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Richard Prebble's Letter from Wellington 15/4/2002

Monday, 15 April 2002

Shoring Up the Majority

Helen Clark has been taking steps to shore up Labour's majority. For more than a month, Labour has been courting Winston Peters. There are signs that Labour is not really backing Margaret Wilson's campaign in Tauranga.

The Greens claim they didn't ask Labour for a deal in Coromandel. That's not credible. Jeanette Fitzsimons has lost a lot of support in Coromandel and has no prospect of re-election without Labour's endorsement.

Feuding in the Mis-Alliance

Both sides in the Alliance dispute are now making amazing allegations against each other. There are stories of misuse of perks, misuse of official money, misuse of travel and of unpaid debts. The Letter does not deal in this kind of yellow journalism. We say to the Mis-Alliance - put up the claims on your own website.

Alliance Website

A check of the Alliance website reveals:
- no press statements since February
- no mention of the split
- the poll on the site is stuck on 292 votes.

A check of internet domain sites shows 'socialdemocrats.org.nz' has recently been registered, as has 'allianceingovernment.org.nz'.

National's Tax Policy

Bill English personally does not support tax cuts. He believes that as 800,000 voters are living off the state, any tax cut will have only minority appeal. English has been more influenced by his background as a former Health Minister than by his short period as Finance Minister, when he also opposed cutting taxes. But English has bowed to the will of the National caucus, who are worried that unless they promote tax cuts, small business will vote ACT.

In February, the National caucus passed a resolution to cut company tax to 25 cents - an idea being promoted by the Auckland Chamber of Commerce. But after consulting with tax experts, they scrapped the idea. In NZ, because of imputation tax credits, company tax is really a withholding tax. Apart from the need to tax foreign companies, company tax could technically be zero.

National's Half-Way House

National's tax-cutters have tried again. ACT's endorsement of the McLeod tax report has caused them to read the report. (More likely, they have read Richard Prebble's easy-to-read summary in ACT's new book, 'Old Values - New Ideas'.) McLeod advocates flattening the tax scale.

National has announced it will cut the top personal tax rate to 35 cents and the corporate rate to 30 cents in April next year. Both rates will be reduced by 1 percent a year until 2006, when the top personal rate will be 32 cents and the company rate 27.


A 35 cent tax rate is better than 39 cents but it won't give New Zealand a point of difference over Australia, or stop the loss of top entrepreneurs. National has acknowledged what most business leaders already know - that NZ needs a tax cut to promote prosperity and reach the goal of 4 percent growth.

What the Letter doesn't understand is why National wants to postpone prosperity until 2006.

Low, Flat Tax Is Best

ACT favours a low, flat tax. As a first step, ACT will move to a 28-cent company and top personal tax rate. ACT will also reduce the current 19.5 cent tax rate to 18 cents - giving every working person a tax cut. This would cost about $2 billion. By scrapping wasteful policies such as social welfare for business, Maori TV, Kiwibank, the dole for artists, Air NZ bailouts and Closing the Gaps, we could easily save $2 billion.

The government now takes 40 percent of GDP. No country where the government takes 40 percent has ever grown at 4 percent sustainably.

Brain Drain Continuing

Later this week, the government will release immigration figures for March. The Letter predicts the figures will show the loss of skilled Kiwis has started again. Magazines that write glowing articles about talented Kiwis coming home, have a credibility problem. ACT's analysis of the immigration data shows most Kiwis who returned after September 11 were unskilled, as are most new immigrants. Under the Labour government's 'Knowledge Wave' the country is dumbing down. The figures are on ACT's website at www.act.org.nz/braindrain. ACT will post an updated analysis of the figures on Friday.

The House Resumes

Parliament resumes tomorrow after the Easter break. National will focus on Jim Anderton's Monty Python-type political position and Helen Clark's denunciation of party-hoppers.

ACT believes Anderton is history. We will focus instead on opposing the Sentencing and Parole Reform Bill which will release most violent offenders from jail after just one-third of their sentence. Ninety-two percent of the electorate voted for tougher sentences for violent crime. Violent crime has increased 14.9 percent since the election.

ACT advocates the New York approach of zero tolerance that has seen a 30 percent drop in violent crime in America.

Toilet Humour

The Letter has noticed it's getting a bit crowded in the toilets on the 8th-floor of Bowen House - ACT's floor. Staff from the 7th-floor, which accommodates Margaret Wilson, Judith Tizard and Tariana Turia, have been coming up to share our loos.

"What's wrong with your conveniences?" we asked. "We've been locked out by our Ministers," they replied.

The Letter has checked. This piece of staff abuse and class discrimination is true. The Ministers, who are in Bowen House while the Beehive is being refurbished, have complained they are missing their exclusive Ministerial showers. So, sparing no expense, the male and female toilets on the 7th-floor have been converted into Ministerial rest rooms, including showers and changing rooms.

This is too good for the staff. They've been asked to go elsewhere. As we're a friendly bunch on the 8th-floor, it's their favourite de-watering hole. We also welcome them as new contributors to the Letter.

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