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28 February 2010 New Zealand Needs a Champion

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Speech to ACT Annual Conference, Wellington, 27 February 2010.

Thank you for inviting me to address this 2010 ACT New Zealand conference - it’s great to be here.

As you know I run the New Zealand Centre for Political Research, a public policy think tank that produces the biggest weekly electronic newsletter in the country. It enables me to keep my finger on the pulse of public and political opinion. It is from this perspective that I would like to share some observations that might assist ACT in looking forward.

At the last election the political tide was out for Labour. As we know, opposition parties don’t win elections, governments lose them, and after nine years of nanny state socialism, voters wanted change. National swept into power supported firstly by ACT, and then by the Maori Party.

Sixteen months later, the polls show the Prime Minister and the National Party still enjoy majority popular support, while ACT and the Maori Party languish at around 2 percent of the party vote – similar to most coalition partners under MMP.

The challenge for ACT is to lift its support back to levels it enjoyed in the past – so it can make a significant contribution to public affairs in New Zealand after the 2011 election.

The goal should be to attract back to ACT those people who believe in freedom, choice and personal responsibility, who understand that ACT’s policy prescription would lead to a future of greater opportunity and prosperity for New Zealand, and who want a party in government strong enough to hold National to account.

One of the great delights in running the NZCPR is the insightful feedback I receive every day from a large cross-section of New Zealanders. They speak frankly of their despondency over the situation in present-day New Zealand, and of their overwhelming belief that the country could be doing just so much better.

Many supported National at the last election, believing it would repair the damage caused by nine years of Labour’s rule. They are now disillusioned because National is not rising to the challenge but instead has its feet planted firmly in the political centre-ground from where it is working hard to retain popular support.

As a result, many voters are looking for leadership to get the country back on track - visionary and courageous leadership; principled leadership; leadership of the kind that ACT has always been renowned for.

So what are the areas of rich opportunity for ACT?

To be honest, with National’s positioning in the centre-ground, they are everywhere. But as we all know in politics, you have to be careful that you don’t spread yourself too thin, so there are three that I will talk about today that tie in with ACT’s and National’s election pledges to catch Australia – a promise, by the way, that struck a chord with a good many voters.

Catching Australia by 2025 was central to the support agreement between National and ACT. But it is now clear that National intends to only pay lip service to the goal. This is a great disappointment to those New Zealanders who voted for National because they want a better life.

If ACT campaigned hard on this goal, supporting the work of the 2025 Taskforce, it will be pushing a message that resonates strongly with the public. In particular I would suggest the following three components to this campaign to catch Australia: growing the economy, modernising welfare, and healing the racial divide.

Firstly, growing the economy.

Everyone knows that Australia’s economy is doing better than ours. The key reason is government spending.

In 1972, the Australian government spent 18.9 percent of gross domestic product (GDP). Today it spends just over 25 percent – the same level it has been at for around 35 years.

In comparison, government spending in New Zealand in 1972 was 24 percent (5 percentage points higher than Australia back then). By 2004 it had edged up to 28.9 percent. But now, thanks to the profligate spending of the Labour Government, it has blown out to 36.7 percent – almost 12 percentage points ahead of present-day spending in Australia.

In other words, it is New Zealand’s consistently higher government spending that has contributed to our consistently lower economic growth. Given Labour’s recklessness, if National does not act to significantly reduce government spending, our decline in living standards will be even more dramatic. Even the Secretary of the Treasury is critical of the present level of government spending, estimating that an astonishing 65 percent – some $40 billion – of the government’s $62 billion budget is inefficient and wasteful.

The point is that big government crowds out the private sector, yet it is private sector wealth creators that are the powerhouse of an economy. That’s why ACT should be relentlessly campaigning on cutting waste and inefficiency in government spending. Someone needs to hold the government to account for the fact that their excessive spending is dragging the country down. If you look around Parliament, ACT is clearly the only party that can take on this role.

Then there’s tax – you can’t grow an economy without lowering tax.

The 2025 Taskforce did the country a big favour by spelling out a realistic goal for New Zealand: if core government spending is reduced to the same proportion of GDP that it was in 2005 (29 percent), the top personal tax rate, the company tax rate and the trust tax rate could all be aligned at 20 percent, which means all those earning above $14,000 would be paying less tax and nobody would be paying more.

Dropping taxes to 20 percent and lowering government spending to under 30 percent would make an excellent campaign for ACT. Imagine the electrifying boost to the economy that a top tax rate of 20 percent would deliver. It would give Kiwi businesses – especially exporters - a huge competitive advantage over Australia. A 20 percent top tax rate is consistent with ACT’s goals of lowering and flattening the tax base. A 20 percent top tax rate is a huge point of difference with National. Since it was prescribed by the Taskforce, the goal of 20 percent tax for New Zealand has great credibility – it just needs a champion. I believe that champion should be ACT.

As we all know, growing the economy is not just about tax and government spending. It’s also about making it easier to do business in New Zealand. When red tape and compliance costs become the serious constraints that they are at present, then something serious needs to be done.

It is great to see that Rodney Hide is doing a sterling job in this area with his focus on reigning in regulation. But there are two areas in particular that are so damaging that they need to go under the spotlight urgently. The first is local government, where Labour’s 2002 amendments to the Local Government Act are responsible for holding back progress in local communities all around the country – and should be repealed - and the second is the Emissions Trading Scheme (ETS).

