Fiscal Discipline pays off

April 22nd, 2010 at 1:11 pm by David Farrar

has just announced:

In the Budget last year, we identified $2 billion of lower quality spending over the subsequent four years to redirect into higher priority areas.

In this year’s Budget, we will find another $1.8 billion of low quality spending between now and 2014 for reprioritising into higher priority initiatives.

$3.8 billion of savings is not bad. That is around $3.799 billion more than what would have happened under Labour.

I said in last year’s Budget that most Government agencies will receive no budget increases over the next few years. And in this Budget, I will say the same thing again.

Not because they don’t deliver worthwhile services, but simply because we cannot allow debt to escalate further.

And the private sector has had to cope with falling revenue. Staying constant is relatively a better position to be in.

And in the release:

“The Government will continue to weed out low quality spending. We will live within the $1.1 billion annual operating allowance for new spending we have set ourselves, and restrict annual increases in this figure to 2 per cent from 2011/12.”

Mr English repeated that most Government agencies would receive no budget increases over the next three or four years, as the Government moved to get back to Budget surplus as soon as possible.

This fiscal discipline is necessary so we can stop borrowing, and start paying off debt. Borrowing $240 million a week is not sustainable.

“I want to get the Government back into budget surplus as quickly as possible, because surpluses give us choices.

“For example, surpluses give us choices to invest more in public services; to pay down public debt; to resume contributions to the New Zealand Super Fund – or to do any number of other things.

“As long as we run deficits, we don’t have those choices,”

Exactly.

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44 Responses to “Fiscal Discipline pays off”

  1. krazykiwi (9,189 comments) says:

    The $3.8 billion “redirected into higher priority areas” is not savings DPF. It’s redirected borrowing on which we’re paying interest.

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  2. Peter Cresswell (48 comments) says:

    “Fiscal discipline” my arse.

    To talk about “fiscal discipline” and making “savings” when you’re planning on $1.1 billion of new spending is, well, it’s bullshit and blatant spin.

    A child could see the misdirection. “Look at the savings we’ve made!” “But what about all that new spending, arsehole.”

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  3. JeffW (324 comments) says:

    Absolutely right, kk.
    An increase in expenditure of $1.1 billion is a disgrace, they should be looking to spend $1.1 billion less.

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  4. krazykiwi (9,189 comments) says:

    For those which the government would get its costs (ie our spending) under control, here a list of commision[ers], councils, departments that you and I pay for… and which I’d like to put in front of a taxpayer jury. Some should be gone completely. Others should have some of their functions transferred before they’re stopped. Others require serious makeovers. I’m not holding my breath.

    1. Broadcasting Commission
    2. Charities Commission
    3. Children’s Commissioner
    4. Earthquake Commission
    5. Electricity Commission
    6. Families Commission
    7. New Zealand Fire Service Commission
    8. Health Sponsorship Council
    9. Human Rights Commission
    10. KiwiRail Holdings Limited (yes, a fire sale required)
    11. Local Government Commission
    12. Te Taura Whiri i Te Reo Māori (Māori Language Commission)
    13. Maori Television
    14. Mental Health Commission
    15. Ministry for Culture and Heritage
    16. Ministry of Social Development (Keep, but rename ‘Ministry of Essential Welfare’ and re-task accordingly)
    17. Ministry of Māori Development
    18. Ministry of Women’s Affairs
    19. Ministry of Youth Development
    20. Ministry of Pacific Island Affairs
    21. National Advisory Council on the Employment of Women
    22. New Zealand Game Bird Habitat Trust Board
    23. New Zealand Fish and Game Council
    24. New Zealand Quality College
    25. Drug Free Sport New Zealand
    26. New Zealand Teachers Council
    27. New Zealand Walking Access Commission
    28. Ngai Tahu Ancillary Claims Trust
    29. New Zealand Artificial Limb Board
    30. New Zealand Film Commission
    31. Office of Ethnic Affairs
    32. Plant Variety Rights Office
    33. Public Sector Training Organisation
    34. Real Estate Agents Authority
    35. Registrar of Unions
    36. Removal Review Authority
    37. Retirement Commissioner
    38. Social Workers Registration Board
    39. Sport and Recreation New Zealand
    40. Standards Council
    41. Standards New Zealand
    42. Tertiary Education Commission
    43. Te Puni Kokiri
    44. Radio New Zealand Limited
    45. The Bioethics Council
    46. Transport Accident Investigation Commission
    47. Valuers Registration Board
    48. Walking Access
    49. War Pension Services

    I anticipate howls of outrage from vested interests. Tough. We simply must have a cleanout because the junkroom is overflowing as we’ve been hoarding government ’services’ for far too long. Business can and do this (read Maverick by Ricardo Semler), and so should governments.

