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Why Act Will Win In 2002 -- Richard Prebble

Sunday, September 9 2001
Richard Prebble

Speech to ACT Wellington Regional Conference, Wellington, Sunday, 9 September 2001 at 3pm

It is a pleasure to be addressing the Wellington Regional ACT Conference. I feel a real affection for Wellington which has always been good to me.

Wellington has this irony. It is the capital city, yet it is badly represented. I do feel some anger that at the last election, the Left's two candidates, Marian Hobbs and Phillida Bunkle, sang a duet - that Richard Prebble is an outsider from Auckland.

Of course we now know that I was the only honest candidate in the race - the only one not claiming out-of-Wellington accommodation allowances - $1,000 a month, tax-free.

Phillida Bunkle became the fall girl. It was too hard to claim hers was an innocent mistake. Ms Bunkle wrote to Parliamentary Services with detailed questions about MPs' perks before she was an MP. It usually takes a decade of living off the taxpayer to develop that amount of greed - but then she has lived off the taxpayer all her adult life.

Ms Hobbs went and saw the Auditor-General and cried her eyes out. So he wrote in his report that she genuinely believed that she could register in Wellington Central, buy an apartment in the electorate and still claim expenses on a property in Christchurch. She told the Auditor-General she had sought advice from Parliamentary Services, who told her that she was so entitled.

What you should know is that no MP believes Marian Hobbs. There are only four possible people in Parliamentary Services who could have given advice. All four deny ever being asked. All four say, there is no way they would have told an MP who lives in Wellington it's OK to claim out-of-Wellington allowances.

Every MP finds it not credible that Ms Hobbs can remember with unshakeable clarity the advice but not the advisor. The Auditor-General did rule that she took the $18,000 unlawfully. If she was a civil servant or a member of the public, she would have been charged in the courts, to see if a judge believed her story.

In my time in Parliament there has been no other case of an MP's outright defraud of the taxpayer. I regard her continued presence in Parliament as an insult to the ethical standards we are entitled to demand from our law makers. I am determined that she should be sent back to Christchurch.

Ms Hobbs has failed as a local MP. Prior to the election she promised to stop the by-pass ' but it's going ahead. She promised to preserve the town belt - then voted against a measure to protect the town belt. She promised to advance Wellington Hospital ' now Capital Coast Health is hopelessly in deficit.

And she told us that as Minister of Broadcasting she would introduce quotas for local content. As Minister of Broadcasting, all she has done is financially wreck TVNZ.

Wellington deserves better, in fact Wellington deserves high-profile, effective representation - representation even my critics agree I provided.

I have had many approaches from both ACT and National and political independents to put my name into the race for Wellington Central.

I was honoured to have represented the capital city. I would be honoured to be your MP again. I will give you an answer before the end of the year. If I do run, I will run to win. The voters are entitled to honest representation.

I am pleased to report to this ACT Regional Conference that the ACT MPs are the effective Opposition and to note that all commentators agree there is no dead wood in ACT's team.

Let me share with you the secret. ACT is providing effective leadership because only ACT has a clear vision of how great this country of ours could be. ACT MPs do not oppose the coalition just to make petty political points. ACT MPs use Parliament to promote fresh ideas and to open other MPs' minds to our country's real capabilities.

We ACT MPs really believe in New Zealand and our fellow New Zealanders. An important piece of research has recently been published which shows that our belief in what New Zealand is capable of, has a sound intellectual basis - but more of that later.

Let me illustrate to you your MPs' approach, with the case of the proposed People's Bank. This week, the minority Labour/Alliance government announced that the Rt Hon James Brendon Bolger will next year replace Helen Clark's favourite SOE Chairman, Dr Ross Armstrong, and become Chairman of New Zealand Post and the new People's Bank.

The Leader of the Opposition, the Rt Hon Jenny Shipley, a politician for whom I have great respect, put out a press statement welcoming the appointment, noting that Jim Bolger as Prime Minister had dealt successfully with the Bank of New Zealand restructuring - and saying no doubt he will be a good leader of the People's Bank.

Rodney Hide and myself both issued press statements pointing out Jim Bolger knows nothing of banking, and stating his appointment does not change ACT's view of the People's Bank - it will fail.

Even if Jim Anderton persuaded Sir Roger Douglas, or Dr Brash to become chairman of Post Bank, the ACT MPs would still oppose the People's Bank. It's not a proper use of $83 million dollars of taxpayers' money.

The appointment of Jim Bolger I think illustrates the bankruptcy of today's politics. National's opposition was not to a People's Bank, but that they are not running it.

New Zealand deserves more. ACT has not opposed the People's Bank just because the new bank has only nine branches that are not within walking distance of existing banks. Or because its fees will be only $22 less than the ASB; or because the Post Office should concentrate on its real business - delivering the mail. Or because the People's Bank is nothing more than sleazy - you rub my back ' deal-making politics.

ACT's opposition is principled.

The state in New Zealand has no role in providing services that the community can and should, and in this case does, provide itself. Big government is bad. Government involvement in banking is a threat to our economic security.

Let me take the last point first. Economists now agree that while the Wall Street crash of 1929 triggered the Great Depression, it was banking failure that made that economic collapse so serious.

