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Heather Roy's Diary - Labour's miserly budget

Heather Roy's Diary

Labour's miserly budget last week saw very little for the working Kiwi despite a $7.4 billion surplus. It is outrageous to think that hardworking New Zealanders who provided the Government with this surplus in the first instance will see nothing of this returned to them. The huge and growing surplus has definitely made tax cuts affordable and overdue. The Government however would rather keep this money than give it back to those who earned it and in the budget Michael Cullen announced what amounts to a cost of living adjustment to tax thresholds effective from 1 April 2008. This amounts to an extra packet of chewing gum a week in three years time!

ACT Tax Petition launched

Last Friday Rodney Hide launched ACT's tax petition. We believe that Kiwis should have their hard earned money returned to them. The petition requests that Parliament return to hard-working New Zealanders the surplus through a tax cut for every worker. Petition forms are available on the ACT website at

ACT's Tax Policy announced

On Tuesday ACT's tax policy was launched in Auckland. Rodney Hide's speech to the Newmarket Rotary can be found at

Each year the Labour Government is taking $4,000 more from each household than it spends. This is the result of over-taxing ordinary New Zealanders. But while the Government is awash with money, the average household is struggling. Extra taxes and inflation under Labour have left the average household no better off than they were in 1999 when they came to power.

Our tax policy is this: We say that our tax structure should be simpler and flatter, 15% up to $38,000 of earnings and 25% above that. Company tax should be 25% too. We would then have just two rates of tax instead of four. This tax cut for every worker would return almost $6 billion to Kiwi workers.

For the average worker on $40,000 this is the same as getting a 7% rise in take home pay. At the moment unions are pushing for - and some have been striking for - a 5% increase. Their members would be better off with tax cuts instead of strikes. The country would be better off too.

Predictably Finance Minister Cullen has been very critical of Opposition parties proposed tax cuts. He has been quoting an OECD report warning of interest rate rises if more money is pumped into the economy through tax cuts. The problem for Dr Cullen is that he has quoted the report selectively - it actually states that there may be another round of interest rate rises if more money is pumped into the economy through tax cuts or extra spending. This includes extra government spending and in his budget address he was very quick to tell of the extra spending in many areas - $1 billion in health for example. Dr Cullen's message seems to be that tax cuts and extra spending by the Opposition will be inflationary but extra spending by him will not be.

Red-tape gone mad

Marlborough careworkers from Nelmar Home Support have been banned from taking their elderly clients out to get their shopping done or run errands. The ban has been put in place because the law says anyone being paid for using a vehicle must have a taxi licence. Anyone without said taxi licence will not receive insurance in the event of an accident. This is another example of over-regulation and common sense out the window.

$50 million on Health Bureaucracy

Labour has wasted around $50 million dollars a year on bureaucracy instead of spending the money on real health services since becoming Government. Information I have received from Parliamentary Questions and Official Information Act requests shows the following spending:

* The cost of running Primary Health Organisations (the new way of running family doctor practices) is around $26 million a year.

* District Health Boards cost over $6 million a year to run.

* Over $1 million is spent on special Maori committees or consultation with Maori.

* Ministry of Health bureaucracy has increased from 781 full time equivalent staff in 2001 to 1,085 in 2004. A conservative estimate of $55,000 per person a year means that the extra cost to the taxpayer of this increase in staff numbers is around $15 million a year. At the same time as staff numbers have increased the Ministry has devolved most of its services to District Health Boards.

This huge increase in bureaucracy is one of the reasons there is no increase in health services despite the extra funding allocated to health since Labour came to power.


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