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Shipley Speech - Good Policy Good Government

It sometimes seems much longer, but tomorrow marks a year since the fateful Cabinet meeting that sparked the end of the Coalition and the beginning of Minority Government.

The decisions I made during those dramatic days were all concerned with guaranteeing good government.

I was not prepared to sacrifice the standard of governance merely for the sake of holding on to the Coalition.

So we had to take some very bold steps.

And in the 12 months since then, we have proved that good governance is eminently possible under a minority Government.

Good government cannot be properly analysed in a few seconds on TV, because good government is bigger than TV.

It's bigger than the media.

It's bigger than the individual politicians and personalities involved.
And good government is not an easy road to walk.

Good government comes from a mix of things –

 Positive leadership,

 A sure vision,

 Experience and energy,

 A great team.

These are all things the National Party brings to government.
Behind this is a solid commitment to good policy that gives substance to promises. It's what has led to the great achievements we have made in the past nine years.

While good policy may not always be what the populists cry for, it delivers more solid and positive results in the longer term.

Good policy is not just good government. It is good politics.

Labour is finally starting to make policy announcements and I welcome that because it allows us to show how much we differ from Labour in fundamental areas of policy.

It also demonstrating Labour’s lack of ideas, their populism and their lack of understanding of the complexity of the issues facing New Zealand.

Today I want to talk briefly about three policy areas:

1. tertiary education funding;
2. crime; and
3. industry policy.

I am choosing these because they clearly demonstrate:

 the difference between good and bad policy

 the difference between good government and bad government

 the difference between National and Labour.

In tertiary education, we all agree on the need for a highly skilled, knowledgeable society.

In the next week we will announce the details of our Five Steps Ahead programme. It contains some important initiatives on tertiary education, but I can't give the details just yet.

However, I can assure you we will be sticking to our policy that tertiary students should contribute something to the cost of their own education.
We will also continue to offer a guaranteed student loan scheme to help students pay for part of their study costs.

I remind you that Labour also plans to keep the scheme.

Labour has announced no intention of changing the proportion of the fees student pay, nor to discontinue the loans scheme.

And the reason is clear. Having students contribute a bit over 25 per cent of their fees is fair.

The taxpayer – be they butchers, farmers, panelbeaters or ditch diggers – pay the other 72.5 per cent.

All taxpayers, whether they have a tertiary qualification or not, pay for the vast majority of the tertiary education system.

When a young New Zealander graduates, he or she can expect to earn well above the average wage. They can also expect to earn much more than taxpayers without such a qualification.

A 30 to 34 year-old with a bachelor's degree earns, on average, $37,165, compared to someone with a secondary school qualification who earns $30,371.
By the early 40s the gap is $46,269 to $36,671. Tertiary education is good personal investment. That's why we consider it a good idea to pay 72.5 per cent of the course costs of tertiary students.

Remember other young people who start out to become farmers or business owners or anything else, get no such help.

The current funding arrangement for tertiary education has opened up the system to thousands more young New Zealanders. Enrolments this decade, are up by more than 40 per cent. Access to education is better than ever before.

I want to touch on the issue of student debt and the interest on that debt. I acknowledge the issue is not an easy one and we are concerned about those students suffering genuine hardship.

From 2001 we will introduce two changes to the scheme.

The first is a 25 per cent discount on the real interest rate charged while students are borrowing. This will be limited to low income earners, but should apply to the majority of students.

The second is to prioritise the use of student loan repayments. Money will be applied to the effect of inflation first. Once that commitment is paid, 50 per cent of the remainder will be used to pay the loan.

If the interest bill is more than the other half, the Government will pay the balance.

These changes will make a dramatic improvement to the student loans scheme and help alleviate the debt burden of students.

I would like to make a few comments about the rationale of student loans and our differences with Labour.

The system is NOT free for a very good reason. We can't afford it.

Taxpayers borrow the money from the money markets and lend it to students on very generous terms. Not free terms, but very generous ones.

The taxpayer must pay the loan back with interest. Students, in turn, must pay back their debt to the taxpayer.

There is an incentive for students to minimise their debt. We encourage them to support themselves through other means, like part-time work, if available, and through the support of family.

For those who come from low-income families, we still provide a student allowance.

If the Government did provide interest free loans, let's be honest, students would borrow the money whether they needed it or not. Anyone would.

To my way of thinking, that's poor policy and it gives the wrong signals. It provides no incentives to minimise debt and it costs taxpayers.

If all of the 40,000 students who currently don't subscribe to the loans scheme decided to borrow about $6000 each, this would cost taxpayers a further $250 million, plus $60 million a year in interest costs.

That's the same amount of capital we are investing in a new hospital for Auckland. Is that the kind of choice taxpayers want to make – sacrifice health expenditure to wipe out interest on student loans?

I warn you, beware of Helen Clark's promises on student loans. Be very careful. If you scratch beneath the surface you will find fault in her policy.
In order to scrap the interest on student loans, the costs will fall on other areas. Will it be fewer hospitals? Will it be fewer pre-schools? Will it be higher taxes?

