Who Will Bail Out The Government?

Hon Sir Roger Douglas Speech to Ministerial Statement on AMI support package; Parliament; Thursday, April 7 2011

Over the past 15 years successive Labour and National Governments have played a game of brinkmanship with the New Zealand economy.  They both have drastically increased spending and recklessly borrowed billions of dollars to fund their vote buying schemes.  The impending bailout of AMI has led us right to the precipice of economic collapse.  We now have a decision to make, we can either go over the cliff, or step back from the edge, there is no other choice.

In normal circumstances, the Government should not step in and bail AMI out.  Certainty is essential to the operation of the market, bailouts undermine this certainty by suggesting to businesses that the Government will start actively picking winners and losers.

In the case of insurance companies, there should be very little problem.  It is not difficult to sell insurance, collect premiums, hedge your risk elsewhere with reinsurers and then conservatively invest the remaining premiums.

However, in AMI’s case this was a company that gained a large market share through low premiums and a policy of limiting expenditure by having too little reinsurance.  They took a risk and those who took out insurance with them benefited from the risk for a while, it was a risk that did not work.

If the Government is going to step in here, what about those people in Canterbury who ran a similar risk by getting no insurance at all?  What is the Government going to do with them? In principle, it has no option but to bail them out also.

What do we do from here?  We, as New Zealand citizens, might just be able to go along with the Government decision to bail AMI out but only under certain conditions.  If these conditions are not met, then any bailout should not proceed.  These conditions would require the Government to urgently act to pull us back from the brink.

There need to be two non-negotiable conditions set on this bailout.  First, the Government must send an unequivocal warning to all New Zealanders that the Government cannot afford, nor will it entertain, any future bailouts.  This is it.  If you want to try and benefit from running a risk, you must be prepared to live with the consequences.  The Government can no longer afford to pick up the tab.

Second, the Government gets its books in order.  We may have been able to absorb various shocks to the economy if Government was not already standing on the economic brink.  We need to get Government spending under control immediately; going slow is no longer possible. 

Once again with the AMI bailout, we are doing what we have done before – looking for a quick way out instead of fixing the problems at their root.  This approach will have consequences that hardly bear thinking about, maybe not this time, but in the end it will push us up to and over the economic brink.

I have been warning the Government of this moment for the last two years.  Here is what I said in March 2009:

“All this talk of bailouts and the like undermine certainty.  It suggests to business that the Government may begin to actively pick winners and losers. But such an approach is a recipe for disaster.”

The fact is that at this time the country cannot afford an irresolute Government like the one we have now, or a Labour Government that wants to go back to the policies it pursued in the last decade.  New Zealanders need to separate the rhetoric from the reality.  We simply cannot go on borrowing $300 million a week - piling up debt onto our grandchildren.

It is time the Government started to act in the interests of the nation as a whole.  The Government’s refusal to get public spending under control has been economically disastrous given the risks we face at home fiscally.  What principles should Government follow to get us out of the mess we find ourselves in?

Government needs to focus more on creating an environment where there is choice, competition and diversity.  Government does not itself need to be provider of services.  Competition within and between the private and public sectors is vital.  Ownership often distracts from what is important.  There should be no rule or special assistance that favours one sector over another, the consumer should be sovereign.

The 10 lessons from my speech in 10 March 2009 are equally relevant.

When you boil it down, the way Bill English has run the economy is no different to the way AMI has run their business.  They have both lived on the edge of financial ruin where one more unforeseen catastrophic event will push them over the edge.  My question is this: who is going to bail out Bill English when the New Zealand Government can no longer play this game?


Hon Judith Collins Address to 2011 ACT Conference

Hon Judith Collins Address to 2011 ACT Conference; Barrycourt Accommodation and Event Centre, Parnell, Auckland; Saturday, March 12 2011.

ACT Leader Hon Rodney Hide, ACT Parliamentary team, ladies and gentlemen.

Thank you for that warm welcome. It is a pleasure to be with you here today.

All our thoughts are with the people of Japan this afternoon as they confront an unimaginable crisis.

As a nation that is, itself, coming to terms with a major catastrophe, we share their grief and their sorrow at this time of great loss and uncertainty.

When the earthquake struck Christchurch on 22 February, Japan was quick to offer help.

Their people were on the ground just days after the quake struck.

I'm sure that we will be there for them, in whatever capacity we can, in the difficult weeks and months ahead.

I would like to take a moment to pay tribute to the heroic men and women who have been working so incredibly hard in the aftermath of the Christchurch earthquake.

Over the past three weeks we have been in awe of the courage of our emergency services.

Time, and time again, they have put their own safety on the line to rescue others.

Many of the Police and emergency teams are, themselves, from Christchurch. Their homes have been damaged and their lives uprooted.

Yet every day they show up to work, to help others in need.

I think this speaks volumes about the sort of people who serve in our Police, Fire Service and Search and Rescue.

I met one firefighter who crawled into the Pyne Gould building in the hours after the quake to search for survivors.

He told me of crawling through tiny spaces with tonnes of unstable concrete balanced above him.

All around him the building was shifting, the floor sinking as the aftershocks hit.

He told me that he prepared himself for death with each jolt.

Several people in that building owe their lives to him and his colleagues.

What incredible courage.

I’m sure you will join me in acknowledging their feats in the rubble of Christchurch.

Without them this terrible disaster could have been so much worse.

I would also like to pay tribute to another group of people whose efforts following the quake have been an inspiration to us all.

I’m talking about the vast numbers of people, from all walks of life, from every town and city in the country, whose immediate response to the disaster was to help others.

Thousands pitched in with whatever they had – shovels, food, equipment or just their bare hands.

Thousands turned to their neighbours in need and offered food, support and comfort.

Thousands more organised car washes, cake stalls, raffles and collections to help the victims through this extremely difficult time.

Normally we don’t read about these people in the papers because they’re not the types who seek publicity.

And when they give so generously, they don’t seek thanks.

They do it because they care so deeply about their communities.

They care about the people that live over the fence, that live on their streets, who their kids visit after school, who coach sports on Saturdays.

This is why communities such as Christchurch are so strong and resilient in the face of incredible adversity.

These people are the heart of this country.

And, you know, when we hear so much about what is wrong, and the dark side of human nature in the news every day, it is wonderful to hear about what is good and decent.

Today, I would like to talk to you about the huge amount of work that this Government has done in the area of law and order.

In recent years many New Zealanders would have looked on in dismay as some of the values that underpin our good and decent society have been eroded.

This has certainly been the case with our criminal justice system.

When this Government came to office, there was a strong feeling in the community that the scales of justice were tilted too far in favour of the criminals, rather than their victims.

Victims felt that the cards were stacked in favour of the offender and that they were being revictimised by the system.

There was a strong feeling that dangerous criminals were being given a slap on the wrist and released into the community when it was known there is a high likelihood they would reoffend.

I believe one of the big changes that led to this situation has been a decline in individual responsibility.

Too many people believe that they are not responsible for their actions.

They believe that their actions are always somebody else’s fault – usually the government, Police or society in general.

Fleeing drivers is a good example.

Until recently, it was common to blame Police when a fleeing driver killed themselves or someone else.

The excuse was that if the Police hadn’t been chasing them, they wouldn’t have been forced to drive dangerous speeds.

But the Police are not to blame.

The driver who runs from Police is to blame.

They choose to run from Police.

To suggest otherwise is to say they are not responsible for their actions. They can choose to stop at any time.

If they had chosen to stop, many innocent people would be alive today.

Just as there has been a growing belief that criminals are not responsible for their actions, there has been a growing belief that criminals have certain rights.

These rights proliferated to the point where the lines became blurred between right and wrong, victimiser and victim, law breaker and law enforcer.

Criminals are quick to exploit their rights, which make their victims feel more powerless.

Criminals shouldn’t be able to play the system by electing jury trials for relatively minor crimes.

Criminals shouldn’t be able to hide behind legislation over submitting DNA samples that can help quickly resolve crimes and give victims closure.

Criminals, whose offending has taken away the rights of innocent people, shouldn’t have the right to vote while serving their sentence.

Criminals don’t have a right to smoke in prison, and possess lighters and matches that they can use to endanger Corrections staff.

I’m very pleased that steps have been taken, or are being taken, that go some way to addressing this imbalance.

We are fortunate the vast majority New Zealanders have not lost sight of the clear values on which our justice system should be based.

They have given us – both National and ACT - the responsibility of restoring those values, reducing crime, and sending a very strong signal that criminal offending won’t be tolerated.

During the past two years we have all taken that responsibility very seriously.

Law and order is one of the Government’s biggest priorities.

National has worked very closely with ACT on a range of new laws aimed at rebalancing the justice system and making our communities safer.

I would like to thank ACT, and in particular the Hon Rodney Hide, for its support, and acknowledge those who worked behind these scenes to make these initiatives possible.

Some policies have required our caucus to make compromises.

I know the same has been true of the ACT caucus.

But this is what coalition politics is all about.

That we are willing to engage, debate and find common ground in the pursuit of common goals, shows the strength of the relationship between our parties.

One of the best examples of what this partnership has achieved was the Sentencing and Parole Reform Bill.

The legislation upheld the Government’s election promise to remove eligibility for parole for the worst repeat violent offenders, and incorporated significant aspects of ACT’s three strikes policy.

As at 28 February there were 229 offenders convicted and issued with their first strike.

They were for a range of serious offences.

  • 31 were for indecent assault on a woman over 16.
  • 23 were for aggravated robbery with a firearm.
  • 9 were for indecent assault on a female under 12 year old.
  • 20 were for indecent assault on a female aged 12 – 16.
  • and 14 were for committing burglary with a weapon.

The first second strike warning was handed down just a few weeks ago for a 20-year-old man who admitted aggravated burglary.

The legislation has had its critics who argued that it breached the rights of offenders.

Well, I’m happy for victims to take precedence.

I understand that when repeat, violent offenders stay in jail it reduces their opportunity to reoffend and create more victims.

Some critics said Three Strikes was not fair on Maori because Maori would be disproportionately represented among those who receive longer sentences.

This argument is insulting to Maori.

This law is about criminality, not race.

One more thing we should remember:

A disproportionate number of victims of repeat, violent offending – particularly domestic violence - are Maori.

This law is about protecting them, and all victims of violent crime.

One of the biggest law and order issues facing this country is the spread of organised crime.

I’m sure you’ll be aware that in recent months one of Australia’s largest and most troublesome outlaw motorcycle gangs has been attempting to set up a franchise here in New Zealand.

Yesterday, Police and other agencies raided a gang in Nelson that was linked to the Hell's Angels.

Among the items seized was bomb making equipment.

It’s evidence that gangs are no longer groups of small-time thugs, but large criminal businesses with global connections and a willingness to use violence.

The game-changer has been methamphetamine.

The vast amounts of money to be made from the sale of this evil drug have bought gangs previously unheard-of wealth and influence.

The Police estimate that the combined profit from methamphetamine and cannabis sales alone is between $1.4 billion and $2.2 billion per year in New Zealand.

One of the biggest concerns is that when criminals gain access to large amounts of money it increases the possibility of corruption taking root.

Corruption undermines the rule of law, erodes the effectiveness of government regulations, strangles government revenues and contributes to a slowing of economic growth.

Left unchecked, criminal gangs would begin to exert significant influence over our institutions and way of life.

This simply can’t be allowed to happen.

This Government has made sure our law enforcement agencies are well equipped to deal with this threat.

ACT has been right on side, supporting changes have given Police new powers to intercept gang communications, take down gang fortresses and seize gang assets.

These changes are already starting to bite.

Last year a record 30.4kg of methamphetamine was seized by Police and Customs, up from 20.8kg in 2009.

That’s around $30 million that won’t find its way into the shadow economy run by organised crime.

As I mentioned earlier, gangs are now multi-national businesses.

They exist for the profits that can be made.

We are going after those profits.

Police have used their new powers to seize $37 million worth of assets from criminals – around $22 million of which was from people with known links to organised criminal groups.

The assets seized include cars, boats, heavy machinery, jewellery and property.

The strong message we are sending is that crime shouldn’t pay.

Another area where the Government has much in common with ACT is ensuring offenders do the time for their crime.

When I took over as minister of Corrections it quickly became apparent that the previous government had not invested enough in prison capacity.

We faced the prospect of a serious capacity crisis.

It was unacceptable to us that prisoners be released back into the community without serving the appropriate sentence.

We didn’t want prisoners being driven around in vans until beds became available – as happened under the last government.

And we didn’t want judges to feel constrained in their ability to sentence lawbreakers to custodial terms.

To address the short-term shortage, we have double bunked almost 900 additional prison cells across our four newest prisons.

Increased use of double bunking has given us the capacity to make extra prison beds available in emergency situations, such as the recent Christchurch earthquake.

Of course, there were plenty of people who felt prisoners shouldn’t be inconvenienced by having to share a cell.

They said it breached their rights.

We disagreed.

Offenders must take responsibility for their actions.

When they commit a crime, they forego some of their rights.

We will also be banning smoking in our prisons from July 1, which will make our prisons healthier and safer.

People said this breached prisoners’ rights too.

I don’t see why our Corrections Officers should be the only New Zealanders required to work in a smoke-filled environment.

If people want to smoke, they shouldn’t commit crime.

To cope with forecast prisoner numbers we also introduced shipping container cells at Rimutaka which were built in half the time and at roughly a third the cost of traditional cell construction.

The usual apologists for criminals said that this was inhumane and talked of container cell slums.

The container cell block has turned out to be some of the best accommodation we have and is proving to be very popular with prisoners.

We are also planning a new men’s prison at Wiri in South Auckland.

That prison will be the first in New Zealand to be financed, designed and built under a public-private partnership arrangement.

The last Labour Government changed the Corrections Act to prohibit private management of our prisons on purely ideological grounds.

They overlooked the fact that when ACRP was under private management in the early 2000s, it was a resounding success.

Currently, it costs around $91,000 to keep a prisoner behind bars for a year.

We believe we owe it to taxpayers to find ways to lower this cost.

