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Brash Speech to Marine Industry Association of NZ


Don Brash Speech to Marine Industry Association of NZ

Address to Marine Industry Association of NZ at Formosa Country Club, Auckland

I am delighted to be speaking to such a successful industry group, which combines the recreational passion of so many New Zealanders with world leading innovation, technology and craftsmanship.

As you will all be aware, the marine industry has exhibited quite spectacular growth over the past decade. It ranks as one of the biggest non-primary manufacturing sectors in New Zealand, and has a very strong international focus with export sales now around $500 million.

Although recent events, such as the loss of the America's Cup and the very sharp appreciation of the New Zealand dollar, may cause a short term slow-down, I would think the future still looks pretty bright.

But there are some heavy squalls on the way. Some of them are already much closer than others.

Some, in fact, are already washing up at our feet on the foreshore.

It is this threat that has consumed so much of our summer, and we have spent 10 months arguing over the pros and the cons.

The reality is that we are now being conned. The Government is dressing the old foreshore and seabed proposals in a new kit and presenting them to the public as a major change.

While the Government is telling all New Zealanders they own our beaches, it is telling Maori that they have control.

One of my predecessors, Jenny Shipley, would say Helen Clark is speaking out of both sides of her mouth.

Because that is exactly what is happening.

The public is being sold a pup - and whether it's Treaty burn-out or something else, many of us are now saying we just want the matter sorted out.

But good policy was never born out of expediency. Good policy has never been born out of panic. What the Government is proposing for the foreshore and seabed is not good policy.

We all want certainty, we all want security, and we all need to know we have access and that at the end of the day the local beach will still belong to all of us.

But that's not what the Government's package delivers. It's a ticking political time-bomb that's begging for Treaty industry opportunism.

It paves the way for dual management over our coast, with the words 'ancestral connection' merely substituted for the contentious concept of customary title. The Government has already said this will cover virtually the entire coastline.

The proposed legislation opens the way for an extension of the powers of the Maori Land Court and will undoubtedly signal the beginning of a whole new Treaty grievance industry.

This framework gives minority groups the power of veto over virtually our entire coast.

Although the word "veto" itself is gone, the reality is that any resource consent that would adversely affect a customary right would be declined - that's a veto in any other language.

Maori would get new rights of consultation and rent seeking, while special RMA provisions would give greater weight to the Maori point of view.

We already know from papers uncovered last year that some Maori approach the RMA process with three simple rules: Object, object, and object again.

And we know from experience that there is usually a way around the regulatory deadlock - it's called koha!

We all better get used to that word because we'll be using it a lot more under this Government.

Holders of Maori customary rights will be able to get commercial gain as of right and without any compliance costs. They don't even have to get a resource consent. That is in stark contrast with the position of all other non-Maori developers.

Non-Maori developers will face increased compliance costs brought about by extended consultation, the cost of 'koha' for Maori objectors, and the inevitable litigation.

On top of that they still face the prospect of having their projects vetoed by customary right-holders.

National has no problem in recognising limited customary rights, but those customary rights have to be proven, and this new concept of 'ancestral connection' certainly cannot be allowed to cover the entire coast - especially when the burden of proof for an 'ancestral connection' is so low.

The Government's Bill limits the opportunities for non-Maori to object to Maori claims of ancestral connection when they come before the Maori Land Court. It effectively shuts them out of the Maori Land Court decision-making process.

While Maori applicants are automatically entitled to representation before the Maori Land Court, a non-Maori objector would have to prove that he or she "has an interest in the proceeding that is different from an interest in common with the public generally".

To you and me that is clearly two standards of representation.

The Bill also says that "if no objections are received to an application, the Maori Land Court must make an order... if it is satisfied it is entitled to do so".

In other words, in the absence of objections, the court can tick the boxes and rubber stamp the request without a public hearing.

It is further proof, if we needed it, that Labour's framework for 'Crown ownership' is nothing more than a sham designed to appease the majority of its Maori caucus.

I'm desperately worried that these policies will put the future development and protection of our foreshore and seabed in the hands of minorities whose primary interest will be in lining their own pockets.

As I've already said, the legislation is also plagued by loose language that will fuel the Treaty industry for generations to come.

Kiwis should not be conned into thinking that the Government has abandoned 'customary title'. It has been replaced by 'ancestral connection', as confirmed by the Prime Minister, and that will give Maori "strengthened ability to participate in decision-making."

