Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

A High Growth-Low Welfare State

A High Growth-Low Welfare State

Hon Sir Roger Douglas, ACT New Zealand

February 15 2009


The reactions to my Orewa speech (Brian Fallow, New Zealand Herald 'wealthy get tax relief' or John Key, 'idea is fundamentally flawed'), are disappointing but not surprising - clearly, the politics of gesture or pigeon-holing still reigns supreme while New Zealand's problems escalate.

Will the policy I outlined at Orewa help the rich? It will - but not nearly as much as it will help the poor. Why? Because rich and poor taxpayers alike get precisely the same tax relief: $6,150.

That means someone on $30,000 per annum will pay no tax at all, while someone on $100,000 will pay no tax on the first $30,000. Thereafter, they will pay a flat rate on the balance of $70,000. It is the current system, apparently supported by Fallow and Key, that denies options and opportunities to the poor - while the poor are forced to queue for healthcare, (sometimes dying on the waiting list), the wealthy get the care they need through private provision.

How is it then, that the option I propose - which puts the poor in the same position as the rich and allows them to get treatment when they need it - hurts the poor?

The poor will also have $4,000 a year inflation-proofed to save for their retirement compared to being unable to save under the present system. For someone saving under this option from ages 18 to 65, that equates to $1.8m or $850,000 in dollar-of-the-day terms.

How does this adversely impact on the poor? Or is it simply that there are some who want the poor to rely on the good-will of the taxpayer or the whim of a politician?

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

The size of Government spending is set to balloon under National from 30 to 36 percent. The tax-cuts will be financed by mortgaging our future, with the interest on the increased debt having to be paid back by future generations.

Under Labour, we mortgaged our houses to buy consumer goods; under National, we are about to mortgage our children's future. Under Labour's rules, New Zealand became a high-tax low-growth welfare state.

My speech at Orewa shows how to obtain a high-growth low-tax welfare state. Labour moved the State from a growth-oriented model to an income re-distribution model. This saw New Zealand take a dive in productivity from three percent to around one percent.

In New Zealand we have come to believe that we are all getting a free lunch. There is no free lunch. For instance: pensioners may enjoy free trips to Waiheke but, unless you know what kind of trade-off has been made to obtain such free rides, it is hard to think of this as bad policy.But let us go back to the cut in productivity and, hence, the foregone rises in the average wage resultant from the policies of redistribution.

For pensioners the dive from three percent to one percent productivity-growth per year over the past nine years has meant they are missing out on around $100 per week per couple. Those who thank the past Labour Government for their free trips to Waiheke - and other redistribution policies, like more money for art and racing - need to think again.

For wage earners, was the loss of around $180 per week really worth it? Or for pensioners, around $100 per couple? Perhaps we should stop fiddling with the cents; and get on with the dollars.


ENDS


© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines


Gordon Campbell: On The US Opposition To Mortgage Interest Deductibility For Landlords


Should landlords be able to deduct the interest on the loans they take out to bankroll their property speculation? The US Senate Budget Committee and Bloomberg News don't think this is a good idea, for reasons set out below. Regardless, our coalition government has been burning through a ton of political capital by giving landlords a huge $2.9 billion tax break via interest deductibility, while still preaching the need for austerity to the disabled, and to everyone else...
More


 
 

Government: Concerns Conveyed To China Over Cyber Activity
Foreign Minister Winston Peters has confirmed New Zealand’s concerns about cyber activity have been conveyed directly to the Chinese Government. “The Prime Minister and Minister Collins have expressed concerns today about malicious cyber activity... More

ALSO:


Government: GDP Decline Reinforces Government’s Fiscal Plan

Declining GDP for the December quarter reinforces the importance of restoring fiscal discipline to public spending and driving more economic growth, Finance Minister Nicola Willis says... More

ALSO:


Government: Humanitarian Support For Gaza & West Bank

Winston Peters has announced NZ is providing a further $5M to respond to the extreme humanitarian need in Gaza and the West Bank. “The impact of the Israel-Hamas conflict on civilians is absolutely appalling," he said... More


Government: New High Court Judge Appointed

Judith Collins has announced the appointment of Wellington Barrister Jason Scott McHerron as a High Court Judge. Justice McHerron graduated from the University of Otago with a BA in English Literature in 1994 and an LLB in 1996... More

 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels


 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.