Greater involvement of the private sector not only has the potential to deliver more efficient prisons, but also prisons that are safer and have new, innovative approaches to the rehabilitation of prisoners.

ACT was fully supportive as we changed the law to allow greater private sector involvement.

Already a contract to return Mt Eden-ACRP to private management has been awarded to Serco, a company with a strong track record of managing custodial facilities overseas.

This new facility opens at the end of the month and will be fully under private management by the end of August.

A tender process to select a consortium of overseas and local companies to build and manage the new prison at Wiri is also under way and progressing well.

Both National and ACT have faced a lot of criticism for their tough on crime approach.

This is what happens when you try to put the responsibility for crime back where it belongs – on the criminals.

Not the Government.

Not the Police.

Not the moon or the sun.

We are tough on crime, and we are unapologetic.

We are unapologetic because we know that setting clear boundaries and having clear consequences for criminal offending is effective.

Making excuses for offending only encourages more offending and creates more victims.

People who are committed to a good, decent society understand this.

Thank you again for inviting me to join you today.

And thank you for standing with us as we work to make New Zealand a better, safer place.

Enjoy the rest of your conference.


Dr Don Brash Address To ACT Conference 2011

Chairman of the 2025 Taskforce Dr Don Brash address to the ACT Annual Conference; Barrycourt Accommodation & Conference Centre, Gladstone Rd, Parnell, Auckland; Saturday, March 12 2011.

Rodney Hide, Ladies and Gentlemen,

Thanks very much for inviting me to speak to you today.

As you know, I’m not a member of the ACT Party, but this is the fourth time I’ve spoken to an ACT meeting since I left Parliament – four times the number of times I’ve spoken to the National Party over that period! ACT seems to make a habit of inviting speakers from other political parties to address them, and I compliment you on that.

May I also compliment you on the role ACT played in setting up the 2025 Taskforce.

Just before the 2008 election, John Key gave an excellent speech.

In it, he talked about how committed he was to catching up with Australia.

He sounded really concerned about the fact that, year after year, we were losing our children and grandchildren across the Ditch for a better life in Australia.

Straight after the 2008 election, the National Party reached a Confidence and Supply agreement with the ACT Party.

And as you know, one of the key parts of that deal was that the Government would aim to lift New Zealand’s living standards to the Australian level by 2025.

Well, promises are easy.

Helen Clark promised to lift New Zealand back into the top half of the OECD within 10 years.

But did her actions match her words? Did she manage to take us even part way up the ladder?


In nine years, she didn’t manage to lift New Zealand by a single rung.

She was careful to avoid being held to account for her broken promise. As time went by and our economy went nowhere, she even tried to pretend she’d never made the promise.

So after the 2008 election, ACT reminded National that it had been banging on about catching Australia for years – Don Brash did it, John Key did it. So ACT said “Put a date on it”!

To John Key’s credit, he did – 2025.

Not only that: he agreed to set up an advisory group to suggest the best ways to achieve that goal.

Even more amazing, he did something which most politicians don’t like doing: he agreed to be held to account, by accepting that the advisory group should report on progress towards the goal every year.

I was not part of the post-election negotiations of course, but I suspect that the ACT Party played a big part in getting the Government to put a date on the goal to catch Australia, and to agree to be held to account on progress.

Why is that such a big deal? Why bother catching Australia? Don’t we have a perfectly good country now?

Well, we do have a good country now. Actually, we have a great country now. Let’s celebrate that.

It’s a country of wide open spaces, of soaring mountains, of giant kauri forests, of magnificent fiords, with a great climate.

A country rich in resources – fast-growing forests, rich dairy land, a vast fishery, large deposits of coal and iron sands, and a plentiful supply of water – in fact, more water per capita than almost any other country on Earth.

A country which gave the world Ed Hillary, Peter Blake, Katherine Mansfield, Ernest Rutherford, Kiri Te Kanawa, Susan Devoy, Peter Snell, Archibald MacIndoe, Peter Jackson, Jane Campion, Roger Douglas, Roger Donaldson, Richard Hadlee, Dan Carter and William Pickering.

A country which was the first in the world to grant women the vote, and one of the first to grant all men the vote.

A country where we take it for granted that an election will be held at least every three years, and that a government will be elected without bloodshed, with the army safely in its barracks.

But, my friends, this great country is today at risk as never before.

Part of the danger lies in the gradual decline in our living standards as compared with living standards in other developed countries. A century ago, we were one of the three or four richest countries in the world. Even 50 years ago, we were in the top 10. Now we’d be lucky to make the top 30. Our relative decline is one of the steepest on record anywhere in the world.

The gap between us and Australia shows what’s happened. For most of our history, living standards here were pretty much on a par with those in Australia – sometimes we were a bit better off, sometimes not quite as well off, but broadly pretty much on a par.

That began to change about 40 years ago – not, please note, as a result of the big boom in Australia’s exports to China over the last five or six years, but about 40 years ago.

In one sense, it isn’t the gap between us and Australia which finally matters. That’s simply a symptom of our more general failure to keep up with other rich economies.

But the gap with Australia does matter more than where we are on some OECD ladder. (Let’s face it: most Kiwis don’t know what the OECD ladder is.)

Australia is only three hours away. No visa needed. They speak the same language (more or less). They play the same sports.

In the last 10 years, 280,000 Kiwis have gone to Australia – the equivalent of all the people in Whangarei, Gisborne, Masterton, Nelson, Timaru and Invercargill. We all know friends or family who have gone.

Why have they gone? Well, there were no doubt several reasons, but overwhelmingly the main reason was the fact that wages are much higher in Australia than here, especially for those with the skills we desperately need to retain.

The first report of the 2025 Taskforce looked at a whole bunch of statistics and, taking into account differences in the cost of living, we concluded that in 2008 Australians were on average about 35%, more than a third, richer than we are.

Of course, what do you expect! Aussies have all those minerals, so of course they’re richer than we are!

That’s the typical excuse used by politicians of every stripe (not by ACT politicians to be fair!), but it’s a lie.

Yes, Australia has a huge wealth of minerals, and that’s undoubtedly helped them enormously in the last few years. But as I’ve already noted, the huge boom in mineral exports from Australia is quite a recent development.

What’s more, we too have an enormous wealth of resources – including many minerals, even if we make a virtue of not using them.

A United Nations survey done in the ‘nineties looked at natural resources in about 100 countries. What the survey found was that New Zealand was the second richest country in the world in terms of natural resources per head, beaten only by Saudi Arabia.

What’s more, natural resources are neither a guarantee of wealth – think the Congo – nor needed for wealth. Think of some of the rich countries which have virtually no natural resources – Japan, Singapore, Denmark.

It’s simply cop-out defeatist nonsense to claim that we can’t match Australian incomes because of their mineral wealth.

Well, if the gap was 35% in 2008, what’s happened in the last three years? Has the gap got wider, stayed the same, or got narrower?

The 2025 Taskforce hasn’t yet looked at the numbers for this year, and in fact we didn’t even try to make a new estimate in our second report last year. Year to year changes in the gap don’t mean very much.

But nobody I’ve spoken to claims that the gap has got narrower over the last three years, and most people think it has got wider – with continuing weak economic growth here and strong economic growth in Australia over that period. Certainly, the high level of migration to Australia continues unabated, as we were reminded just a few days ago, and that tells you something.

More serious is the fact that no informed commentator thinks the Government has yet put policies in place to give us even a remote chance of catching Australia by 2025.

Make no mistake: catching Australia by 2025 is a huge challenge. Closing a 35% gap over the 17 years from 2009 to 2025 would have needed New Zealand incomes to grow by nearly 2% faster than those in Australia every year for that whole period.

Even assuming that the gap is no bigger now – and it almost certainly is a bit bigger – the shorter time between now and 2025 means that New Zealand incomes now need to grow by more than 2% faster than those in Australia every year for that whole period.

Last year, the Governor of the Reserve Bank, Alan Bollard, was asked on a TVNZ programme whether we could catch Australia. Paraphrasing slightly, he said we didn’t have a dog’s chance – that we’d have to be content with the crumbs from Australia’s table.

I don’t know whether he meant that we literally couldn’t catch Australia, or just that we certainly won’t on our current track.

Either way, I’m glad he made the comment, because it prompted the Prime Minister to say that we would not be content with the crumbs from Australia’s table – “we want the entrée, the main course, and the dessert”.

I absolutely agree with him.

But tragically, progress towards that goal has been extremely slow.

True, we’ve seen a few steps forward. All employers have been allowed to hire staff with a 90 day probationary period (another thing which the ACT Party clearly can claim considerable credit for). That has given some people their first step into a lifetime of productive employment.

Personal income taxes have been reduced, in exchange for increased tax on spending.

A modest start has been made on reforming the RMA.

The moratorium on new aquaculture projects has been lifted.

Progress has been made on improving the road network.

But relative to the size of the challenge, progress has been glacial.

Take investment. If we’re going to lift incomes for all New Zealanders, we need to increase productivity, or production per worker. That doesn’t mean working people harder or longer. It means giving them more tools to work with.

And how do we do that? We need to remove the obstacles to investment and increase the incentives for investment.

In other words, we need to streamline approval processes, not have them drag on for months and years, as is far too often the case now.

And we need to reduce the tax on the profits which businesses can make on investment.

Didn’t the Government do that in the last Budget? Yes and no. Certainly, the “headline” company tax rate was reduced from 30% to 28%, and that was a step in the right direction. But other changes, including those to the depreciation on buildings, mean that, taking all the changes into account, the effective company tax rate went up on average by about 1%, not down.

It is now widely accepted in the economics literature that investment is very sensitive to tax rates, and that if we want to stimulate a radically higher level of investment the tax on profits needs to be radically reduced – to the ultimate benefit of all New Zealanders. Increasing the tax on company profits seems entirely unhelpful.

And in lots of other ways, some big and some small, the Government seems to be moving in the wrong direction.

Take the ETS for example. Before the election John Key said we should be fast followers and not leaders in the race to reduce carbon emissions.

Yet after the election his Government introduced an all-sectors Emissions Trading Scheme.

We weren’t being fast followers, or even slow followers, because at this point none of our three largest trading partners – Australia, China, and the United States – has done anything similar, though to be fair Australia is now talking about doing something.

Or take the youth minimum wage, which the last Labour Government abolished in 2008, requiring employers to hire teenagers on the same wage that they’d pay a fully qualified adult.

Not only has the National Government made no move to reintroduce a youth minimum wage, the National Party actually voted against the Member’s Bill in Roger Douglas’s name which would have achieved that objective.

This despite National knowing that after Labour abolished youth rates, youth unemployment shot up by 12,000.  That’s 12,000 young people who now don’t have jobs.

Thanks to Labour’s action and National’s failure to reverse it, thousands and thousands of young people now leave school or training and go straight onto the scrap-heap.
These young people don’t have the skills to earn the minimum adult wage – but they’d be quite happy to take a job for a couple of dollars an hour less.

But the Government says these teenagers have to find a boss who’s prepared to pay them an adult wage for no relevant experience and few skills.

Otherwise they have to go on the dole.

If they can’t get a job for $13 an hour, they’re not allowed to accept one for, say, $10. They have to go home and lie on the couch receiving a benefit for $5! That has to be inexcusably daft!

In doing this, the Government has denied them the chance to support themselves. In effect, it’s said to them, “If the dole isn’t enough, maybe you should do some burglaries, deal in drugs, or get pregnant and live on the DPB.”

The Government has comprehensively ignored the recommendations in both the first and second reports of the 2025 Taskforce, while insisting that it’s still taking the goal of catching Australia seriously.

There’s been a tendency for some in the media to dismiss the views of the 2025 Taskforce as “just Don Brash’s views”, forgetting that the Taskforce actually has four members.2 The others all have strong views of their own – Judith Sloan, formerly a member of the Australian Productivity Commission and now a professor of economics at Melbourne University; Bryce Wilkinson, a prominent Wellington economist; and David Caygill, a former Minister of Finance in the Labour Government of the ‘eighties, and in the ‘nineties the Deputy Leader of the Labour Party under Helen Clark. None of them likely to accept what I say uncritically!

The reality is that the recommendations of the Taskforce are closely similar to the recommendations made by umpteen other advisory bodies, including the OECD and the IMF. What we’ve been saying is regarded as conventional wisdom elsewhere in the world. But our recommendations are being studiously ignored.

When the first report of the Taskforce was produced, in 2009, the Taskforce had five members. Mr Jeremy Moon, the founder and CEO of Icebreaker, resigned his membership of the Taskforce in early 2010 because of pressure of other business.

Am I being too pessimistic? Well, it’s interesting to note that Transpower has just published a study about the future of New Zealand’s electricity grid. The study makes assumptions about growth in the use of electricity over the years to 2050. Various scenarios are considered, but the one with the fastest growth in electricity usage assumes a growth of just 1.75% annually. Because growth in electricity usage has tended to be roughly related to economic growth, that doesn’t suggest that Transpower sees a dynamic New Zealand economy, hell-bent on catching Australia over the next 14 or 15 years. Whoever wrote that report – and though I’m a director of Transpower I swear I had nothing to do with writing it! Whoever wrote it knows this Government only too well!

The Treasury assumes that trend growth in the New Zealand economy will be only 2.7% over the long-term – again, a long way short of the kind of growth needed to catch Australia by 2025. They too can read this Government.

This dismal prospect should be a huge concern to every New Zealander. If the gap continues to widen, Kiwis will continue to flood across the Tasman and our children and grandchildren will grow up cheering for the Wallabies.

Not only that: we will continue to become a more and more unequal society. To hold onto those with skills in high demand in Australia, we will have to pay them the kind of money they could get in Australia. And since we can’t afford to pay everybody Australian wages, income gaps within New Zealand will get bigger and bigger. It will be the poor without marketable skills who will be on the losing end.

What’s the situation right now? Even before the Christchurch earthquakes, the Government was spending vastly more than it was receiving in tax revenue – and borrowing the thick end of $300 million every single week. In fact, at the moment the ratio of government spending to the size of the economy is bigger than in any year of the last Labour Government.

