, but not providing, education regardless of parental wealth is an example of such insurance.
When used beyond these limited roles as protector, regulator, and insurer, government’s extraordinary powers corrode the creative powers of a free society.
The problem is one of knowledge and politics. It is fatal conceit to believe that one mind or group of minds can know enough to plan the myriad activities of the very society that they themselves are a product of. There is ce qu’on voit et ce qu’on ne voit pas but politics has a tendency to narrow human endeavour into what is visible to only a few actors.
The alternative is spontaneous activity coordinated only by a few general rules.
Perhaps the most literal examples of new wealth from finite means are found in the field of engineering. I am one of two engineers in this house and I come from a family of engineers, several of whom are here today.
IWhile a generous person could barely call my own engineering achievements modest, what my profession has achieved is anything but.
Suffice it to say that when the member seated to my right gave his maiden speech, calling somebody when they were not at home must have been rarer than a bow tie.
The challenge is to create the conditions wherein this kind of wealth creation is most likely to flourish.
Thankfully, nearly 200 nations have unwittingly carried out a vast natural experiment on this question. We now have several decades of data showing which public policies work and which don’t.
It’s an adherence to low government expenditure funded by low-rate broad-based taxes, monetary policy targeted at price stability, a liberal approach to trade and investment abroad, flexible labour markets and secure, predictable property rights.
Countries that adopt these principles don’t just achieve greater wealth. They also make for better environmental custodians, and achieve better civil liberties.
Interestingly, when countries are ranked according to these five measures, New Zealand is consistently in the top five and often in the top three amongst 200 nations.
I returned to New Zealand because it is my home. And it is easily among the most prosperous, pristine, diverse and yet harmonious societies that the world has ever seen.
The desire to go back to the mono-cultural, isolationist, intolerant and interventionist New Zealand of the 1970’s is forgivable only in those who weren’t actually there. In any case, we ain’t going back.
When confronted with an opposition promising to unpick years of consensus on monetary policy, trade, tax, electricity markets, the role of government in the housing market, the people of New Zealand said a resounding NO.
New Zealand today is a country that has adopted, since the mid 1980’s more of ACT’s market liberal policies than all but a couple of other countries in the world. To paraphrase another former member, we won, you lost, but, hey, enjoy it.
Much of the credit must go to Sir Roger Douglas, who is here on the floor today. Roger’s reforms occurred at a unique time in our demographic history. Sir Robert Muldoon’s World War II generation gave way to the much larger generation they produced in what must have been a ravenous reunification after that war.
In their entry to public life the boomers created a society in their image, and symmetry demands that their exit will be similarly disruptive.
My generation, which I share with a growing number of recent entrants to this house, also faces a number of acute challenges in the wake of our parents’ reign.
In the news this week, and for the past decade, has been housing affordability, an entirely supply side, entirely regulatory problem.
For the first time in our equalitarian society, parental assistance has become a prominent factor in home ownership, and there is a hereditary element to property. I look forward to supporting this government’s efforts to increase the supply elasticity of housing.
Fiscal sustainability should interest our generation. Treasury predicts that, on historical trends, government debt will reach double GDP by the time we might think of retiring circa 2060.
We can only lament the advanced auctions in stolen goods that pass for elections every three years and wonder how the various spending promises would add to this burden. With the demographic headwinds we face, fiscal discipline must be a mantra of our generation.
The best thing about New Zealand is our pristine natural environment. Sadly our history as environmental custodians is far from perfect, but again we must think carefully about the role of government. It’s no coincidence that the countries that have been farthest down the pathway of government intervention also produced the worst environmental catastrophes. Modern environmentalists should practice the four P’s. Pricing, Property Rights, Prosperity and Private Initiative.
We pride ourselves on being an equalitarian society. However we must be honest with ourselves about the success of the 80 year old promise to look after our most vulnerable citizens from the cradle to the grave. Welfare and education reform are essential to maintaining an equalitarian New Zealand.
