Brash responds to George
Garth George’s column in the NZ Herald last Thursday was critical of the 2025 taskforce chaired by Don Brash.
The Herald (as is their right) declined [UPDATE: they now have published] to publish a response from Don, so he has offered it to various bloggers. His response is below and it is a first class fisking:
GARTH GEORGE HAS IT SERIOUSLY WRONG
Garth George was way off beam in his attack on the first report of the 2025 Taskforce.
Leaving aside the personal invective, he claims that the “biggest absurdity” in the report is the proposition that New Zealand can and should catch up with Australia. He says that “there is just no comparison between the two countries”, with Australia having five times our population, 32 times our land area, and huge resources of minerals. Well, those are factual statements about Australia, but they ignore some important facts which he would be aware of had he read the report.
First, there is no correlation between living standards and population – if there were, India would be super-rich and Singapore would be poor.
Second, there is no correlation between living standards and land area – if there were, Russia would be super-rich and Finland would be poor.
Third, there is no correlation between living standards and mineral wealth – if there were, the Congo would be super-rich and Japan would be poor.
In any event, a recent World Bank study showed that, in per capita terms, New Zealand has more natural resources than almost any other country in the world.
For most of New Zealand’s history, our standard of living has been very similar to that in Australia – sometimes a bit ahead, sometimes a bit behind. And the Taskforce didn’t off its own bat decide that catching Australia again by 2025 would be some good idea: the goal was set by the Government itself, and the Taskforce was set up both to advise on how best to achieve the (very challenging) goal and to monitor annually progress towards achieving it.
Too often in the past, governments have announced grandiose commitments to lift living standards – such as the last Government’s commitment to lift us into the top half of developed countries within 10 years – but then totally ignored those commitments, hoping that nobody would notice it. It is to the Government’s credit that they made a commitment and then established a mechanism to hold them to account.
Garth George accuses the Taskforce of recommending a whole range of things which we do not recommend. For example, he accuses us of recommending a flat personal income tax, and notes that if such a tax were established a whole range of low income people would have to pay more tax. But whatever the merits of a flat tax, the Taskforce did not recommend such a tax. What we did say was that, if core government spending were cut to the same fraction of GDP that it was in both 2004 and 2005 (29%), the top personal rate, the company tax rate, and the trust tax rate could comfortably be aligned at 20%. Under such a tax structure, all those earning above $14,000 a year would pay less income tax, while nobody would pay more income tax.
Nobody seriously argues that government was vastly too small in New Zealand in 2004 and 2005 (the end of the Labour Government’s second term in office), so why the ridiculous reaction when the Taskforce suggests reducing government spending to that level?
Mr George also suggests that we recommended abolishing subsidised doctor visits, and implies that we are advocating an American approach to healthcare. This is again utter nonsense. We suggested targeting subsidies for doctor’s visits at those who need them, either because they have low incomes or have chronic health problems.
He suggests that we favoured removing subsidies for early childhood education. Again, not true. What we said was that those subsidies – which have trebled in cost from $400 million a year to $1.2 billion a year over the last five years – should be focused on those who need them.
The recommendations of the 2025 Taskforce are actually totally in line with orthodox thinking in most developed countries, and are almost entirely consistent with the recommendations of the recent OECD report on New Zealand.
Don Brash
Chairman of the 2025 Taskforce
UPDATE: The Herald has also now run the response.
December 7th, 2009 at 12:04 pm
They’ve (The NZ Herald) just published it.
Amazing that they would actually feel enough shame.
December 7th, 2009 at 12:04 pm
I think “The Don tears Garth a New One” would be a better title. A sound thrashing for some very sloppy journalism.
December 7th, 2009 at 12:05 pm
Um, it’s in today’s issue.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10613954
Brash needs to learn that he can no longer command instant responses to his demands.
December 7th, 2009 at 12:13 pm
that just makes me want to cry.
a 20% tax rate if we had kept spending levels at the 2005 level.
cullen and clarke really did a number on this country.
December 7th, 2009 at 12:14 pm
Yes
When I read Garths drivel the other day I thought, oh dear, Garths the new voice of the far left.
December 7th, 2009 at 12:16 pm
Of course jackboot, the left wing media should be able print any old crap without the right of reply and everyone else can just shut the hell up.
December 7th, 2009 at 12:16 pm
And this is why RRM deploys the grain-of-salt-ometer when reading political opinion pieces, anywhere. Facts in the report may differ from those illustrated.
This leftie likes Don Brash FWIW…
December 7th, 2009 at 12:23 pm
Murray (4031) Vote: 0 0 Says:
December 7th, 2009 at 12:16 pm
Of course jackboot, the left wing media should be able print any old crap without the right of reply and everyone else can just shut the hell up.
Last time I looked, the NZ Herald was a private business, not an SOE. If you don’t like the way they run their business, start an opposition newspaper.
Why do you right wingers always think you can tell private business owners how to run their business?
