Dunne Speech to Auckland Employers’and Manufacturers’ Association - Ellerslie Convention Centre, Auckland.

United Future’s economic policy and how to achieve it

Ladies and gentlemen,
Thank you for the invitation to talk with you and to share some thoughts on how we can all work together to make this an economically-thriving, safe and healthy place to raise our families.

I speak to you today from a unique position in New Zealand politics; my party and team of MP’s supports the Government in the House on matters of supply and confidence, thus honouring the voters’ desire to make Labour the lead party in Government and ensuring New Zealand – and New Zealand business – is not unsettled by the spectre of constant political instability.

But that supply and confidence agreement does not bind us to agree with all, or any, of the Government’s legislative programme. That’s a freedom we are happy to have and we have already made use of it. I’ll have something more specific to say on that later.

Let me state our general economic principles up front:
United Future New Zealand supports market-oriented policies to support economic growth, balanced by social responsibility. We aim to promote a free and open market to provide business with the best opportunity to move New Zealand forward in a positive and prosperous direction.

Our objectives are to: reduce impediments to business performance promote an export friendly economy encourage innovation establish a taxation system that takes into account the costs of raising a family Our policy is to: reduce tax, as economic conditions allow, with the goal of establishing a tax rate which is comparatively flat and internationally competitive, abolish fringe benefit tax and phase out the remaining excise duties, reduce company tax to 30% streamline the tax compliance and penalties regime, support competition in the provision of ACC services review the Employment Relations Act, to allow for greater flexibility and stability, implement a stable population and immigration policy with the objective of increasing economic growth by 0.5%, improve links between research and commercial application and increase the amount of private sector R & D to 1.5% of GDP by 2010, introduce a watertight tax deductibility scheme for research and development projects support free trade agreements, introduce income splitting for families introduce a home carer's allowance for parents at home caring for children under the age of five increase tax rebates currently available on child care costs, increase personal tax rebate on donations to charitable organisations from $500 to $5000.

There is another leg to the goal of improving New Zealand’s economic performance and that is removing the barriers to efficiency.

One of the biggest barriers is the Government.

At present, government makes up about 33% of New Zealand’s economic performance – and that’s far too much.

The way our Government operates is presently cumbersome, inefficient, and unresponsive. There is still too much waste and poorly targeted spending because bureaucratic structures encourage duplication of tasks while other essential services struggle with inadequate funding.

It is time for changes which deal with public frustration and stop the inevitable drift towards extremist solutions.

Accordingly, United Future believes we should: Cut the number of ministerial portfolios thereby reducing administrative costs, without any loss in service. Institute performance agreements for ministers. Group government departments by function to avoid duplication of effort and to ensure co-ordination of both departmental and ministerial activities. Better resource parliamentary select committees and ensure their independence from the Executive. Reduce Treasury's power by: separating Treasury's control function and policy advice roles, with the Treasury assuming the primary responsibility for economic policy advice establishing a new Department of Finance and Revenue, incorporating both the Inland Revenue Department and the Customs revenue service, to oversee government financial management.

Those are just some of the changes we want to see and, over time, to implement. But our concerns over the hindrances to New Zealand’s economic performance are not limited to the public sector alone.

I need hardly remind this audience that we are a trading nation. We must export or die. Yet our transport infrastructure seems to be heading rapidly towards third world status. Our major roading networks are regularly clogged.

Our workers have trouble getting to work and the goods they produce have trouble getting to market. Our airline, which is vital to our exporters and our tourism industry, seems to be about to fall into the clutches of its most vigorous competitor.

And our rail network is being run by a company whose share price is falling and which gives every appearance of not really wanting to run any sort of rail service at all.

The Government, which really means all of us taxpayers, has bought into the airline; it already owns part of the Auckland rail network; and it partially funds the roading network – yet none of them seem to be performing satisfactorily.

That’s one reason why United Future has been to the forefront in promoting the idea of public-private partnerships, or PPP’s.

They can work for new roading; they could work for rail; and we seem to be already doing it, by default, with our major airline.

But why stop there? PPP’s could also work in key areas like defence, health and education. These areas of infrastructural failure also highlight a major ongoing problem New Zealand has to grapple with – the lack of a significant capital base, brought on in part by our poor savings record.

We are a small country – three-quarters the size of Sydney – yet we are running a national infrastructure.

We desperately need to recapitalise New Zealand, and United Future is currently working on policies to achieve that.

Having set out an economic programme, how do we achieve it? The short answer is: with some difficulty. We are, after all, not part of the Government – we are just on 1/8th of its voting support in Parliament. And the long answer is: through the process we have already begun.

We seek to influence the Government through consultation; through persuasion; through dogged tenacity; through seeking commonsense solutions, and occasionally, through outright disagreement.

Already, it’s working. Labour has plainly realised that its long-term hold on power relies on a sensible, centrist, moderate party, rather than a radical, unstable party to the left.

Accordingly, the Government is being scrupulous about involving United Future in the policy-making, law-making, budgetary process and we are already having an effect.

Marc Alexander was instrumental in getting solid victims’ rights legislation through Parliament; Larry Baldock is doing sterling work in select committees on modifying some of the excesses of resource management and local government Bills; Gordon Copeland is constantly on Michael Cullen’s back about tax reform; and I have every expectation that the Commission for the Family will be up and running by the end of next year.

As I said before, the other way to influence legislation is to oppose it. United Future has already criticised the TVNZ Bill and the associated charter as a woolly piece of unfocussed thinking that will have the effect of becoming a black hole for taxpayer money for no discernible return.

We are even more worried about the Health and Safety in Employment Amendment (2001) Bill, commonly known as the OSH Amendment Bill. Frankly, if this Bill was a sick dog, you’d take it out the back and shoot it.

It’s a classic example of the Government blundering into the business world, stumbling and fumbling about in the dark, and ending up with a piece of legislation that will have the effect of making employers reluctant to hire anyone; forcing them to take responsibility for so-called stress that is undefined; and saddling them with potential fines that will drive them out of business.

It’s utter nonsense and I have written to the Prime Minister this week, setting out United Future’s amendments that would at least limit the damage this proposed law will inflict on New Zealand.

We want to see any reference to volunteers deleted from the Bill because we do not think it is a good idea to kill off all our voluntary and community organisations, as this Bill will assuredly do.

We want to see the concepts of stress and fatigue removed from this Bill because they are so vague they are likely to lead to widespread abuse. And we do not see why businesses should not be able to insure against occupational safety and health risks.

If the Government accepts our changes, that’s great. If it doesn’t, then it will have to go to the Greens for support.

It’ll be interesting to see what the Greens’ attitude is to the thousands of small businesses that make up such a large proportion of New Zealand’s economic activity and to the volunteer ethic that underpins so many of our community institutions.

Above all, United Future recognises what people voted for on July 27, a Government led by Labour and moderated by United Future. They did not want another messy coalition – or the tail to keep wagging the dog.

We now work with Labour on a good-faith, no surprises basis to provide good, stable government for the full three years.

We will certainly promote our policies with vigour, but we will not hold the Government to ransom or threaten to throw our toys out of the cot when we don’t get our own way. United Future aims to become the byword for stability and certainty in government.

Thank you for your attention and your patience.

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