I began by quoting a student I met last week at a Partnership School. “I didn’t know I was smart until I came here, she said.”
Her story matters because in a global and technologically sophisticated economy, the value of skills is ever increasing. We cannot afford to have smart people wasting their potential.
The school she now attends does things differently from the ones she previously attended. The Principal leads the school differently from the one he used to teach at. It is not a pedagogy for every student, but such universality does not exist in a country of nearly one million students. What matters is that it works for her.
The school draws together all of the strands I have spoken of today. Like all human endeavour it is imperfect, but by conjecture and refutation it grows and applies the store of knowledge about educating children. Government plays a role, but a limited one. It brings the creative powers of a free society to bear upon one of our most urgent challenges as a nation.
I am honoured to represent my fellow Epsom electors and lead the ACT Party in this house. It is my hope that I will contribute here to improving public policy for all New Zealanders so that prosperous and free individuals may flourish in this green and pleasant land.
Dr Jamie Whyte, ACT Leader
11am Sunday 14 September
Tasca Café, Newmarket, Auckland
ACT will hold the balance of power after the election on Saturday.
In every poll taken last week, ACT has gone up. Not in every poll published last week mind you but in every poll that was taken last week.
In the latest Colmar Brunton poll – the most reliable of the pollsters – ACT is on 1.2%.
Our messages are getting through. We are winning support. 1.2% (28,000 votes) means I will be elected as a list MP, giving ACT two MPs and allowing John Key to be Prime Minister again without the “help” of Winston Peters.
In a week’s time ACT will be in a position to give the country three more years of stable Centre/right government.
The MMP system and its ramifications remain unclear to many voters. It is worth going through them yet again.
To elect Party List MPs, a party must receive 5% of the Party vote or hold an electorate. 5% is a high threshold. No Conservative-type party has managed it in 18 years of MMP. The Christian Democrats were well funded and they failed. The Conservatives, with their confused and uncosted policies, will also fall short in this election.
The parties that will break the threshold are National, Labour, the Greens and, probably, New Zealand First.
The only other parties that will be in parliament are parties that can win electorates: the Maori Party, United Future’s Peter Dunne, Internet-Mana and ACT.
Of these, only two parties have enough electoral appeal to elect Party List MPs: Internet-Mana and ACT.
Hone Harawira now regrets his deal with Dotcom and is struggling to hold his seat from Labour’s Kelvin Davis. And Internet-Mana is falling in the polls. If Hone loses they will sink without trace.
It is a huge electoral advantage to hold an electorate.
The people of Epsom are doing their bit. Left wing commentators and desperate talk-back callers claiming to be Epsom voters say the electorate does not like being in a position to choose the next government.
I have been campaigning in Epsom. I am yet to meet an Epsom voter who objects to the role.
This week National released their Epsom poll. It puts ACT’s David Seymour over 50%.
ACT’s winning Epsom is important not just because it means all ACT Party votes then count but because it increases centre-right representation in parliament – a fact that even political science professors fail to recognise.
MMP stands for Mixed Member Proportional. “Mixed Member” refers to the fact that there are electorate and list MPs. “Proportional” refers to the fact that the number of MPs a party has is roughly proportional to their Party vote.
Electorate seats that a party wins are deducted from the seats it wins on the list to make the total representation in parliament proportional. So if National had won Epsom last election, the party would have lost its last list MP and the total number of centre-right MPs would have been the same.
ACT winning Epsom meant an increase of one seat for the centre-right and turned out to be the vote John Key needed to be Prime Minister.
The other effect of the electorate seats being deducted is that, at the last election, National needed 63,000 party votes per list MP. At this election, about 28,000 party votes (or 1.2%) will bring me in as a list MP and 44,000 will bring in me and Kenneth Wang – at an average of 22,000 party votes per list MP.