December 7th, 2009 at 12:25 pm
RRM, have a +ve from me! Love The Don’s demolition of George’s argument
Like taking candy from a baby
December 7th, 2009 at 12:25 pm
Why do you left wing fuckwits think you should be able to lie to the public with impunity jackboot?
December 7th, 2009 at 12:27 pm
Um, someone has, and you’re commenting in it now. Our does it only count as a ‘newspaper’ if the journo’s are union members?
December 7th, 2009 at 12:31 pm
getstaffed, I suspect you know the diffference between kiwiblog and the NZ Herald, but in case you don’t.
As much as this is a fun place, the majority of topics here are in repsonse to stories in the MSM. Apart form his polls, DPF rarely actually gets a scoop on the MSM.
December 7th, 2009 at 12:31 pm
Yay Don! I am one who used to think Don Brash was one of the ‘bad guys’ but only because left-wing acadaemia had so successfully put that out there.
Now I know what the man’s vision is, and what Clark and Cullen did to this country – I wish he could get more traction, and the great man Roger Douglas.
I just fizzle when I hear middle-aged people who have had lots of opportunities in life remark that there is no need for economic growth, that economic growth is the enemy etc..
To the likes of Gareth George, how does ‘frig off and let the young ones make something of their lives and the resources of this country’ sound?
December 7th, 2009 at 12:36 pm
“how does ‘frig off and let the young ones make something of their lives and the resources of this country’ sound?”
Roger Douglas and Don Brash, the face of new youth?
December 7th, 2009 at 12:37 pm
See, this is what happens when George can’t plagiarise from others who do all the hard research and analysis work. he makes a fool of himself.
December 7th, 2009 at 12:41 pm
Whatever…who gives a shit anyway…after all this is all about an “aspirational” goal.
December 7th, 2009 at 1:05 pm
MyNameIsJack (12:23pm): what is this “business” of the NZ Herald that you are so desperate to defend – the propaganda business?
December 7th, 2009 at 1:11 pm
Thats some nice bitchslapping 3-coil.
December 7th, 2009 at 1:13 pm
Murray:
“Why do you left wing fuckwits think you should be able to lie to the public with impunity jackboot?”
But Brash’s comeback really really IS in the Herald where Mynameisjack linked to it.
What lie are we talking about exactly?
…Some specific lie that you can actually point to?
…Or the general villainy of the left that is so “obvious” to you?
December 7th, 2009 at 1:20 pm
Thats some nice bitchslapping RRM
December 7th, 2009 at 1:37 pm
And what of our new old prime minister John Clark?
December 7th, 2009 at 1:48 pm
Sucks that people feel they have to respond to the guy who said this:
…boffins who tell us that all the ice is going to melt and flood the world.
I know that’s codswallop and every time I see a rainbow I have it confirmed for me. It tells me that God is keeping the promise he made to Noah after the world-drowning flood thousands of years ago recorded in Genesis.
December 7th, 2009 at 1:51 pm
Every time I see a rainbow I know god is having gay sex.
December 7th, 2009 at 1:52 pm
I’m not your fucking baby sitter RRM, if you can’t read it and point by point see where Garth has just plain made shit up its not my job to walk you though it.
You want bitchslapping jackboot take a look at the karma.
Bitch.
December 7th, 2009 at 2:00 pm
I did, I’m on 33% approval, you’re on 20%
Another win for the palestinian intifada!
December 7th, 2009 at 2:15 pm
he had me going..’yes..’..’yes..’
until this bit..
“..For most of New Zealand’s history, our standard of living has been very similar to that in Australia – sometimes a bit ahead, sometimes a bit behind..”
and that’s it..!..that’s all brash has to say about the fact that we were close to australia..?
and that everything went south from the early eighties..?
which is when that gap..rapidly became a gulf..
and whaddayaknow..?..
this was when the great rightwing/freemarket revolution happened..eh..?
(possible factors that increased that gulf with australia..?
how about in nine years of national govt in nineties..
they raised the minumum wage by 87 cents..
not 87 cents a year..but 87 cents in ten years..
(meanwhile..in australia..the unions told the rightwing revolutionaries to ‘just fuck off..!’..and they did..
our union leaders bent over..and asked the righties to ‘please be gentle..!’..
..then they went and waited for knighthoods/diectorships/perk-city/the big trough..)
so..basically..brash also ignores the fact that the recession caused by rogernomics…is called the rogernomics-recession..(heh..!..eh..?..)
so now..brash advocates closing the wage gap with australia..by cutting the minimum wage here..
(just how fucken ‘disconnected’ is this idiot..?..)
which brings us to the big-joke about brash..
namely..that he is a far-right randite/greenspanite/free-marketeer..
who has always modelled himself on his american equivalent..alan greenspan..also a ‘free-marketeer/’true believer’..
but the thing is..is that alan greenspan has now come out and said that the whole freemarketeer ideas/ideals he has followed/advocated for the last 40 years..