This clearly gives greater rights to Maori than to non-Maori over large sections of our coast. 'Ancestral connection' will be decided by the Maori Land Court according to 'tikanga Maori'.

A search for the word 'tikanga' in the Government-run Learning Media's on-line Ngata Dictionary returns 106 results.

Among them: code, custom, ethic, fashion, formality, procedure, rights, ritual, style, trend and trick.

Tikanga can also mean 'suit' as in 'suit yourself', and you can bet that extremists will suit themselves.

As I pointed out in my Orewa speech, because legislators did not properly define the expression 'the principles of the Treaty', it was left to unelected Court of Appeal judges to determine the meaning. In other words, it was left to judges to build an entire and inappropriate constitutional relationship between Maori and the Crown.

The Government's proposals look like making the same mistakes all over again. It will be a bonanza for Treaty lawyers and leave a vacuum that will be filled by radicals, with our courts left to figure out what it all means.

This uncertainty clouds the future of your industry to some extent, but more fundamentally it threatens the process of building a modern prosperous nation with one law for all.

But there is another increasingly threatening obstruction for your industry that I want to focus on today.

It's the Labour Government's progressively more intrusive and anti-growth regulation of the business sector.

One of the Government's stated key priorities is to enhance economic growth.

Indeed, the Government has delivered no shortage of hype, spin, new committees and new initiatives. All of these are designed to help New Zealand ride the "knowledge wave". And, as it happens, all are very expensive.

It's true that our economic performance has been relatively strong over the past few years - but that is the legacy of reforms by previous governments from both sides of the political spectrum. It is clear that New Zealand's growth potential is declining under this present Labour Government.

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 nearly 5%. Treasury's latest projections show GDP per capita growth deteriorating to 1½% in 2014.

At the same time as the Government has reeled out one glitzy pro-growth initiative after another, it has steadily introduced layer upon layer of anti-business legislation. It has introduced a multitude of tax increases and it has closed its ears to the other side of the story.

Thankfully, the Government's business-friendly illusion is starting to wear thin.

Take, for example, the two most recently published business surveys concerning government regulation.

The first was conducted by the New Zealand Herald and surveyed more than 300 chief executives of small, medium and large businesses. More than half of all respondents identified government policies as having a negative impact on productivity and growth.

More than half of the respondents could not point to one of this Government's policies as being positive for growth and productivity.

Nearly all those surveyed thought New Zealand did not have a growth strategy to sustain business success, and only 2.8% thought the Government/business partnership model was working.

The second survey was conducted by Grant Thornton and covered businesses in 26 countries. That survey showed that more businesses in New Zealand feared government regulation as their biggest threat than in any other surveyed country.

Furthermore, nearly half of all New Zealand respondents identified government regulation as the greatest constraint to expanding their business.

The message is abundantly clear. Government policy is holding back growth in New Zealand.

Not only does the Government seem resolute in ignoring advice from business about what's best for business, it also ignores advice from its own experts on economic policy.

Last month we obtained an official Treasury document entitled 'Issues for Economic Growth: The Next 12 Months and Beyond'.

That document outlined the negative implications for economic growth of government policies in a whole list of areas including transport and roading, energy, tax, resource consent processes, employment law, and the Treaty of Waitangi.

I am deeply troubled by the Government's arrogant rejection of the views expressed by those who know how to create an environment that encourages economic prosperity.

The National Party wants policies for less regulation and less taxation. Labour wants, and is delivering, the opposite.

It has introduced a multitude of new taxes that have collectively raised $3.6 billion in extra tax - which equates to an average of $2,600 for each New Zealand household over the past four years.

The upcoming tax breaks in the Budget will serve only to reinforce the view that this Government cares more about its electoral majority than helping our economy to grow.

The Budget will further narrow the gap between work and welfare - when we already have some 350,000 working-age people on a benefit.

Hard-working New Zealanders deserve better. They deserve more for the sacrifices they have made in the name of a politically correct Labour Government that has been squandering our money on hip hop tours and 'sing-a-long to waiata' courses.

So, instead of putting more gas in the tank of our corporate machine, Michael Cullen thinks he can improve growth by giving tax cuts to beneficiaries.

He is wrong, and in the past few weeks we have had further evidence of that.