We are currently polling 1.2% – enough for David Seymour plus me. But I think things are actually better than that.
ACT has always been under-recorded in the polls. The famous Republican pollster, Gen Ulm, tells us that telephone polls no longer work for a party like ACT. Our supporters have smart phones and polls based on landlines are over recording parties like New Zealand First.
ACT may already be on 3 or 4 MPs.
* * * * *
ACT has never failed to elect an MP in the history of MMP.
That is because of our real electoral advantage.
Many New Zealanders want to be free to make the decisions about their lives and they are willing to accept the consequences of those decisions.
Anyone who wants lower taxes and less nanny state has only two options on election day. They can either stay at home or they can vote for ACT.
We may be a minority, but those who favour personal freedom do so passionately.
I support free market capitalism because it has produced remarkable wealth for humans. Over the last 200 years, free markets have lifted humans out of the grinding poverty that was taken for granted for all previous human history.
Despite what the parties of the left say – and especially grumpy old Winston – there has never been a better time to be a New Zealander.
But even if socialism did work, even if David Parker and Russel Norman really could run a planned economy, I would still reject it in favour of freedom of choice and taking responsibility for my choices.
I know that at least 10% of New Zealand shares my values. They and I know that ACT is the only party of freedom.
I have demonstrated in this campaign and in the debates that I am a person who genuinely believes in personal responsibility. I can be trusted to go to parliament and be true to the values of freedom and responsibility.
We have selected a new team who can also be trusted to reflect our values. David Seymour is leading in Epsom not simply because he has door knocked on thousands of doors. He is leading because when the Epsom voters met him they like what they see. Kenneth Wang came to this country with nothing and has founded and run his own successful company.
ACT’s support will continue to climb this week.
Victoria University has run an interesting study about how voters decide who to vote for and when they decide. ACT voters are late deciders. ACT people are busy. Many of our voters will make up their minds over the coming week.
And they will do that in part by visiting our website. Victoria University says potential ACT voters are the most likely to check out all the party websites.
Here is what they will find. National has the slickest site but it focuses on John Key. It is the John Key party. If you have the most popular politician, why not?
It does not take long on the Labour website to realise this is a party that has lost its way. On the Greens’ site you rapidly discover that this is a party of watermelons: green on the outside and red in the middle.
But the websites get worse after that. New Zealand First is a leadership cult. The Taxpayers' Union says New Zealand First promises are more than Labour and the Greens combined, but none of it is properly explained or costed. There are no serious policy papers on the New Zealand First site.
The Conservative website is even more superficial. It is a hodgepodge of inconsistent policies stolen from different parties. No attempt is made to cost their promises. Even their core policy of binding referendums seems to be slipping into something not quite binding.
Potential ACT voters will not bother with the other sites so neither will I.
ACT does not have the flashiest website but we do have the most substantive – fully-costed policies with carefully researched background papers that cite our sources.
The Taxpayers’ Union’s independent economist says that ACT has costed its policies and that ACT alone is not trying to bribe voters with their own money.
Spend time on the ACT website and you will find ACT is the only party with a plan that distinguished economists agree will return New Zealand to full employment.
The other parties talk about poverty. On our website, we have a practical five point plan to reduce poverty: economic growth from tax reform, reduced housing costs from regulatory reform, improved incentives to work from welfare reform, better education through Partnership schools and less addiction by supporting National’s policy of making treatment a condition for welfare.
20% of New Zealand children leave school unable to read or do arithmetic well enough to be employable. Only ACT has a plan to give our youth an education suitable for the world of robots and global competition.
Spend time on ACT’s website and you discover that ACT has practical policies to combat crime. We have credibility here because our three strikes policy has already reduced violent crime. Three strikes for burglary will reduce our appalling burglary statistics.
Getting tough on home invasion will tackle what is one of the worst crimes. And we are is going allow shop keepers to defend themselves from violent criminals.