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  5. Gooner (995 comments) says:

    I could redirect my fish ‘n’ chips money into Thai takeaways and according to this I would be saving the spending of my fish ‘n’ chips money.

    Aye?

    DPF, what have you been smoking?

    [DPF: God people are such fuckwits. There is a difference between spending money on bureaucrats and spending money on providing more elective surgery for those who need it.

    Yes I know some of you have wet dreams where the Government does not fund health or education at all, but 99% of the population are wedded to that notion.

    When people die on waiting lists, because they could not afford an operation, they tend to blame the Government. Pious pieces about how they should have purchased health insurance 40 years ago doesn't tend to go down so well]

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  6. Manolo (13,517 comments) says:

    I got dizzy and fell to the floor after reading a few lines of DPF’s posting. Spin at its best (or should be worst?)

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  7. Chicken Little (793 comments) says:

    I second having a read of Maverick.

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  8. berend (1,690 comments) says:

    Spin of the week goes to DPF: any spending done by National is by definition higher quality.

    When is it time to stop borrowing money and return money to the taxpayer?

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  9. mawm (211 comments) says:

    $3.8 billion of savings is not bad

    Only when I see coming off the tax I have to pay and not redirected to someother ‘low priority’ spending that has caught National’s eye.

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  10. ISeeRed (244 comments) says:

    We need an Irish budget, not a National Bludget.

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  11. petal (705 comments) says:

    Geez DPF, if that’s the way we define “savings” in our household, we’d be down the toilet. If we could afford one!!

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  12. KiwiGreg (3,244 comments) says:

    Fiscal discipline is NOT spending. Changing what you spend is just spending.

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  13. berend (1,690 comments) says:

    DPF: When people die on waiting lists, because they could not afford an operation, they tend to blame the Government.

    You’d think? They didn’t blame Labour. When people die on the waiting list, they die. It really doesn’t raise enough eye brows of the other voters as everyone thinks it won’t be them when it is their turn.

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  14. bruceh (102 comments) says:

    Bill English’s core Big Gummint beliefs are plain to see here. He is only motivated by being a better manager of big gummint than Labour.

    He wants to get back into gummint surpluses not to just pay off debt but ‘invest’ more in public services. No interest whatsoever in shrinking the percentage of GDP the gummint sucks on.

    Sheriffs of Nottingham come in all sorts of guises. Here’s hoping the next Confidence and Supply Agreement can address the rapacity and gluttony of clunky, smug ineffective gummint in its appetites for the peoples earnings

    Only more Party Votes for guess who can do this

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  15. bchapman (649 comments) says:

    Will be interesting to see what the GDP, unemployment and budget deficit forecasts are for the budget. Australia is now growing faster than anytime since 1997- pretty sure Bill won’t be able to say that.

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  16. Gooner (995 comments) says:

    [DPF: God people are such fuckwits. There is a difference between spending money on bureaucrats and spending money on providing more elective surgery for those who need it.

    Yes I know some of you have wet dreams where the Government does not fund health or education at all, but 99% of the population are wedded to that notion.

    When people die on waiting lists, because they could not afford an operation, they tend to blame the Government. Pious pieces about how they should have purchased health insurance 40 years ago doesn’t tend to go down so well

    Some people are fuckwits David, but I’m not one of them. And neither are the other 15 commenters on this post who have correctly identified what I have: That redirected spending from bureaucrats to the front line is not saving, it is redirecting.

    I don’t have any wet dreams as such. And I have not mentioned here anything to do with health insurance, and neither has any of the other 15 commenters.

    So you wrote a silly thing. Big deal. I do that constantly. But calling me a fuckwit for showing you up is, to use your word, pious.

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  17. freethinker (688 comments) says:

    KK
    Do you have any figure for the total spend by these 49 Quangos?
    DPF Getting back to a fiscal surplus requires, spending less or taxing more or some of each. National is doing neither, that may be OK whilst the economy is fragile but whats wrong with a commitment to reducing state spending to say 30% of GDP within 5 years to give some confidence that voting National next time will produce the outcomes so many National voters desire?

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  18. ISeeRed (244 comments) says:

    The government is spending 40% more in REAL TERMS than 10 years ago! Has the population increased by 40% in that time? Has there been a major war or a catastrophic earthquake to recover from? No? Don’t tell us National can’t make any REAL savings and spending CUTS that won’t mean the end of life, the universe and everything, DF. Let’s hope this translates into more support for ACT – if they’d just get their act together.