..is ‘wrong’..
and has caused the economic crash…
now..as far as brash advocating more..!..more..!..of this freemarketeer bullshit..
he isn’t so much ignoring a greenspan elephant in his room..
he is ignoring a fucken herd of them..
(here is the shout-out..from greenspan to brash..)
http://whoar.co.nz/2009/the-day-when-alan-greenspan-had-his-freemarket-ideology-mea-culpai-was-wrong-moment/
blockquote> Greenspan: I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
Waxman: In other words, you found that your view of the world, your ideology, was not right, it was not working.
Greenspan: Precisely. That is precisely the reason I was shocked ..
.. because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well..”
December 7th, 2009 at 2:18 pm
Brash has torn Garth George a new one.
Garth George has come across as a hysterical dummy.
I wanna see Garth George’s respond to Brashes comments.
December 7th, 2009 at 2:19 pm
Dear old Garth George represents that “old left” pre JPII Catholic social teaching. Much of that had its genesis in the Church combating that novel ideology of the early 20th century: socialism. This wet conservatism combined with grumpy old man syndrome explains the column.
While concern for the poor is admirable, it doesn’t fix the problem. In truth the poor are always poorest the poorer a society is or where an economy is slow decline.
Garth offers no prescription of his own to address New Zealand’s slow economic decline; instead he offers abuse and an absence of ANY evidence that Brash’s basic approach isn’t right.
Brash should not be tangled with unless one knows one’s stuff. George doesn’t.
Tapu Misa (again of the Herald) offers little better here:
http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10613839
Lets just take the first clanger:
“Friedman died in 2006, but his legacy lives on – impervious to the long trail of casualties he and his true believers left in their wake.”
Mmmmm yes Communism/socialism and fascism left no long trail of casualties did they?
There is no evidence to support this Misa’s prejudice. The only real casualties were those on the left who offered various species of socialised centrally planned economies. All were failures. Friedman established that far from liberating the poor these policies trapped people into ongoing poverty.
Friedman in essence played an important role in taming the political left; with a few global exceptions mainstream left wing politics largely accepts the free market. A remarkable achievement; to decouple a political point of view that held intellectual sway from the failed underlying economic policy propositions that gave birth to it.
I am so grateful that I am not financially contributing to the living standards of Mr George or Ms Misa. Of course both have reason to grumpy about economic rationalism; after all it’s finishing the economic model that sustains them both.
December 7th, 2009 at 2:27 pm
Mmmmm yes Communism/socialism and fascism left no long trail of casualties did they?
I haven’t seen Misa arguing for a dictatorship of the proletariat or for ‘unity, strength and purity’ for a while now, you might want to check you’re up to date on that one.
December 7th, 2009 at 2:27 pm
What evidence did Brash provide that his approach would work for all levels of society?
December 7th, 2009 at 2:30 pm
“..“Friedman died in 2006, but his legacy lives on – impervious to the long trail of casualties he and his true believers left in their wake.”
Mmmmm yes Communism/socialism and fascism left no long trail of casualties did they?
There is no evidence to support this Misa’s prejudice. ..”
diack..what stronger ‘evidence’ do you need..
that alan greenspan coming out and going ‘i was wrong’..?
(surely you can see it is like the pope coming out and goiing..
‘iwas kidding..!..immaculate-conception..?..what were you thinking..?
go..!..get on with your lives.!’..)
how is this mea culpa/recant/volte-face from greenspan not similarily earth-shaking to you/your political ‘beliefs’..?
will you just ignore it..?
phil(whoar.co.nz) .
December 7th, 2009 at 2:35 pm
history is about to sweep your rightwing-experiment into the rubbish bin..
phil(whoar.co.nz)
December 7th, 2009 at 2:44 pm
“What evidence did Brash provide that his approach would work for all levels of society?”
do you mean the poor?
why is it ok to target tax relief etc for the poor, but when it comes to tax cuts they have to be for everyone?
how bout giving the people that create jobs and invest money a break!
December 7th, 2009 at 2:47 pm
btw..you do know that karl marx predicted all this..eh..?
..that capitalism..when it went global..would eat itself..
(and that would be its’ final-act..?..)
what karl left out/didn’t ‘get right’..
was that global capitalism would also eat the environment/the earth itself..
phil(whoar.co.nz)
December 7th, 2009 at 2:49 pm
“What evidence did Brash provide that his approach would work for all levels of society?”
Fucking none I hope!
The bastards at the bottom who make no effort to raise themselves up deserve nothing but abuse and scorn.
I am more than happy to give them every assistance we can if they are prepared to match this with their own efforts, however, I am fucking sick and tired of handing out money to bludgers to sit at home, kill their kids or smoke dope and blog all day.
It is time we ended the free ride.
December 7th, 2009 at 2:51 pm
btw..i am still puzzled that there has been no post/acknowledgment from farrar of this astonishing statement from greenspan..
‘cos it goes to/rips the heart out of..his personal/political belief-system..
..eh..?
(kinda like a new will/testament from karl marx being found..that disavows all his writings..
