Richard Prebble to economists

August 11th 2000

Richard Prebble to economists

Speech to Economist Conferences’ Roundtable
the Park Royal Hotel, Wellington, New Zealand

10 in 2010: How ACT is going to grow the centre right vote

Thank you for the invitation to speak to the Economist’s Conference and for the wonderfully exciting topic – how ACT intends building the centre right vote and working with National to implement our policy goals for a more prosperous New Zealand.

I do not intend wasting your valuable time explaining to you how it’s the private sector that creates wealth and jobs. The fact that Carter Holt Harvey this year has $2.3 billion to invest, shows how Jim Anderton’s $100 million job machine over three years is irrelevant.

In February, when the Labour/Alliance coalition was riding the most popular honeymoon ever, ACT decided to be the opposition as National had determined the task was futile. The insurance industry told us that when they contacted National’s research unit about ACC re-nationalisation, they were told, it’s a done deal, it’s futile to fight it.

Well, ACT fought it! Using new political tools of email, the internet, Powerpoint presentations, we told business what the bill meant and generated hundreds of submissions.

When groups like Women’s Refuge and Presbyterian Social Services came to fight for competition, the right to choice and the benefits to consumers of a free market, it rocked the government.

We applied the same techniques to the Employment Relations Bill. Some 391 organisations made oral submissions. Over 2,000 substantive submissions were made, more than 15,000 form submissions and 57,000 people signed a petition in favour of the freedom to be independent contractors, to have freedom to contract.

When the Employment Contracts Bill was introduced a decade ago just 445 submissions in total were received.

ACT’s growing the centre right vote. Michael Cullen and Margaret Wilson claim that ACT is responsible for the opposition to ACC re-nationalisation and their union-promoting Employment Relations Bill.

Indeed, Dr Cullen goes further and says ACT is responsible for the collapse of economic confidence. While I believe that our role has been significant, Dr Cullen’s contribution has been more important.

The policies that the coalition have put in place will fail, even in their own terms – the gaps will widen.

The ACT caucus believes we can as a party move on from just leading the Parliamentary opposition. Since the budget National has stirred itself. This week National put up a strong fight in Parliament. Winston Peters is overcoming his depression at going within 37 votes of political annihilation and has begun attacking Mr Tamihere and Helen Clark’s role in `Dovergate’. ACT is happy to vacate this ground to the expert.

So ACT can return to our traditional role – to be the ginger group, the party of fresh new ideas, to supply a vision of how great this country can be.

Too many of our best and brightest have lost confidence in New Zealand. The ultimate vote of no confidence is to vote with your feet and migrate.

Since the election – the latest figures show some 51,000 New Zealanders, (that’s 212 a day), have left the country saying they will not return.

They do not see any leadership, practical policy solutions, or vision of a country they want to be a part of and to raise a family in.

So ACT’s first task is to demonstrate how New Zealand could be turned around.

ACT’s challenge is to describe an alternative future to the one this government is delivering.

Instead of a future of New Zealand with rising levels of dependency, deteriorating social services, poor standards in education, a Gisbornised health service, rising crime and social tensions, this country could be so different.

We can choose to have a New Zealand with excellent social services for those in need, to be a world leader in education, with every child able to read and be numerate, a health service that provides safe, high quality, accessible services and a government that is providing the framework to build a sense of purpose and nationhood.

I know which New Zealand I would rather live in and have my children live in. It’s a New Zealand that my successful 27 year old daughter in London would return to, bringing with her the skills we need.

What is exciting about this alternative future is it is ours for the choosing.

We know the policy framework needed to achieve it. We can do it in less than a decade.

ACT wants to set the country a goal.

Number 10 by 2010

Let us as a nation decide to achieve being at least 10th in the world ranking of social and economic indicators by the year 2010.

There is no social problem in this country that I know of that being 10th instead of 20th in standard of living, would not be improved by the extra prosperity.

There is no health problem that I know of that being 10th in GDP would not have the effect of lifting our present World Health Organisation ranking of 44th.

There is no education standard that would not be improved if we were 10th. In the most recent comparative test New Zealand was 23rd for teaching science.

The first goal is economic prosperity. If we set the goal as a nation to be 10th, then we have some yardstick to measure policy by.

What’s wrong with the goal of closing the gaps is that it is a Pol Pot policy. Year Zero. The income gap is closed when we all have nothing. There is no other explanation for envy taxes.

10 by 2010 measures the real gap, the growing gap between Australia and New Zealand, between the world and ourselves.

Australia is currently 13th in the world. New Zealand is 20th.

Our GDP per person is about $17,712 – Australia’s is $22,689.

So we are saying, let’s increase the average wealth in less than a decade by a third, to pass Australia and move into 10th place

Can’t be done you say?

Yes it can.

We need to be bold. We need leadership.

Every policy to achieve the goal – we already know.

As recently as 1993-1996, New Zealand was achieving 5% growth, we had inward migration, we had a tax and government compliance advantage over Australia.

By 1996 we had reached 5th in the world on the economic freedom index, by 1999 we were 14th, and today we are in free fall.

If we measure every policy against the goal – will this policy help the country reach 10 by 2010? – then I cannot think of a single policy the coalition has implemented or announced that will assist to achieve the goal of greater per capita income.

It’s an ambitious goal.

More ambitious than anything Sir Roger Douglas or Ruth Richardson attempted.