Luckily, thanks to the careful management of the government’s books by National in the ‘nineties and, let’s be fair, Labour in the first few years of their nine year term in office, the level of government debt relative to the size of the economy is not too bad at the moment. But it’s accelerating like a Ferrari.

A year before the earthquakes, the Treasury calculated that the ratio of government debt to the size of the economy would reach a totally unsustainable 220% by 2050 unless policies were changed. Despite that warning, policies haven’t changed.

The Prime Minister knows that policies have to be changed. But when, I ask you, does he intend to turn his mind to the challenge?

Take New Zealand Super for example. John Key knows that there need to be changes in that scheme. How do I know that? Because it’s clear that John Key can count, and that’s the only skill you need to know that the scheme can’t stay as it is now. But Mr Key has said it won’t change while he’s Prime Minister. Why on earth did he box himself into a corner on this issue? Even the Labor Government in Australia has just announced that the age of eligibility for their taxpayer-funded superannuation scheme has to go up.

Sadly for all of us – and especially for younger New Zealanders who will either have to pay the bill for current extravagance or have to flee the country – the Government has made no attempt to signal the need for a change in New Zealand Super, has made no attempt to reverse any of the truly dopey policies put in place by the Labour Government in its last term (think interest-free student loans), and has made only occasional rather weak attempts to explain to the public why the track we’re on now simply can not go on.

(An honourable exception is Bill English, who from time to time does try to tell people why some major changes are needed. As we all know, he quickly finds the ground cut from under his feet.)

And now come the devastating earthquakes in Canterbury. I was brought up in Christchurch, and my sister and her family still live there. I was educated at Canterbury University, where some of the classic buildings in which I took lectures have suffered significant damage. The devastation of that beautiful city is a national calamity. And the difficulties under which many Christchurch people live – with no water and no sewerage – are truly awful.

I have no doubt that the Prime Minister is absolutely sincere when he says the Government wants to do everything possible to help the city. It’s just a tragedy that he hadn’t cut out some of the wasteful government spending before now, so there was more scope to assist. I hope he’s got the courage to do so now, with the government’s fiscal position about to get even more seriously out of whack.

I want to talk a bit about an issue having nothing directly to do with economic growth. But it’s an issue which has a lot to do with economic growth indirectly, and is another serious threat to our future. And that’s the whole issue of the Treaty of Waitangi and the place of Maori New Zealanders in our society.

And I want to talk about this because, as long as so many New Zealanders are focused on the past, and assuming that a government cheque will somehow make them wealthy, we will never reach our full potential as a country.

As most of us know, the Treaty of Waitangi guaranteed to all New Zealanders “the same rights and duties of citizenship as the people of England”. (Those are the words of the English translation of the Maori version of the Treaty, which is what Maori chiefs signed up to in 1840.)

And the National Party campaigned in the last three elections on a commitment to one law for all New Zealanders.

But since being elected, the National Government has moved time and time again in the opposite direction.

National no longer talks about its promise to abolish the racially based Maori electorates.

The Government is in a Confidence and Supply Agreement with the race-based Maori Party.

The Maori Party makes no secret of its desire to see the New Zealand constitution restructured.

They want it to be a partnership between Maori and non-Maori. A partnership that confers special privileges on Maori. A partnership in breach of the clear meaning of the Treaty of Waitangi, since there is absolutely no mention of partnership in the Treaty.

To appease the Maori Party, Parliament is debating legislation to surrender Crown ownership of the foreshore and seabed despite evidence that the 2004 legislation has been working adequately.

They’ve signed up to change against the wishes of the general public – and despite the fact that the Prime Minister gave a commitment that the new law would not go ahead without widespread public support. At the moment, it appears that not even most Maori Party supporters support the proposed Bill.

The Government signed the United Nations Declaration on the Rights of Indigenous Peoples.

Among other things, this says indigenous peoples have a right to “self-determination” and “autonomy or self-government in matters relating to their internal and local affairs, as well as ways and means for financing their autonomous functions”. What on earth does that mean in the context of 21st century New Zealand, where most people calling themselves Maori are a blend of races?

The Government has made no attempt to change the clause in the RMA which directs local councils to consult with their communities and with Maori, as if Maori were somehow distinct from the community in which they live.

The Government supported legislation which has resulted in non-elected Maori representatives sitting on all the committees of the Auckland Council, and possessing a vote that is equal to the votes of those who were elected by all the people of Auckland. (I’m sure Rodney will want to comment on this when I’ve finished.)

And why? Such an arrangement was clearly not required for Maori to be involved in decision-making in Auckland. The recent local body elections resulted in three Maori members being elected to the Council – meaning that Maori councilors make up roughly the same proportion of the Council as do Maori in Auckland’s population. There was absolutely no need for designated Maori seats on the Council, or for a Maori Statutory Board.

Early this week, the Minister for the Environment appointed the members of the Establishment Board of the Environmental Protection Authority. One of the four people appointed was Maori, hopefully appointed on merit.

But why does the Environmental Protection Authority also need a Maori Advisory Committee? Sometimes I think this Government can see no other races in New Zealand except Maori!

Don’t get me wrong. Maori traditions are an important part of New Zealand culture and should be respected as such.

But for the life of me I can’t see why so many public events must begin with a prayer or lengthy speech in Maori, even if none of those present can understand it. Most New Zealanders these days don’t say any prayers. Why should they have Maori prayers they can’t understand thrust upon them?

Nor can I fathom why some government agencies assume that all New Zealanders should respect the animist religious views of a tiny minority.

We must not, we’re told, have a barbeque on Mount Taranaki.

We must not, we’re told, build a road where a taniwha might be offended.

We must not, we’re told, let pregnant or menstruating women visit the national museum.

We are now in the 21st century, when the vast majority of all New Zealanders, Maori and others, do not share these animist beliefs.

And what of the Treaty itself?

I’ve always believed that the Crown should pay compensation where it can be shown that it breached its commitment to protect the property rights of Maori.

I still believe that. Article II of the Treaty guarantees those rights.

But Article III of the same Treaty makes it crystal clear that all New Zealanders should have equal rights under the law, with no special privileges for any creed, or for any culture, or for any race.

It doesn’t matter whether those New Zealanders are of European, Maori, Pacific Island, Asian or other ancestry.

And it doesn’t matter whether they’re descended from those who arrived 700 years ago, or whether they became New Zealand citizens yesterday.

It is my very strong belief that, unless we can get these tensions between Maori and other New Zealanders resolved in the right way – in the way clearly envisaged by the Treaty of Waitangi – we have no show of catching Australia. We will remain distracted by issues which were in fact resolved in the best possible way in 1840.

Chris Trotter – not a person who would be a regular voter for ACT or for National I suspect – recently noted that “any state which invests one part of the population with more rights than another, or strips a minority of citizens of rights enjoyed by their neighbours, is quite rightly condemned for promoting inequality.”3 He was writing about New Zealand and he was absolutely right.

There is a final issue I want to touch on quite briefly, and that relates to our welfare system.

At the moment, we have some 350,000 adults of working age on a benefit, and a large number have been on a benefit for years, even decades. Far too many of these people are Maori, but right now that isn’t my point.

My point is that if we’re to have any chance at all of catching Australia we have to get every able-bodied adult onto the field of play.

We have often beaten Australia at rugby, and sometimes at league, cricket, netball and basketball. But mid-way through the second half, trailing by 35 points, we will never win this game of Economic Prosperity unless we have a full team of able-bodied people on the field. Right now, we haven’t. You don’t win rugby matches, or indeed any other matches, if you have 10% of your players sitting on the side-lines. Or if you have some of your players arguing about whether it’s even worth trying.

The Working Group on the benefit system has come up with some gutsy recommendations. For everybody’s sake, we have to hope that the Government won’t treat those recommendations with the same contempt they’ve treated those of the 2025 Taskforce.

Mr Chairman, New Zealand can have a great future. It can offer all New Zealanders a rich and rewarding life, with income levels on a par with those in other developed countries. It can offer all New Zealanders equality before the law.

We must insist that whichever party leads the next Government commits itself to those goals. I’m certainly willing to do all I can to achieve that end.


The State of the Farm - Don Nicholson

Speech by the President of Federated Farmers, Don Nicolson to the ACT National Conference, Auckland 13 March 2011

I wish to thank your Party's President, Chris Simmons and of course the Hon Rodney Hide, for this opportunity to speak to you this Sunday.

This will be my final speech to the ACT Party as President of Federated Farmers, a role I have enjoyed for almost three years.

Can I start by saying your Party's leader has been the most effective Minister of Local Government I have dealt with.  He's a dynamo in an area that wrongly sails under the media radar given how much the sector consumes  All the power to your pen, Minister.

I'd like to thank the ACT Party for its focus on regulatory scrutiny and reform.  It's courageous and right because regulation is like death by a thousand cuts.  While one may be good, hundreds can kill endeavour though the insidious costs it adds.

Yet I can't say the same thing about one Ministerial colleague, who recently said Federated Farmers had overblown the ETS's cost because it has been 'absorbed into margins'.  That person is right, except those margins are the margins of farmers, consumers and taxpayers.

We've absorbed the ETS's cost only to enrich foreign owned forestry companies. Can anyone tell me how that's improved the climate?

Federated Farmers is disciplined, principled and focused.  Best of all we have a growing net membership.

Farmers are coming to us for the skills we offer in local and regional government, the discipline we bring to the Wellington policy meat grinder and overseas, with our ability to talk farmer to farmer.

I must confess the first fielday I attended as President, very few wanted to shake my hand.  In year two, people started coming up to me to say I was doing an 'okay job' but now, in the twilight of my presidency, I've started to blush.

According to Rural News, it looks like Federated Farmers presidential election will be the first contested one since the early 1990's.  As one of our staff members observed to me, 'people want the top job because Feds has its mojo back'.

The Christchurch earthquake

In recent weeks things as we knew them have changed.  Before I talk about our earthquake, I think we need to take a few seconds to reflect on the 8.9 earthquake that devastated Japan on Friday.

These images remind me of how numb I felt as CNN and the BBC relayed images of the Christchurch I know in ruins.

Christchurch happened while I was at the biennial Paris International Agricultural Show, French farmers openly extended their heartfelt sympathy and sorrow.  This was genuine and completely unexpected.

Everyone, everywhere, became a son or daughter of Christchurch.  We now need to become the sons and daughters of Sendai.

I have offered to Ministers, Federated Farmers assistance to mobilise a team of farmers to assist our Japanese colleagues recover farmland inundated by this terrible tsunami.  It may be small but it shows how farming is collegial.

We're all farmers and mates help their mates.

From our local tragedy the response of students and our own 'Farmy Army', was to me, a big positive for the spirit of community.  We proved communities can self-organise for a common good.  That's a lesson policy makers need to learn from.

It will surprise many to learn but Federated Farmers has no compulsory levy to fund itself.  We don't get any Government grants but instead survive off a voluntary subscription base.  It's why we are a union of farmers for farmers, as we rely on people calling 0800 FARMING, emailing us or joining online to fund what we do.

While farmers and students get stick from time to time, we both got stuck into helping Christchurch recover.

Last September it was rural Canterbury, with people like Murray Rowlands dashing from silo to silo followed quickly by a severe southern storm, that had me and our troops right in the thick of it.

This year it was the leadership of my good friend, 'General' John Hartnell, a Federated Farmers board member who was ably supported by our provincial teams and staff.

Together with 4,000 volunteers from us, Young Farmers, Rural Women New Zealand, Rural Contractors, Canterbury's rural rugby teams as well as walk-up volunteers and local businesses, they made the impossible, possible.

In ten days volunteer tanker drivers with Fonterra delivered 5.5 million litres of water from Silver Fern Farms Islington reservoir.  Silver Fern Farms, like Fonterra, also chipped in donations and food as well.

So consider this.  Our 4,000 volunteers spent 28,000 hours digging backed by 3,900 machine hours to remove 70,000 cubic metres of silt and we're still going. 70,000 cubic metres.

2,000 kitchen hours also generated over 5,000 hot meals to keep the Farm Army fed.  Until recently, 500 meals several times a day were being delivered to mainly elderly residents - all led by dual Federated Farmers and Rural Women NZ member, Helen Heddell.

We'll be back over the weekend of 18 March to commemorate Christchurch with one last big clean up effort.

Can I pay tribute to volunteers and companies that have so generously supported us, because we don't get a cent of Government funding to assist with what we do.

It's like an A-Z from Alliance Group to Rabobank.  To Jack Lim, a local greengrocer to Turners & Growers, a much larger one.  Thank you Lions and there are many, many more who deserve credit but I fear, I'd lose your attention.

But spirit is found in companies like Greenlea Premier Meats, with 350 employees, who made a $150,000 donation to our charitable Adverse Events Trust to assist Christchurch.

This is what community is all about and is why we need resilience reinforced in our DNA.

This list also includes a certain Hon 'Private' Heather Roy of the Farmy Army.

With Mayors, councillors and her parliamentary colleagues from both National and Labour, she pitched into helping urban Christchurch.

As I said there's more to come over the weekend of 18, 19 and 20 March.

As a membership based movement we have to prove the value we deliver each and every year.  The money we deal with is not our money but our members and we work in their interests as well as the wider community.

It's a pity not all ships are run so lean.

Paying for Christchurch

Together with Darfield last September, billions of dollars will be needed to repair and replace infrastructure let alone the 10,000 new homes that may be needed.

Fletcher Building's rough calculation has put the bill at around $20 billion.

If you are a person whose home has been wrecked and whose place of work has been destroyed, you will eventually get a payout.  Families will then face three choices:

1.    Do they stay in Christchurch and rebuild hoping for new jobs and opportunity?

2.    Do they move elsewhere in New Zealand and do the same thing?

3.    Do they take the payout and move to Australia?

I'll be to the point on this.

Putting up taxes will be like giving each affected resident a one-way ticket to Sydney.

We'd not only lose the type of people needed to re-build the Christchurch economy but risk recession.  So how can we afford this bill, let alone last September's?  There is a third and fourth way.

The third way is partial asset sales that could raise $10 billion. That is in the public sphere, but is the scope wide enough?

