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Roger Douglas Address To The ACT Annual Conference

Hon Sir Roger Douglas: Address To The ACT Annual Conference

Sunday 11th Mar 2001

Speech -- Other

This is an important occasion. I want to seize the opportunity this morning to talk about what I see as New Zealand’s top priority if we want to make this country a better place in the 2000s and beyond and reach our stated goal of 10th by 2010.

We look around us and we see the many good things New Zealand offers in the 2000s. Qualities we can all be proud of and share as New Zealanders.

But we also see a lot of the other good things about New Zealand being eaten away in a tide of waste, incompetence, violence and sheer indifference.

These are things that we as New Zealanders are increasingly fearful of – our declining health care, education, our high rate of crime, social abuse and retirement standards.

Our sense of community is fraying and decaying all around us.

The old, tired ways of dealing with these problems have proved themselves hopelessly, pathetically inadequate.

ACT New Zealand was formed to breathe new life into New Zealand politics. ACT shares the sense of foreboding that prevails among many decent New Zealanders about the dangers to our society if New Zealand continues on its present social path.

We are losing our way as a nation.

The economy may be slowly improving and I emphasise slowly but our community values are declining.

We see it in our street kids and battered women.

We see a whole group of New Zealanders locked into poverty, many of them third generation beneficiaries. 400,000 New Zealanders of working age relying on the Government for their income.

We see a health system with thousands upon thousands of people waiting for operations.

We see an education system where sometimes a tenth of the students are playing truant and at least half of the students leave without achieving a basic level of education.

We are creating a permanent underclass of unskilled New Zealanders. We see a superannuation system which takes $300,000+ from ordinary people over their working lives and gives them a pathetic pension of a few thousand dollars a year in return.

Our traditional party political leaders respond to all this with cynicism and indifference.

They imply this is the price of living in the real world. That is a huge lie, peddled by politicians who only know how to look back and not forward.

New Zealand politics today can be summed up in two words: Intergenerational Robbery. Not only are we bequeathing a huge debt to future generations, but far worse, they will inherit a social legacy of frightening dimensions.

The State has failed New Zealanders by stripping their sense of New Zealand-ness. The numbness, the powerlessness that so many New Zealanders feel about their inability to stop this social reverse, to restore our inherited belief in a progressive and caring community, is no more than a symptom of our bankrupt politics and even emptier leadership.

Small wonder that so many New Zealanders have lost faith in their governing institutions.

It is time we took back the fundamental right to manage our own lives and provide for our own education, health and security without the threat of State mismanagement.

That does not mean there is no role for Government.

Under ACT’s policies, government would continue to set the rules, maintain essential services and provide for those who cannot provide for themselves. That should be all that future Governments do.

ACT New Zealand has pledged to restore the basics of Social Justice - New Zealand values of fairness, dignity, security, opportunity and prosperity. We do not subscribe to any labels or to any particular position in the political spectrum.

ACT New Zealand is a party for all New Zealanders.

ACT is very different – different from Labour, The Alliance, NZ First, National and all the rest.

And New Zealanders are going, over time, to be increasingly attracted by our difference, our innovation, our logic, our common sense.

If we do our job well – the next election will be about ACT versus the rest.

They collectively represent the politics of self-preservation, privilege, incompetence and sheer nonsense that is so utterly despised and rejected by commonsense New Zealanders. Only ACT is really different.

ACT is a child of MMP. ACT has been the only party to seriously address the deficiencies of conventional party politics.

ACT is here to rid New Zealand of privilege. This is the philosophical glue that binds ACT New Zealand.

To understand ACT you must understand our sense of injustice.

We know and share those New Zealand values that demand all New Zealanders have a right to a decent education – not one that breeds failure.

A health system that does not favour the rich – one that treats people as people and not numbers on waiting lists.

A tax system that encourages and rewards work and effort.

A superannuation plan that ensures everyone has the right to grow old with grace and dignity.

An immigration policy that makes new migrants contribute to the infrastructure we all built and paid for.

