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Richard Prebble's Letter from Wellington 18/3/2002

Richard Prebble's Letter from Wellington
Monday, 18 March 2002
ACT Conference

The ACT Party held a successful conference at the weekend. Party manager Graham Watson reported membership is rising, candidates for every electorate will be selected by the end of May and fund-raising for the election has begun. Having risen in every poll this year, ACT is in good heart.

ACT Leads, Others Follow

ACT's conference last year set a goal for NZ of "10 by 2010" - 10th in the OECD economic rankings by 2010. Eleven months later the Labour/Alliance coalition has adopted the goal of being in the top half of the OECD - that is, 14th place. Having got the government to adopt ACT's goal, the election is now about how to achieve it. Being "innovative" is just a slogan, not a strategy.

ACT's Five-Point Plan

* lower taxes than Australia
* lift education standards
* tackle student debt, to keep the graduates we need in New Zealand
* replace bottomless social spending with smart programmes that use the private sector
* reduce crime with a zero tolerance approach

The McLeod Report

Rob McLeod, author of the Mcleod tax report, addressed the conference and confirmed that:
* a 25 cent flat tax would raise as much money as the current progressive tax system
* by cutting just $2b of government spending (the cost of the Cullen super scheme) the top personal and company rates could be lowered to 28 cents and the middle rate to 18 cents.

A Pay Rise for Every Worker

Richard Prebble in his speech called for the party to campaign to reach a flat rate of tax. But, as a first step, he advocated the Mcleod suggestion of a two-tier tax system - a top personal and company rate of 28 cents and a lower rate of 18 cents. This would give every working person a pay rise. Think of the boost to jobs and growth of a company tax rate below Australia's. If we keep the 15 cent tax rate, no one would be worse off. (His speech is video live-streamed at

A Maximum Tax

In the workshops, McLeod raised an idea floated in the report - a maximum tax bill for any individual. That no one should have to pay more than $1m a year in tax.

McLeod cited evidence to show that NZ's tax system is driving the most successful entrepreneurs overseas, to countries such as Switzerland that have a cap on the maximum amount of tax any individual pays.

McLeod is convinced that such a system would attract home again some of our top entrepreneurs, with their capital and ideas. GST alone would ensure that such a move was revenue positive.

The Cost of Leaving ANZUS

Former Australian Deputy Prime Minister Peter Reith gave a thoughtful address. He said: "There was a time, not so long ago, when NZ was at the forefront of economic reform ... Today, Australians who come to NZ want to see if NZ looks like Tasmania." He pointed out that "countries such as Finland, Denmark and Austria, with populations only slightly smaller, have performed much better than NZ over the past quarter of a century....

"In Australia's case, our Productivity Commission attributes our improved economic performance in the 1990s more to economic reforms than to the application of information technology or the business cycle ... Australia thrived in the more competitive environment flowing from the reforms ... there seems no reason why NZ could not follow suit."


Peter Reith was forthright. "The United nations will never defend New Zealand ... your international reputation has suffered since you abandoned ANZUS ... you no longer have the same clout on other issues such as trade negotiations. New Zealand's strategic environment is not benign ... governments need to fulfil their most basic obligation to society, namely the defence of the nation's sovereignty. This function is not peace-keeping for someone else who can't manage their own affairs." Peter Reith's speech is at

Zero Tolerance for Crime

ACT has launched a nationwide billboard campaign advocating the New York approach of zero tolerance for crime - to coincide with Parliamentary debate on the Sentencing and parole Reform Bill. ACT, as a party that believes in personal responsibility, says offenders should be held accountable for their actions and serve 100 percent of their court-imposed sentence. That's Truth in Sentencing.

ACT's Polling

ACT's campaign manager surprised the media by revealing the results of ACT's polling. It is very favourable to ACT, which voters see as the effective Opposition. ACT is seen as plain speaking, with fresh ideas. Forty percent of those leaning towards ACT are women. ACT is on track for its best-ever election.

Conference speeches are at

Budget Policy Statement

Every year under the Fiscal Responsibility Act, Parliament's Finance and Expenditure Committee must report on the government's fiscal position. Parliament debated the report last week. Ruth Richardson had hoped this would become a major debate, as it is in the United States. Unfortunately, government members on the committee now just rubber stamp the government line and the debate is used to discuss anything except fiscal policy.

Last week, Winston Peters used the debate to defame a Christchurch businessman, falsely claiming that he'd organised the seminar in Fiji and was running a Ponzi investment scheme. ACT and National MPs filed a minority report which Richard Prebble has described as the most economically literate report from a Parliamentary committee he's ever seen. The report is a devastating critique of how the government's balance sheet is deteriorating. The media ran Mr Peters' false claims and gave not a word to the in-depth economic analysis. To redress the balance, ACT has posted the minority report at


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