The fourth way is to cap all Government and local council spending to the 2010/11 financial year.

Given this is projected to hit $110 billion by 2015, any spending growth above this cap would instead be redirected towards Christchurch.

Such an approach could raise $10 billion within four years, while gradually reducing the Government's size as a percentage of the economy.

This is without cutting one cent from what's being spent right now, without increasing tax by one cent and without adding one cent to the $300 million we're borrowing each week.

That borrowing, put another way, is $496 a second or by the time I finish my speech, 'NZ Inc' will have all borrowed $595,200.

Some thoughts on narrow interest groups

I don't wish to make this overtly controversial given recent natural disasters, but just as the Titanic crushed Edwardian belief they'd mastered nature, these natural disasters remind us we live on an ever changing dynamic planet.

Yet a whole industry has been built out of fear.

Fear of the climate, fear of technology, fear of progress, fear of tomorrow.  Instead of fearing tomorrow we need to embrace resilience.

We need people who know how to look after themselves, their neighbours and their communities.  We need robust infrastructure to adapt and evolve instead of pretending a treaty signature can magically halt geophysics or astrophysics.

The fact is we are one asteroid away from joining the dinosaurs.  Indeed, it won't be until after 2020, that 90 percent of all "killer asteroids" larger than a rugby field will be mapped.  That of course leaves 1:10 unmapped.

We are also one 'super volcano' away from extinction.

Taupo is the youngest of these 'super volcanoes' but 26,500 years ago, it ejected 1,170 cubic kilometres of material.  If water, that would fill Lake Taupo some 20 times over.  Pinatubo changed the world's climate in the 1990's but that event was 12 times smaller.

Yet this pales beside Lake Toba in Indonesia. 74,000 years ago that single eruption is thought to have reduced humans to just several thousand breeding pairs.

While I wonder if I should now call Hone, cousin, none of these are valid reasons to fret, to stop living, or to go into our shells.

Life is too precious to waste on 'what ifs' or  suspect computer modelling.  We need to understand there are things beyond our control and geophysics and astrophysics are two.

We are all tenants of this planet.  Sometimes we are a very poor one but we are a tenant that exists by the gift of an almighty landlord.

For the ACT Party, as for Federated Farmers, this is not a license to ignore wasteful or inefficient resource use.

To fulfil the needs and wants of 6.9 billion people means we are fast consuming the resources of this planet.  Yet farming can also be a lesson in sustainability.

Fringe groups speak loudly but don't have any skin in the game.

They don't produce anything but hot air.  They pontificate and lecture but have no dirt under their fingernails. The Greens in particular tell a lie that farmers get a 'subsidy' from the environment.   Really?

We've farmed in New Zealand for 170 years and we've become better.  Farming is sustainable because we continue to farm with nature than against it  We have a 170 year track record on that score locally, but a 12,000 year farming pedigree overall.

To me, sustainability is simply being able to do something indefinitely.

Yet the irony of a city slicker who can't tell a bull from a cow lecturing farmers on how to farm is farcical.

What are people like this without the food we produce?  What are people like this without electricity carried on pylons in the Mackenzie?  What are people like this without fuel imported to fly them overseas to swanky weddings?

Farmers know we need the cities, affluent cities, but there are some in Parliament who think they don't need the farms but who wish to farm the farmer nonetheless.

That's why today [yesterday], from Whangarei to Balclutha, we opened up farms near the main centres as part of Federated Farmers Farm Day.  The more people who learn about what we farmers do, the more likely they'll question the half-truths, the slogans and slurs put out for selfish political gain.

It's 'Dirty Politics'. Dirty, dirty politics.

New Zealanders also need to stop judging ourselves by how we think others should view us.

This was reinforced recently by Professor David Hughes of Imperial College London, who gave a lecture telling us farmers to 'get with the green programme'.

Yet the UK totally exempts agricultural emissions under Europe's ETS.  Best of all, he reckoned Australian farmers will kick themselves for not asking to be put in Australian's proposed ETS.

Tell that to Australian beef farmers who've lost market share in Korea to cheaper American beef that doesn't come with the costs of traceability let alone an ETS.  Australian farmers are concerned about becoming a high cost producer and that's the risk we now face. 

So I have a challenge to people like Professor Hughes, Rod Oram and Dr Russel Norman.

Mates, farms are for sale everyday so go out and buy one, work it as you see fit and show us how it's really done.  If you know the secret recipe for export alchemy then just do it.

Some believe we ought to be the Rolls-Royce of agriculture.  But having been on farms around the world, these artisan like Rolls-Royce's already exist.

We should instead be the Toyota of agriculture.  Trusted food and fibre with an integrity built from excellent animal health delivering safe, reliable and wholesome products.

Can I also suggest to Professor Hughes that he needs to read research done by the University of Otago's Associate Professor John Knight.

Professor Knight asked supermarket consumers about food buying preferences before and after they'd been to a supermarket and guess what?

The principled reasons spoken pre-supermarket, didn't make it into the trolley post-checkout.

Research like Professor Knight's, must and I repeat that word, must be expanded upon.  Assumptions are dangerous but assumptions have underpinned public policy for too long.

Let's find out what truly motivates our consumers instead of overlaying the desires of local policy analysts upon them.

A new political direction

This is why I believe there is scope for a political movement to tackle green issues from a disciplined market approach.

Do you know that led by farmers, 111,000 hectares have been voluntarily protected under QEII National Trust covenants since 1977.  If that was a country, it'd be the 184th largest on earth. Who started it? Among others, Federated Farmers.

Being a Scot by descent I can't abide waste.  I know market principles and farming can vastly improve environmental and biodiversity outcomes.

Look at Roger Beattie, Mr Weka Weka Woo.

His weka programme massively out performs DoC's because he uses farming principles.  No farmed species I should add has ever become extinct.

You'd think he would get a trial license to sell weka to high end restaurants or at this weekend's Hokitika Wildfoods Festival.  No siree.  Weka could be our turkey but is DoC interested in increasing its numbers by way of commercial farming.  No siree.

How about trout?  Sanfords has said to us that if the ban on commercial trout farming was lifted Monday, they'd start farming trout on Tuesday.

At US$5.00 a kilogram exported, it could be a US$50 million export within five or so seasons but are we farming trout?  No siree, because the funding for a certain lobby group comes from a license ticket.  Is its Chief Executive interested in exports? No siree.

This is despite faring would lead to much larger and exciting wild trout under catch and release.  Farming salmon hasn't stopped people from buying licenses to catch a wild one.

While trout is largely farmed in sea cages, it being a member of the salmon family, it can be farmed in artificial ponds that in turns demands water with nutrients. It's about integrated farm management because our food export potential is vast.

That's why a new super Ministry made up of MAF and MFish must be for agriculture rather than of it.  You aren't of something, you are for something.

Farmers need for in the title as that tells public servants what they're there for.

But what we farmers also need are for political movements to ask the 'why not' questions.

So what are ACT's colours again?  That's right, blue and yellow.

When it comes to the light spectrum, the Government occupies the blue and the Labour opposition, the red.  All the Maori Party's colours can be made from yellow, blue and red and even the Peter Dunne party is there with indigo.

A very wise member, an agricultural scientist no less, pointed out to me that plants absorb all but one colour in the light spectrum.  You'll never guess it, but that one non-colour happens to be green.

Plants reflect green light so ironically, the most useless colour in the light spectrum for plants is green, but the most useful are red, orange, yellow, blue, indigo and violet.

While you can be green by mixing together the various colours found in the political spectrum, especially yellow and blue, the one that embraces green as a solid colour form the get-go happens to be the one colour in the light spectrum rejected by plants.

Speaking of ironies, could whales be sending a coded message to anti-farming protestors?

And that message?  To lay off farming.

Last month a whale stranding was found on Stewart Island around the same time animal rights activists chained themselves to a chicken farm's grain silo.   

On 4 February, there was a major whale stranding in Golden Bay, preceding only by hours, an anti-Fonterra protest on a cargo ship in Taranaki.

On 23 September last year, Greenpeace initiated another protest at Fonterra's headquarters 24 hours after a major whale stranding in Northland.

Not convinced?

On 18 May last year, Greenpeace protested against Fonterra's use of a legal fuel, called coal, by chaining themselves to the Clandeboye Dairy Factory.  Guess what?  There was an orca stranding at Ruakaka Beach 11 days later but this time, with a happy ending.

Perhaps the whales are protesting against Greenpeace and their friends not focusing on the sustainability of cities.  Let's face it, every time it rains in urban areas we're told not to swim or collect shellfish for at least 48 hours but no one delves into this, especially those who purport to be green.

So while farmers are monitored by councils and warts and all, these results are published or prosecuted, who actually monitors the councils or for that matter, the real environmental performance by our pantheon of Government departments.

Don't you think there's scope aplenty for a political movement to do just that?

The Taniwha In The Room

Hilary Calvert MP Speech to ACT Annual Conference; Barrycourt Accommodation and Event Centre, Parnell, Auckland, Sunday, March 13 2011.

One law for all.

When I talk of One Law for All I mean simply this: In a civil and democratic society, all are equal before the law.

We all grew up with this idea.

This concept is as old as democracy.  Aristotle wrote extensively about it.  The French and the Americans fought revolutions over it.

And our leader Rodney Hide has been fighting for it in Auckland.

The fact that he has needed to defend this principle is surprising and frankly disappointing, bearing in mind that we thought that equality before the law, regardless of ethnicity, was a core National Party principle.

After all the National Party campaigned against Maori seats in our Parliament.

However maybe we should not have been surprised.  In the last two years National have embraced co-governance of the Waikato River, signed the Declaration on the Rights of Indigenous Peoples and gone silent on their plan to abolish the Maori seats.  They have provided for Maori Authorities to pay 17.5% tax for the 2012 year, compared with the company tax for the rest of New Zealand of 28%.

Worst of all, they have introduced the Marine and Coastal Area Bill.

Sadly these sorts of laws are likely to continue.  This is the price National has paid for signing a deal with a party based purely on race.

This price is not just a political one, and not a price only paid by the Government.

The social cost of these separatist policies is being incurred in part by all of us today.  And the cost will continue to be borne by future generations of New Zealanders.

So long as we continue to ignore the taniwha in the room, we will have more race based laws, and the chance of achieving the dream of one law for all will recede ever further.  And New Zealanders who are not of Maori descent are seriously troubled by the idea that somehow they will never be as special as some of the earlier immigrants to our country.

When the Marine and Coastal Area (Takutai Moana) Bill passes – and National is determined it will – access and development rights along our coastline will be based on whether you’re a member of the right iwi.  The Resource Management Act will not apply to all equally.

The Bill is fatally flawed and it must be scrapped.

The current legislation is also fatally flawed.  The 2004 Foreshore and Seabed Act took the protection of the Courts away from Maori.

This is, to put it bluntly, racist.

If this was a nation where ‘One Law for All’ was practiced, then the Government would restore the right for Maori to have their claims heard by the High Court, based on centuries of common law, as we would do for any other such claims.

Not behind closed doors, as the current Bill threatens.  And not by the Government of the day, possibly with a bare majority, ramming it through Parliament as they are doing with the current Bill to appease a Party unashamedly supporting race based legislation from a platform of race based seats.

ACT stands steadfastly against separatism in all its forms. We believe the term ‘positive discrimination’ is an oxymoron.
ACT has the beginnings of a solution to the increasing separatist rules and systems. Rodney Hide has before Parliament the Regulatory Standards Bill.

This will require future legislation to comply with a number of fundamental principles – and when they don’t, the Government must clearly explain why not.  ‘Equality before the law’ is one such principle future Bills will be judged by.

Had the Regulatory Standards Bill been passed before the Marine and Coastal Area Bill, the Attorney General would have had to explain to the house why he was proposing a law which breaches this principle so clearly.  And the people would have also been in a position to go to court for a declaration that the legislation breaches this principle.

In short if the Regulatory Standards Bill had already been law then, Chris Finlayson would have stood no chance of confusing and befuddling the public over the Marine and Coastal Area Bill.

And equality before the law would be addressed in all future legislation in New Zealand.

Of course, New Zealand already has a very important document that promises One Law for All regardless of ethnicity.
We have The Treaty of Waitangi.

The Treaty often gets maligned.  In reality, it is a great foundation on which to build a nation based on strong property rights and equality before the law.

Article Three specifically gives Maori all the rights and privileges of British subjects.  This includes the right to own property and the right to protection in the Courts.

There were many breaches of the Treaty by past Governments – and as a party that defends property rights ACT says these must be settled, and in a timely fashion.

We also say, however, that you do not resolve one breach by causing another.  The Marine and Coastal Area Bill, co-governance, lower tax rates for Maori Authorities – all are examples of inexplicable special rights for a select few of Maori descent.

ACT is the only party serious about stopping our nation’s trek down the path to separatism.

If we are to succeed in this, we need to get out there this year and get some more MPs.
More MPs will ensure the Regulatory Standards Bill becomes law.

And more MPs will help stop the march toward co-governance of our resources.

Equality in opportunity Government is also an inherent part of equality before the law.

More ACT MPs will give parents the chance for greater choice and opportunity in education for their children.

More ACT MPs will give us a government that takes the axe to low quality spending.

And more ACT MPs will give us a government that sticks to the principle of One Law for All we are one people.
The taniwha must be acknowledged and dealt with if we are ever to respect the principle of one law for all.

He iwi tahi tatou.

We are one people.

Thank you.


Jobs - Not Borrow and Hope

ACT Leader Rodney Hide; Speech To ACT 2011 Annual Conference; Barrycourt Hotel & Conference Centre, Parnell, Auckland; March 13 2011. 

On Friday 2:46 pm local time the people of Japan were hit with a mighty earthquake and tsunami.
Our thoughts and our prayers are with Japan.  We give our heartfelt condolences to the families and friends of the lost, the missing and the broken.

We especially grieve with Japan because of our own recent tragedies.  We will always remember too the tremendous help, the support and the comfort the people of Japan provided us in our time of great need.

Please stand and join with me for a minute’s silence on this New Zealand Sunday to focus our thoughts and our prayers for the people of Japan.

