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The key to a more prosperous NZ

Newman Online Weekly commentary by Dr Muriel Newman MP

Good governance: the key to a more prosperous NZ

This Week Newman Online looks at the key ingredients to creating a more prosperous economy, including welfare reform.

It is ironic that at a time when political parties are hustling to win power, that the storm clouds of an economic slowdown are brewing. That means that those political parties such as Labour, the Greens and NZ First that are advocating higher taxes and higher spending may find their promises fail to resonate with voters.

In politics, as in life, it is horses for courses: parties that tax and spend can gain popular support when times are good, but they run the risk of becoming mill-stones around a country's neck when times are tough. What is needed most at times like this, are parties that are focussed on improving the ability of the country to be able to ride out the storm.

Continual improvement is, of course, a driving force in the private sector. It was interesting today to read reports that highlighted this in the National Business Review's rich list. In particular, Richard and Christopher Chandler of Hamilton, who have just been ranked at the number one position with an estimated fortune in the region of $4 billion, have amassed their wealth is through the purchase of strategic shareholdings in companies where they can identify that better governance would lead to improvements in performance and benefits to all stakeholders.

The same principle applies to the running of a country. With good governance the performance of the New Zealand economy could be dramatically improved, and every citizen would benefit.

That is why it is so important at this election that the focus is on how party policies will help strengthen the economy and improve the country's performance over the next three years.

The reality is that it is the private sector that creates the wealth in an economy. That is why the small business sector is so vital, and why reducing the crippling burden of regulation and bureaucracy - much of it introduced by Labour - that inhibits productivity and profitability is so crucial.

Similarly, it is imperative that for the economy to thrive, the widespread abuse of the welfare system must be stopped. It is an appalling indictment on past governments that they have done little to address the growing abuse within the system allowing welfare to become an anchor to New Zealand's progress. It is not only the cost of welfare that holds the country back, but it also prevents beneficiaries and their children from being able to achieve their potential in life.

The problem is that while the economy has been strong and Labour has talked tough about welfare, all the while they have been quietly changing the system, making benefits easier to access, more generous, and harder to get off. That means that when a downturn comes along, welfare dependency will escalate into a massive problem.

Further, Labour has been less than honest about welfare statistics, hiding the number of unemployed to make themselves look good, by encouraging them onto sickness benefits, enrolling them as students in questionable courses, and turning them into public servants.

At a time when employers around the country are crying out for workers, it makes no sense at all to have 75,000 adults being supported by the Unemployment Benefit. That costs taxpayers over $800 million a year.

Neither does it make sense to leave 50,000 sole parents whose children are at school and who are costing taxpayers around $1.5 billion a year, with no incentive or requirement to get a job. Having been there myself, I know first hand what a dead end life welfare is and most of these women would be far better off in the workforce - especially if they were supported with after school child-care and the like - and the children would be better off as well having their mum as a working role model.

In fact, with the job market being so buoyant, having 125,000 able- bodied beneficiaries on welfare being paid to do nothing amounts to a massive abuse of the welfare system (estimated to be in the region of $2 billion a year when the rampant benefit fraud is added in as well) by a Labour government that has realised it gets more votes from beneficiaries dependent on welfare, than from workers taking responsibility for building a successful future.

ACT's five-step plan to reform welfare involves an annual review process, changing to a single temporary benefit for the able-bodied, introducing time limits and a 40-hour work week along with appropriate supports for those who need extra help.

That programme, combined with ACT's tax reform plan - to lower taxes to 15 cents in the dollar up to $38,000 and 25 cents above that - will significantly boost the economy to help us weather the difficult period that may lie ahead.

But what is equally important is a reform programme to help relieve the compliance cost burden on small business: reducing company tax to 25 cents in the dollar to help create a competitive advantage, repealing the Employment Relations Act to enable free workplace contracts once again, and introducing a personal grievance free trial period, will re- create flexibility in the workforce.

Further, introducing competition into ACC, replacing OSH and scrapping the RMA will all help to alleviate some of the punitive burdens on small business to assist in increasing productivity and profitability.

These three measures - welfare reform, tax reform and a reduction of small business compliance costs - are responsible commitments that ACT is promoting that would fit in well with the plans that Don Brash is espousing. That is why the best combination of parties to handle the difficult period that lies ahead is a Don Brash led government with ACT there to provide the ideas, the support and the stability that the country will need.


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