ACT’s over-riding philosophy is to combat disadvantage – wherever it is found in New Zealand society today. To borrow the words of John Fitzgerald Kennedy, people need a hand, not a handout.

That is the essence of what we are saying. When people get a hand they have choice, independence, freedom, security, dignity and fresh hope. When they get a handout they are caught in an eternal web of dependency and poverty.

ACT New Zealand offers a practical path out of that vicious cycle.

ACT New Zealand is about attacking social privilege in New Zealand, a system that denies some sections of our society the right to a decent education, proper health care, the opportunity to work and retire in comfort and dignity.

There is some unfinished Business to do in this country and it’s called social justice – fairness, respect, and equality of opportunity for all. ACT wants the chance to show it can deliver.

How can we achieve our goal of 10th by 2010?

My view is: - That it can only be done if we find a way to change the attitude and contribution of the 1M+ New Zealanders who currently feel alienated from New Zealand society.

- The only way to do this is to package social policy reform as we did economic reform in the 1980s.

- Some elements of such a reform programme won’t be 100% pure (that was equally true of the economic reforms of the 1980s).

- Our policies need to be practical – we need to start by taking account of where New Zealand is today.

- We need to take account of the goals, aspirations and incentives facing individual New Zealanders.

- We need to advocate a social policy package that has a chance of making a difference to the lives of those 1M+ people who feel alienated from New Zealand society today.

Where do we start?

We start by solving the Superannuation problem that faces New Zealand and has done for more than 30 years.

- 25% of New Zealanders have no savings – their debts exceed their assets.

- Another 25% have little or no savings except possibly a small amount of equity in a home.

- Large numbers of these people feel alienated.

- The Government takes $300,000+ from a large number of this group over their working life and then gives them a pathetic pension in return.

We need to ask:

- What would the position of these people be if they were allowed to save that $300,000 and earn interest on it?

- How would same people who currently have no capital in retirement feel if they retired with $½m+?

- My view is that over time it would change the negative attitudes and perceptions of more than one million New Zealanders into positive attitudes and perceptions of New Zealand and their role in it.

- In addition, the majority of the 400,000 New Zealanders of working age not currently employed and their families costing working New Zealanders well over 12 Billion a year ($6000 a year for each working person) would become contributing members of society.

Only ACT is free enough in its thought process to do it. I say let’s do it – I know there is debate within the Parliamentary party about the merits of such a proposal – I understand the economic arguments made by some but given where New Zealand is today, the social and economic advantages of such a proposal far outweigh any negative aspects. The following facts remain relevant:

- One Million New Zealanders who have no savings could retire, in time, with $½m+.

- The social benefits flowing from this fact in terms of lower crime and the way people behave and feel about themselves would be enormous.

These benefits, on their own are huge, and merit making the changes suggested for their own sake, but of even more importance is the fact that they hold the key to successfully changing the negative incentives of New Zealand’s current welfare system.

What then do we do to bring these changes about?

1. We finance the current and future cost of superannuation out of the Forecast Surplus and Government contingency allowance, 5½B in 2004. To the extent this is not available, we do it from new income and expenditure savings as follows:

Immigration – (ie) By tendering places available

$2B a year

Saving in Government Expenditure including Social Welfare

$2B a year

Privatisation $2B a year

2. This would then allow us to allocate the present cost of Superannuation among the 2 million New Zealanders between the age of 18 and 60 i.e. $2500 each.

$2500 saved for 47 (number of working years between 18-65) at 6% real = $665,000 available in retirement. This amount would increase over time as current retirees start to meet some of the costs of their own retirement. This would result in individual savings per year rising from $2500 to well over $3000.

3. Having solved the Superannuation issue we could move to choice in Health and Welfare by way of a 100% tax rebates (or tax reduction) for those aged 18+

Money available Health (60%) of current expenditure

= 4000 million

ACC = 1400 million

Unemployment

= 1200 million

Sickness

= 400 million

DPB (½)

= 1000 million

Total Available

8000 million

This would be divided amongst the 2 million people of working age, taking into account, size of family, age, employment and health record etc. This money would be banked along with their superannuation.

