ACT For A Growing Economy And Real Jobs
Sunday 14th Nov 1999
Richard Prebble
ACT
Leader Hon Richard Prebble today set out ACT's vision for
the economy with
the two key priorities to bring the top
rate of tax down to twenty cents and to
cut red tape and
compliance costs to businesses.
ACTÆs economic goals
are:
- New Zealand to have the highest growth, and lowest
unemployment, in the OECD,
and to have the highest living
standards in the Asia-Pacific region and
- To foster
wealth creation by reducing taxes and eliminating
stifling
regulations
ACT believes
- Prosperity
comes from an open economy, low spending and taxes,
minimum
regulation, and honest and stable government
-
Our tax system, Government red tape and bureaucracy are
destroying far too
many jobs and businesses
"After low
flat tax, cutting red tape is the most important economic
priority
to secure real job growth and keep New
Zealand businesses competitive and
growing.
"It is
estimated that 2.5% of GDP goes on compliance costs - that's
just form
filling and nonsense, a millstone around
business' neck, a drag on the economy
and costing us this
year the equivalent of 23,000 people working full time
just
to fill out tax forms alone.
"In the 1990's,
Government has hammered businesses with 5200 NEW laws
and
regulations. 13% of average small business revenue
is sucked into compliance
costs. And that's before you
even take into account the impact of things like
the
Employment Court.
"What's shocking is that Government
has no idea of what its regulations are
costing
business. As a first step in a major assault on compliance
costs and
red tape, ACT in Government will
commission a study of the real cost of
compliance. We
are also proposing a regulatory responsibility act to
require a
proper cost-benefit study of all new
legislation.
"Cutting red tape and excess bureaucracy
is essential to restoring our rural
profitability, to
encouraging our entrepreneurs, to attracting investment
and
most importantly, making New Zealand competitive and
a country where businesses
want to stay and
trade.
"Infometrics has confirmed that ACT's programme
of tax reductions to a low,
flat tax of twenty cents
can be achieved in five years without cuts
to
government services through restraint, not reduction
in overall spending.
The IRD's own studies confirm that
this will create 80,000 real, sustainable
new
jobs.
"ACT is the only Party saying that it is the
private sector, not government,
that grows the economy
and that employs our people. The fundamental
difference
between ACT and the left is that the
jobs they claim their policies will
create are illusory
and unsustainable. Tariffs, risky government
make-work
schemes and trying to pick winners with
handouts for business are all failed
policies of the
past. The Left also want to let the government grow out
of
control. Labour alone has promised 160 new
Ministries, offices, funds and
quangos, and 97
inquiries.
"Labour and the Alliance are refusing to
listen to the businesses like Artel
Industries in Levin
that are telling those parties that their plans to hike
up
tax, re-nationalise ACC and repeal the Employment
Contracts Act are threatening
thousands of real jobs up
and down the country. At Artel alone, 380 jobs are
at
risk if Labour and the Alliance become the
Government.
"Under the economic policies of Labour
and the Alliance businesses will be
queuing up to buy a
one-way ticket out of New Zealand.
Under ACT's economic policy, businesses will be queuing up to come home.
"This
week's National Business Review poll on the issues of
most concern to
voters this election put the economy as
number one. It is ACT's top priority
for the same
reasons. We want New Zealand to be a strong, prosperous
nation
that has the businesses and jobs to give our
brightest young people every
reason to stay," said Hon
Richard Prebble.
ENDS
[Infometrics updated report on ACT's economic policy attached]
Comparison of ACTÆs
3 November 1999 alternative Budget with
InfometricsÆ
assessment of ACT tax policy prepared
for the New Zealand EmployersÆ
Federation
David
Grimmond
Infometrics Ltd
On the information provided
by ACT in their 3 November 1999 press release,
their
fiscal projections for their alternative budget appear to
be reasonable
and consistent with the assumptions that
they have used.
The fiscal position forecast by ACT for
2004/05 in their ôalternative budgetö
is very similar
to that modelled by Infometrics in its assessment of the
ACT
PartyÆs tax policies as prepared for the New
Zealand EmployersÆ Federation.
Both approaches result
in Government spending less than 30% of GDP
(our
assessment is 29.6% of GDP, ACTÆs 29.5% of GDP)
and an operating surplus of
around $1.5 billion. The
key difference is that the more aggressive
spending
reduction assumed in the Infometrics report
results in a lower net public debt
position.
By
lowering government spending sooner plus receiving more
revenue from asset
sales [1], the Infometrics
projections accumulate $3.3 billion more
in
operating surpluses than projected by ACT over
the five year period. This
difference seems to be
consistent with the different input assumptions used.
The
ACT projections assume a $1.8 billion lower amount of
revenue from asset
sales, and do not include the $1.25
billion in spending reductions assumed by
Infometrics to
take place in 2000/01 and 2001/02. The remainder of
the
difference is consistent with the compounded affect
of carrying these expense
cuts forward in the following
years.
[1] Infometrics assumed more asset sales but
at very conservative prices.
Asset sales have an
impact on the operating balance to the extent that
the
Crown receives more (or less) than the assetÆs
book value. Infometrics had
assumed a $3 billion boost
to the operating balance over this period from
asset
sales. The ACT numbers incorporate a $1.2
billion contribution from the sale
of
TVNZ.