Thank you.

Mr President, welcome; welcome to all delegates.  I would especially like to welcome former Party President Michael Crozier and to acknowledge the terrific work Michael has done for the Party over many years.

Delegates, now is not the time to mince words.

New Zealand is facing the toughest of times.  Make no mistake, we are on the brink.

The recovery from the global financial crisis is tentative, both here and in the rest of the world.
The upheavals in the Middle East and north-Africa are creating yet another global oil shock.

And now Japan has taken a terrific hit.

Our Government is borrowing $300 million a week just to get by.  It’s broke.

And our second largest city has been devastated.

The cost of the Christchurch earthquake is estimated at 10 percent of our GDP.

Other countries have suffered major earthquakes and disasters.  But they were much, much bigger economies.

The cost of the 1995 Kobe earthquake represented around 2 percent of Japanese GDP.  The cost of Hurricane Katrina was 1.2 percent of US GDP.  The cost of the recent Queensland floods is about 0.7 percent of Australian GDP.

The cost of the Christchurch earthquake at 10 percent of GDP is a massive blow to the New Zealand economy.

Those European countries facing the biggest strife are those with the highest current account deficits, the highest overseas debt levels, the highest government debt levels.
Until recently we at least had modest government debt levels, but that last remaining prop is gone.
We no longer have the option of borrow and hope.

That the Labour Party have no thought other than to spend more, borrow more, and hope more, is both laughable and tragic.  Labour has a long way to go before they are fit to govern again.

And National is too timid.  The Government has stopped some of the rot.

But that is not remotely and not nearly enough.

We have to fix and rebuild Christchurch.

We can’t do that unless we fix New Zealand.

We must build a strong economy to have the investment and business confidence needed to rebuild Christchurch.

We don’t build a strong economy by making big government even bigger.  Quite the reverse.

It’s going to take business and private investment to get Christchurch back on its feet.  Government’s job is to provide the leadership, the necessary infrastructure, and an environment conducive to business and investment.

Christchurch can’t succeed as a government town.  For a bright future we need to ensure it’s a city of successful business and enterprise.

So, we have big choices ahead for this country, big tests of our resolve.

We kiwis now face a real test of our attitude, our resolve, our determination
We need a steely focus on jobs and the economy.

We can’t afford to be knocked off course by political indulgences.  That’s why Hilary’s speech on One Law for All is so important.

If Christchurch has taught us anything it is that we are one people.

The racist and separatist policies that National and the Maori Party have continued in office are wrong, and an unconscionable diversion at this time when our country needs focussed and determined political leadership.

We all now have to step up. 

And that includes ACT.

It’s up to us to make the difference.  It’s up to ACT – those of us in this room – to reverse New Zealand’s economic decline.
No other Party can do it or will do it.  But we can.

Yes, the country is facing a huge challenge.

But we have huge natural resources.  And we have a great resource in our people.
The problem is we don’t utilise either properly. 

We must now take the opportunities we have for jobs and for growth.  We can’t afford not to.
I want to focus on just one important opportunity, before moving on to wider issues.

John Boscawen spoke about it yesterday in his address.

New Zealand is rich in mineral resources.
But we aren’t taking advantage of them.

Last year the Government proposed to allow prospecting to establish in detail what mineral resources we had. 

It wasn’t about mining, wasn’t about digging or drilling.  Just looking to see what was there so that we could make an informed decision.

About a third of the total land area of our country is under the control of the Department of Conservation.

So looking means looking on Department of Conservation land. 

But the simple suggestion that we ‘have a look to see what potential wealth we have’ alarmed those who rate a few tree more important than the chance for a decent livelihood for working people. 
The chance of decent jobs, good incomes, greater wealth for this country, higher revenue for government to fund our health and education systems – none of that rated as a serious consideration against the risk of disturbing a few wilderness areas.

100% pure and 100% broke was fine by them.

They protested on the streets in Auckland about the possibility that somebody might mine somewhere remote in the South Island, or somewhere not so distant like the Coromandel.

These were people for whom the notion of a reasoned trade-off between jobs and national wealth, versus some temporary and minor environmental damage was not an issue that should even be considered.
Indeed, New Zealanders must be denied even knowing what the trade-off is.
Even though there may be hundreds of billions of dollars of wealth available.
Most of the protests bordered on the hysterical.

Some of it was nuts.

The misrepresentation grotesque.

The picture the protestors tried to convey was of open-cast mines covering the landscape.

It was childish, adolescent.
And the media provided little critical scrutiny of their claims.

The fact is that most mining can be done with very little impact on the environment.  A mine entrance doesn’t need to be large.  The land required is tiny.  Our wilderness vast.

And it can easily be tidied up afterwards.

And besides, what is so wrong with a few open cast mines?

Actually, I find the scale of them dramatic and grand.  Plenty of other people do too.  The open cast mine in Waihi is a tourist attraction.

We need to get a sense of proportion about mining.

The Waihi open cast mine is just a pin-prick of land on the map of New Zealand, but it is also the financial backbone of a township, the source of jobs and thus dignity for local people.
So there we were, simply considering whether we should attempt to discover what resources we had. 
But somewhere along the way the protestors got the upper hand. 


And all those jobs that we could have, all those high paying jobs, all the investment, all the business activity, all the associated service industries – engineering, transport, legal, accounting, all the technical trades – were cut short.

All because a couple of actresses decided they had enough jewellery already.

And so the Government lost its nerve.

As usual, it is the well-off middle class, those with opportunity, jobs and money, who stop developments that create jobs and a livelihood for those who don’t.

And it is not just some vocal protestors and environmental activists killing off jobs.  Overly tough environmental constraints and rules and regulations do as well.

Our environmental requirements are so stringent that developments either never get off the ground, or they do so at great additional cost.

Or, as we have seen with Pike River, they end up with absurdly restrictive rules regarding environmental impacts on conservation land, so that options such as open cast mining are taken off the table. 

We end up mining at great additional cost and much increased risk.

In the Pike River case, with tragic outcomes.

So a tiny patch of remote New Zealand was left undisturbed – a place most new nothing of, would never visit, or never think about.

And it is a place that is now a memorial to the men who worked there.

Not long after that disaster, we heard that Government was considering whether this mine should be open cast after all. 

And with $10 billion of resource underground, surely we should have the ability to mine, open cast if necessary, and then repair any damage done when we have finished.

What a tragedy, what a waste.

We won’t lose that opportunity again.  ACT with eight plus MPs will insist we open up our conservation land to the basic research to establish what resources are there.

With that information we can, as a nation, have a debate about whether we are going to pass up the potential of billions of wealth, and thousands of high paid jobs, for the sake of preserving untouched some tiny patches of our total conservation estate.

And the ACT Party, I can tell you, will be pushing hard in favour of jobs, not borrow and hope.
We need to start mining, start drilling, start digging.

We want our young people to have the option of working at high paid jobs in New Zealand’s mineral exploration and mining sectors, not just Australia’s.

It is unconscionable for well off middle class city dwellers to dictate what working people can and cannot do in their own patch of New Zealand.

ACT is focussed on jobs.

Jobs not welfare, or handouts.

Jobs not borrow and hope.

The ACT Party has been through some tough times, but we keep coming back stronger.

In 2005 our mission was simply to survive – and we did, by winning Epsom.

In 2008 our mission was to get rid of Helen Clark, to help form a centre-right government, and to nudge that government to do the right thing.  And we did that too.

In this term of government we have had some important wins. 

We passed Three Strikes, the culmination of more than a decade of work.  I am proud of this – it will make our communities safer. 

We convinced the Government to expand the 90-day trial period from firms with less than 20 staff, to all firms – that will create jobs. 

We negotiated with the Government to start work on opening up ACC to competition – that will reduce costs for all New Zealanders.

We reformed Auckland governance, reducing staff numbers, cutting the price of water, and gave Auckland a structure to unlock its potential.  We have delivered a long overdue reform of the Local Government Act to improve transparency, accountability and financial management in local government.

We established a Productivity Commission to contribute the analysis needed for fundamental medium-term reform, and we established the 2025 Taskforce which has outlined the policies needed to get this country moving again.

We have improved regulatory processes in government, reduced compliance costs, repealed obsolete regulations, and have major regulatory reviews under way to save business around $300 million a year.

In education we have chipped away at the edge of the state monopoly with the Aspire scholarships.

We fought losing battles too: we tried unsuccessfully to stop the ETS, we fought against poor law on smacking, and we are still fighting to stop the latest round of foreshore and seabed legislation.

We tried to reintroduce a youth rate to give our youth a chance to get a job to set them on their way in life, and to their shame all other Parties voted against that – even the Maori Party, when Maori youth unemployment is 27 percent.  

Sadly, most politicians don’t understand basic economics, and even when they do they lack the guts to stand up for what they know is right.

Finally, what we did promise, and will continue to deliver, is stable government.

The ACT Party continues to challenge National, but we will not pointlessly destabilise the government, nor break our promise to the people of New Zealand.

So, we have achievements to be proud of.  We have nudged National along, and made a difference.

But it is not enough.  Not remotely near enough.

Our mission statement in 2011 is to return with at least 8 ACT MPs, to make the changes that will get New Zealand working again.

Just imagine if we had had eight MPs since 2008.  There’d be no foreshore and seabed mess.  There’d be no ETS.  No UNDRIP.  No Maori Statutory Board.

And that’s just the stuff ACT would have stopped.  Imagine what we could have achieved!

The reason New Zealand is at the brink of disaster is that we have politicised so much of our culture, so many of our economic decisions. 

They aren’t honest transactions in a market, where you earn and spend your own money.

Instead too many issues have become dishonest political transactions, a fight of all against all as we lobby for our preferences to be funded through government.

Think of where we have got to.

The middle class want free childcare.  Students want interest free loans. 

Pensioners want gold cards, and want the age of eligibility to remain unchanged even as our life expectancy increases.

Teachers don’t want parents and students to be free to spend the funding allocated to each child at any school of their choosing.  Many of our tertiary institutions have wasted a staggering amount of money –

just recall the rorts that occurred under the last government, the courses funded by the taxpayer for people who never turned up.

The arts community want heavy subsidies, film makers want subsidies, as do various sports code. 

Some businesses want research and development subsidies and tax write-offs.

Many beneficiaries – but certainly not all - resist the notion of a reciprocal responsibility to give something back for the support they get.  Heather spoke of the damaging consequences of that yesterday.

We provide subsidies on doctor visits and pharmaceuticals to everybody, not just the poor.

Every interest group wants its own Government department or agency – a Families Commission, a Ministry of Women’s Affairs, a Ministry of Youth Affairs, Te Puni Kokiri.

We have to endure the shameful reality of a political system that has reserved race-based seats, and a race-based political party.  Too many on the taxpayer purse are working hard to establish two classes of citizenship, rather than the promise of the Treaty of Waitangi – that we are one people.

People don’t want the Government to sell any state owned businesses, but they want the Government to keep investing in new infrastructure, as if there were no such thing as a budget constraint.

Helen Clark perfected the art of spending money on key interest groups to keep and to hold power. 

In this destructive and politicised environment you are almost forced to participate as a defensive measure.  If you don’t, you get nothing and end up paying for everybody else.

And so we get to the point where the bulk of our taxing and spending is just churning money from one pocket to another. 

This churning of tax and spending makes productive kiwis both a funder and a ward of the state. 

And that is wrong.

It is a downward spiral, a spiral of relative decline.

Sir Roger Douglas spoke yesterday of how Singapore overtook NZ over the course of just 30 to 40 years.  They faced up to reality.  We haven’t.

We need to be on a dramatically different path.

As with most things, it is all about incentives.

Politicians have every incentive to spend more, and promise too much, and no incentive to save money, to cut programmes, and to eliminate departments and agencies.

It serves only one simple purpose: to keep politicians in power.

Only ACT is prepared to speak out.

In the short term we need politicians with the courage to make tough decisions – politicians of the calibre of a Roger Douglas, Richard Prebble and Ruth Richardson.

That’s why ACT’s success is crucial to our country’s future.

For the longer term, we must change the political dynamic. 

That’s what ACT’s ‘Spending Cap (People’s Veto) Bill’ does.  The Bill caps real spending per capita.  If any government wants to increase spending, they will have to seek the consent of the people through referendum. 

That’s only fair – it’s the people’s money after all.

The Bill will change the political spending dynamic. 

I could tell a similar story about red tape: poor incentives, too much regulation done in haste, with little thought, and at enormous cost.  But we can’t depend on the occasional crusading politician trying to reduce regulation.  We need to build the discipline into the heart of the decision process.

The ACT Party has the solution to this problem too - a Regulatory Standards Bill.  Again this is an attempt to shift political incentives, and to inject transparency and accountability into regulatory processes.

There is much more to be done.  The 2025 Taskforce reports give a good summary of what we must do, and provides a profound analysis of the issues.
It was truly appalling that National dismissed that report for political reasons, without any consideration for New Zealand’s economic future. 

With 8 plus ACT MPs the 2025 Taskforce report will be firmly on the government’s agenda post election 2011.

ACT’s success in this election has never been more important.

Our objective this year?  To reverse New Zealand’s economic decline.

And remember this.

If not us, then who?

If not now, then when?

ACT is stepping up to the challenge.

We have a total focus on jobs.

So I say, let’s get started.

Let’s start with mining.

Thank you.


Stop Buying The Bullsh*t

Hon Sir Roger Douglas Speech to ACT Annual Conference; Barrycourt Accommodation and Event Centre, Parnell, Auckland, Saturday 12 March 2011.

I Introduction

Where are we?
We’re here.
And we’re swimming against the tide. We’re up to our neck in it. We’re running a cash deficit of $300 million a week, and it’s about to get a lot bigger.
And the Government’s response has reeked of cowardice. Too gutless to do the right thing.
Happy to fund reports, hold press conferences, make meaningless speeches.
Whatever it takes to avoid making any decisions that might be unpopular.
Our country is staring down the barrel of financial ruin, and all our Government wants to do is sit on its hands.
Well I, for one, have had enough.