In order to deliver her promise, it is possible Helen Clark would introduce rules to decide who deserves loans. Labour will be meddling in people's lives again – just like the bad old days.

Ladies and gentlemen, good policy is about prioritising. It's about providing the right incentives and providing fairness. That's what the Government's policy on student loans is about.

Turning now to crime.

Reducing crime is one of the more complex and difficult issues faced by a Government.

Crime is a product of a wide range of factors, for which there is no single solution.

The Government has adopted a four pronged attack on crime:

1. better enforcement;

2. tougher penalties;

3. early intervention;

4. crime prevention.

Each has a part to play, but it is the work that we are doing with early intervention that I think is the most exciting.

For many the quality of the early years determines the risks later in life.
For this reason we are putting our resources into young families at risk. We insist that all the agencies working with a family co-ordinate their activities. We appoint a single case manger to make sure this happens.

We have invested heavily in extra police – 900 more since 1990.

We have also lifted the penalties faced by criminals, and increased support for their victims.

And we have set up Safer Community Councils to involve the local communities in the fight against crime. These councils now cover 95% of the population.
We have been working to a coordinated strategy for reducing crime.

And it is working.

Recorded crime in New Zealand is coming down. I repeat – recorded crime is coming down.

Only in “Drugs and anti-social” and “Administrative Offences” has there been a significant upward trend over the last six years.

The largest category - “Dishonesty” - has fallen 14% between 1992 and 1998. The rate for young people apprehended for “Dishonesty” is also falling.

I have mentioned these particular figures because Helen Clark has identified reducing youth crime and burglary as one her major commitments.

Empty words are no substitute for action. 900 more police on the beat since 1990, is action ladies and gentlemen. Falling crime stats is action.

Could it be possible that she didn’t check what was already happening before she made the promise? Does she and the Labour Party really know this little about what is going on?

On the other hand, perhaps this explains why she has not felt it necessary to promise any extra spending for this commitment.

Labour have constantly criticised our approach to social policy, and are divided on the issue. They have fought our strategy for crime reduction every inch of the way, despite the fact it has worked.

They have a long record of talking tough while voting soft.

Our policy on crime is good policy. The results prove that. Labour's past record and blind opposition to our progress is not only bad policy, it's poor politics.

The Labour Party has put forward its own proposals to help industry grow.
The policy sounds attractive, $100 million spent just to help small businesses But it is bad policy.

It is bad because Labour proposes to use this money unwisely.

The centre point of Labour’s policy is a Crown Agency, Industry NZ. This will be staffed by state servants and have a board that will no doubt include representatives of Labour’s backers the unions.

These experts will decide which worthy high-risk business projects it will invest in on our behalf.

I hope you get the point. It doesn’t sound as though it’ll make much of a difference to industry.

And it certainly won't make as big an impact on small businesses as the money that this Government has saved them in ACC premiums.

In at least three surveys – in Auckland, Wellington and Otago/Southland – nearly 80 percent of employers are expecting to pay less in ACC costs. That is money that will go directly back into their businesses.

South Island health provider South Health estimates it will save $600,000 in ACC premiums as a result of the ACC reforms – that is money going directly back into the South for operations.

That story will be repeated all over New Zealand – businesses saving on ACC costs and ploughing that back into their business.

Particularly when you take account of the amount required to run Industry New Zealand.

Trade New Zealand currently spends just under $20 million on its New Zealand based operations. If Industry NZ is to have wider representation in provincial centres its costs will be higher. There won’t be much left of that $100 million to help industry.

The proposed spend up of $100 million is bad policy because it wastes money on what sounds good but won’t deliver.

More important it is bad policy because Labour intends to do a lot of other things to undermine it.

Helen has a secret industry policy.

She intends to increase taxes on high skilled workers. This will put up industry’s costs and encourage our best people to move to Australia, just when we need them most.

She will repeal the ECA, not because she thinks it is unfair or hasn’t produced good results for New Zealand. She will repeal it because she has to look after Labour’s backers, the unions. There will be more strikes, and unreasonable wage demands.

Ironically it will be the unemployed who will suffer most, because there will be fewer new jobs.

She will be more meddlesome in her demands on industry. She will make it the law for every firm to have a staff-training plan, she will give local government the power to do whatever it wants, rather than staying within the limits set out in law.

She will nationalise ACC.

She will stop paying off debt.

She will delay tariff reductions.

And so the list goes on. Each initiative in Helen’s secret industry policy could cost industry more than the benefit it is likely to see out of her $100 million spend up.

Labour’s industry policy is bad policy. You will see the result in what the Reserve Bank will have to do. Each of the planks in Helen’s secret industry policy will push up prices.

Interest rates, which are at their lowest in 30 years, will go up. Investment and growth will decline.

Labour’s bad policy will catch up with them. Bad policy becomes bad politics. It is easy to promise what people say they want in an effort to make them happy.
The hard job is to work out what is a really wrong, and design policy to fix it.

That’s what good policy is about, which is what makes good government.
Which is what you have always got from National. And will continue to get.

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