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Whyte: Speech to Grey Power

Media Release

22 August 2014

Immediate Media Release

Dr Jamie Whyte ACT Leader

Dr. Jamie Whyte – ACT Party Leader

Rotorua

Media Release 21 August 2014

Speech to Grey Power

National’s failure to increase the age for super and reform health is a threat to every New Zealander’s security.

Let me set out what ACT has been saying on superannuation, health and saving for retirement. Then a little on the economy, because a strong growing economy makes all these issues easier.

One of this National government’s legacies they will be seen to have failed to tackle major economic issues that will come back and bite us.

The first of these is superannuation. We have had sixty years notice of a demographic time bomb that is destroying the economies of Europe today. Like all Western countries, we have fewer working aged people and more retired people.

There are a number of answers but one is to lift the working age and lift the age of entitlement to the universal pension. Australia is moving this age to seventy.

Of course, some people would lose the ability to work before they meet the new, higher retirement age. This does not automatically arise at age 65. There are people at age 55 or even younger who, through illness or accident cannot work. The answer for those people who cannot work is access to a benefit. There is a good case to make access to a safety net easier for those over the age 60, as manual work becomes no longer viable for them.

However, all such benefits should be means tested. We cannot afford to carry able bodied adults, whether they are 18 or 65, if they can fend for themselves.

Lifting the age for universal superannuation should be a no brainer. Lifting the age helps fix the problem of the future cost to taxpayers – your children and grandchildren – and makes superannuation affordable in the long term.

No one advocates increasing the age of eligibility overnight. Adequate notice must be given. We would phase or rise from 65 to 67 in over many years. No one now close to retirement would have the deal changed on them and every one affected would have time to change their plans.

Those on fixed incomes by definition cannot change their income. So they need to be protected from inflation. This is one reason ACT favours CPI indexation rather than wages indexation.

In short, we can fix superannuation without hurting anyone who is already retired or about to retire. But that still leaves a bigger problem, where the answers are not easy: namely, healthcare.

The costs of healthcare are greatest up to the age of 5 and over the age of 65. As we age our health care costs rise. Most of our adult health care costs occur after we are 65 and are highest in the last year of our lives. There are more of us living longer lives and so health costs are going to balloon.

National’s failure to make real improvements in healthcare will come to be seen as an even greater failure than the blind refusal to touch the age of eligibility for superannuation.

The present solution is to throw more and more money at the health sector. National has increased health spending not just in real terms but also as a percentage of the economy.

This last point is important. If you draw a graph there comes a point when health spending is no longer sustainable. Treasury has been pointing this out to successive governments. The point at which the health system becomes unsustainable could be just when you need it.

Even more worrying is that the productivity of the health sector is falling. We are getting less healthcare for our money.

This is alarming. The reason we have a standard of living our grandparents could not dream of is because productivity has made things like food, cars and electrical appliances affordable.

There are huge advances in medicine, so why are we not seeing a productivity improvement?

Do not say medicine is different. The World Health Organization compares countries’ health systems. We do not come out well. We have poorer outcomes for illnesses like cancer and we spend comparatively more.

The country that comes out top or close to it is Singapore. They have a universal health system and spend less than we do.

Singapore’s health system makes more use of choice, the private sector, insurance and competition. Our monopoly, one-size-fits-all system is expensive and inefficient. Monopolies are always inefficient, wther they are private monopolies or state monopolies.

ACT wants to see much more use of all the features of the Singapore system – the private sector, insurance and competition – and less monopoly one-size-fit-all healthcare.

If you want the health system to be there when you need it, then you should be in favor of a significantly improved and more efficient health system. Simply throwing more money at it won’t result in a better health system.

Finally, a word about compulsory savings, even though this is more relevant to your children and grandchildren.

The ACT party does not favor compulsion. When you are young, investing in your education, buying a house, starting a business or providing for children may be a much better use of your money than putting it in Kiwi Saver. Money forced into Kiwi Saver is money that cannot be spent on things that may be more valuable, not only in the short term but as investments for the future. You cannot spend your money twice.

Compulsory saving may make fund managers rich but it is not the answer for your children or your grandchildren. Nothing beats personal responsibility. The evidence is New Zealanders are saving in many ways other than Kiwi Saver.

I will not waste your time discussing the other opposition parties’ absurd spending promises. National’s policies have the merit of being better than the left’s policies, but they fall far short of what we need.

New Zealand needs serious economic reform.

Our present growth is built on milk and Christchurch. In Christchurch we are just rebuilding what we had. So while it makes GDP look good, it does not make us any wealthier.

Strip out milk and the earthquake, both of which are unsustainable sources of growth, and things do not look so good.

The answer is not crony capitalism – politicians picking winners. If politicians could pick winners, they would be making millions working on Wall Street. When the likes of Russell Norman and Winston Peters tell you that they can “run the economy”, the only reasonable response is laughter – or tears.

To get the economy moving we must do the opposite of letting politicians run it. We must cut the red tape that politicians create and which strangles investment. It can take millions of dollars of expensive planning applications to start new ventures and, even then, then you may well be turned down. The cost and uncertainty means people with good business ideas often give up before they even start.

Second, we have to recognize New Zealand now has one of the highest effective company tax rates in the world, higher than the high tax European Union average. High company taxes discourage investment, growth, jobs and wages.

ACT says we should reduce the company tax rate from 28% to 12.5% to encourage investment, jobs, growth and real wages. We can pay for this cut by scrapping all the corporate welfare – the tax-funded subsidies – that favoured companies currently receive.

The economists who have modeled this say it will increase the rate of economic growth by a third. Over just 15 years, that will make us 20% richer than we would have been.

Why is that important? An economy that is a 20% larger can afford pensions and health systems that are 20% larger.

Of course, just being in favour of sustainable superannuation, a more efficient health system, personal responsibility for saving and a larger economy is not enough.

To get it you have to Party vote ACT on 20 September.


Local Government should not go into business- Stick to the knitting

“No one should take any comfort from the fact that “Infracon”, a roading company in Tararua and Central Hawke's Bay, is to go into liquidation. This puts the future of more than 200 jobs in doubt. ACT sympathises with those whose jobs are on the line,” said Dr Jamie Whyte ACT Leader today

"Infracon is not just any construction company. “Infracon “is one-third owned by a Central Hawke's Bay District Council with Tararua District Council owning two-thirds.

“ACT strongly opposes Local Bodies getting into the construction business. It is a sector of the economy where large companies have been building up their resources over the years, honing their skills and delivering value for money to their shareholders, their workers and their clients, Local Bodies and the Central Government.”

“For a council charged with looking after the interests of its ratepayers to imagine it could compete with well-funded capable road companies was folly,” said Dr Whyte.

“It may be a tad boring for councillors to stick to figuring out ways to keep the sewers open, get the roads fixed and buses running on time. Commerce can look an exciting prospect. It is. However, it is best left to the private sector. It’s what they do best.”

“ACT will seek to amend the Local Government Act so that councils stay out of business, stick to their knitting and serve the ratepayers.”


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