I challenge every voter to take the tour of the websites. ACT is the party of fresh ideas and practical solutions.
* * * * *
I also ask voters to look at the leadership I offer and compare it with what is on offer.
Before entering politics I wrote two books about the shoddy arguments that politicians commonly use. So I entered with low expectations about what I would encounter.
But I am afraid my expectations have turned out to be not quite low enough.
The most astonishing thing has been the willingness of my rivals to simply make things up.
Winston Peters, for example, claims that he can come up with $7 billion in annual revenue to fund his wild promises by cracking down on tax evasion.
Some journalists have asked how he knows there is this much tax evasion and how he can possibly stop it. He simply replies that he knows what he is talking about because he was involved in exposing a famous tax evasion scam many years ago.
It’s like arguing that you can bench-press 200 kilos because you once picked up a kitten.
Even worse: if he knows of this $7 billion of tax evasion, why has he not already informed the IRD? What’s he waiting for? The baubles of office?
Colin Craig, the man who would be Winston, seems to be learning from the master.
His tax policy has become a farcical farrago of invention.
Initially, Mr Craig claimed that he would create a $20,000 tax-free threshold and impose a flat rate above $20,000. This flat rate remained a mystery both to the voters and, apparently, to Mr Craig.
Mr Craig had announced no cuts in government spending. So the tax rate imposed above $20,000 would have to suffice to maintain the current total revenue from income tax.
We calculated that this meant the rate would need to be 34%. That’s higher than the current 33% top rate but would kick in at just $20,000. Imposing a 34% marginal tax rate on people earning just $20,000 is economically crazy.
No no no, said Christine Rankin at a candidates meeting in Epsom. The rate would be between 20% and 25% with the shortfall made up by a $4 billion new excise duty on alcohol.
Excise duty on alcohol – at for example $2 a bottle of wine – now raises about $670 million. The Conservatives plan to increase this to $4 billion or, in other words, by a factor of 7. The duty on a bottle of wine would rise from $2 to $14. A bottle of wine that now costs $18 would cost $30!
We pointed this out.
Then Mr Craig announced that he would only phase in his $20,000 tax-free threshold, starting with $5,000.
Well, even this will entail a revenue loss of $1.6 billion. What spending will be cut?
Answer: he will cut some unspecified wellington bureaucrats and reduce the number of MPs.
Suppose that the total cost of an MP is $1 million annually, including office staff and all the attendant costs. If parliament were reduced from 120 MPs to 100, that would save $20 million, which is 1% of the $1.6 billion required. The remaining 99% of savings required are, of course, left unspecified.
He is just making it all up as he goes along, coming up with a new mistake as soon as the previous one is exposed.
The unabashed left, on the other hand, have succumbed to self-aggrandising fantasy.
Their every policy involves a transfer of decision-making from private citizens to politicians and bureaucrats.
How will Labour increase economic growth? By shifting responsibility for making investment decisions from private investors risking their own money to David Parker risking taxpayers’ money.
What extraordinary economic insight Mr Parker must be possessed of! With no skin in the game and only a fraction of the information available to private investors, he can make better decisions than they can.
How will Labour, the Greens and Internet-Mana increase the incomes of those on low pay?
They will simply force employers to pay their staff more. Never mind all the complexities of the labour market, the ever-shifting demand for various kinds of labour and the supply of them. Never mind the great variation in living costs around the country. Never mind the effects of high minimum wages on employers’ plans to hire new staff or on the non-monetary conditions they offer their employees.
Meteria Turei, Hone Harawira and David Parker can do a better job of setting pay than can millions of voluntary contracts between employers and employees.
What god-like insight these people must believe themselves to possess.
* * * * *
When I make such points, my rivals and some commentators dismiss me as a philosopher.
They hope to make a political virtue of their inability or refusal to reason properly.
It isn’t a virtue.
This country faces problems that call for some straight thinking.
We need some MPs in parliament who are willing and able to think.
