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Dr Muriel Newman

Ideas Shape Nations

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As we step into election year, it is surely time to take stock of what the National Party said it would do, and what it has actually done.

When the country voted for change, did they just want new faces on the government benches, or did they vote for serious reform?

After nine years of Helen Clark’s Labour Government, voters had had enough. A pall had descended over the country as the oppressive shadow of socialism fell on our land and lives. The introduction of a raft of extremely generous handout policies – such as Working for Families, interest free student loans, and Kiwi Saver – had caused government spending to balloon. This had put upward pressure on inflation

People were looking for someone to enable their hopes and aspirations to become a reality, and John Key was the man. At long last someone would take the economy in hand so we could look forward to jobs and growth – and catching up with Australia. In his victory speech, John Key stated that the election result showed people had “voted for hope, they voted for action and they voted for results. They voted for a better life for all New Zealanders.” Indeed they did, but has John Key delivered on his promises?

Election night, we thought, was the beginning of a new phase for New Zealand: where sound economic management would prevail, where the burden of the state would be reduced, and where intractable and devastatingly costly problems like the “underclass” would finally be tackled. “I have no intention of being a Prime Minister who tackles only the easy and convenient issues. I don’t pretend I’ve got all the solutions. But I can tell you that dealing with the problems of our growing underclass is a priority for National, both in opposition and in government.1

Unfortunately the fine words and principle have given way to paranoia as opinion polls have become the main game. In the quest to keep his administration as popular as possible, John Key has shunned reform – even failing to reverse those principles he railed against while in opposition.

But while he might think that failing to instigate reforms that will outrage socialists is the popular thing to do, new research from Harvard University shows that he is almost certainly wrong. They found governments that cut public spending to reduce their deficits do not in general lose voter support. Clearly voters are more intelligent than most politicians think – they understand that governments need to cut spending when times are tough, just as they cut their household budget to live within their means.2 Our own experiences in 1984, where Labour was re-elected in 1987 after introducing extensive reforms, shows this to be true.

If National had been truly committed to transforming New Zealand into the prosperous nation it could be, they would have seriously cut government spending – as advised by not only by the 2025 Taskforce, but also the Secretary of the Treasury John Whitehead, who once labelled 60 percent of government spending as being of ‘poor’ quality! Why not introduce a spending cap like Hong Kong, which doesn’t allow government spending to exceed 20 percent of GDP? If we moved towards such a goal gradually, it would guarantee a future where everyone would be better off.

Since National has been in office, core government spending has increased not decreased – in spite of the tax take being down. That means that National is spending $250 million a week more than it earns, putting the country deeper into debt as each day goes by.

The increase in GST would not have been necessary, if National had cut government spending. Furthermore they could have looked at following the lead of the Canadian Government, which, to give local businesses a strong competitive advantage, has just cut company tax to 16.5 percent. This move matches the rate in Hong Kong (16.5 percent) and Singapore (17 percent), two countries that are regarded as economic powerhouses. Given that our government only collects in the region of $8 billion a year in company tax, following that lead and radically reducing company tax to 16.5 percent could have given this country the sort of economic boost it desperately needs!

If National had been really focussed on getting the country onto a growth path it should have repealed Labour’s 2002 amendments to the Local Government Act that introduced the power of general competence and diverted local government from its core business. Constraining local government and getting it back on track would not only reduce the cost burden on local communities, but would help to remove roadblocks to progress and development.

A really serious commitment to growth would have seen National reintroduce the youth wage. Since youth rates have been abolished (at the behest of arch-socialist Sue Bradford), youth unemployment has almost doubled, with nearly two out of five young Maori now unemployed. The problem is that when young people are forced to compete against older and more experienced workers for jobs at the same wage rate, employers are more likely to choose experience, thus preventing the young worker from even getting their first foot on the employment ladder.

If National had really prioritised growth, they would not have introduced the Emissions Trading Scheme. None of our major trading partners have an equivalent scheme, and Kiwi businesses are being penalised as a result. The ETS is responsible for unaffordable costs increases right across the economy, as increases in the price of fuel and electricity push up the cost of almost all other goods and services. And all for no gain. The ETS is having no impact at all on the climate, so the sacrifice that National has forced New Zealanders to make, in terms of our falling living standards, is all for nothing – especially as the whole scheme is destined to collapse next year once the Kyoto agreement expires.

