Monday, 9 May 2022

Free Press, 9 May 2022


The Haps 

It’s a Budget day of sorts. Commissar James Shaw brought out his first carbon budget under the Zero Carbon Act, legislation that only ACT opposed and we are still the only party opposing this new form of central planning. ACT meanwhile presented its own Alternative Budget for Real Change. The Prime Minister is being isolated under her own absurd seven day isolation rules. We should follow Singapore and set people free as soon as they test negative. 

ACT's alternative budget for real change 

As a country, we’re in one of our downward slumps. Former members of the Union of Soviet Socialist Republics, such as Lithuania, are now richer than us. Israel, which presents a few risks as an investment destination, still manages to attract twice as much foreign investment per capita as we do. An estimated 23 per cent of New Zealand born citizens live outside the country.

Into this situation stride Labour. Their big ideas include fishing for hidden wealth to tax, and putting whole industries on one nationwide employment contract. The National Party want to offer an alternative but we haven’t seen it yet.

Good thing we have the ACT Party, who have released a fully costed Alternative Budget for Real Change that shows how much better things could be. You can read David Seymour’s speech launching it here, or see the full budget document here.

In summary it would:

Get back to surplus immediately to kill inflation dead. Labour says it will be back in surplus by 2025, but Adrian Orr is right when he says ‘monetary policy needs friends.’ We can’t afford to risk a wage price spiral and stagflation by Government working against the Reserve Bank in the meantime.

Simplify the tax system from six rates down to just two. Making the tax system simpler, fairer, and more competitive. A nurse earning $70,000 would be $2,300 per year better off. More importantly, flatter taxes reflect and reinforce a cultural value. Success should be celebrated not punished.

Reduce debt in 2025/26 by $15 billion. That’s roughly $3,000 less per person, saving over $200 million a year in interest.

Extend the successful Mixed Ownership Model to more SOEs. Investors would be able to buy up to 49 per cent, while the Government retained majority control. This would raise around $8 billion to retire Government debt.

Secure the future by making superannuation sustainable. ACT’s alternative budget would gradually raise the age of entitlement by two months per year. The retirement age would reach 67 by 2035. Over those first 12 years, it would save $16 billion. If you’re already retired, nothing changes. If you’re 64, you’ll be eligible at 65 and two months instead of 65.

ACT’s budget still finds room to invest more in teachers, to the tune of $250 million with a Teaching Excellence Reward Fund. We would match Australia’s goal of spending 2 per cent of GDP on Defence, enabling us to properly join in the ANZAC alliance again. We would share half of the GST on construction with the Council that gave the consent, giving councils the incentive and the means to support building homes.

All of this is made possible by reducing expenditure by $6.8 billion in the first year. There are policies we just cannot afford, such as fees free tertiary that transfers three quarters of a billion to kids from mainly wealthier households, but has not increased participation from poorer households.

New Zealand faces a choice. We can carry on as we always have, using each budget do divvy up the nation’s wealth. Or we can ask what values we want to underpin New Zealand, and create a society that promotes work, savings, investment, and productivity growth.

The first one is the default for every other party. It will see a slow comfortable decline until we wake up and see we have joined the ranks of sunny island nations that are much nicer to visit than actually live in.

One of ACT’s jobs is the be the long-term conscience of New Zealand. Will we face up to hard choices to secure our future, or turn away from them as we enjoy the decline? If you read Free Press you probably know the answer, and we appreciate your support in what will be a long hard fight for power over the next 18 months.