..eh..?
it’s a big one..!..)
phil(whoar.co.nz)
December 7th, 2009 at 2:52 pm
It is often a good corrective to point out that NZ was pretty much following the Australian growth pattern for the initial post-war period. It’s not really until we get to the late 60s when the divergence occurs.
One catalyst for this was the collapse in wool prices, which affected NZ a lot more than Australia and the subsequent mismanagement of the economy that followed. We stuck with fixed exchange and higher inflation rates through much of the 70s and early 80s, leading to the accrual of massive macroeconomic imbalances. Inflation was higher, current account was worse, and the budget balance had ballooned to a massive deficit of near 9% of GDP by 1984.
From the late 60s to the mid 80s, we’d dug ourselves into a far bigger hole than Australia, and climbing out of that hole was never going to be easy. You can’t turn around inflation rates of 15%, budget deficits and trade deficits of 7-9% of GDP quickly or in a painless manner.
December 7th, 2009 at 2:56 pm
“how bout giving the people that create jobs and invest money a break!”
They’ve mostly gone overseas. Who wants their income diverted to the pockets of a legion of reptiles like Ure?
December 7th, 2009 at 2:59 pm
i’m still here
i’m not leaving either!
December 7th, 2009 at 2:59 pm
Stephen:
Point taken. Misa doesn’t offer us any prescription. Just tired old tropes.
Yes. There is economic inequality in free societies; the freer the society the greater inequality. Inequality isn’t actually the problem; socio economic mobility is.
What we also know is levels of absolute poverty are also lower in free societies. Various species of planned societies make everyone on average poorer.
Misa maintains that economic freedom is bad yet like most media commentators doesn’t address herself to the alternative models (all of which don’t work at all) or offer us a prescription of her own.
Pete George:
The economic prosperity generated in the 2000’s had everything to do with the reform of previous governments; Helen essentially left a successful model undisturbed and spent up the dividend. She in essence turned the Labour Party into a small “c” conservative or status quo party on economic issues. National appears to be following suit. These are governments in the Holyoake/Kirk/Muldoon tradition.
Status quoing is cutting it anymore. It will result in slow decline and then crisis adjustment.
Philu:
Get back to the bong.
December 7th, 2009 at 3:13 pm
diack..you sad little man..
i)i don’t use a bong..
2)that is sorta a silly answer to that greenspan-question..eh..?
y’know..!..that one that shows up your whole political belief system to be nothing but a big heap of stinking shit..?
(mmm!!..smell the freemarket..!’..)
that you choose to ignore that your belief system is just a sad/sick joke..
couldn’t be a clearer portrayal of your good self..
as nought but ‘a sad/sick joke’..
in your own right..
..eh..?
(diack:..new bye-word for ’self-deluded fool’..)
‘get back to the bong..’..indeed..!
address the greenspan question..!..diack..!
phil(whoar.co.nz)
December 7th, 2009 at 3:16 pm
At least initially anyway. Don’t forget there was also a bit of an investment splurge ahead of the Y2K scare, as businesses updated stuff. A bit of deepening capital, the happy coincidence of good growing seasons, high commodity prices and a weakish dollar helped.
The problem is that the fiscal discipline wasn’t sustained, leading to worsening macroeconomic imbalances all over again, and with the exception of dairy products, high commodity prices weren’t sustained. And in the end, the growth was being fueled by household debt (that were able to access cheap loans via banks borrowing on international credit markets). It could never be sustained.
December 7th, 2009 at 3:44 pm
firstly, economic parity with australia will only benefit the upper income bracket. secondly, new zealand would be treated worse than tasmania, we would constantly be pushing shit up hill with a rake, just to be heard.
December 7th, 2009 at 3:46 pm
Could you explain what you mean bob8? That’s a very opaque post.
December 7th, 2009 at 4:20 pm
This must send the left all aflutter. Who to back: that evil wimmins ryghts denier George or the evil arch-capitalist Brash? I wonder how Coe and Brown et al are coping.
December 7th, 2009 at 4:32 pm
Philu:
If you present like a dope fuelled bong user you get treated like one.
However (already regretting taking you seriously) Greenspan is on record warning Congress of the risks posed by public policy that incentivised leading to poor people who will struggle to repay. However the US Congress really liked rising levels of home ownership and in particular rising levels among minorities.
The bigger issue is what this has to do with Brash’s 2025 Taskforce. I wonder really what Friedman has to do with it either but the left will get themselves distracted and chase down personalities like small dogs chase cars.
Chthoniid:
Yes. Although the big fiscal laxness came post 2005. English apparently (and amusingly) calls this the “Brash dividend”. He right observes that if it were not for Brash (haven’t we all moved on) doing so well in the 2005 general election, Labour would not have been spooked into emptying the coffers. They were shocked that we had not “all moved on”. Most interestingly, National’s takeout from 2005 was not one of just missing out while offering a platform of economic reform, but rather that the New Zealand electorate cannot handle economic reform and wont vote for it.