II Reclaim Excellence

In the 80s we believed in Excellence.
Now we believe in Expedience. That means “A concern for self-interest rather than principle.”
Our politicians say we can’t catch Australia. “Too big,” they cry, “too rich in minerals.”
Well, on that logic, there’s one country we should be absolutely monstering economically.
Forget Australia.
Let’s look at Singapore
Singapore has about the same population as us. But it’s so tiny it could fit inside Lake Taupo. It’s got no minerals. And unlike Lake Taupo, Singapore hasn’t even got any water.

We should be bigger and better than Singapore in every way. But the reality is, we don’t even come close.
Our most recent GDP growth was under 1 percent. Singapore’s was over 14 percent.
In 1960, our gross domestic product was more than three times Singapore’s.
Yet by 2015, Singapore’s GDP will be three times ours.
Labour productivity.
In 2010, each Singapore job was worth NZ$182,000. Each one of ours was worth $93,000. Almost double.
How do they do it?
Because they’re led by leaders, not politicians who put reelection before the country’s best interest. Leaders who’ve had the guts to make the tough decisions.
Their government slogan gives you a clue to their standards:
Integrity. Service. Excellence. (That word again.)
Their government spends only 17% of GDP. Compared with our 43%.
They keep their tax rates low too.
Singapore’s top tax rate is only 20 cents – and you have to earn a whopping NZ$320,000 to pay that. Our top rate is 33 cents and kicks in at $70,000.
Hugely different incentives.
Singapore’s low tax rates act as a magnet to thousands of high quality immigrants, whom the government encourages to come and grow their economy.
Singapore’s cabinet ministers are the best brains in the land, so they’re natural goalsetters.
But unlike ours, they’re also goalgetters.
And their goals are long-term.
These ministers are paid a fortune, but their pay is indexed to GDP growth.
Could this explain why Singapore’s GDP growth over the last 50 years has averaged 7 percent, compared with our 1 percent?
Now here are some health numbers where New Zealand is well ahead in most cases.
That’s pretty encouraging, isn’t it? – until you realise that it’s the number of deaths per thousand people for various ages.
We also beat Singapore in such things as:
• getting cancer
• the number of hours we spend waiting at the emergency department, and in
• the number of weeks – or in our case, months – we spend waiting for surgery.
Singapore not only has one of the world’s best health systems, but also one of the best education systems.
In the last two PIRLS reading literacy surveys, Singapore rose from 15th place to 4th, while New Zealand dropped from 13th to 24th.
In the last PISA survey of reading, maths and science, Singapore was no lower than 5th for any subject, compared with New Zealand’s 13th.
Singapore’s great founding leader Lee Kuan Yew believes in “a fair society, not a welfare society.” Thus they create the conditions for the ablest to go far, so they can bring in jobs for the masses. Then they redistribute the surpluses to help the less able.
Singapore’s economic success means they can take care of their old and vulnerable. The able can get productive jobs. The sick can get treated. Their children go to great schools.
These are the hallmarks of a prosperous, compassionate society.

III A Vision for New Zealand

OK, so that’s Singapore. I’m not saying we have to become Singapore.
But I am saying we sure as hell don’t have to be poor.
So what should be our vision for New Zealand?
The first thing we need to do is chart a course for excellence. Aim high.
Defy mediocrity. Refuse to accept apathy and poverty as the norm.
We need to sweep the stage of the politicians, and replace them with leaders who are prepared to put their country’s needs before their own.
I want to quickly sketch what New Zealand will need to do to leap over Australia and catch Singapore.
First, we should ask ourselves: “What would Singapore do if they were us?”
What did they do in the 1960s, when they were kicked out of Malaysia? They were left to fend for themselves in a very tough neighbourhood.
They asked themselves the simple question, “What do we have to do to become a strong and wealthy nation?”
If they were us today, their answer would be just as simple: “We’ve got to dramatically improve our productivity.”
And how do we do that?
By increasing competition in poorly performing areas like:
• Health
• Education
• Welfare (including retirement)
• Local Government
• Regulatory environment
What would this involve?
A big shift of service provision from state to great. Give private companies the incentives to achieve excellence.
We need to start with a goal.
Government spending and tax levels should be between 20 and 22 percent of GDP within 4 or 5 years.

IV The Right Policies

To achieve this we need to put in place the right policies.

1) Tax
• 0 percent tax for all full-time workers up to around $35,000.
• Flat rate beyond $35,000.
• Look at replacing company/business taxes with a tax on assets (1-2 cents in the dollar would suffice).
Singaporeans pay 0 percent tax up to NZ$21,000, then 2 percent up to NZ$35,000.
And as we’ve seen, they’ve also greatly flattened their tax rates. Imagine having to earn NZ$320,000 before you pay 20 percent tax!
Like Singapore, we should let the poorest in society take care of the basics of life before paying tax.
That’s true compassion, and it works for Singapore.
Making the tax system fair has been the key to Singapore’s dramatic growth.

2) Health
• Move from a mainly-public to a mainly-private model like Singapore’s.
• Introduce personal health savings accounts and catastrophic insurance for claims over $10,000.
Singapore has had this model in place for a long time. They spend a mere 3 percent of GDP on healthcare, compared with our 9 percent.
 If we switched to this model, we could cut Government spending by around 6 percent.

3) Education
• Money follows the child 
• Total parental choice at school and individual choice at tertiary level.
• Replace Ministry of Education with a board of directors.
• Property company to ensure competition
It’s interesting that in Singapore children from disadvantaged backgrounds do well  academically. Of students in the bottom third socio-economic bracket, about half score within the top two-thirds of their Primary School Leaving Examination.
Why can’t we do that here? Of course we can. Education is the best tool we’ve got to lift children out of poverty – we’ve got to get it right.

4) Retirement
• Move away from the unsustainable model of pay-as-you-go.
• Establish individual retirement savings accounts for all New Zealanders.
Both Singapore and Australia have moved to get superannuation under control. By bringing in individual savings accounts, they’re now in a much stronger financial position than New Zealand. These accounts have greatly boosted the level of savings in both countries.

5) Welfare
• Replace existing benefits with a minimum income scheme for working families.
• Time limits on benefits to avoid long-term dependency.
• Re-education programmes to help unemployed get jobs
We need to move quickly to make sure the able-bodied are doing productive work and are relying on themselves, not on the state.
In the words of Lee Kuan Yew:
“The fundamental issue is, we must not demotivate people. Once we demotivate them and they feel it is an entitlement – “Society should look after me. I am born, you are the government, you have to look after me” – then we are in trouble.
“You are born, the government has to provide conditions for good healthcare, good housing, good education. You must strive. What you make of yourself depends on you. We can’t equalise everybody’s results.”

6) Regulations
• Get rid of remaining tariffs.
• Cut through red tape (i.e. get rid of monopoly control within the professions).
In Singapore they understand the benefit of open markets. They don’t have mineral resources, so their only choice is to attract businesses and wealth through open and deregulated markets.
Their prosperity is a testament to such freedom.

7) Immigration
• Open up immigration – get skilled people in.
 Lee Kuan Yew says, “If we do not have immigrants and foreign workers, the economic opportunities would pass us by”.
In fact, he says immigration is the most important factor in Singapore’s success. Getting skilled workers is crucial for our growth too.

8) Reform Government asset ownership
• Extract maximum long-term productivity from state assets.
• Where New Zealanders would benefit economically and socially from assets being transferred to the private sector, we should do it.
There’s no need for the Government to own large assets. A recent World Bank report confirmed that overall growth would dramatically improve and social outcomes would be better if some assets were run by private companies with incentives to provide top service.

V Conclusion

Such a programme would guarantee New Zealand a great future.
In conclusion let me say this.
I hold the same ideals I always have.
In fact, every party in Parliament claims to share essentially the same goals when it comes to the wider welfare. National, Labour, and the Greens are all wedded to the current system.
The problem with the status quo is that it’s all about power. Politicians control who gets an operation, where kids get educated, and how much super you receive.
I share the goal of equal opportunity for all. But I have a different way of achieving it.
It is often with the best of intentions that we have made the worst mistakes.
Look at the way the State tries to help Maori. No one can disagree that poverty falls hardest on Maori. But government’s response, over generations, has done nothing but lock Maori into dependency.
Only when we’re willing to look forward and devolve control of money to individuals, will we deliver solutions to the problems Maori and others face.
The great irony is that the very paternalism that stripped Maori of individual autonomy and self-determination in the past, is today seen as the solution to Maori problems.
When you look not at the goals of the welfare state, but its actual performance, the results are depressing.
In the last 80 years we’ve grown much wealthier. Yet there are more on welfare now than ever.
We’ve created a system that gives options to those who can afford them, while denying choices to those who most desperately need them.
We’ve created a system that taxes and regulates opportunities out of existence for most people, and drives many into poverty.
We’ve created a system that creates two classes of citizens.
And at the same time, the solutions put forth in Parliament are more of the same. More health spending, more education, higher taxes on the wealthy.
Remember, if we always do what we’ve always done, we’ll always get what we’ve always got.
What 80 years of political control has achieved is a larger welfare budget, more people on welfare, and barriers for those at the bottom to actually get ahead.
When are we going to stop buying the bullshit and wake up?


The Country Needs ACT Now More Than Ever

Hon Richard Prebble speech to the ACT Annual Conference; Barrycourt Accommodation & Conference Centre, Parnell, Auckland; Saturday, March 12 2011.

At 12:51pm on February 22 2011 an earthquake not only destroyed New Zealand’s second largest city, but set off a political aftershock that is going to have an equally dramatic impact on this year’s general election.

The electorate is realising that the issue of the election is how to pay the cost of the two earthquakes is now estimated at $15 billion by Treasury and $20 billion by Fletcher construction.  Treasury concedes that its estimate does not include the personal costs of the earthquake.  To most of us that is Jo Giles, who was a very popular ACT candidate who was killed in the CTV building collapse.

The news that whole suburbs of 10,000 homes will have to be demolished is giving us an idea of the scale of the disaster and the cost.

I doubt that my relative’s losses are in the Treasury estimate.  In the first earthquake he lost his possessions when he was not allowed to return to the house he rented.  In the second earthquake his new home was destroyed and he lost his most valuable possession - his van.  He has lost his job as a contract cleaner because the central city is closed.  He, and his wife and children, just own the clothes they are wearing and are now living with his mother-in-law in Wellington.  None of his possessions were insured.

His case illustrates what the earthquake means to the nation: a huge loss of wealth.  Assets that had taken 170 years to build are gone.  The payouts by the Earthquake Commission will require the Commission to sell billions of dollars of assets.  Every insurance-holder will be levied to rebuild the Commission’s reserves.

Even insurance is really a group savings scheme with a provision in certain circumstances for a payment.  Insurance companies expect to make a profit.  Insurance premiums will rise as actuaries re calculate the risk and, through significant increased premiums, we are all going to pay the insurance cost of the earthquake.

Then there is the uninsured risk of the Crown’s assets and council infrastructure.

An American friend of mine said he had worked out that, relative to the size of our economies, the Christchurch earthquake is 15 times larger than Hurricane Katrina – America’s costliest natural disaster, and no one thinks New Orleans is America’s second city.  Six years later thousands of residents are still living in temporary accommodation. 

New Orleans is what happens if we get our response wrong.

There is a political consensus that Christchurch must be rebuilt.  There is also a consensus that there is no way the ratepayers of Christchurch can meet these massive bills.  There the consensus ends.

No Party has yet been upfront with the electorate about the magnitude of the cost, or been realistic about how to pay.

We are facing one of the biggest challenges in our nation’s history.  

We formed the Association of Consumers and Taxpayers because the two old Parties would not face reality and put up positive solutions to the problems facing the nation.

Someone has to say that things that were affordable on February 21 are not affordable today.  That someone is us - the ACT Party.

Someone needs to spell out that on the day of the earthquake the Government spent $48,857,142 more than it earned.  Not that the 21st day of February was, in that respect, an unusual day - the National Government has been borrowing $300 million a week all year and plans to continue to borrow until 2014.

Bernard Hickey has calculated that by the time the borrowing programme is complete it will cost $2.4 billion every year just to pay the interest.  This calculation was done before the Christchurch earthquake.

When we add in the private debt to the Government debt, New Zealand has one of the highest levels of per capita debt in the world - right up there with the basket cases Ireland and Greece.

There was a view that we only had to worry about the Government’s debt.  That cherry view was destroyed in a few hours just three years ago when the Australian Banks informed the Government they had $40 billion of short term borrowing and, following the collapse of Lehman Brothers, no lender was willing to roll the loans over without a guarantee from the Government.

Lenders are asking whether countries can ever repay.

When I started writing some notes for this speech I wrote that:

“The risk with the Government’s plan to borrow now and return to surplus later is not only is the global debt crisis not over there is other economic events that could affect our economy. 

“History has taught us that as a small trading nation we are very vulnerable to economic shocks.  These future shocks that will rock our economy can come from anywhere.

“The only thing we can be sure of is that these economic shocks will come from a direction we did not expect.  The next economic shock could come before the next election”.

There have been two major shocks the earthquake and the oil price between my starting drafting this speech and its delivery.

We all know that in our households that we should put money aside for a rainy day.  Government is no different.  We will look back on the last three years and realise what we thought were hard times were actually good. 

Someone needs to say that borrowing $300 million a week is reckless folly when the money is being borrowed to finance Labour’s spending programmes that National, in Opposition, said were wasteful, unaffordable and unnecessary.

The someone who needs to say that is us: the ACT Party.
Let me, as an aside, deal with the repeated claim that government spending is needed to sustain the economy.

There is no evidence here or anywhere ever that you can grow your economy by state spending.  If it were true government would be easy.  The Soviet Union would have won the Cold War.  State spending has not boosted the New Zealand economy.  The economy after four years of deficit spending and record export prices is in a technical recession. 

This should be our issue.

We formed our Party because we know neither National or Labour can be trusted not to spend, borrow and hope.  We are the low tax, small government party.

That’s our brand; that’s our purpose.