4. From their Superannuation/Welfare Account, New Zealanders would be required to take out Private Insurance to cover sickness, unemployment, ACC and health problems of a catastrophic nature.

5. They would self-insure for minor costs e.g. day to day health costs and short-term periods off work for sickness, accidents or unemployment, self-insurance would start at 2 weeks a year and moving to 26 weeks over 12 years.

6. Government would become insurer of last resort i.e. where an individual could not get cover.

7. New Zealanders with families would also be eligible for tax credits equivalent to the amount of money the Government currently spends on their children’s education, provided they spent money on an approved school (Public or Private).

The benefits that would flow from such a programme (capable of being introduced over a two year period) would be enormous.

Benefits include

- A massive improvement in incentives. The last thing a New Zealander would want to be was out of work because the cost would initially come from his/her savings not the Government

- Within 5 years, the number of people of working age on benefits would fall from over 400,000 to less than 60,000.

- Within 40 years, 95% of people would retire with enough money to be able to look after themselves without recourse to Government i.e. $800,000+ in today’s dollar terms.

- One million New Zealanders of working age who today have no savings and often feel alienated from main stream society would have significant savings in their own account and as a result, feel really good about themselves.

- Health care would be 100% better than it is today.

- Education outcomes would become the best in the world.

- Growth per year would be amongst the highest in the world as 300,000+ New Zealanders currently on welfare move into full-time employment, increasing Government revenue as result.

- Savings in Government expenditure would be major, (less people on welfare) allowing further tax reductions to take place.

- After allowing for the tax credits for Superannuation savings and money to buy Catastrophic Health, Sickness, Unemployment and Accident insurance.

- The effective tax rates for people without dependent children would fall to around 10-12c in the dollar.

- Most people with dependent children would find themselves with a higher net income than their gross income. This would come about because of the tax credit for education.

- Clearly, focusing any programme of social policy reform on helping the disadvantaged, in the end helps everyone of us.

Let me summarise this way:

There is no way back for any of us to the simplicities of a past era.

The only road open is the road ahead.

The reality we face today is that a lot of New Zealanders, Maori and Pakeha did not get what they needed from our schools and elsewhere to overcome the handicaps of their personal background. They failed in school. They are now failing through lack of motivation, lack of incentive and lack of skill to find a constructive role in their adult world.

They do not know how to remedy their own problems.

If society does not move in, with positive incentives, (not more handouts) a lot of them will be stuck with their situation for life.

Power to the people, not power to the bureaucrats, politicians or providers has a lot to be said for it.

In the end, we will only solve our country’s problems if we face reality and base our solutions on fairness. We need however, to be careful here. Because the question arises:

Fairness to whom? Fairness to Maori? Fairness to Pakeha? Fairness to Women?

Are those different fairnesses fully compatible anyway?

Those questions are a bog we can all drown in.

I want to suggest today that there is only one kind of fairness that really matters and that is fairness to the future.

The future of this country which we have to share, there is no choice about that. We are bound to it by 150 years of history which not one of us can reverse. The road back is closed; the only road open is the road ahead.

Our job together is to resolve the problems of the past not on the principles of the past. But on a basis that makes the future a country worth living in, for our children and our grandchildren.

We are the ancestors of generations to come who will read about us; we hope, in schools better than any we have provided. They will read and they will judge us – Maori and Pakeha Alike – on what we do now to take care of their future interest in the country they inherit from us.

Just as Richard and I inherited a New Zealand of the 1980s from our ancestors when we came into Government, their gift to us of their achievement and their mistakes.

Fairness to the past is important. None of us can afford to neglect it. But fairness to the future, not the past is what will make this nation something that deserves celebration, a hundred years from now. If we fail to serve the future, we fail in the heart and soul of everything we undertake.

ACT has the most impressive group of MPs and Leadership in politics in New Zealand today. Let’s support them to fulfil our dream of a better New Zealand.


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