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  19. side show bob (3,660 comments) says:

    “Borrowing $240 a week is not sustainable.” So how long can it be mantained, my guess would be till GST goes up and the ETS kicks in. After that little effort nothing will be sustainable.

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  20. jackp (668 comments) says:

    There is alway a negative in the paper about spending cuts and government. There is this perpetual fear that doctors and nurses are going to be extinct… which is why John Key won’t cut. National has increased their spending by what, 3 billion? Labour increased spending since 2005 by 8 billion, so, 3 plus 8 is 11 billiion in 5 years. I don’t see how this is saving. David, just because the wheel of spending is slowing down, it is still crippling this country. I just ask anyone to walk through any bureacracy and watch how they work. The solution is get rid of middle management. What’s great about this is it won’t hurt the frontlines and will increase efficiency. Key, on the other hand, wants to spin spin spin…

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  21. ben (2,418 comments) says:

    Would it be too much to ask that the lower quality spend is cut. Period.

    What is outrageous is the total lack of outrage that there is excuse whatsoever for taking hard earned money off people and then directing it into things nobody wants.

    Where is the uprising – anything, people? – that demands the New Zealand government, already among the largest in the Western world – stop spending more of other peoples’ money. Between spending and its ownership interests, the NZ government comprises 56% of the NZ economy. 56%.

    Just how out of control does the public sector in NZ have to get before a government, any government, prompted by you, the taxpayer, finally stands up and says enough?

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  22. ben (2,418 comments) says:

    Time ACT told National to shove it. ACT is being ignored anyway, and it is hard to think of an ACT principle that National isn’t walking all over. Come to think of it, its hard to think of a National principle National isn’t walking all over.

    This country is going to hell because we keep getting Prime Minsters aiming for four terms.

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  23. dimmocrazy (286 comments) says:

    The real outrage is of course that Billy Boy can stand there and actually say that there is billions of “low priority spending” after he’s been in office for a year and a half. If he’d be worth half his boots he’d had that chopped out at least a year ago for starters. Now saying that this is to be “redirected” doesn’t mean anything else than INCREASING government spending, no matter what twists DPF is putting on it for his paymasters. Personally, I’d love to see some accurate breakdowns of these numbers.

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  24. big bruv (13,647 comments) says:

    I note that full moon King said on the news tonight that “the people will not stand for this” and I suspect that she may well be right.

    Of course the people who will not stand for this are mind numbingly fucking stupid but that is not the issue, the point here is that the gutless Nat’s will spend weeks and weeks defending the spending cuts in a manner that desperately seeks to not offend anybody.

    Far better for them to take the direct route…

    Pinko media hack: “Minister, this means that hundreds of people will no longer be able to access further education courses”

    Bill English: “That may well be the case”

    Pinko media hack:”But is that not ripping out their support systems and dashing their chances of an education”

    Bill English: ” It may do”

    Pinko media hack: “What do you say to those people Minister”

    Bill English: ” I say that we do not have the money for it, we are skint, broke, whatever term you want to put on it, there is no bloody money for that, and as for their education, well, the tax payer has already paid for it the first time around, perhaps they would have been better to listen when they were at school”

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  25. kaya (1,360 comments) says:

    This is just more of the same shit from another Government barely distinguishable from the last lot of self-serving fucwits. The desire to stay in the top seat overrides any small chance of any of these twats ever doing what is needed to get this country back on it’s feet. KK’s list of departments that need microscopic scrutiny and chopped to the bone or eradicated would be an excellent place to start but it won’t happen.

    Sure they will fuck about around the edges but government is funded by you and me, they don’t have to work to a budget like the rest of us. They will just keep squeezing what is left of the productive component of the country. Personally I have had enough. I’m reducing debt, reducing output and generally going to do as little as I need to to survive. I’m sick of these fuckers wasting hard earned tax revenue. Any motivation to increase the size of my business has been put on hold until I can see someone who is going to spend the money more wisely.

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  26. PaulL (6,003 comments) says:

    So, we had a spending trajectory under Labour. National are spending less. Is that not a saving? Looks like one to me.

    If I had a mortgage, and I was paying interest on it at 10%, I’d have a spending trajectory. If the bank cuts my interest rate to 6%, my future spending reduces. But I’m still spending. Is that not a saving?

    No, National are not perfect. Yes, they are a damn sight better than the alternative.

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  27. jackp (668 comments) says:

    PaulL, National isn’t spending less, it is spending more by 1 billion. Add 1 billion to what Labour was spending and I don’t see how national is spending less. It’s really irrelevant how government is growing when there is a 240 million a week loan taxpayers have to pay back.