ACT may well be re-elected because we have a powerful tactical message.  MMP means that National will need a coalition partner.  The Maori Party, even before it started its meltdown, cannot provide stability.  Peter Dunne will go with anyone who will give him one of the new Ministerial BMWs.  ACT is the only Party that can provide a stable coalition partner to National.

Rodney Hide being elected to Epsom could well decide whether National forms the next government, and the voters of Epsom are the most sophisticated in the country.

But, as Rodney has often said: “we do not want to be elected just to make up the numbers”.

I was delighted to see our leader’s statement last week “Reprioritise, Rebuild”.  Rodney Hide set out what should be our manifesto.

Rodney said:

“Our second city is devastated…We are forced to make hard choices, to focus intensely on only the highest priorities – we need to face reality.

“Our starting point is not good.  Our government has been borrowing $300 million a week simply to keep afloat.  That’s almost $200 per week for each and every Kiwi household.  And now we have Christchurch to rebuild.

“The middleclass wants free childcare.  Students want interest-free loans.  Pensioners want …gold cards.

“We could not afford that before the earthquake and we absolutely can not now.
Government must live within a budget as tight as the budget that ordinary households face”

No other Party leader would have made that statement.  Rodney’s statement is why we need ACT.

Our creditors are going to demand that the government balanced the books and this day may come much sooner than anyone thinks.

Spend, borrow and hope is not a sustainable strategy.  As Greece and Ireland have discovered a nation’s creditors can say almost overnight “We will not lend you any more”. 

There are only three ways to balance the books, cut spending or increase taxes or do both.

Labour’s policy solution to every problem is to spend more taxpayers’ money.  Phil Goff says he will finance Labour’s spending promises by taxing the rich.  Labour is somewhat vague as to who is rich knowing that even the rich do not think they are rich.

Anyone who owns their own business, employs someone, gives professional advice, has a trade, they are the “rich” Labour is talking about.  The people who live in Epsom are right in the bull’s-eye of Labour’s target. There is no electorate that has more at stake in this election than Epsom. 

Just electing a National government is not going to protect Epsom taxpayers.

Epsom voters have been wondering “who are these people Phil Goff says have had huge tax cuts”.  National’s tax changes were not designed to reduce the amount of tax raised. The fluctuation in the government revenues are caused by the recession not by tax changes. 

The government is borrowing because under National government spending as a percentage of GDP has increased from 31.2% of GDP under Labour to 34.9 percent today.  A National government has increased government spending as a percentage of GDP by a massive 10 percent.

Even with the income tax rate changes many households in Epsom are paying more tax today than they were three years ago. Epsom voters pay the increased GST.  Owning a rental home is the preferred savings scheme in Epsom.  Rental home owners have been hit hard by National’s tax changes.

Is it only me?  Why should anyone be surprised that there is now shortage of rental accommodation in Auckland? 

National’s change in depreciation rates for which there is no economic justification has resulted in many companies paying more tax this year than they paid under Labour.

Someone needs to say that.  There is no scope to finance the Christchurch rebuild by increasing taxes. 

Someone needs to say taxes do not become good just because the government has changed colour.

That someone is ACT.

There has been a debate in ACT since we started whether we are more influential inside government than out.

The real issue is that ACT must be able to speak out on our issue; the need to balance the books, reduce red tape and lower taxes.

The Free Democrats in Germany are a low tax, smaller government party like ACT.  The Free Democrats are very out spoken on the need to reduce taxes and spending even though they are in government.

So I am delighted to see Rodney speaking out on our issue.

The electorate expects us to set out our program for the next three years. 

We need to say that government must stop spending that does not meet any sort of cost benefit test such as urban rail in Auckland or roads of national significance that just happen to be in marginal seats.

To listen to the left all government spending cuts hit the poor.  If government spending just benefits the poor how come after such a massive increase in government spending people are still poor?  As Rodney pointed out in his statement gold cards for millionaires, interest free loans to the sons and daughters of the rich and free child care to high income earners does not help the poor. Cutting government spending is the way to ensure we all contribute to the rebuilding of Christchurch.

If we return to the level of government spending as a percentage of GDP before Labour took office we can easily rebuild Christchurch without new taxes or new borrowing and balance the budget.  It is that simple.

Someone needs to say that.  That someone is the ACT Party.

There are a lot of things that ACT can say that no one else will.  Having over 50 billion in under performing assets and growing debt is absurd.  The state’s businesses should be privatised not to repay debt but because government is hopeless at business.  The Crown agency that monitors SOEs reports last year under a National government that the state’s businesses earn less than half the returns of the average public company that is a loss of hundreds of millions of dollars a year for taxpayers. 

Some one needs to say we need to privatise the state’s businesses because it will result in low prices, better efficiency, more tax revenue and a wealthier New Zealand.
That someone is ACT.
Having taken three years to notice that the civil service is bloated I have little confidence that National will reduce the number of civil servants or tackle the problem that civil service terms and conditions are too generous.  For over a decade government employees’ wages have been rising faster than the private sector.  

Someone needs to say that we not only need fewer bureaucrats but their pay and benefits should not be higher than the pay and benefits in the private sector. That someone is ACT.

When asked for an example of how to stream line the bureaucracy the Prime Minister suggested amalgamating the departments of agriculture, forestry and fishing.  When in business has the merge of three inefficient businesses resulted in one efficient slim business?  The fact that the state unions think the merge has merit should be a warning sign. 

Someone needs to speak out and say that the only effective way to reduce the size of government is for the government to stop doing things.

That someone is ACT.

Having taken three years to notice there are 300,000 able bodied people on welfare gives me little confidence that a re elected National government will tackle Welfare reform.  John Key says it makes him feel squeamish.   Someone needs to say that one of the most important principles of good government is “Do not pay for the things you do not want more of”.
That someone is ACT.

I think a re elected National government will decide it is easier to raise taxes than cutting spending.|

You can just see National having accepted the myth that rental home owners somehow got a tax break will next decide we need to increase taxes to be “fair”. 

The Conservatives in Britain are taxing bankers in the name of fairness.  There is no economic logic that says people in banking should pay a higher rate of tax just as there was no logic in saying rental businesses should pay taxes that other businesses do not pay.   

Someone needs to be saying that the real solution is to grow the economy.  Someone has to say that it is entrepreneurs that create jobs.  If we want more new jobs then we need to tax the job creators less.

It is that simple.

Someone needs to say it. 

That someone is us, the ACT Party. 

We formed this party because no other party will say we need low flat tax.

I believe we can be rightly proud of our party and our MPs.

The reorganisation of Auckland is the biggest single reorganisation in our nation’s history, local or central.  It has been accomplished in two years. It is the most remarkable achievement of the Key government.  

Let me tell you something else that no MP will say.   The reason the MPs hate Rodney is because Rodney Hide has ended the payment of parliamentarians by perks.

When Rodney first spoke out against MPs travel perk I said to him “Rodney you do realise that perks is how MPs are paid.  The day will come when you are a minister and will need to go overseas.  You are not paid enough to pay your own way.  Be careful never to say that you will not use the travel privilege”.

Rodney promised me that he would never make such a statement.  The media and the Opposition have been through every statement Rodney as ever made and they can not find a statement from Rodney saying he would not use the travel entitlement.  If he had they would have told you again and again.

What killed the perks was a personal decision by Rodney not to accept the parliamentary travel entitlement and to repay the taxpayer for travel he was legally entitled to.

I have to confess as a retired MP when I saw Rodney had decided to take his stand I said “Dam, Rodney has just killed my travel perk.  The parliamentary travel entitlement can’t last now one MP is paying it back”.

John Key may have signed the death certificate but Rodney Hide killed the travel perk.  Much as it hurts me I am very proud of Rodney.

Just as I am proud of John Boscawen who was voted by the press gallery the most effective backbencher and is now being an effective minister.  I am an open fan of Heather Roy.  I have not forgotten David Garrett.  He achieved more in two years than most MPs achieve in their total careers.  His final achievement may be his greatest getting Hillary Calvert into parliament; she is going to be a future star.

Our MPs have spoken out on the issues ACT campaigned on; ETS, the anti smacking bill, three strikes and one law for all. 

Which brings me to Sir Roger; Roger your output is amazing.

When I first visited Europe and saw the youth unemployment I said to myself: “How can any nation tolerate a system that results in a third of all young people being unemployed?  At least in New Zealand young people can get jobs”.

We now have one of the highest rates of youth unemployment in the OECD.  If we include the young people doing training courses because they can not find work we have the highest youth unemployment of any developed country - 62,100 young people between the age of 18 and 24 are unemployed.  For those of you from out of town you travelled through Mangere to get here - 62,100 is more people, man woman and children that live in Mangere.  It is a wicked waste of young lives.

Our young people are better educated than ever and more unemployed than any time since the great depression.

There is no shortage of work.  There is just a shortage of jobs where employers can afford to hire an inexperienced, immature, young person with no work experience.

In some regions of New Zealand over half of all young Maori are unemployed because it is illegal to offer young people a job at what they are worth.  

When I graduated with two degrees as a lawyer I had to find a barrister who would agree to take me as his pupil for no fee.  It was a good deal for me to work for no pay because as anyone will tell you, I learnt more on the job than I ever did at university.

Who speaks out in parliament on the importance of young Maori getting that all important first job experience?  Not the Maori Party.  Not the Labour Party.  The Greens want the minimum wage for an illiterate, innumerate, inexperienced and immature 18-year-old who was expelled from school lifted even further.

The man who has introduced a private members bill to let young people get that all important first job is parliament’s oldest MP Sir Roger Douglas. We are so proud of him. 

They all deserve to be re elected.

As a nation we do not want to look back in six years like the people of New Orleans and say what went wrong?  How did we drive our skilled people to Australia with high taxes?  How did we borrow so much we have lost our credit rating?  How did we put our grandchildren into debt?  Why are thousands in Christchurch still in temporary accommodation?  

It is vital ACT MPs are re elected.

I believe our best days are still ahead. 

The consumers and taxpayers of New Zealand need an ACT party to speak for them now more than ever.


After The Earthquake – A Vision For New Zealand

Hon John Boscawen speech to the ACT Annual Conference; Barrycourt Accommodation and Conference Centre, Parnell, Auckland; Saturday, March 12 2011

Good morning, ladies and gentlemen.

Welcome to our conference, and thank you for your support.

It is an honour and a privilege to stand before you this morning as a Member of Parliament, a Minister and the Deputy Leader of ACT – something I never dreamed of when, in March 1995, I sent away for a copy of ACT’s founding document ‘Common Sense For a Change’.  I signed up as a volunteer soon after - that was 16 years ago.

Without a doubt, the state of our economy is the number one issue facing New Zealanders today.  And with two tragic earthquakes the situation has just become a whole lot worse - and the need for solutions and political courage even more urgent.

I want to start with National’s proposed changes to our foreshore and seabed laws, which passed their Second Reading just this week and are set to become law within days.

Few New Zealanders understand the constitutional significance of the Marine and Coastal Area (Takutai Moana) Bill, nor the massive transfer of wealth it will facilitate to a select few from other iwi and non-Maori New Zealanders.

This Bill restores nominal customary title and ownership over the entire coastline and, as Tariana Turia and Pita Sharples correctly wrote in the ‘New Zealand Herald’ this week, “The Crown will now have to prove customary rights have been extinguished, instead of iwi having to prove they remain intact.”

Customary title will have commercial benefits similar to freehold title and, while public access must be guaranteed and the land cannot be sold, a title-holder will also be able to develop a plan that regional councils must - and I repeat must - recognise and provide for.  This is a major benefit far exceeding any conferred by a freehold title, and is not available to all other New Zealanders.  It breaks National’s 2008 election commitment of ‘One Law for All’.

It is unsurprising that few New Zealanders understand - or have even taken an interest in - what is happening.  National has repeatedly perpetuated the fiction that the test for customary title requires continuous, exclusive use and occupation of an area since 1840 - despite knowing this is patently untrue.  The Bill specifically allows for others to have used and occupied an area, and for the claimant group to maintain a charade of continuous and exclusive use and occupation.

I agree with Sharples and Turia when they say: “We have achieved amazing results in a short time.”
Now to the economy.

At the turn of the last century New Zealand was regarded as having the world’s highest standard of living.  By the 1950s we’d dropped to fourth.  Today we rank around 25th of around 30 OECD countries.  We’ve suffered a massive drop in prosperity and living standards by comparison.

Today we borrow around $300 million a week – over $1 billion monthly – and following the earthquake this will only get worse.  This can’t continue.  We’re living well beyond our means.

Sooner or later, the countries lending to us will demand a higher rate of return to reflect the higher risk – or will stop lending and demand repayment.

Our social welfare system traps people, stealing their self-esteem, and disincentivises them through high effective marginal tax rates.  We’ve added to that by scrapping youth rates and requiring 16 and 17-year-olds to be paid the minimum wage.  The unintended consequence has been to deny thousands of young people the first step on to the employment ladder and instead force them on to the Unemployment Benefit.

We lead the world with the most comprehensive Emissions Trading Scheme, despite none of our four largest trading partners having such schemes.  The Government is effectively taxing all New Zealanders $500 million annually for electricity and petrol, and paying this as a massive subsidy to foresters.  The Government is giving away free forests to those smart enough to know how the system works.

We also have an interest-free loan scheme that incentivises students to borrow the most they can and locks them into debt.  Little wonder that outstanding debt has increased from $5 billion-$11 billion over the past six years - all funded by foreign creditors.  How much longer will this continue?

And we have a Government publicly committed to paying current superannuation to those aged 65 – despite the fact that people’s life expectancy and working lives are both increasing.  This says nothing of the greater health costs, as a consequence of an aging population and improving technology.  Surely we owe it to those approaching retirement to give them as much notice as possible of changes that can only be required.

Is it any wonder that over the past 20 years we’ve seen a mass exodus to Australia, where opportunities and incomes are greater?  Today, Australian incomes are some 35 percent higher than here.

In 2008, ACT campaigned to eliminate this gap and ‘bring our children home’.  Sadly, the 2025 Taskforce that was set up at our insistence has been largely ignored by National.