And many voters know it.
That’s why ACT is going to do well on Saturday.
That’s why we will be holding the balance of power in the next parliament.
ACT’s Campaign Opening
Ellerslie Event Centre
11am, Sunday 7 September
It is nearly 20 years since the ACT party was born.
Many people no longer remember why it was named ACT.
They may imagine that it was on account of our determination to actually do things in parliament rather than simply occupy the seats and collect the salaries.
That’s true but it isn’t the right answer.
I don’t need to tell you here that ACT was an acronym, short for the Association of Consumers and Taxpayers.
ACT was created because its founders, Roger Douglas of the Labour Party and Derek Quigley of the National Party, objected to what their parties had in common.
In 1996, both the National and Labour parties believed in taxing people heavily to fund government services that people had no choice but to consume.
Douglas and Quigley wanted New Zealand to be a society in which taxes were light and people had a say in what they consumed – even when that consumption was funded by taxpayers.
School vouchers are the perfect example of this goal. They allow all parents, no matter what their incomes, to exercise a choice that only the wealthy now enjoy – a choice between schools competing to provide their kids with an education that suits them.
In the 18 years since its beginning, ACT has had many successes. For example, John Banks got our Partnership Schools policy passed into law, with the help of his upcoming replacement in Epsom, David Seymour.
Partnership schools are state-funded but they only get that money if they can convince parents with a choice in the matter to enroll their children.
Despite such policy successes, ACT’s original raison d’etre remains. 18 years on, New Zealanders are still over-taxed and they are still over-regulated. National and Labour are no less disappointing today than they were 20 years ago.
Anyone who really believes in personal responsibility and individual liberty, anyone who believes that the answer to every problem is not “the government should do something”, still has only one party to vote for. ACT is still the only party that wants big individuals and small government.
* * * * *
Nor has ACT’s significance changed over the short term.
Three years ago, the people in this hall and the voters of Epsom, decided who would be Prime Minister. Because the ACT candidate for Epsom won a majority of 2,300, John Key became Prime Minister. And we were spared a Labour-led government.
History is repeating itself.
National is well ahead of any other party in the polls. But the parties of the left, including New Zealand First, could still get enough votes to form a government.
A Frankenstein Labour-Green-Internet-Mana-New Zealand First government may be unthinkable, but it is not impossible.
It is over to us again.
The people of Epsom are doing their bit. David Seymour is door-knocking his way to victory.
Now we need get a number of ACT Party list MPs elected. We need just 1.3% of the party vote – 28,000 votes – for me to join David in parliament. Another 16,000 votes will add Kenneth Wang.
If ACT succeeds, New Zealand will have three more years of stable center-right government. If we fail, New Zealand faces the prospect of a chaotic left-wing Frankenstein government.
* * * * *
It’s not pretty, but we should look at that monster.
Part of the monster – the crazy tangled mess of hair stitched onto the scalp – is the Internet-Mana party.
This is a party of hard-left socialists – Hone Harawera, Laila Harre, Annette Sykes and John Minto – funded by a convicted fraudster wanted for copyright violation in America.
Their lunatic policies include shutting down all the prisons (perhaps on the suggestion of their fugitive sponsor).
In a televised debate, Hone explained that prisons are unnecessary because if boys are sent on Kapa Haka courses, they commit no crimes.
If only they had Kapa Haka in Germany, Kim Dotcom would not be a wanted man!
As I said to Hone at the time, it’s a very nice idea. But let’s not get ahead of ourselves. Why don’t you send all the boys for Haka training and then, after the crime rate falls to zero, we will close the prisons. In the meantime, let’s keep them open – just in case you are wrong about the transformative power of Kapa Haka.
* * * * *
The Greens are the monster’s face, grinning inanely below its swivel-eyes.
In the nicest possible way, they intend to force everyone to live as the Greens prefer. They will tax the things they don’t like, such dairy farming, and subsidize the things they do like, such as solar panel manufacturers.
