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NewsWorthy: The aftermath of the budget

25 May 2007 - No. 111

The aftermath of the budget

Many words in the media and many speeches in the debating chamber of Parliament later have seen the legislation to implement the budget enacted. The Government sees its work as a triumph; the National Party does not.

So here are the talking points which highlight the limitations of the budget.

The people wanted tax cuts but it was denied them.

The economy needed a balance of savings and growth, not just a strategy based on savings alone. The economy needed to move out of consumption mode and into production mode. It needed to reward work and saving and encourage risk taking and innovation. This Budget ignored all of this.

Labour has had eight years in which to lift productivity and expand the capacity of the economy to grow. It has squandered that opportunity.

• New Zealand has fallen down the OECD rankings. From 20th to 22nd. Portugal, Hungary and the Czech Republic are snapping at our heels.

• Labour productivity has fallen to historically low levels. Labour productivity has more than halved since this government came into office.

• Because of inflation, more people are paying the top tax rate than ever before. The budget document reveals that 15% of income earners – that’s 456,000 people – now pay the top income tax rate of 39%, after Dr Cullen initially assured the nation that only 5% of income earners would pay this rate. The Government published 8 budgets doing nothing to address this major rise in taxation.

The things that have grown under this administration have been:

• interest rates: Treasury expects that borrowers coming off fixed interest rates will be paying an extra $3.9 billion on their mortgages from now until 2009.

• fiscal drag: this causes an additional $1billion a year in income tax. In this Budget no adjustments were made.

• the gap with the top half of the OECD. Labour has a goal of returning NZ to the top half of the OECD. We’re heading in the wrong direction

• the wage gap with Australia: In the last six years the after tax average income in Australia grew by 33%. In New Zealand it grew by only 18%. Dr Cullen said last year that New Zealanders who go to Australia for tax reasons are “functionally innumerate, and we are probably better off without them”.

The latest statistics published on 18 May 2007 show that in the past three years, the annual loss to Australia has grown from 18,186 to 24,006.

Dangerous dogs and foolish thinking
As Chairman of the Regulations Review Committee I was recently in Canberra looking at current issues in the area of delegated legislation. One of the key questions which legislators continually fail to ask is

“is the legislation really necessary and will it achieve its intended purpose?”

A classic illustration would have to be the requirement which the New Zealand Parliament recently enacted for the compulsory micro-chipping of dogs. All dogs registered in New Zealand for the first time from 1 July 2006, except working farm dogs, need to be micro-chipped.

That was done allegedly to stop dangerous dogs attacking humans. The reality of course is that owners of dangerous dogs will likely not microchip them and the micro-chipped dog is no less dangerous than the non-micro-chipped dog.

It was a Parliamentary response which was in every sense a mis-hit.

If we are serious about dealing with dangerous dogs then the answer is to ban such breeds. Not easy perhaps with the complication of cross-breeds, but speak to many residents in parts of Auckland and they will tell you one of their greatest fears are roaming dangerous dogs in the streets.

A moment of refreshment
Last week the Commerce Select Committee continued its consideration of the Major Events Management Bill. The Bill facilitates major events such as the Rugby World Cup and contains provisions relating to ambush marketing, ticket scalping and pitch invasion.

Lisa Lewis who bikini streaked in June 2006 at the All Black Ireland Test match was one of the submitters. She noted that the first recorded incident of streaking was by college student George William Crump, who was arrested running nude through Lexington Virginia. He was later to become a US congressman and Ambassador to Chile.

The Wikipedia encyclopaedia dictionary for New Zealand refers to “bikini streaking” and she thought such streaking should be legalise at the end of sporting events as “not everybody goes to the horse races just for the racing”. They go for “best dressed” and the atmosphere as well.

Political Quote of the Week

"A people that values its privileges above its principles soon loses both." Dwight D. Eisenhower - 34th US President

Dr Richard Worth
National Party MP


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