It seems to me the wrong takeout. The New Zealand electorate will vote for a government that offers substantive economic reform so long as the case is clearly made out. Key should back himself; he has the skill and the public persona to do this.
December 7th, 2009 at 4:43 pm
I think the jury is out on both of these points. But Key has an ideal opportunity to back himself – to make some changes over the next two years to demonstrate he is on the right track, and to outline a more comprehensive reform package at the next election to get confirmation he has the electorate behind him.
December 7th, 2009 at 5:08 pm
strawman argument 101..eh..diack..?
i wasn’t talking about the rightwing meme that it is poor/undeserving peoples attempting to attain the status of homeowners that caused the downfall of capitalism..
i am talking about the admission from greenspan that the whole freemarket worldview is a crock of shit..
and is actually what caused that economic meltdown..
how about addressing that..?
(for the third time being asked..!..)
phil(whoar.co.nz)
December 7th, 2009 at 5:15 pm
Phool the Marxist is getting excited. He might want to think about changing his nappy soon.
December 7th, 2009 at 5:16 pm
@Chris Diack
Yes, albeit there were warning signs starting to emerge from about 2003.
Unfortunately the status quo in NZ, means that much of the populace’s standard-of-living depends on being supported by either by taxes on the more productive, or by borrowing from overseas. I’d like Key to do something a bit more ambitious than just tinker at the edges and avoid the hard decisions.
December 7th, 2009 at 5:19 pm
Getting excited and lying as usual. The left are so completely devoid of integrity its amazing that they get even a skerrick of respect. One born every minute I guess, and there are plenty of dumbfucks who came out of university viewing everything through a red haze and have been (due to a complete lack of real life experience) stuck in that desperate rut ever since.
December 7th, 2009 at 5:20 pm
Another reefer moment from our Phil.
No. Greenspan has not said the whole of the capitalist system is failed.
His comments actually related to the calculation of risk. But look there is little point in continuing this.
When you purchase or sell your weed tell me again that capitalism doesn’t work.
December 7th, 2009 at 5:33 pm
you really are an intellectual flyweight..aren’t you diack..?
quote:..
“..Greenspan: I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
Waxman: In other words, you found that your view of the world, your ideology, was not right, it was not working.
Greenspan: Precisely. That is precisely the reason I was shocked ..
.. because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well..””
do tell how you can read/interpret that in any other way..
than as a repudiation of the freemarket/less regulation economic-doctrines/dogma/imperatives..’for 40 years or more’..
do try not to insult our intelligence any further..eh..?
greenspan was talking about thwhole freemarket-package..as you/any reader..can well see..
(for the fourth time..)..how about addressing this demolition of your political belief system..
..by one of its’ authors..
eh..?
(or will you just drag out another pot ad-hominem..?..
cos’..that ‘diversionary/avoidance-tactic is fooling no-one..eh..?..)
phil(whoar.co.nz)
December 7th, 2009 at 5:36 pm
Apparently Alan Greenspan dictated what I believe in.
Unlike dickhead Marxists, free marketeers don’t have it forced down their throats by German academics.
December 7th, 2009 at 6:04 pm
oh..ok..hurf..that randian/rugged self-assurance/individualism coming to the fore..?..again..?..eh..?
goodonya..!
so..in your mind..how did greenspan get it so wrong..?
phil(whoar.co.nz)
December 7th, 2009 at 6:06 pm
“..dickhead Marxists..”
were they before or after the mensheviks..?
phil(whoar.co.nz)
December 7th, 2009 at 6:13 pm
Phool the Magpie continues to miss the point. Just because Greenspan was wrong on risk doesn’t mean the entire system, one which doesn’t rely on wishful projections and historical determinism, is broken. It’s not like the Climategate scandal where the whole data pack is dodgy or the Brezhnev stagnation caused by the systematic failures of socialism. The free trade of goods and services based on supply and demand, free of state-imposed economic bubbles? Well, shit. It works.
December 7th, 2009 at 6:17 pm
You have to read the whole article in context of what is being debated. Put simply, Greenspan thought that the housing bubbles would be “quick” to self correct. This is why he did not act aggressively in the past, to deflate these bubbles. He got it wrong and has since revised his view (duh). By getting it wrong, we mean that he kept the price of money (interest rates) lower than they should be.
Because afterall, there is no free-market in banking. Currency is a nationalised asset whose price (interest rate) is influenced by central banks to the best of their ability. If Greenspan really was a Free Market doyen, he’d have been arguing for a return to free banking.
There is no failure of capitalism here, it is a regulatory failure that became globalised through CDOs and sustained by US interventions in the mortgage market.
December 7th, 2009 at 7:21 pm
yeah hurf..what we need is more freemarket/less regulation/end social welfare..
eh..?
(btw..going on acts poll-ratings..
a (generous) 3% of the population supports your actite-dreams..
eh..?
so..dream on..!..eh..?
phil(whoar.co.nz)
December 7th, 2009 at 7:38 pm
And a whole 7% support Phool’s deranged idea of state control of everything in the name of Mother Gaia.