The Greens are not so much a political party as a religious movement, worshipping snails and ferns and all that makes up Gaia, except us humans of course.
For the Greens, humans fall into two categories: the helpless, who smart green politicians must save, and the wicked, who smart green politicians must stop.
In virtue, and intellect, Russel Norman and Meteria Turei are so vastly superior to everyone else that it is their moral duty to subjugate us.
* * * * *
The big flabby torso of the monster is the Labour Party.
It was briefly a thing of beauty and strength. We have the Labour government of Roger Douglas and Richard Prebble to thank for the fact that New Zealand is not now a basket-case like Argentina.
But the Labour Party has gone horribly to seed.
Nothing reveals this more clearly than its finance spokesman, David Parker – the man who now occupies the position once held by the great Roger Douglas.
Mr Parker fancies himself the smartest boy in the fourth-form. But he has not even the weakest grip on basic economics.
At the recent Queenstown Chamber of Commerce political debate Mr Parker explained his party’s desire to reduce immigration to New Zealand. He claimed that economic output requires increasingly little labour to produce. So immigrants cause unemployment.
This nonsense has been peddled by economic fools since the invention of the weaving loom. In fact, I imagine it got started when someone first thought of killing animals with a sharp stick instead of bare hands.
For the sake of Mr Parker’s education, here is what really happens when workers become more productive. People produce and consume more.
And not just more of the same, but entirely new things. Even Mr Parker has surely noticed that, over the past 30 years, as worker productivity and the population have both risen, unemployment has not increased.
Instead, we are consuming more than we ever have. And we are consuming better goods and services than ever before.
Everyone, please, get your cell phones out and wave them in the air so that Mr Parker might understand.
* * * * *
Finally, we come to Winton Peters and his New Zealand First, the stumpy little legs of the monster. Little legs that remain idle for 2 years and 10 months out of every three years and then spend two months running around furiously kicking everyone in sight – foreigners, journalists, bankers, you name it: everyone except pensioners.
After all, it’s common sense.
That’s Winston’s slogan: it’s common sense.
I am not sure what “it” refers to but that doesn’t really matter. Because, as my old PhD supervisor used to say, “sense isn’t common”.
And there is no better example of this fact than Winston himself.
Winston’s big economic policy for this election is removing GST from food. That would reduce government revenue by 3 billion dollars.
But Winston has no plan to cut government spending by 3 billion dollars. On the contrary, he plans to increase government spending massively.
Where will he get all the money?
Winston’s answer: by cracking down on tax evasion.
Honestly. He claims that he can raise 7 billion by cracking down on tax evasion.
That’s not sense, common or otherwise. That’s bollocks.
When a politician tells you that he is going to fund his spending promises by cracking down on tax evasion, you know he is either a fool or a charlatan. And Winston ain’t no fool.
* * * * *
I am not so sure about Winston’s main rival, however.
Colin Craig has a tax policy that no self-respecting charlatan could propose.
He says that the first $20,000 of income will be tax free. Above that, he will apply some unspecified flat rate.
Imagine you wanted a $500,000 mortgage and you went to your bank. The lending officer says: “you’re in luck, we have a special deal on mortgages this week. You can get the first $250,000 at a zero rate of interest. On the second $250,000, we will charge you some other rate of interest.”
“What rate is that?” you ask.
“Oh never mind that, for now”, the lending officer replies. “Just sign the contract and you will find out when the first payment comes due”.
Only a complete idiot would sign the contract. And even the greedy and devious bankers of Winston Peters’ fevered imagination would not dream of making such an offer.
Yet this is the tax policy that Colin Craig is offering the people of New Zealand.
It is all too easy to think that other people are just like you. I fear Colin Craig is putting too much faith in the gullibility of voters.
* * * * *
So much for the monstrous alternative to a National-ACT, centre-right government. I don’t want to spoil your lunch.