I’m pleased to see that the wheels are finally falling off the man-made global warming movement. The reputation of the United Nations Intergovernmental Panel on Climate Change – the agency that has directed New Zealand’s climate change policy - is in tatters. They have been caught out using scare tactics, lying and cheating with leading scientists now confessing they were wrong with their calamitous climate predictions. Even official weather agencies are having to admit that they manipulated data. Meanwhile, polls are showing that public support for anthropogenic global warming is plummeting, and according to the BBC even Greenpeace is reappraising its approach, thinking that it might have to stop blaming mankind for what the climate is doing!

In Australia, their ETS has been delayed by the Senate, because the failure of the climate talks in Copenhagen in December has shown that carbon reduction schemes have no future. That makes New Zealand’s situation untenable. Our ETS is aligned to an Australian scheme that will probably never become law. It pushes the country into a carbon market that is destined to collapse. The Minister, Nick Smith, who forced the country into this dire situation has built his career on the back of catastrophic climate predictions and is unlikely to back down. There is no alternative but for the Prime Minister to urgently step in and postpone then repeal the scheme - before it becomes operational later this year.

ACT should be all over this issue. The Party campaigned on getting rid of the ETS – now is the time to deliver!

There are many factors, of course, that contribute to growing the economy, but prime amongst them is welfare reform.

ACT first entered Parliament on a promise to reform welfare. The point is that New Zealand’s welfare system has become outdated. It leads far too many beneficiaries into a life of state dependency rather than a future of opportunity based on work.

As an MP I had the privilege of visiting the State of Wisconsin, which has a similar population to New Zealand, in the early years of the US welfare reforms. I saw first hand the benefits of replacing the concept of welfare entitlement with support based on contribution. Tackling the hard area of welfare reform – sole parent benefits – their reforms transformed lives, reducing the number of mothers with children on welfare from 108,000 to around 2,000 over a ten year period. Many counties in Wisconsin had no sole parents registered on benefits – none at all!

At the present time New Zealand has 109,000 sole parents on the Domestic Purposes Benefit (DPB) – an increase of 10,000 over the last two years. The DPB, which was the brainchild of the feminist movement – a way for women to have and raise children independent of men - encourages family breakdown: it leaves mothers struggling to raise their children alone, it locks fathers out of having proper contact with their kids, it puts children at risk of abuse, and it ensures they grow up in families without a working role model. In fact the DPB is a sociological disaster.

This benefit has had a devastating impact on the Maori family in particular: in 1968, 72 percent of Maori children were born into a family where their parents were married. Today only 22 percent are born into a family with married parents. That is the reason that so many Maori children are doing so poorly in New Zealand - it’s not about race, it’s about family.

ACT would be doing the country a huge service if it picked up on the theme of welfare reform and ran a campaign to modernise the sole parent benefit as a priority – especially in light of the fact that around the world, almost no other country supports single parents with a stand alone benefit like the DPB. Instead they prefer to provide assistance in ways that do not put the children at risk. 

And by the way, it is good to see National adopting the welfare policies that ACT promoted when I was in Parliament – an annual review of beneficiaries to ensure they are receiving the appropriate assistance and to cut out welfare fraud and abuse, and tighter controls on the Sickness and Invalid Benefits.

The final opportunity for ACT on the theme of catching Australia that I would like to talk about today is healing the racial divide: how can a country progress and flourish if its team is divided?

Over the last fifteen months, National and the Maori Party have seriously damaged race relations in this country. Instead of promoting one law for all, they are pushing Maori privilege.

There is enormous support in New Zealand for an end to racial division. That was evident in the overwhelmingly supportive response Don Brash received to his Nationhood speech in 2004. And as we know, in essence, that speech promoted the race relations policies of ACT.

Opposing Maori privilege will require real courage. There are big issues and big challenges ahead: the proposed foreshore and seabed legislation; the United Nations Rights of Indigenous People (which even Labour would not support); the Maori seats in Parliament; Maori seats on councils; Treaty principles being inserted into legislation; the whole Whanau Ora programme, which appears to be underpinned by racist policies. Any proposal based on race should be vigorously opposed.

New Zealand is desperate for leadership on this issue – the void is so great that even Winston Peter, from outside of Parliament is getting traction by speaking out against racial privilege! Many voters feel betrayed by National. They are afraid of the growing racial divide and they are deeply worried for the future of the country. They need a champion.

ACT needs to go back to its roots and campaign on one law for all - a founding principle of the Party. It needs to campaign against the opportunism of the separatists from both inside and outside of Parliament, and it needs to campaign against Treaty clauses in legislation, and any other policies based on race. In doing this, ACT must realise that it would be speaking on behalf of the silent majority of New Zealanders who no longer speak out themselves for fear of being labelled a racist.

The point is that New Zealand can only pull togeth er strongly if we are all united as “New Zealanders”, rather than being divided by race. As New Zealanders together, we can achieve the big aspirations that we have for the future - including catching up with Australia.

ACT was formed as a party of principle. Promoting principle from the opposition benches is easy. Standing firm on principles as a part of government is harder.

But the country needs a champion – to take on these tough issues. ACT could be that champion. For the sake of the future of New Zealand, I hope ACT is up to the challenge! 

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