Brash Speech to the New Zealand Herald
Brash Speech to the New Zealand Herald Mood of the Boardroom Survey Launch
Don Brash MP National Party Leader
Speech to the New Zealand Herald Mood of the Boardroom Survey Launch
Dr Cullen, ladies and gentlemen. Thank you for the opportunity to speak here this morning. Straight off the bat, I've got to say the results of the Mood of the Boardroom Survey come as no surprise to me.
There is clearly much that concerns us and a lot that needs to be done. This survey confirms what we have known for quite some time - this Labour Government is a most business unfriendly Government.
Employment Relations legislation, Holidays legislation, the Health and Safety in Employment legislation, the Resource Management Act and the Treaty of Waitangi. These are issues that you have identified as having a hugely negative impact on productivity and growth.
It's little wonder then that the Government, faced with slowing growth, has abandoned its stated goal of returning New Zealand to the top half of the OECD within a decade.
Labour did that some time ago; they saw the writing on the wall. Unfortunately many of our small to medium sized businesses don't have the luxury of accepting these lower expectations.
The fact that nearly 95% of those surveyed don't think we have a growth strategy to sustain business success is truly worrying. It shouldn't just worry you; it should worry all of us, especially the Government.
As I've stated many times, one of the top priorities for the next National Government will be to improve New Zealand's sustainable rate of economic growth. Stronger economic growth is absolutely critical to raising the living standards for all of us.
The sad reality is that the present Government's policies will most likely see the $175 per week gap in living standards grow wider between the average Kiwi and the average Aussie.
To catch up to Australia's average standard of living within 10 years, New Zealand's GDP per capita would need to grow at an average rate of near 5%. Treasury's latest projections show GDP per capita growth deteriorating to 1½% in 2014.
Early in the Government's first term, Michael Cullen said he thought it would be clear by the middle of 2004 whether or not the Government's policies were on the right track in terms of improving New Zealand's economic growth rate.
He confirmed that expectation in a Select Committee just over a month ago. Well, I guess there's three months to go before we're technically in the middle of 2004 - but, unless we see an enormous turnaround in Treasury forecasts, it's abundantly clear he's going to be very disappointed.
The Government's economic policies have clearly failed. The outlook is getting worse, not better.
A thriving and internationally competitive business sector is absolutely crucial to achieving the goal of higher living standards. The National Party is committed to doing what it can to help the business sector grow faster.
We take surveys like this morning's very seriously. And the message from this survey is not hard to understand: business needs less government, not more.
I know that every Opposition politician promises to make the environment more business friendly. I could stand here and do that too, but frankly, I think you want to know what we must do to put things right.
The thrust of National's policies are for less regulation and less taxation.
Despite all the international evidence and experience that points to the contrary, this Government continues to staunchly deny that higher taxes hinder growth.
It has introduced a multitude of new taxes that have now collectively raised $3.6 billion in extra tax, which equates to an average of $2,600 per New Zealand household over the last four years.
Many of you will be aware of my comments last week broadly outlining National's tax policy. In short, we are absolutely committed to reducing and flattening New Zealand's tax rates. However, our immediate priorities upon election are providing tax relief for low and middle-income families, and cutting the corporate tax rate to at least match the 30% rate in Australia.
Our corporate tax structure says 'invest in Australia' but you and I know it is critical for us to encourage firms to invest here, in order to boost productivity and employment and ultimately the income-generating capacity of the country. Cuts in the top personal income tax rate will also be implemented during our first term of government, but that will happen only gradually. It will allow us to address other priorities in education, retraining the long-term unemployed, and better policing of our communities.
Let me emphasise that reducing tax over time does NOT require government spending to be slashed - what is required is that the growth rate of government spending is kept below the growth rate of the economy. That requires discipline.
National is also absolutely committed to returning more flexibility to New Zealand's increasingly regulated labour market.
Although the Labour Government continues to claim credit for the current low unemployment rate, the reality is that New Zealand's improved rates of employment and economic growth owe much to the increase in labour market flexibility introduced by the previous National Government through the Employment Contracts Act of 1991.
Against the advice of expert bodies such as the OECD and our own Treasury, Labour is continuing to unwind these gains with more union-friendly and business-costly legislation.
It is bizarre that New Zealand should try to imitate the industrial relations law of European countries where unemployment rates are stuck at around 10%! While we try to emulate their failed policies, they're busy trying to repair the self-inflicted damage.
In New Zealand the result of these proposed changes will undoubtedly be higher unemployment, especially among vulnerable workers, reduced flexibility in our economy to cope with unexpected shocks, and lower economic growth. The changes will make it still more difficult for those on benefits to get into employment.
The business sector has quite rightly identified the RMA as an area of prime concern. That cumbersome piece of legislation, with its maze of consultation obligations, is suffocating development and holding up important projects.