In government today they have simply ignored the fact that one adult in three is on dependency.

When the recent household survey was published showing 3,000 fewer people not recorded as jobless, Jim Anderton celebrated.

This audience knows that to be recorded as jobless on the household survey you must in the last week actively look for a job.

15,000 fewer people looked for a job. 15,000 people gave up.

It follows that if everyone stopped looking for a job, then the coalition would claim total success.

To achieve 10 by 2010 we must reach out to the 380,000 people in benefits and give them a hand up into work.

It can be done. In the United States, state after state introduced successful welfare reform.

Last year the greatest welfare reformer this century, Governor Tommy Thompson of Wisconsin, America’s longest serving governor, visited.

He has reduced welfare rolls in Wisconsin to one tenth of the level they were a decade ago.

Crime’s down, child abuse is down, family breakdown is down.

If Wisconsin can reduce welfare dependency by 90%, New Zealand can introduce a compassionate, effective welfare reform to liberate a third of our beneficiaries from welfare in seven years.

An achievable goal

ACT says we need to look at every policy.

Employment Relations Bill – will it promote investment, growth and jobs? It’s already destroying them.

Does freedom to contract promote employment? – You bet it does.

Does government monopoly accident insurance promote investment and jobs? – No.

Does competition and choice in accident cover promote growth and jobs? – You bet it does!

Does having a higher tax rate than Australia persuade people to stay and invest in New Zealand – no, it does not. So would having a tax rate below Australia promote jobs and growth? – You bet it would!

We know from the work of economists such as Scully, Caragata and others that it’s not just the tax rate, the level playing field, but the total tax take that matters.

So to catch Australia, our total tax take must be below Australia’s.

Does a virtual state monopoly in education lift standards? No it does not.

Does choice and competition lift standards in education? You bet it does – so ACT supports choice.

Does the record of independent hospitals show better return for the dollar in health? – You bet it does.

ACT also wants to look again at tough subjects like superannuation. Prefunding a tax paid benefit like superannuation makes no more sense than prefunding any taxpayer benefit, such as the DPB.

There is a growing welfare crisis. Social welfare spending increases have been unstoppable. When I had my first vote in 1969 there were just 38,346 New Zealanders on a benefit. 30 years later there are now 381,398 beneficiaries. That’s one in seven adults at a cost of $13.7 billion dollars per annum- and these are just 1999 figures.

If you make a straight line projection of the increase in benefits, you would believe that by 2020, 49% of all families will be headed by an adult on a benefit.

The figures don’t even include superannuitants – so following Cullen’s logic we should prefund the DPB.

Prefunding super from tax is one of the silliest ideas I have seen being seriously promoted. Repaying debt from surplus has got to be better than the government investing.

ACT intends entering the super debate with ideas of our own. Within the Party we have started a fundamental review of our superannuation policy ideas.

I like an idea that Len Bayliss has promoted. Let me quote him – “old people are not a burden – they are a valuable national asset already making major social contribution. They can make a much greater economic contribution, if through ‘Active Ageing’ policies, they have the choice of actively participating in the workforce. Prefunding should be given a decent and speedy burial, so that ‘Active Ageing’ policies can be developed within a soundly based political superannuation Accord.”

Let me turn to this question – how does ACT work with National?

We have gingered them along.

ACT put up a website on the Employment Relations Bill – National followed.

ACT did seminars for business – 27 last week, over 4,000 people attended.

National is also doing seminars.

This National opposition is now doing more within a year of an election defeat than National did in 1985. Much more than Labour was doing in 1991, or for that matter, 1997.

Competition leads to excellence.

ACT is setting the standard. For example, the best political Web site in New Zealand – ACT is regularly awarded this honour.

National rises to meet it – their ERB site, Walking with Dinosaurs – is a good site.

So we have to do better.

This week our site posted all amendments on the Employment Relations Bill as they were presented. We posted Hansard and the key speeches before the media reported the debate.

Indeed we are turning our website into an internet portal. If you want to know what is going on in politics, the ACT website is a must. Last week the ACT website received 185,000 hits.

It’s growing the centre right vote.

ACT has also removed from National one of their favourite political strategies.

Successive National oppositions opposed measures like compulsory trade unionism, but did not abolish it. It took National 40 years to abolish compulsory unionism.

National was able to campaign that they would administer Labour’s policies better than Labour – a credible promise.

So the believers in free enterprise, in choice, in freedom, in personal responsibility or George Bush’s compassionate conservatives, were disenfranchised. They had no one else on the centre right to vote for but National, and when National, for pragmatic political reasons decided to adopt Labour policies, the market liberals still had to vote National.

ACT gives the liberal voter a real choice.

Two weeks ago senior National MPs were telling Chamber of Commerce audiences that a National government may not be able to repeal the Employment Relations Bill.

ACT said we would.

The next day, Jenny Shipley also pledged to campaign to repeal the ACT.

So ACT is having a great influence.

So ACT will work hard to ensure that Jenny is our next Prime Minister.

But in a democracy, it’s the voters who decide.

For ACT to have a real influence in government, we need a mandate from the voters. First a majority for the centre right, and then a significant vote for ACT.

I am saying to every audience. If you share the vision of a prosperous New Zealand, of being 10th by 2010 – then you must vote for it by giving ACT your Party list vote.

It’s your choice – and as a Party of choice – I would not have it any other way.

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