Brash-Report - No. 32, 16 June 2004
An update from the National Party Leader
No. 32, 16 June 2004
An extraordinary advertising splurge
It's a sad day when the Government is so unconvinced of the merits of its own policies that it feels the need to employ advertising agencies to sell them to the public. But that's exactly what is happening with this year's Budget.
Even those in the big spending advertising industry are raising their eyebrows at the $21 million propaganda campaign, which surpasses the annual advertising spend for major brands like Coca Cola.
Quite correctly, in my view, the Auditor-General is now looking into Labour's astronomical spending after a request from National's Murray McCully.
It's an extraordinary amount of money. $21 million is 50% more than the Government gives to Maori TV for programming in a year; it's more than what is given to TVNZ to deliver on the charter; it's more than two-thirds of what Labour spent on the Families Commission; and it dwarfs the $850,000 spent promoting 'the mother of all Budgets' in 1991.
It's hard to avoid the conclusion that this is a desperate act by a desperate Government that is instinctively trying to 'educate' the public on what is in their best interests.
Making work pay?
And in the last week or so, the National Party has discovered precisely why the Government thinks it may need to spend so much to sell the Budget.
A key slogan has been 'Making Work Pay'. While it sounds catchy, the title does not always reflect reality.
Our analysis shows that, in thousands of cases, the package will actually reduce the incentive to work for middle-income New Zealanders. National accepts, and is supportive of, some of the Budget measures that provide relief for hard-working families. But though Labour claims to be 'making work pay', the facts don't always show that that's what happens.
Take the situation faced by two single income families with two young children each, living in a South Auckland suburb such as Manurewa. The working parent in each family earns the same hourly wage. The only difference is that the working parent in one family works four days a week earning $40,000 a year while the other works five days a week, therefore earning $50,000 a year.
So how much better off is the family earning $50,000 after taking into account Government support? You'll be shocked to learn - a mere $21 a week, or just over $1,000 over a full year.
In other words, the person working five days a week gets to keep only 10% of what he or she earns from the fifth day's work. It is definitely not an incentive that, as Labour claims, 'makes work pay'.
It gets even worse higher up the income scale. Take two similar single income two-parent families with three children living in Auckland and earning gross salaries of $60,000 and $70,000. The difference in disposable income between these two families is as little as $500 - just 5% of the difference in their pre-tax income.
Both the Prime Minister and the Minister for Social Development accept our analysis but claim we are highlighting the most extreme situations. This is quite wrong. In 2001, census data told us that more than 100,000 families with dependent children earned between $40,000 and $70,000. That is one third of the total number which Labour claims to be helping in the Budget.
It is clear to us that this will not affect just those on the fringes or at the extremes - it will affect a large number of people.
We utterly reject Labour's claim that nothing can be done. Very simply, lower tax rates mean people can keep more of every extra dollar they earn. Lower tax rates provide an incentive for those who work to go to work. They provide an incentive for employees to take on overtime, to accept that promotion or to take on that part-time job. Lower personal tax rates provide an incentive for all workers - not just those deemed worthy by Michael Cullen and Helen Clark.
Lower company tax rates would provide an incentive for businesses to invest here rather than in Australia, and would thus create jobs in New Zealand and stimulate economic growth.
Recent polling suggests that over-taxed New Zealanders are in favour of a refund of part of their taxes by a ratio of two to one. But instead, Labour has moved to extend the welfare system while refusing to lower taxes.
National favours providing tax relief to hard-working New Zealanders, not more welfare.
So how generous really is this Budget package?
It's not nearly as generous as has been claimed when you consider the extra tax that hard-working New Zealanders have paid over the past five years. Families whose wages have been keeping pace with inflation are now paying a significantly higher proportion of their income in tax, while receiving a lower proportion of their income back in family assistance than they did under the last National government.
This has provided Labour with a windfall gain in revenue, by stealth, and the chance to spend up big around the upcoming election.
National's calculations show that, in fact, half of the extra family assistance that is being promised to the average one-income two-parent two-children family in 2007 is needed just to restore their real disposable income to its 1999 level.
And that's before the extra tax paid through increases in petrol, alcohol, and tobacco excises is taken into account.
Time To Target Career Crims
National is pledging to take career criminals out of circulation and put them in jail much longer. Corrections Department figures released to National's Law and Order spokesman, Tony Ryall, show that more than 400 inmates have more than 100 criminal convictions.
One prisoner with 777 convictions is now completing a sentence of less than three years. Another with more than 640 convictions has been sent back to jail after committing more serious offences while on parole. These 'career criminals' are mocking the justice system and their victims.
National is planning to change the law to take career criminals out of circulation. These people have shown that the only time they stop committing crime is when they are behind bars. Under National, career criminals will get longer sentences. They won't get bail. And they certainly won't get early parole.
The figures show there's a group of long-time hardcore criminals who don't take any notice of the law or common decency. There's no point in recycling them - that creates only more victims.
Official data reveals that each inmate in New Zealand prisons has an average of 35 convictions, that the worst 1000 average 112 convictions each, and the worst 100 average 266 convictions.
I'm planning to further outline National's thinking on law and order within the next few weeks.