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  28. ISeeRed (244 comments) says:

    Wow, 6 new blog entries since this lame spin was posted 1:11 pm? Trying to bury this turd under piles of inane filler about Youth MPs and roleplaying last hurrahs?, DF? Can’t blame you, really. This is a eye-watering, stomach-churning, heart-clutching stinker. It’s like a mirror image of the spin we normally see at the Substandard. Please keep it real.

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  29. jackp (668 comments) says:

    Let me rephrase that last sentence, It may look like National is cutting back on spending, but they are adding 2 billion to what Labour added since they were the government. And that is a big chunk of change. and with a deficit of 240 million a week, Natinal isn’t doing anyone any favours.

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  30. V (704 comments) says:

    If NZ media would follow along with what is going on in the Greek bond markets right now, NZ’ers might get the consequences of too much debt.
    Check out the yield cuve.
    http://www.bondsquawk.com/wp-content/uploads/2010/04/2010-04-21-Greek-YC-Change.gif

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  31. Clint Heine (1,570 comments) says:

    Krazykiwi… I support eliminating the lot of that list. The savings would be immense! Anybody got any idea how much we’d save?

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  32. sonic (2,818 comments) says:

    “Where is the uprising – anything, people? – that demands the New Zealand government, already among the largest in the Western world – stop spending more of other peoples’ money. ”

    There is a party called ACT which stands for just that, remind me of their polling performance again?

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  33. tvb (4,301 comments) says:

    Krazikiwi I would merge that impressive list of organisations into one organisation call it the quango corporation and let them fight on the beaches and the streets and the hills and the landing grounds for resources.

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  34. Julian (20 comments) says:

    Kaya,
    Agree, with the business decision, the 10 per centers (pay 76% of the taxes) may not be big in the voting numbers, but we can have our say, by not creating economic growth and employment opportunities for this goverment and any other until they see the light.
    You are not alone, in your decision to not increase the size of your business.

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  35. krazykiwi (9,189 comments) says:

    I don’t have any information on the cost of running those state service organisations. In truth I simply compiled the list from newzealand.govt.nz, a master list so large that it’s paginated by letters of the alphabet.

    I’m picking that over the last three decades this list has grown pretty much unchecked, as the burgeoning state has pushed its way into every last corner of our lives… and charged us for the privilege of having them there.

    There are certainly candidates for merger, and others to have an essential portion of their activity transferred before being closed down. Other should just be closed. Sure there will be some pain, but the collective pain felt by ordinary NZers who unwittingly fund all this stuff has to be considered.

    The philosophical issue is this: we’ve allowed ourselves to believe that the government will regulate to solve all societal problems. And with each one they ‘solve’ two more are created.. and still more of our tax money is poured into solving those two. And so it’s continues.

    This slippery slope will stop in time – either because we come to our collective senses, or as a result of catastrophic economic failure and/or revolution. I hope I never see that latter in my lifetime, but can’t see any hints of the former which, of course, would require leadership with balls and principal.

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  36. Manolo (13,517 comments) says:

    “No, National are not perfect. Yes, they are a damn sight better than the alternative.”

    Jeepers. You must be deeply myopic.

    Neville Key’s National government is as deceitful and self-serving as Clark’s. Both are examples of heightened political arrogance and lust for power.

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  37. Lance (2,612 comments) says:

    Of course ACTs fine moral and fiscal stance is why it got elected with a majority and continues to ride high in the poles…
    oh wait…………….

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  38. krazykiwi (9,189 comments) says:

    hmmm … that should have finished “,would require leadership with balls and principles“… too much school board of trustees stuff happening for me at the moment :)

    @lance – ACT is languishing in the polls because the left, aided and abetted by the MSM, have been very successful in depicting ATC as far right extremists, when in truth they’re further to the left than Labour was in the 80, and they’re further to the left of quite a few modern so-called social democracies.

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  39. Scott (1,759 comments) says:

    While I agree with much of the sentiments being said, I am remotely optimistic that the government has a right intentions regarding spending. Bill English is even wanting us to go back into surplus — which is a good thing.

    However I do think that less government, more limited government, more individual and community and family responsibility are the keys to a better New Zealand. Unfortunately we have had so many years of socialism that there will be a long slow process to withdraw the electorate from government dependency.

    I can also think of some savings — for example all of those advertisements telling us how to drive, what cars to drive, be careful with ladders, etc etc — which are funded by the taxpayer to the tune of millions of dollars per annum — how about getting rid of them?

