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A Nation Of Leaders And Winners

Thursday 9th Nov 2000 Dr Muriel Newman Speech -- Social Welfare

On Monday night I had the privilege to hear an address by Hon Mrs Anson Chan, the Chief Secretary for Administration in Hong Kong. She was here as part of a delegation to strengthen trade relationships between our two countries.

Like many others in the audience, I was very interested to learn about the impact on Hong Kong of reunification with China – to see whether it remains a global beacon of capitalism. According to Mrs Chan the answer is a resounding yes. She went on to explain their strategy to maintain that goal.

Hong Kong has positioned itself as Asia’s World city in the 21st Century - a country that upholds the rule of law, has an independent judiciary, a commitment to free and open markets, a level playing field for all who do business, and low taxes – corporate tax at 16% and personal tax a maximum of 15%.

Hong Kong has a bright future. In an increasingly global world, countries do well when their businesses are internationally competitive. Hong Kong put the fundamentals in place years ago and they are reaping the benefits.

New Zealand has tried to do the same: over the last 15 years, for a total of four years there have been determined attempts to put those fundamentals in place here. Unfortunately for us, although the reforms achieved some gains, the commitment to change was not enough to provide the sort of wide-reaching benefits that were within our grasp.

During the period from 1984 to 1987, the Labour Government under the stewardship of Roger Douglas pulled down the shutters of fortress New Zealand. The currency was floated, loss making government businesses were sold, subsidies were removed to create a level playing field for all businesses, and taxes were reduced from 66c to 33c which as expected resulted in a significant increase in taxes collected and kick-started the economy.

Sadly for New Zealand, because Prime Minister Lange lost his nerve, the reform programme was abandoned and large sectors of the economy were left in limbo. In particular workers, displaced by the reform programme, remained marginalised, unable to re-enter the highly regulated labour market. Those who were affected to the greatest degree were Maori.

For a brief period in time, the National government picked up the reform programme, deregulating the labour market, and creating 250,000 new jobs in the fastest period of job growth in the western world. This had an electrifying effect on the country, and by the mid-90s, New Zealand was on a path to 6% growth, a triple-A credit rating, and an $8 billion surplus. New Zealand was also ranked third in an international competitiveness rating, behind Singapore and, yes, you guessed it Hong Kong.

Sadly, we lost our way and the goals that were within our grasp slipped out of our reach. The tragedy is that New Zealand now risks being overtaken by countries that started way behind.

Just a couple of weeks ago Dr Yegar Gaidar, leader of Russia’s Democratic Choice Party and a past acting-Prime Minister, told New Zealand audiences of the struggle to transform Russia from a totalitarian regime to a market economy. They had to bring about changes that we take for granted.

Introducing a democratic system, building a market economy to provide the engine for economic and social advancement, ensuring individual rights and freedoms, reducing company and personal taxation to 12.5% to create incentives for investment, jobs and growth.

So while the rest of the world moves on and overtakes us, New Zealand languishes with high taxes, serious over-regulation and a welfare system that traps growing numbers of families into intergenerational benefit dependency.

The problem is that it doesn’t have to be like this. New Zealand could be positive, optimistic and succeeding in the global economy. A nation where we provide generous support for those in need and a hand up for those down on their luck. A “can do” nation striving for excellence.

Douglas Myers, in an interview in North & South tells us the secret: “I believe you start by creating a free environment and giving opportunities and incentive, not in the form of subsidies and write-offs, but by bringing taxes down as low as possible and making people want to work for all of the right reasons. You keep a safety net and create a culture that applauds success”.

Governor Mike Harris of Ontario, Canada, used that strategy to transform his state from a basketcase to a Canadian leader. His programme of lowering taxes and reducing the red tape and bureaucracy that overburdened small business, created incentives for investment and growth. His welfare reform programme helped hundreds of thousands of beneficiaries, to break the bonds of dependency, to get their lives back.

The Governor of Wisconsin, Tommy Thompson, who visited New Zealand late last year used literally the same prescription – lowering taxes to empower families and give them choices over where to spend or invest their own money, reducing regulation and compliance costs to enable small business to become nationally and internationally competitive, and transforming welfare by putting in place incentives to support people into work, to strengthen families and to encourage personal responsibility.

The results have taken a state that had an entrenched and growing dependency culture, overburdened by the negative social consequences – crime and violence, drug and alcohol addictions, teenage pregnancy, educational failure – to a state that is so vibrant and successful that it is attracting back home businesses, as well as sons and daughters, who sought better opportunities elsewhere.

The results of the most powerful race in the world are still unfolding. Eventually we will know who will hold the most powerful position in the world, presiding over a country that has experienced the most remarkable growth in history. Some say it is because the United States has such a strong economy. I say it is because of the effects of the welfare reform programme developed by Tommy Thompson and adopted by President Clinton, which has liberated millions of families from the limiting and demoralising trap of welfare.

What makes a country buzz is the energy of tens of thousands of people all striving to achieve their goals and aspirations. Welfare reform liberates that energy.

We all have an inborn human drive to improve life for ourselves, our families, our communities and indeed our country. In pursuing our dreams, each and every one of us becomes a leader, making our own unique contribution to society. With leadership comes an understanding that if we all do just a little bit extra in reaching out to others, together we can have a significant impact on the well being of our society.

All of this leads me to the conclusion that with commitment and political will, we too can transform ourselves into a secure and prosperous nation. A nation of leaders and winners. A nation whose government sees its role to promote freedom, uphold the rule of law, protect property rights, to expand people’s choice and to ensure people accept responsibility for their actions. But to do so, we must take a u-turn away from the policies of the current government and once more become a country which encourages enterprise, endeavour and success.


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