December 7th, 2009 at 8:05 pm
Who said these wise words? anyone remember?
[New Zealand] is a beautiful place with boundless opportunity. So I won’t accept that the bottom third of the OECD for average income is where we rightfully belong. I simply won’t believe we have to put up with losing 80,000 of our people every year to other parts of the world. I am horrified that the gap between our wages and those in Australia are now wider than they have been in our history – at more than 35%. How can we hope to hold on to our young people, the educated, the talented, the motivated, if on the Monday you can earn $50,000 for doing one job and on the Friday earn $80,000 by simply moving across the ditch? If we stay on the same growth course and speed, by 2030 the gap between wages here and wages in Australia will have risen to over 60%. We have a plan to steer New Zealand on a course to a more prosperous future. And we need to get to work on that plan straight away.
December 7th, 2009 at 8:07 pm
The Answer;
John Key, “National’s Blueprint for Change”, January 2008.
What is so disappointing about the Prime Minister’s response to the Taskforce’s report last week was the derisory way in which he dismissed the recommendations
An extraordinary debate has been raging over the last week about what is probably the most important question of the decade: do we as a nation want a more prosperous future, or are we prepared to accept the continuing decline in living standards? This is the critical issue that is at the heart of the discussion over the report of the 2025 Taskforce which was released last Monday.[1]
The 2025 taskforce, headed by the former Governor of the Reserve Bank and leader of the National Party, Dr Don Brash, was part of the Confidence and Supply agreement between National and ACT. Both parties had campaigned on catching Australia during the 2008 election, largely in response to the Labour Government’s dismal failure to achieve their stated goal of lifting New Zealand’s economic performance into the top half of the OECD during their nine years in power. Sensing the public’s mood to support a future where New Zealand’s living standards are rising rather than falling, both parties pledged to prioritise policy goals aimed at closing the income gap with Australia. That made the setting up of the Taskforce a mutual objective.
The National-ACT agreement states: “National and ACT have joint aspirations for greater prosperity for New Zealanders, and see Australia as a benchmark. They have agreed on the concrete goal of closing the income gap with Australia by 2025. This will require a sustained lift in New Zealand’s productivity growth rate to 3% a year or more. Both parties recognise that achieving this goal will require significant improvements in New Zealand institutions and policies. Their joint commitment to limited government – government limited to its proper role – and greater economic freedom will need to be consistently adhered to. To that end they have agreed on the establishment of a high quality advisory group to investigate the reasons for the recent decline in New Zealand’s productivity performance, identify superior institutions and policies in Australia and other more successful countries, and make credible recommendations on the steps needed to fulfil National’s and ACT’s aspirations. The advisory group will report annually on the progress made to improve the quality.”[2]
The report released by the 2025 Taskforce clearly shows that New Zealand has lost its way. This country that was a beacon for hard working immigrants from around the world, who wanted a better life for themselves and their children, has now become, according to John Key, “a breeding ground and giant education facility for Australia”. Over the last 10 years, a net 260,000 skilled workers have left New Zealand, mostly for Australia where average incomes are 35 percent higher than they are here. That means that for a family of four, the gap is worth around $64,000. This is the critical issue – no country can prosper when so many citizens vote with their feet for higher living standards.
What is so disappointing about the Prime Minister’s response to the Taskforce’s report last week was the derisory way in which he dismissed the recommendations, and in so doing undermined the pledge given to the ACT Party to take parity with Australia seriously.
By labelling the central proposition that government spending needs to be reduced so that taxes can be lowered as “radical big bang reform”, John Key did the 2025 project – and the country – a huge disservice. Further, he has raised serious questions about the sincerity of his own election pledges and whether he is like so many other politicians who compromise good intentions once they are in power: “I came into politics because I believed New Zealand was underperforming economically as a country. I don’t think it’s good enough that so many New Zealanders feel forced to leave our country each year to seek higher wages in Australia. I don’t think it’s good enough that our average incomes lag so far behind the rest of the world. And I think it’s unforgivable that the Labour Party has done so little to address these fundamental challenges. I believe that a very big step change is needed in our economic performance to ensure New Zealand can make the most of its considerable potential. Growing the economy of this country continues to be my driving ambition. I stand before you today ready to deliver on that ambition for New Zealand. You have my personal commitment that if I am elected Prime Minister in eight days’ time I will work tirelessly over the next three years to deliver the stronger economic future our country deserves.”[3]
Essentially the simple concept behind the 2025 Taskforce’s recommendations is that if core government spending is reduced back to the same proportion of the economy that it was in 2004 and 2005 (around 29 percent of GDP), then the top rates of tax – personal, company and trust – could all be dropped to 20 percent, with all of the lower tax rates including GST left exactly as they are now. That would effectively mean that everyone earning more than $14,000 a year would pay less income tax, and nobody would have to pay more.