The KPMG World Tax Survey found that 8 out of 30 OECD countries have cut their corporate tax rates in the past year, and that 21 have cut their corporate tax rates since 1999.

Since Labour was elected in 1999, the average OECD corporate tax rate has fallen from 35% to just below 30%.

At the same time, Labour has stubbornly left ours at 33%.

Put simply, that means we have moved from a position where we were better than average in 1999 to a situation where we are now worse.

Many of our international competitors are using those lower corporate tax rates as a carrot for foreign investors. There is little doubt that if we leave our rate where it is today, we will be left further behind.

National is committed to putting this right. Our present corporate tax structure all but encourages companies to invest in Australia, but I think that if we are to boost productivity and employment then we must encourage firms to invest here.

We are absolutely committed to reducing and flattening tax rates. Our immediate priorities are cutting the corporate tax rate to at least match the 30% rate in Australia, and providing tax relief for low and middle-income working families.

We will also cut the top personal income tax rate gradually, but we're mindful of priorities in education, retraining the long-term unemployed, and giving our police and security agencies the resources they need.

National is also committed to returning more flexibility to the increasingly regulated labour market.

Although the 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's 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.

All wage and salary earners will eventually pay the price for the Government's pro-union, anti-business agenda.

Many small businesses, which are the powerhouse of our economy, simply will not be able to afford wage increases when they are already being saddled with an extra week's leave, on top of paying double-time-and-a-half on public holidays.

Those extra costs will inevitably deter employers from taking a risk on workers who will instead be left languishing on the dole. The Government is taking us backwards.

It's a return to the bad old days as Labour pays back its union mates - rewarding their unquestioning support with de facto compulsory unionism.

The Resource Management Act is another area where Labour's loudest special interest groups have been allowed to hijack commonsense.

That cumbersome piece of legislation, with its maze of consultation obligations, is suffocating development and holding up important projects.

For example, roading is critical to our economic growth. But as we see over and over again, it often takes longer to get a resource consent than it takes to build the road. In Singapore it takes one week to get a consent.

The RMA must also shoulder some of the blame for the forecasts of power price rises - that is, if there is still enough power to go around. Developers are being held to ransom by special interest groups and extremists - it's little wonder some are throwing in the towel.

Combine that with the premature decision to sign up to Kyoto and deny us the opportunity to capitalise on our massive coal reserves - and New Zealand is looking like an increasingly dark and lonely place.

National is absolutely committed to streamlining RMA processes so investors can proceed with projects expeditiously, with certainty and at 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.

Finally, while we're an island nation, we're surviving in a global economy - a global economy that has been rocked by the weakness of the US dollar.

I, more than many others, fully appreciate the pressure that the exchange rate must be putting on many of you.

But while I recognise that our dollar has been well above historical average levels in recent months, it is not clear to me that the Government should be attempting to do anything about the exchange rate at the moment.

The Kiwi has already fallen back from its highs against the US dollar, and for now the US economy continues to recover - and that may well continue. These issues are best left to the markets and the instruments that markets provide for hedging against risk.

Parliament recently authorised the Reserve Bank to increase its capacity to intervene in the foreign exchange market to influence the level of the exchange rate.

But this carries considerable risk. Certainly, 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.

The bigger risk I suspect is that exporters may assume the Reserve Bank can have a bigger effect on the exchange rate than is in fact the case - and may fail to take appropriate measures to protect themselves against exchange rate risk as a consequence.

Our politicians would do a greater service to business if they simply focussed on reducing the business costs that regulation and taxation have created.

Of more concern than the short-term currency movements and of much greater medium-term importance is Australia's free trade agreement with the United States and our exclusion from that agreement.

This represents the establishment of a very significant relationship with by far the biggest, 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.

We are left in the position where what is being rightly celebrated 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 also, probably more importantly, through the loss of foreign investment and technology to Australia that otherwise might have come here.

There is a small glimmer of hope on our collective horizons though - the prospect of a free trade agreement with China.

Although there are obvious negative implications for our textile industry, it has huge potential for the economy as a whole.

By the middle of this century the United States and China will be the major economies in the world. We need trade agreements with both, and though we seem to be off America's radar right now, the prospect of a trade deal with China appeals very much.

It is in our interests to be at the leading edge of this trade development wave.


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