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ACT: less tax, less government, more police

A party vote for ACT means less tax, less government, more police

Rodney Hide Friday, 29 April 2005

Speech to the Rotorua Chamber of Commerce; Rotorua Public Library, Rotorua; 29 April 2005.

We live in the greatest country on earth.

It remains beautiful and we continue to prosper despite our politicians best efforts at making it next to impossible.

Last week was Earth Day. Green MP Nandor Tanzcos said that while the earth had its problems he was pleased he moved here.

The other Green MPs stay in orbit.

Their economic prescription for New Zealand is bicycles, subsistence farming and selling dope 24/7, with everything else either tightly controlled or totally prohibited.

The Green Party want to take New Zealand back to pre-industrial times.

The Maori Party wants to go back further. Their vision for New Zealand is a tribal one. That’s the worst possible way to organise an economy. Look at Africa.

Helen Clark wants to put every business on welfare. That way she can decide which businesses succeed and which ones don’t.

Doing business in New Zealand has never been tougher. I could marry and divorce the man next door easier than I could hire and fire him. Our employment law is too tough and too uncertain.

It’s no wonder that Jim Anderton’s Job Machine is advising kiwi businesses to shift off-shore.

To get police action, we are advised to dial 111 and scream. But that doesn’t always work. We pay more tax than ever, but can’t get police action when our business is robbed and our places of work and our homes are sprayed with graffiti.

We can’t blame the police. They are under-valued and under-resourced. We have seen how Helen Clark dispatched former Police Commissioner Peter Doone. She was underhand and dishonest. She has made one of her most incompetent ministers, Police Minister. No wonder police morale is at an all-time low.

Interest rates are up, strikes are up, forecast growth is down and business confidence has slumped.

Helen Clark is anxious to call an early election. She knows it’s going to get worse. She’s just casting around for a half-decent excuse. Helen Clark’s mission is to win an historic third term for Labour. She will do anything to achieve that. She will even kiss and make up with John Tamihere.

National’s economic policy is better, but not much. Their approach to the election is to say they disagree with Labour, but to save squabbling, they agree with Labour’s policies. Hence their backdown on holidays, kiwibank, the Cullen fund, and taxes.

Winston Peters approach is to take Grey Power’s wish-list, agree with it and say we are going to pay for it by stopping Asians coming to New Zealand. It doesn’t make sense but it works for Winston.

Peter Dunne’s price for supporting socialism is the $8 million a year Families Commission. The Commission’s only achievement is a messy divorce with their CEO and a $700,000 campaign to find out what makes families tick.

It’s little wonder that we are disillusioned with our political leadership. We need vision and leadership to match our potential. What we have now falls woefully short.

We are a great people and we have a great country. We can do so much better. Here’s how.

We need government off our backs and out of our pockets. We need to reorder government priorities. It should not be trying to do everything. It should be concentrating on the basics. Like policing. Like National defence. Like providing basic infrastructure like roads.

Let’s take law and order.

Under Labour, violent crime has increased 14 percent. And that’s just reported violent crime. There are increasing numbers of people not reporting crime because they know the police will not deal with it. Why bother reporting crime if your complaint is going to be filed? The reality is police are too stretched with violent crime and traffic policing to attend to a whole lot of crime at the lower end of the scale.

The message to the young thugs is simple: crime pays in New Zealand.

The police minister defends Labour’s soft on crime policies.

He defends the focus on traffic tickets saying that sometimes burglars get caught speeding and that’s a good way to catch them. He says that women are more afraid of bad drivers than of the possibility of being a crime victim. This is absolute nonsense.

Under the Government’s soft-on-crime policies, New Zealanders suffer with one of the highest crime rates in the developed world.

Labour’s softly-softly approach is going to make it worse not better.

Here’s what we need to do. Understand one thing: policing matters. So too does sentencing. We need more police and we need active policing. I mean the police out and about policing the streets, our homes and our places of work.

Their attitude must change. No longer band-aid policing. Zero tolerance policing. That means police act on all crimes no matter how small.

That’s what’s worked on the tough streets of New York and the UK. That’s what will work here.

It is about sending a message that society will not tolerate crime of any sort. Petty crime included.

At our conference we heard from Middlesborough Mayor Ray Mellon, who as police chief in the city, introduced zero tolerance policing. He told us what worked. He explained that concentrating on petty crime stops the big crime. That’s because a strong message is sent to young people that crime won’t be tolerated.

Under ACT’s zero tolerance policy, it will no longer be acceptable to say to criminals their crime is OK because the police are busy investigating more serious stuff.

And we need punishment that matches the crime. Not this wet bus ticket stuff. ACT will abolish parole. If the judge sentences someone to two years jail. They will serve two years jail.

New Zealand also needs more police. The number of police relative to the overall population is low by international standards. It is about 20% below Australia’s. On this basis, New Zealand could do with another 2,000 police.