Just imagine the electrifying boost to the economy that a top tax rate of 20 percent would deliver. It would not only provide a welcome reward for hard work, but it would also create the incentive for able-bodied beneficiaries who have chosen welfare as their lifestyle option, to get jobs. Crucially, Kiwi businesses would gain a huge competitive advantage that would help to keep New Zealand one step ahead of Australia – especially as Australia is considering dropping their company tax rate down to 25 percent. Lower company tax would also help to mitigate the cost burden that National has just imposed on businesses through its ill-advised emissions trading scheme.
The 2025 plan sounds just what New Zealand needs – proper constraints on government spending and a welcome increase in taxpayers’ freedom and opportunity. The harsh reality is that without reducing the expansion of the state, New Zealand will never close the income gap with Australia because increasing government spending is a key factor in the differences in the performance of our two countries. According to Ken Henry, the Australian Secretary of the Treasury, government expenditure in Australia has grown from 18.9 percent of gross domestic product (GDP) in 1972 to just over 25 percent today. It has remained at that level for almost 35 years.[4] In comparison, government expenditure in New Zealand grew from over 24 percent back in 1972, to 29 percent in 2004, with a massive rise to 36 percent today. In other words, New Zealand’s consistently higher government spending has contributed to our consistently lower economic growth, and if the blow-out in spending during Labour’s last term in office is left unchecked, it will lead to an even more rapid decline in our living standards.
So what is it that the Taskforce is recommending to save $7 billion and enable a 20 percent top tax rate? Well, a total of 35 recommendations were proposed which cover initiatives in most policy areas including the idea of introducing a cap on government spending like they have in Hong Kong, a Taxpayers’ Bill of Rights like they have in Colorado, and an independent Productivity Commission like they have in Australia. The Taskforce also proposed that a proper first principles review of the Resource Management Act be undertaken, and that property rights be included in the New Zealand Bill of Rights. In the industrial relations area they have suggested extending the 90-day probationary period for new employees to a maximum of 12 months for all businesses, the reinstatement of youth wage rates, and the pegging of the minimum wage to the same ratio to average wages that prevailed in 1999. They have recommended that foreign investment restrictions should be loosened, that local councils should be encouraged to sell their trading enterprises, and that businesses owned by the government that operate in a competitive market should be sold.
In addition, the Taskforce has proposed that welfare reform be prioritised, as much to prevent the development of an underclass, as to reduce government expenditure. They have highlighted the fact that there are insufficient constraints in the welfare system to prevent large numbers of working age people opting out of the workforce to become fully supported by the state. In fact it is a scandal that the welfare system has been allowed to remain dysfunctional with ineffective work requirements for the able-bodied and a lack of intensive case management for those on sickness and invalid benefits. The end result is an escalation in the cost of welfare, with individuals deprived of the opportunity to achieve their potential and disadvantaged groups locked into cycles of intergenerational dependency.
This week’s NZCPR Guest Commentator, Lindsay Mitchell, has long campaigned on the need for effective welfare reform in New Zealand. In her article, If social security had been contained, how much better off would New Zealanders be today? Lindsay outlines the disturbing growth in welfare dependency:
“During the post-war years benefit levels were reasonably stable despite population growth. For instance between 1940 and 1975 the population grew by 92 percent but receipt of Unemployment, Sickness and Invalid benefits grew by only 9 percent. Compare this to the next almost 35 year period – 1975 to 2009 – and the picture is vastly different. Reliance on the same three benefits grew by 903 percent or 9 times. The population grew by a mere 38 percent over the same period.
“But what if benefit dependence had stayed at 1975 levels? Using estimates based purely on total population growth the numbers would now look something like this: Unemployment benefit 3,964, Sickness benefit 10,727, Invalid’s benefit 12,897; add in the DPB created in 1973 23,606. That’s a total of 51,194.
“However, the actual total today is 309,717. The difference in terms of expenditure is about $5.17 billion. That represents an average of $2,400 per employed person.” To read Lindsay’s full article, click here >>>.
The 2025 Taskforce report has brought to a head the choices that National faces – it can either cut government spending so that the country can prosper or it can hold a gun to the heads of taxpayers and demand more taxes so that it can endorse the spending spree that the Labour government set in motion. Most people who voted National into power wanted change. They were sick of socialism and state control. They wanted to be liberated and they wanted a brighter future. National has a responsibility to deliver that. And if they think that the policy prescription outlined by the 2025 Taskforce is not the right one, then they need to find their own $7 billion worth of spending cuts so that taxes can be reduced down to 20 percent and New Zealand can have a brighter future.
http://www.nzcpr.com/weekly209.htm
December 7th, 2009 at 8:25 pm
i think hurf..that you will find the progressive vote is more than 7%..eh..
and growing by the day..as people turn resolutely away from yr failed formula..eh..?
face it hurf..
the tide is rapidly going out on you/those ‘freemarket-ideas’..
the glory days are long gone..
and your 3% support will only go down..
you are like a steam-engine salesman..who dosen’t realise the industrial revolution is in full swing..
and nobody wants your out-moded/out-dated ideas..
eh..?
harsh..!..but that’s how it is..eh..?
phil(whoar.co.nz)
December 7th, 2009 at 8:54 pm
You mean, onto a real winner? Because the steam engine heralded the growth of the Industrial Revolution. Pick up a history book, kiddo. One without pictures.