What about our friend the National Party?
Without doubt, they are far better than the alternative. John Key beats David Cunliffe, hands down.
And yet … and yet, National disappoints.
When in opposition to Helen Clark’s government, National said Working for Families was a terrible policy that made ordinary middle-income kiwis welfare beneficiaries.
They said interest free student loans were a crass election bribe. They lamented the massive expansion of the Wellington bureaucracy.
ACT cheered them on.
Now, after 6 years of a National government, we still have Working for Families. We still have interest free student loans. The number of bureaucrats is unchanged.
National is a party of competent managers. They don’t make a terrible mess of things – except for Muldoon.
But they show too little commitment to the principles they espouse. They show too little commitment to what has made New Zealand the great country it is.
Like all successful countries, New Zealand was built on the rule of law, private property rights and trade. And our continued success also depends on them.
Chip away at these institutions and we will lose the prosperity and freedom that we now enjoy.
Labour, New Zealand First, the Greens, Mana-Internet and the Conservatives are all openly hostile to the institution of private property.
All want to ban the sale of land to foreigners. I have heard the leaders of all these parties justify this policy by claiming that “we should not be selling our land to foreigners”.
When Lochinvar station was sold to Chinese buyers, we were not selling our land. The Stevenson family was selling their land.
Land in New Zealand is not collectively owned; it is privately owned. New Zealand is not yet a communist country.
Winston Peters lives in a street near mine. He cannot come knocking at my door demanding entry to “our house”. Nor should he presume to tell me who I can sell my house to. I own my house and Winston owns his.
That’s what John Key should have told David Cunliffe when the topic came up during their televised debate. Instead, Key quibbled that the National government already applies Labour’s proposed test for an acceptable land sale.
In other words, Key accepted Cunliffe’s assumption that the government should decide who a private property owner may sell to.
There is no virtue in meeting your opponents halfway when they have strayed miles off course.
The Overseas Investment Office should be abolished. It has no proper job to do. When foreigners invest in New Zealand, we benefit. There is no injury for the OIO to protect us from.
ACT would also abolish the Resource Management Act rather than streamlining its consenting processes, as National plans to do.
The problem is not with the administration of the RMA. The problem is with the very conception of it. The RMA is an assault on property rights that stifles investment and economic growth. The restrictions it puts on using land for residential development are the reason housing is so expensive.
We did not have an environmental crisis in 1990 when the RMA was made law. But we did have affordable housing. ACT would return to sensible planning laws based on private property rights.
* * * * *
Nor is National fighting hard enough to defend the rule of law. It is a fundamental democratic principle that everyone should be equal before the law.
To know someone’s legal rights, you should not need to know their race.
Under National’s watch, this principle is systematically violated in New Zealand.
We have race-based electorates. Race-based representation on city councils. Race-based rights to influence resource-consent decisions. And race-based admissions to university courses.
A student from a South Auckland state school can fail to get into law school or medical school because her place has been taken by a private school student with lower grades – simply because she is the wrong race.
How can anyone think that’s fair?
National is apparently unconcerned by such injustices.
ACT is not. We will work to eliminate all race-based law from New Zealand.
* * * * *
Nor has National faced up to the cost of providing state superannuation for everyone over 65. As the portion of the population over 65 continues to grow, this will place an unsustainable tax burden on those of working age.
Other countries are facing up to the challenge. Australia is lifting the age of entitlement to 70. New Zealand should face up to it too. ACT would push a National-led government to lift the age of eligibility to 67.
Sometimes it is better to admit you were wrong and break a silly promise.
* * * * *
H. L. Mencken, the mid-20th century American journalist, said that all elections soon become an “advance auction sale of stolen goods”.
This election is a shining confirmation of Mencken’s assessment.
The Taxpayers’ Union has employed a reputable economist to calculate the spending promises of each party. Their “bribe-o-meter” shows that every party but one will increase tax-funded spending massively over the next 3 years.