To date, the Government has done little to address these issues.  Government expenditure continues to rise, we continue to borrow heavily from foreign creditors, and the Government has quickly dismissed unpopular solutions.

In his State of the Nation speech to Parliament in February 2010, the Prime Minister spoke of “unlocking access to our abundant natural resources” and “unleashing the untapped economic potential of New Zealand.”  Sadly, National backed away from these goals.

ACT believes we can no longer afford to leave valuable resources in the ground.  We must do all we can to maximise their value for the good of all New Zealanders.
Just one example of a major natural resource crying out for development is Southland lignite.

New Zealand has literally billions and billions of dollars worth of lignite – essentially low-quality water-logged coal. 

The good news is that, far from lying in national parks, this lignite lies under Southland dairy farms.  Better still, those dairy farms are owned by you and me - the taxpayer - through Solid Energy.

Given the state of the New Zealand economy, the world economic recession, Pike River, and two Christchurch earthquakes, there has never been a better and more important time to develop this than now.

Solid Energy CEO Dr Don Elder told me this week that the company has the capability and know-how to commercially develop this lignite into diesel and urea for fertiliser.

He advises me that, at today’s prices, New Zealand would be better off by around $2 billion per annum from the development of this resource.  That’s just the difference between the cost of importing urea against what it would cost to produce it here.  That’s the profit alone - the overall addition to GDP would be even greater.

It is a national imperative to develop this resource in the fastest way possible.  New Zealand stands in ‘pole position’, and we need to move now to take advantage of those investors who want to help us develop this resource - before other countries get there first.

Incredibly, late last year, the Environment Commissioner recommended that these resources not be developed due to the carbon emissions that would purportedly be released.  Solid Energy refutes these claims.

The Government must move to clear all the hurdles necessary to commercialise this resource – now.  The reality is we simply can’t afford not to.

Ladies and gentlemen: in 1984 ACT co-founder and then Labour Finance Minister Sir Roger Douglas and his colleagues were confronted with a closed, over-regulated and bankrupt economy.

They seized the opportunity and displayed the courage and vision to make the bold decisions necessary.

Sadly New Zealand is again in a similar position.

Not only do we need to rebuild Christchurch, we need to rebuild New Zealand.  We can no longer afford to continue to tinker around the edges.  We need a bold government; one that will set out the problems, articulate the solutions, and show the political courage required to implement them.

John Key has said he doesn’t want to take the “big bang” approach that Sir Roger did in the 1980s, preferring a slower and more incremental approach.  The time for that has gone.

It’s time for John Key and National to show the same political courage ACT’s co-founder displayed over 20 years ago.

It’s time to reform our economy and to save, and then transform, this country.

The time to act is now.

Thank you.


The State Of Our Nation

These are grim times for Canterbury.  And for New Zealand.

Our second largest city is devastated.  The people of Christchurch are enduring the hardest of times.  Our economy has taken a huge whack.

The task ahead for New Zealand is big – we have a mountain to climb.

We can do it.  We have done it before.

But we need to face reality.  Something kiwis are good at.

We are forced now to make hard choices, to focus intensely on only the highest priorities.

Our starting point is not good.

We already faced serious problems before the February 22 earthquake.

Our Government is borrowing $300 million a week simply to keep afloat.  That’s almost $200 a week for each and every household.  We are broke.  And now we have Christchurch to rebuild.

It’s not just Government.

As a nation we have built up overseas debt of $162 billion, 85 percent of GDP.

We have seen the economic and social turmoil in the most highly indebted European countries.  The future has arrived for them.  Those in deep trouble were the countries with the highest current account deficits, the highest overseas debt levels, the highest government debt levels.  If you need to know what the future holds on our present track, just look at Ireland, Greece, Portugal, Spain.

2025 Taskforce Chair Don Brash summarised our dire predicament in a speech last month:

“Government spending as a share of GPD is now more than it was in any year of the last Labour Government, and the structural budget deficit is now bigger than it was under the Muldoon Government”.

Sobering stuff. 

Our debt and deficits are symptoms of deeper problems.

We all know that in a country of just over four million people, something is terribly wrong when we have around 350,000 people permanently dependent on welfare; when one in five kids are in benefit dependent homes; when sickness and invalid beneficiary numbers have increased by 70 percent in just a decade.

This year 60,000 children started school.  On our present track, 16,000, or almost 30 percent of them, will leave unable to read or write adequately for a job.  That’s despite 11 years compulsory schooling and a billion dollars of spending on their education.

For Maori children, that failure rate is almost 50 percent.

That it is not just a problem – it’s a calamity.  We must address that failure.

Our economy and our society can’t afford that level of failure.

The ACT Party campaigned for over a decade, and finally passed, the Three Strikes legislation.  Three Strikes will get the most violent repeat offenders off our streets.   I am proud of ACT’s achievement.

But it’s not enough.

It’s tough for young people these days.  It’s made especially tough for those who can’t read and write and who have only ever lived in a community dependent on the state and a background of crime.

If we are to truly make our streets, our places of work, and our homes safe, we need to reverse intergenerational welfare dependency and provide every young child with the skills they need in the 21st Century to provide for themselves and their family.

It’s tough being among those who Helen Clark labelled rich too.  Constituents say to me they feel government policy attacks middle income families, the families that are hard-working and self reliant, the families that do it right. 

If you are on a benefit or low income, then the support keeps coming regardless how many children you have.

But if you take responsibility for yourself and your family – if you acquire skills, work hard so that your income rises, and you only have more children when you can afford them – then somehow you become the mug in the system.  You pay for more than your share, and get little back in return.

Under the Working For Families system, middle income families find themselves with marginal tax rate of 53 percent (the 33 percent band plus an additional Working For Families abatement of 20 percent).  

So despite all the care, all the diligence, all the hard work that has got you into the broad middle income bracket in this country, you are scarcely any better off.  What then is the point of doing some overtime, of working harder or getting a promotion?  You get to keep less than half of what you earn.

That is how our tax and benefit system destroys the incentive to get ahead from your own efforts.

Families that exhibit every day the traditional kiwi values of personal responsibility and self reliance – which are core values to the ACT Party – are the ones that get hammered in our tax and benefit system.

And they aren’t the rich.  Not by any means.  So many of them are doing it real hard.

Think about what these families are up against.

Because they care about their children so intensely, if their local school is not up to scratch they look for an alternative school. 

If it is an independent school, they get little credit for the taxes they have paid, so end up paying twice.  

Or they might decide to relocate into a zone with a better state school, but then they will have to pay more for their housing.

To look after their family, they might take out health insurance and again end up paying twice, by removing some of their health cost burden from the state.

As one woman said to me recently, “you do everything right, but you end up paying twice.  It’s just not right.”

And she is right. 

It’s not right. 

It’s wrong.  It’s unfair.  It’s inequitable.

We need to support and reward personal responsibility.  Not punish it like we do now.

In 2008, ACT set the goal with the Prime Minister of catching Australia by 2025.   Our aim was to boost jobs and to boost wages.  We set up a Taskforce to measure our performance and to recommend what was needed to close the gap. 

That Taskforce in 2009 estimated Australian incomes on average to be at least 35 percent above those in New Zealand.  They made some modest recommendations to boost our economic reforms.  That National part of the Government rejected them as too politically tough.  The gap has now undoubtedly widened and will continue to widen.

We should not be surprised that the ‘New Zealand Herald’ recently reported that there was a net loss of almost 22,000 kiwis to Australia last year.  The Kiwi diaspora looks likely only to worsen.  The second 2025 Taskforce report predicted on our present path a loss of over 400,000 over the next 15 years.  We cannot afford to lose our best and brightest at the rate of a hundred per day.

We need to implement the 2025 Taskforce reforms.  We simply can’t afford not to.

We pay a lot of attention to the polls in New Zealand.  We need to pay a lot more attention to the kiwis voting with their feet.

We have a big challenge.  Let me cover just two policies ACT is working on this year to reverse our country’s fortunes.

First is getting government spending under control. 

The reason we have so much wasteful, pointless and counterproductive government spending is that politicians have every incentive to spend more, and promise too much, and no incentive to save money, cut programmes, and eliminate departments and agencies.

The middle class want free childcare.  Students want interest free loans.  Pensioners want pensions and gold cards.  On and on it goes. 

Every interest group wants their own government department or agency.  Helen Clark perfected the art of spending money on key interest groups to keep and to hold power.  Through Working For Families she reduced hard working kiwis to taking government handouts.  National, anxious to hold the middle ground, aren’t prepared to reverse the spending promises.

To control government spending, we need to change the political dynamic.  That’s what ACT’s ‘Spending Cap (People’s Veto) Bill’ does.  The Bill caps real spending per capita.  If any government wants to increase spending, they will have to seek the consent of the people through referendum.  That’s only fair – it’s the people’s money after all.

The Bill changes the political spending dynamic.  The total amount of government spending is set by the people, not by politicians bit by bit pandering for votes to a multitude of special interest groups.  The general good gets to prevail over narrower self-interest and government must live within a budget set by the people. 

It’s modest enough.  It’s not a cut to spending.  It’s just holding it in real terms.

ACT’s ‘Spending Cap (People’s Veto) Bill’ will make a huge difference to New Zealand’s economic fortunes and to jobs and to wages.  As the 2025 Taskforce showed, if we had held government spending at 2004 levels (as a percentage of GDP, not even real terms) the top personal and company rate of tax would now be 20 cents in the dollar.  That would be a huge boost to investment, to entrepreneurship, to jobs and to wages.

The second area ACT is focussed on is cutting red tape.  Our regulatory environment is extremely low quality, and a huge barrier to growth in New Zealand incomes. 

Regulation overrides commercial solutions, creates huge cost and uncertainty for business, diverts energy into political lobbying instead of market performance, reduces the competition it pretends to promote, and deters badly needed foreign investment.

ACT’s ‘Regulatory Standards Bill’ serves to change the political dynamic when it comes to law-making.  This Bill has three simple ingredients: it sets out the principles that all good regulation should comply with - that’s the benchmarking mechanism; it requires Ministers and officials to tell us if their legislation breaches these principles and, if so, to explain why - that’s the transparency mechanism; and it allows private citizens to seek a declaration of incompatibility from the Courts - that’s the incentive mechanism to ensure Ministers and officials behave.

We need this Bill, because politicians have next to no incentive to legislate with proper consideration and due regard to good principles.  We face enormous pressure to regulate in haste, with little scrutiny of alternatives, and few tests against fundamental principles of good government.

Let me give just one practical example.  National campaigned in the last three elections on a commitment to one law for all New Zealanders.  Despite that, National with the Maori Party in November 2009, gave non-elected Maori voting rights on Auckland Council Committees dealing with natural and physical resources.  There was a considerable outcry when people realised what had been done.

The ‘Regulatory Standards Bill’ wouldn’t stop a Government or a Parliament doing this.  The Bill does not over-ride Parliament’s sovereignty.  But it would require the Minister and officials to tell the public that is exactly what they are doing and why.  The Bill does ensure transparency and accountability – long overdue in law-making.

The ‘rule of law’ principle in the Bill states that laws and regulations should ensure that “every person is equal before the law”.  Clearly provisions that give some members of the community – especially unelected officials – specific control rights over resource management are not compatible with the principle of equality. 

Any government proposing a Maori Statutory Board, or similar arrangements, in future would need to inform Parliament and the public that their laws would be incompatible with equality before the law.  And that Government would have to clearly state why violating the principle was necessary and in the public interest.  Voters and other MPs would be able to make their own judgements as to whether the Government’s justification was reasonable.

I believe that we would not have had the debacle that we had with the Maori Statutory Board on the new Auckland Council if we had had the simple transparency that ACT’s ‘Regulatory Standards Bill’ provides.

The ACT Party will be working hard on these two Bills this year.  They are critical to New Zealand’s future economic success.

ACT’s wider plan through to the election and beyond is very straightforward. 

Our mission statement in 2005 was to survive.

Our goal last election was to ensure a centre-right government and to nudge the Government to do the right thing.  That is what we have done.

ACT’s success was crucial to a change of government in 2008.  That’s the nature of MMP.  If ACT hadn’t succeeded in Epsom, and secured five MPs, Helen Clark would still be Prime Minister.  It was the people of Epsom who ensured the John Key-led Government.  On election night I was able to pledge ACT’s support for National.  The Maori Party’s choice was whether to join with National or be in Opposition. 

If it wasn’t for the people of Epsom the Maori Party would have backed Labour.  The best we could have had would be a John Key-led Government utterly dependent on the Maori Party.  That would be a far different Government to the one we have now.

ACT in the last two years has built up experience and trust working with National in Government.  We our proud of the policy difference we have made.  The 2025 Taskforce, Three Strikes, the 90-day trial period for all firms, sorting out Auckland’s governance, the Productivity Commission, and the work to open ACC up to competition. 

That’s all because of ACT.  But it is not enough.

We have a National-led government because of ACT.  And we have a better Government because of ACT.  But the difference ACT has made is not enough to reverse New Zealand’s economic fortunes.

That’s what this year’s election is about.  This election is about the future direction of the country.  It’s about jobs and wages.

And ACT’s success is essential for our country’s success.

Please reflect on this.  ACT has five MPs.  If ACT had just three more, not a big ask, just a couple of percentage points in the vote, there would be no ETS, no foreshore and seabed legislation, no more racially divisive and separatist legislation, and the 2025 Don Brash Taskforce would in large part be implemented, not rejected out of hand.

That’s the crucial difference a party vote for ACT makes.

That’s ACT’s mission statement for the next four years: to reverse New Zealand’s economic decline.  ACT has delivered on our mission statement for the previous three years. 

It’s up to us in ACT to explain and to convince New Zealanders of the importance of a party vote for ACT and then it will be up to the people whether ACT delivers for the next four years.  That’s the nature of our democracy.  ACT needs eight or more MPs to deliver.

This country has a big job ahead.  We need to rebuild Christchurch.  We need to rebuild our economy.

Each and every one of us has to step up to the challenge.  We all have a vital role now to play.

ACT is stepping up to the challenge.  We are on the road this year challenging kiwis to do likewise.  We know kiwis can do it.  So do you.

Thank you.