It was banking failures that triggered the Asian melt down.

It is banking failure that has kept Japan's economy in recession for a decade. State banking failures have wrought great damage to New Zealand's economy. The state Rural Bank financed the farm land speculation of the early 1980s that led to the inevitable crash. Some farmers are only recovering today.

It was the Development Finance Corporation and the Bank of New Zealand that financed the crazy sharemarket bubble of 1987, that made the New Zealand sharemarket crash the most severe in the world. The taxpayer has had to bail out the Bank of New Zealand not once, not twice, but three times.

Dozens of good sound New Zealand businesses have gone bankrupt for no other reason than they banked with the DFC - an institution Jim Anderton still praises.

Who believes that the People's Bank will be satisfied in just providing savings services for pensioners? The New Zealand Parliament set up an independent Reserve Bank because we recognised that politicians can't be trusted to run a bank - they will use it to find a job for otherwise unemployable ex-Prime Ministers.

It was a mistake for the first Labour government to ever nationalise the BNZ but at least they were being consistent with their belief in a nationalised trading bank. Why did National not privatise the BNZ in 1950, or 1960, or 1975? Who believes that Jim Bolger would have privatised the BNZ but for Ruth Richardson?

The real political failure of New Zealand politics is that while National opposed every extension of the State by Labour, they campaigned just to manage it better.

ACT says while well-managed big government is better than bad-managed big government, well-managed small government is better than either.

ACT is a party that is saying something that is fresh - it is different from every other party.

It is important that we in ACT explain why big government is bad. As a liberal party we oppose big government because it necessarily entails some form of coercion. Government cannot collect over 40 per cent of everything we produce without draconian tax laws and ever-more-curtailing regulations. Big government is making us poor because big governments waste resources big time.

Big governments create social tensions as government advances some at the expense of others - the Closing the Gaps programme is one such example.

Let's not also fail to state that big government is morally wrong. It is morally wrong for the state to coerce its own citizens. Big government has led many New Zealanders to believe that they are owed a living. A true liberal believes that every citizen has a duty to provide for themselves and their family, and the role of the State is to help those who truly cannot fend for themselves.

I am pleased to tell this conference that last month an important piece of research by Canberra-based economic consultant Winton Bates was published - "How Much Government? The Effects of High Government Spending on Economic Performance." No doubt the Left will reject this research without reading it, because it's published by the Business Roundtable.

That would be a mistake. It's a book every MP should read because it explains very clearly why New Zealand has slipped from 3 rd in the OECD to 21 st place and why this government will fail to achieve its own goal of 4 per cent growth to take New Zealand back to the top half of the OECD.

The author states Dr James Gwartney, Professor of Economics at Florida State University and it's worth quoting - " New Zealand is still a big government welfare state. Government spending continues at nearly 40 percent of GDP, a figure much too large for maximum growth. I do not know of any country that has sustained per capita income growth of 4 percent or more with that level of government spending."

Warren Bates explains why big government damages economic performance. Let me mention just one - the dead weight of taxes. We all realise that to collect a dollar of taxes costs more than a dollar - there is the paper work. Economists say we should add the opportunity costs - what could you have done with the dollar?

Economists at the New Zealand Treasury, in the past, have been guilty of not examining the impact of big government on the private sector. Provided the tax system was a level playing field, Treasury thought big government was not a problem. Helen Clark and Michael Cullen still believe this.

Warren Bates produces strong evidence to show that the dead weight of any new taxes raised is a massive 50 cents in the dollar. So when Michael Cullen increased the marginal top rate of taxes, the effect was a tax increase not of another $400 million dollars, but $600 million dollars. As Bates says, any new government expenditure must give $1.50 value for every extra dollar spent.

So for Jim Anderton's People's Bank, to be a good investment for the country it must return $126 million dollars a year. Every dollar less than $126 million is the amount the People's Bank makes the country poorer.

Warren Bates points out that the rest of the OECD is reducing the size of government. New Zealand alone is increasing big government. In the OECD last year New Zealand alone increased taxes - nine OECD countries decreased taxes.

Bates states that just reducing the size of government from 40 percent to 30 percent of GDP would permanently increase the growth rate by half a percent. In other words, it would make everyone five percent wealthier in a decade. He concedes this is a conservative estimate because as an economist he can't estimate what he calls the dynamic factors.

It is what I call cultural factors. With one third of the total population now on state dependency, we have created a culture of dependency. We have created a society where there are 60,000 more able-bodied adults on welfare today- when unemployment is down - than there were when unemployment was double its present level.

It's an evil thing to make another adult dependent ' it's an evil thing what our state is doing to our fellow citizens. That is why real welfare reform is at the heart of ACT's message.

Delegates, it is important work that we are doing. The future of our country depends upon us. We are never going to be able to attract home again the 180,000 talented, well-educated young New Zealanders who have left since the last election, until ACT has won. And win we will.

Never underestimate the power of ideas, of the power of being right. Just as ACT MPs dominate Parliament with our fresh ideas, vision and leadership, ACT will dominate the next election.

We have gained ground at every campaign and the next election will be our break through to power.


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