And what a slap in the face the ETS has been to the rural sector. Failing to exempt food producers from the scheme at the outset, shows National has really lost touch with its support base.

The reality is that most people just want government to get out of the way as they try to build a decent life for themselves and their families. But instead of removing the roadblocks left by a Labour Government that did not trust individuals to be able to live their lives free from the hand of the state, National has left many in place – including the ridiculous ban on smacking.

It’s not as if banning smacking was ever regarded as the best way to tackle child abuse. The smacking ban was part of a radical anti-family campaign being pushed by Sue Bradford. As a result of the ban, serious child abuse continues unabated and innocent parents now face criminal prosecution for trying to discipline their children. Meanwhile, John Key, who promised to change the law if it criminalised innocent parents, resolutely looks the other way.

The disastrous Marine and Coastal Area Bill is another dreadful piece of legislation that is being forced onto the country because John Key wants to forge an enduring relationship with the Maori party. Having agreed with the Maori Party to review the present 2004 Foreshore and Seabed Act as part of their confidence and supply agreement, National supported the recommendation from a biased panel that consulted almost exclusively with the Maori sovereignty movement, that the 2004 Act should be repealed. He naively believed that if he told the public there wouldn’t be much change and rushed the whole process, then the new law could be passed by Christmas, ahead of election year.

Fortunately for New Zealand, we – the New Zealand Centre for Political Research – and you – our readers – looked beyond the political platitudes and misrepresentations. You supported the formation of the Coastal Coalition and helped fund our public information campaign and together we were able to explain to the public that there are many concerns regarding the government’s Marine and Coastal Area Bill. The Bill will open the door to a massive redistribution of wealth as New Zealand’s coastline is privatised to the Maori tribal elite. Corporate iwi are reputed to be overjoyed that they will get their hands on the spoils, and while the hand-over, through a secret political deal-making process introduced in clauses 93-95 of the Bill will start relatively slowly (the Attorney General predicts 10 percent of the coast will go initially), the Maori Party has promised that they will not stop until the whole coast is in Maori title.

And if this preparedness to give away our foreshore and seabed for Maori Party support is not bad enough, John Key does not seem to realise the issue of trust is at stake. He promised the public that if there was not widespread support for his Bill, the present law would be retained. Well, Prime Minister, all of the submissions and opinion polls show that there is no widespread support – not from Maori nor from non-Maori – so we expect you to honour your promise and withdraw your disastrous Bill!

Then there is welfare. It will take courage to reform the welfare system. But reform is absolutely necessary because the country can no longer afford the burgeoning cost of growing dependency that this broken system is inflicting on the country. Proper reform is needed to eliminate the widespread fraud and abuse that riddles the system and forces taxpayers to pay billions of dollars a year to support people who could and should be working – like former gang leader Daryl Harris from Christchurch, who has just had his benefit cancelled after spending the last 26 years on welfare!

The government’s Welfare Working Group has been doing a good job identifying options for reform. One of the most promising ideas to surface is that being promoted by the OECD to “harmonise” all benefits to prevent people from swapping from one benefit to another and to require everyone receiving welfare to contribute through work to their own capacity. If New Zealand’s welfare system was re-jigged in such a way as to link income support to a work requirement, welfare dependents would be able to contribute to society in a meaningful way that is simply not possible at the present time. It will be a test for the Prime Minister to see whether he has the courage to put meaningful reform into effect.

It is big ideas that shape nations, not political parties that lack the courage to introduce reform when reform is so obviously needed. That’s got this week’s NZCPR Guest Commentator, former MP Gerry Eckhoff, thinking outside the square, looking at whether independent MPs is what the country needs. In his article Rattle of a Grumpy Man, he states:

“The day of the independent MP may well be on its way back if enough people understand what happened in the Australian election. Consider the benefits of independent MPs. The people actually get to choose their representative rather than being appointed and anointed by their party. The independent MP is not subject to “whipping” – rather they are wooed by the other parties for support. MMP is tailor-made for independent MPs.”

After two years of a National government, Labour’s socialist agenda largely remains intact. New Zealand will never get ahead if we are led by leaders paralysed through fear of upsetting vested interest groups. As the Harvard Study shows, the electorate is smart enough to know when parties are standing on sound principle and when they are standing on a self-serving political soapbox.

  1. John Key, The Kiwi Way 
  2. The Economist, Vote for agony