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Speech: Prebble - The One Per Cent Election

Thursday 15th Jul 1999 Richard Prebble Speech -- Economy


7.00pm Thursday 15th July 1999



The 'one percent' election

This election appears to be the year of the little idea. It's the one percent election.

National and Labour are saying that if we vote for them it will be business as usual, only under National we will pay 1% less in tax and they will spend $400 million more in social spending.

Labour says vote for us and the 'rich' will pay 1% more in tax and we will spend $350 million more on social spending. In Parliament they are arguing about whether Labour will be taking two loaves of bread each week out of the family shopping basket. There is not discussion over whether another $400 million on social spending will make any difference.

I believe Bill English dreamed up $400 million because it's 50 million more than $350 million. His promise to spend a dollar on social spending for every dollar on tax cuts in interesting until one realise that over the last five years National has spent two dollars on social spending for every one dollar in tax cuts.

Indeed if National and Labour were to restrict government spending increases to just $4000 million, that would be the most disciplined public spending since Ruth Richardson.

Just one Labour promise, to nationalise ACC, will cost over a billion dollars. And Labour's state house policy will cost another billion dollars.

So it's clear that any analysis would show that what both parties are giving us is snake oil. Both parties are trying to persuade us that central government spending will solve social problems and that just a few dollars extra will resolve everything. It will not. I agree with the left wing commentator Chris Trotter that the real issues in this election are not the one percent tax changes.

Labour quietly announced three policies that are very radical indeed. First - Labour proposes to reduce state house rents to just 25% of income, and to build 10,000 new state rental houses to replace the ones that have been sold. It's a bold plan by Labour to drive down the cost of renting. If the policy succeeds, it will drive down the cost of all houses.

Destroying the private rental market is Labour's first objective. They can only succeed by wiping tens of thousands of dollars off the cost of everyone's home. Home owners will be left with mortgages greater than the value of their house. The only people who will benefit from this policy will be those who qualify for state houses. But those people will be the real losers.

We will go back to a system where people do anything to make themselves poor enough to qualify for a state house - have more kids, separate, refuse promotion, have brother-in-law move in creating overcrowding - just to get to the top of the state house queue.

Everyone who rents or owns a house should realise what a radical attack on the Kiwi dream of being a home owning democracy Labour's policy is.

The second radical policy is Labour's pledge to repeal the Employment Contracts Act. I read somewhere that one third of employees said that this did not concern them. Have we forgotten the disruption of strikes so soon?

Last Saturday morning I got up at 5.30am so I could catch the 7.00am flight from Wellington to Auckland. The flight was cancelled because the aircrew had all reported in sick. It's so long since airline strikes were common - they used to happen every school holiday - I was expressing concern over the health of the crew before it was explained to me that this was industrial action.

There is some discussion over how much power Labour's proposal gives to the unions. The one group who have had an input to the policy, who helped write it and as Chris Trotter points out, 100% endorse it, are the trade unions. The country's trade unions are totally in favour of Labour's industrial relations policy. As Chris Trotter says - Labour's industrial relations policy is radical.

The most radical policy is Labour's ACC policy. Labour will nationalise without compensation the private ACC insurers by refusing to allow the insurer to renew policies. The private insurance estimate their losses at $1 billion. If Labour refuses to compensate, this policy will do enormous damage to the country's reputation as a safe place to invest. There are bound to be serious trade implications and possible retaliation.

ACC policy premiums will rise. But Labour also promises to introduce up to $100,000 lump sums. Even the Alliance's Jim Anderton says that will cost employers $400 million a year.

But there is more. Labour promises to extend ACC to cover sickness. The sickness benefit is $435 million a year. But as employers know, employees will be sick to match the sick leave. When I was on the Kindergarten Association, with a hundred kindergartens, ninety percent of the staff were sick the exact days of sickness leave available.

As my mother used to say to us boys as she sent us to school complaining we were not feeling well: "Ninety percent of the work in the world is done by people who are not feeling well."

No fault, unlimited sick leave - and ACC will cost a fortune; it will break business. Labour's ACC promise alone will cost ten times Labour's tax policy.

I am amazed at the lack of scrutiny by the media of Labour's policy but as Frank Haden, who was receiving a lifetime award from his fellow journalists this week said, state radio and television have determined to defeat this government.

But National must take some blame. Labour has set the agenda - a one percent tax rise and a claim of $350 million more on social spending and like a well trained circus, National has mirrored Labour with its one percent tax cut and its $400 million social spending. Real problems are not being looked at.

ACT is pointing out that it's the private sector that creates wealth - not government. Over the last six years, an anti business environment has been created. Over 5,200 new laws and regulations affecting business have been passed in the 1990's alone. Hong Kong has less than a thousand.

ACT says we need a fiscal responsibility act for regulations. Let's have a law that states every regulation must get a cost benefit analysis. Where is the cost benefit of making taxi drivers pay $300 for a piece of plastic every year?

ACT says things like the Treaty settlements going off the track with claims for radio waves; with runaway social welfare where beneficiaries get more money than MPs; where you are more likely to be burgled, raped or mugged in Auckland than the USA; and red tape and bureaucratic waste - these are the real issues.

There is good news. Thanks to MMP it's not a choice between the two old parties' one percent solutions. You can vote for a party with new ideas to tackle the real issues.

The fact that my new book has now topped every single bookseller's best selling list indicates to me that New Zealanders are interested in real solutions to real problems. But then, in the end, it's over to the voters - and that's where you come in.

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