Take Auckland for instance. The gridlock in our economic powerhouse is costing the economy more than $1 billion a year. In my view, finding the $10 billion which the AA says is needed to build new highways isn't the biggest problem. Planners are facing massive regulatory snarl-ups.
Take for example the North Shore bus-way. Approvals for that took years. If we were in Singapore, it would take one week.
There is no argument that the Resource Management Act is another major source of significant additional costs, substantial delays and uncertainty. Much-needed investment in transport and energy infrastructure, and many, many other important projects are being delayed or even worse, abandoned altogether.
The Government's latest bid to band-aid the problem away is to create a fast-track process for projects that are deemed in the "national interest". But of course, as Treasury advice points out, giving priority to major projects will mean even longer delays for other works.
National is absolutely committed to streamlining RMA processes so investors can proceed with projects expediently, with certainty and minimum cost.
I have already commissioned an independent study to identify ways of removing Treaty clauses from that legislation. That fits with our focus of reducing the widespread abuse of the consultative process. We'll also work hard to address the variable standards of implementation at local government level.
Of course we wouldn't have much of an economy without our exporters and I want to tell them today that I understand their frustration at the weakness of the US dollar. But while I recognise that the New Zealand dollar is now well above historical average levels, it is not clear to me that one would, as a matter of policy, necessarily want to attempt to do anything about the exchange rate at the moment.
You will all be aware of the Reserve Bank's announcement that it is seeking to have the capacity to intervene in the foreign exchange market to influence the level of the exchange rate.
There are considerable risks with this. Certainly, as Alan Bollard has pointed out, there is potential for the Reserve Bank to make money. But, on the other hand, if the bank were to get it wrong, the taxpayer will have to pick up the tab.
Both Alan Bollard and Michael Cullen have acknowledged that, at very best, such intervention is capable of knocking only a cent or two off the top or bottom of the range. As my colleague, John Key - a former currency dealer himself so elegantly describes it, it's as effective as "Holding up a pop-gun in a bank robbery".
Daily foreign exchange turnover in the global market is around US$1.5 trillion. It would be a wild exaggeration to describe the Reserve Bank as capable of being even a minor player in that market.
The reality is that the impact on the business sector of potential Reserve Bank involvement in the currency markets is likely to be relatively insignificant.
What's of real concern, is Australia's free trade agreement with the United States and our exclusion from that agreement.
Although the terms of the agreement are not as favourable as Australia had originally hoped, it nevertheless represents the establishment of a very significant relationship with by far the largest, most innovative and most dynamic economy in the world, a relationship that will deepen as time goes by.
Not that long ago it would have been unthinkable for New Zealand to be excluded from such a deal. It is a sad reflection on how far the relationship with our most important friends and allies has slipped that the unthinkable is now routine.
We are left in the unfortunate position where what is being rightly celebrated by our friends across the Tasman will likely have a detrimental impact on our economy not only in terms of losing preference to our Australian export competitors in the US market but, probably more importantly, through the loss of foreign investment and technology to Australia that otherwise may have come here.
It is easy to see why a foreign operation, or even a New Zealand operation for that matter, looking to export into the US would now be more enthusiastic about setting up in Australia. A National Government will be working hard to ensure that New Zealand gains a free trade agreement with the United States and remains a highly competitive location for industry.
This Labour Government has had the good fortune to be in office at a time of moderately strong economic growth, the result of the policies put in place in the eighties and nineties, the low exchange rate in 1998 - 2001, and the net inflow of people over the last two years.
A growing economy has emboldened the Government to load costs onto business and introduce labour market laws highly favourable to their union supporters. These are things the Government can control, unlike the exchange rate, and the costs of these policies will show up when New Zealand encounters a less favourable economic environment.
I have previously indicated five key priorities for the National Party.
I have touched on the economy.
The other four are focused on what sort of nation we will have in the future, and the sort of aspirations we can offer our children and grandchildren.
Those priorities are the urgent need to: * Improve the performance of our educational system * Fix our entrenched culture of welfare dependency, * Improve security by much tougher and more effective law enforcement, and * Reverse the dangerous drift to racial separatism in New Zealand with policies that focus on need not race.
At Orewa, I asked whether New Zealand is to be a modern democratic society, embodying the essential notion of one rule for all, or a racially divided one with two standards of citizenship.
Recently we obtained Treasury advice to the Minister of Finance under the Official Information Act warning that uncertainty generated by unresolved Treaty debates could potentially have "quite large" negative impacts on New Zealand's economic growth.
That advice was given to the Minister when the seabed and foreshore had been on the political agenda for only four months. Six months later, the economic and social fallout has increased dramatically as the Government continues to dither over these important issues. The results of today's survey reflect that.
The reality is that, as a community, we are a multi-ethnic, multicultural, society. We are not all the same. We all have different preferences and interests and sympathies. But we are all still unquestionably, and proudly, New Zealanders.
That is the
message I want to leave you with this morning.