New Zealand spends less than 1% of Gross Domestic Product (GDP) on police. Even with funding for another 2000 police, it would still be less than 1% of GDP.

ACT says this is worth the price.

ACT policies of tougher sentencing, no parole and more police, will reverse the odds in favour of law-abiding New Zealanders.

ACT will turn the tables on criminals, so it is them who are afraid to walk the streets.

We also have to fix the tax system.

Tax is a major cost to businesses, to people, and to our economic fortunes as a nation. It stifles productive investment and robs workers of spending power and their ability to save.

Under Labour, the tax take has grown by 36%. Personal taxes are up 40% on 1999 levels and the amount taken in corporate tax is up a whopping 56%.

The Government is awash with cash, and posting 6 billion dollar surpluses.

People have been dragged into higher tax brackets and the effect of that together with inflation, means the average household is no better off in real terms than they were in 1999.

Internationally, company tax rates have been falling over the last decade. In 1997, the average corporate tax rate in the OECD was 37%. New Zealand was 4% below this at 33%.

Now, the average OECD tax rate is 29%. New Zealand is 4% above this. Global investment is highly mobile. People can choose to do business anywhere in the world.

Under Labour, New Zealand has lost any tax advantage relative to other countries and has fallen off the radar for foreign investment. Other countries will lend New Zealand money but will not invest directly.

ACT is the party which bests understands taxes and how lower taxes are the key to unlocking higher economic growth rates.

Even the Treasury agreed that ACT’s tax policies would boost economic growth by at least 1%.

The proposition is simple.

The Government is taking more than $6 billion a year that it doesn’t need.

ACT wants to leave that money with the people and businesses who produced that wealth in the first place.

ACT would do that by moving to a simple two-tier tax scale-

We would drop the middle rate of 21% to 15. And drop the top rates to 25%. We would drop the company rate to 25 too.

That would give us just two rates. A low 15% rate all the way up to $38,000. Then a top rate of 25% for people earning over that.

For the average worker, that’s the same as a 7% pay rise under the current tax system. Or an extra $2000 a year in take-home pay. Unions are striking for 5%. They’d be better off with tax cuts not strikes. So too would the country.

For business, it would restore New Zealand’s tax advantage to the 4% below OECD average, which we had in 1997.

The Treasury says it’ll mean an extra 1% growth. That’s what we need if we are ever going to make our way back into the top half of the OECD.

Tax cuts are good for business. They are good for workers. But best of all, they are good for the country.

But tax isn’t the only cost of doing business in New Zealand. Small businesses are under constant attack from red tape and compliance costs.

I don’t know why we put up with it. New Zealanders who produce and work get taxed to destruction to pay for over-zealous bureaucrats whose only job it is to hassle them. And when you ring the police because you are getting robbed they’re too busy to help.

There’s a simple message for how government can help: get out of our pockets and off our backs. Cut out the rubbish and provide the basics like the police and roads.

The way to protect the environment and drive up workers’ wages is to protect private property rights and the freedom to contract. Not by having a bunch of government busybodies going around hassling people engaged in productive endeavours.

We need to deal to the problem fast. The best first step is not to make the problem any worse.

To do this, ACT would impose the equivalent of the Fiscal Responsibility Act for regulations – a Regulatory Responsibility Act. This would require government ministers to abide by a prescriptive set of standards before signing any new regulation into force.

The Regulatory Responsibility Act would demand that a government answer a few basic questions before running off with the legislator’s pen. Questions like does the proposed regulation pinch property rights, is compensation being paid, is it necessary? Most regulations would fail to meet these tests and the country would be a better place for not having them.

ACT would move to gut those laws that impose the greatest level of compliance costs on business currently. You can guess what these are.

The Resource Management Act, the Employment Relations Act, the Health and Safety in Employment Act and the Holidays Act.

The principles that should underscore any re-write are simple enough. Private property rights should be protected, so too should be the freedom to contract. Applying these two principles would devastate these existing laws and make New Zealand a freer and more prosperous place.

Such reforms have the potential to boost New Zealand’s economic growth significantly. The medium term outlook is for GDP growth of just under three percent. The Treasury has said that if ACT’s tax policy of a maximum 25 percent rate of tax was adopted, the rate of economic growth would be boosted by one percent to four percent per annum.

ACT believes that removing unjustified compliance cost constraints on New Zealand business could have a similar impact on growth – adding another one percent. If we can do that then mean economic growth of 5 percent is achievable.

Higher growth and greater prosperity would mean we could look after our elderly better, our young, have better housing, better health care, better education.

Lower taxes and lower compliance costs are the keys to unlocking higher growth rates and a higher standard of living for all New Zealanders.

ACT is the only party that understands this. The National Party says they do but then go and support Labour Party policy.

Voters have two votes this election. The ACT party is just asking for one of them. The party vote. That’s a vote for less tax, less government and a freer more prosperous future.


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