Winston’s promises are so wild that they are beyond the economist’s ability to calculate them.
Next are the Greens, with a promise to increase spending – and therefore taxes – by $5 billion.
Then Labour at $4.7 billion.
Then the National Party, with $600 million of extra promises spending and taxes.
Even Colin Craig, who claims to favour smaller government, plans to increase government spending $400 million, on top of confiscating privately owned land and preventing you from selling to the highest bidder if they are foreign.
* * * * *
Only ACT resists the temptation to buy votes with taxpayers’ money.
In our Alternative Budget, published in May, we announced a plan to reduce “middle-class welfare” – tax-funded goodies for people who are not hard up. Things like Working for Families payments to people on middle incomes and interest free student loans.
The people who receive these benefits are the very people who pay for them. By cutting middle-class welfare we can reduce the personal taxes paid by the middle class from 33% and 30% to 24%.
We can eliminate an absurd “money-go-round” that creates perverse incentives and slows economic growth.
By contrast, the other parties want to tax the middle-class harder. The Greens and Labour state this clearly. But the Conservatives would also whack the middle class.
Colin Craig plans to apply no tax to the first $20,000 of income while slightly increasing government spending. That will require his unannounced flat rate of tax to be 34% -- slightly higher than the current top rate of tax. Someone earning $40,000 now faces a marginal tax rate of 17.5%. Colin Craig plans to double it.
Under Colin Craig’s tax plan everyone earning over $36,000 would be worse off and households earning between $50,000 and $80,000 would be especially hard hit.
* * * * *
ACT is also the only party promising to eliminate corporate welfare, the corrupt practice of handing over taxpayers’ money to firms who can make friends with politicians and bureaucrats.
By eliminating this crony-capitalism, we could use the $1.4 billion saved to reduce the company tax rate from 28% to 20% next year.
And by rejecting National’s proposed $1.5 billion of election bribes announced in the last budget, we could reduce the company tax rate to 12.5% by 2020.
No other policy being proposed by any party in this election would do more to increase economic growth. Significantly cutting the company tax rate will increase investment and lift wages. Economists estimate that a company tax reduction of this size would increase our long-run economic growth by at least 1 percentage point: that is, by a third.
* * * * *
The parties of the left claim to seek an end to poverty.
But the only way out of poverty is gainful employment. To get the unemployed into work we need a vibrant economy: one that is growing fast and creating jobs.
ACT’s policies of low taxes and light regulation will create such an economy.
The Left’s policies of high taxes, crony capitalism and ever-expanding welfare are economically stultifying. They will only expand the number of people with no serious prospect of getting ahead.
They will only increase the number of children living on welfare.
* * * * *
People also need skills to take advantage of job opportunities.
Our schooling system serves most children well. But it is failing around 20 percent of our children.
Only ACT has an answer.
Thanks to ACT, New Zealand now has five charter – or Partnership – schools. The pupils at these charter schools, who were failing at state schools, are now excelling. The improvement in grades is astonishing. Our charter schools are doing even better than ACT had hoped.
We want many more charter schools in New Zealand. On our education policy for this election, the board of any state school could choose to opt out of Ministry of Education control and become a charter school.
When you vote ACT on 20 September you will be voting to extend charter schools to every community. You will be voting for the only practical, positive solution to poverty: education.
Labour and the Greens plan to close our charter schools and condemn pupils to failure. Those children are relying on you.
* * * * *
So there it is – ACT’s case for your vote.
ACT is the only party that does not buy votes with money taxed from the middle class.
We are the only party truly committed to what made New Zealand the great country it is – to the rule of law, property rights, trade and personal responsibility.
Only ACT MPs will push National to stick to these principles, to live up to these values.
If these are your principles, your values, you have no one else to vote for.
Vote your values.
Party vote ACT.
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.
* * * * *
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.
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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.
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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.