Oh yeah. If you consider the combined left wing vote it’s stagnated at 30% since the election.
Face it. No one gives a fuck about your bankrupt “progressivism” (which is really socialism with a PR rebrand after the collapse of the Soviet Union and the adoption of the Third Way). All together now:
“Cos’ Phool’s living in a dream world/Don’t know when he’ll be back again…”
December 7th, 2009 at 9:10 pm
“We have a plan to steer New Zealand on a course to a more prosperous future. And we need to get to work on that plan straight away.”
That must be a joke in the worst possible taste. If John Key said the above before the election someone should be reminding him of another of his vacuous, empty promises.
The laziest Prime Minister of recent history continues his rudderless journey, dithering and fumbling issue after issue.
Hide was correct when he asked the question: what does John Key do? Absolutely nothing.
December 7th, 2009 at 9:31 pm
He did indeed.
[New Zealand] is a beautiful place with boundless opportunity. So I won’t accept that the bottom third of the OECD for average income is where we rightfully belong. I simply won’t believe we have to put up with losing 80,000 of our people every year to other parts of the world. I am horrified that the gap between our wages and those in Australia are now wider than they have been in our history – at more than 35%. How can we hope to hold on to our young people, the educated, the talented, the motivated, if on the Monday you can earn $50,000 for doing one job and on the Friday earn $80,000 by simply moving across the ditch? If we stay on the same growth course and speed, by 2030 the gap between wages here and wages in Australia will have risen to over 60%. We have a plan to steer New Zealand on a course to a more prosperous future. And we need to get to work on that plan straight away. John Key, “National’s Blueprint for Change”, January 2008.
December 7th, 2009 at 11:43 pm
National set up Don Brash and his mates from ACT to fail. John Key has his head so far up the Maori Party’s arse National has written off ACT.
Matthew Hooten on Labour Radio this morning said the Prime Minister’s Department leaked the report details before the official release. This was the signal for the MSM mob to stone Brash and his mates.
Garth George sometimes hits the nail on the head, but was far too tough on Brash in his column. If Brash and his colleagues are last century’s men, so is Garth. The son of a National Party employee, Garth has been True Blue all his long life. However, this criticism by Garth of the report is over the top:
Garth is near the mark on one point, however. The politicians are overselling NZ’s supposed mineral wealth. They are claiming we have one of the highest mineral resources per head of population. This is clearly based on unproven resources at the bottom of NZ’s large economic sea zone. It may be centuries before it can be economically tapped. If it were oil, perhaps. Unfortunately, NZ petroleum finds tend to be gas, which is of use only if you have a market, and the NZ market is tiny now that Greenies are against thermal power. To claim, as Brownlee and now Brash have, that NZ has as much mineral wealth per head as Australia does, is cargo cult delusion.
Re Mynameisjack at 12.23
The Herald is owned by an absentee Irish owner, being squeezed financially, and unable to find a buyer for the NZ Herald group. The journos are having a party while the absentee owners are otherwise engrossed.
December 8th, 2009 at 12:27 am
Brash is very skilled at framing his arguments. He would’ve made a great PM.
December 8th, 2009 at 8:04 am
“They are claiming we have one of the highest mineral resources per head of population.”
I think the report they cite says we have one of the highest levels of natural resources per head. Fish and stuff as well as rocks.
December 8th, 2009 at 8:20 am
ABSTRACT(pdf)
The Northland region contains a wide variety of mineral commodities and currently produces
high quality ceramic clays, limestone for cement and agriculture, and rock and sand
aggregates. Antimony, coal, copper, diatomite, kaolinite clay, kauri gum, manganese,
mercury, peat, serpentine, silica sand and silver have been mined in the past and there are
prospects for aluminium, bentonite, chrome, feldspar sand, gold, lead, nickel, phosphate, zeolite and zinc
Resources of rock aggregate, sand and limestone have not been quantified, but are
estimated to be large and sufficient to meet foreseeable local demand. Previous estimates
have been used for sub-bituminous and bituminous coal (23 Mt valued at $1,150 M), lignite
(31 Mt valued at $620 M) and peat (300 Mt valued at $12,000 M). Other potential mineral
resources have been estimated using a three step process involving mineral deposit models,
a geographic information system (GIS) of spatial data sets, and a counting method of
assessment. Estimates of value for 16 metallic mineral deposit types total NZ$5,235 million,
and for 14 non-metallic mineral deposit types they total NZ$28,019 million.
A scenario is proposed whereby the value of Northland’s mineral production could increase
from the current NZ$58 million to more than NZ$354 million annually.
December 8th, 2009 at 8:24 am
The report as HTML