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  40. krazykiwi (9,189 comments) says:

    Scott, line-item changes (TV ads et al) won’t do it in my view. This is because minor change has vested interest groups scream ‘unfair’, and they’re given a MSM stage to garner public sympathy. We need a low-level structural transformation; change that’s so deep that while everyone feels some pain, there’s no single group who can claim that others’ aren’t doing their bit. It’s easy to say “Too idealistic. That’s not going happen”… but why not? Why should we wait for an economic or political crisis to do what we know is urgent now?

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  41. jackp (668 comments) says:

    I agree with act, there should be a cap on government spending. The only way I can see stopping this government is to vote for Winston Peters…National would loose supporters to winston and decreasing their majority, then nothing would get done in Parliament which is better than what National is doing now. After all, Key said he wouldn’t align his government with NZ first. And, it would be a slap in Key’s face which I want to see so dearly.

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  42. sallydeb (13 comments) says:

    National’s Vision For New Zealand – from their website – http://www.national.org.nz/About/vision.aspx
    • Individual freedom and choice
    • Personal responsibility
    • Competitive enterprise and rewards for achievement
    • Limited government
    What a F*#@*ing joke

    And what are ACT doing supporting them on supply and demand??

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  43. tom hunter (4,639 comments) says:

    Screw it. I’m just going to repeat what I said last year about this:

    People have short memories, and while they let Labour run the lines about inherited problems for several years, I doubt National will get more than two. After that the only thing people will notice is that we’re in the shit and National are in charge.

    That will then open up the argument by Labour that they can better manage the institutions of NZ society, that they’re more competent, a replay of the basic National argument through the 1950’s and 60’s. Worse, they will argue that the problems can be solved if only more money is spent on them, which the public will be receptive to after several years of “National hardship” (e.g. Restricting budget growth to 2% per annum).

    Those are losing arguments for National. Their focus should be on removing or reducing the areas those arguments play on. The alternative is something I pointed out in 2008, even as I voted for them:

    what is National going to do should it win this November beyond babysitting the institutions of Labour and the Left. Nursing those things along, tiring all the time and steadily losing votes simply by being in Government and getting blamed for the insanities of those self-same institutions. Until the day comes, one or two election cycles down the road, when a revitalised Labour gets back into power and gets to push forward some more. Ratchet Socialism at its best.

    In light of that expectation, I think that National, with Key leading, should be laying out the arguments now, and repeating them endlessly in specific areas so the message is reinforced. That message is simple:
    – for their own sake, people cannot depend on government to the degree they do now.
    – if this continues then sooner or later government will fail them, as it failed them in the 1970’s and 1980’s, and they will actually be worse off, not better.
    – people must be given the chance and the incentives to begin supporting themselves and their loved ones, with the emphasis on making that support grow and strengthen steadily over time.

    All these points can be hammered home by focusing on four key aspects of people’s everyday lives:
    1 – retirement
    2 – education
    3 – healthcare (including work injuries)
    4 – corporate welfare

    The focus in each case should be on four arguments.
    First, point out what has happened in these areas failing to live up to their socialist promises, and failing expensively.

    Second, show how these areas will continue to degenerate if we keep doing what we’re doing now.

    Third, argue the changes that must be made, with the emphasis being less on “revolution” in the public institutions, than focusing on growing private institutions that people are already turning to from the public bodies that are failing them.Giving individuals the financial incentives and legal defences that allow them to keep pushing in those directions.

    Fourth, Don’t ignore the privileges granted by government – just tie them to the changes – via tax credits for example. I’m not that keen on tax credits but any fiscal issues they create short-term are outweighed by their political strengths. They turn the Left’s primary electoral argument against them, in that voting for the Left will mean losing your tax credits for (health insurance, retirement investments, etc, etc).
    Sure, the argument will be made that such things “rob” the public institutions of money, but if that argument is engaged the whole process is stopped in it’s tracks right at the start, which is the lefts intention anyway. Push it through and deal with the argument with actual spending and budget facts on the ground, rather then hypothetical, worst-case scenarios.

    Instead, the left will be forced into making a choice between the privileges they prefer – direct government benefits and support via government departments – and individualised privileges already locked in that people are using to support their own choices, or the usual fantasy land where endless amounts of money will feed both choices.

    In short, give people the means to at least start controlling their own solutions and their own lives, as some already are. Do that and the area that the left wish to play on will steadily shrink.

    Sadly I don’t think National will move in these directions and will find themselves polarised in bitter arguments over 1% tax cuts or 2% spending increases. Whatever moves to the private sector are being made now (i.e. Increased use of private hospitals) will have been made from the top down, via the public institutions, and as such a change of government will simply mean the rules being changed again in the future.

    That’s a failure.

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  44. Redbaiter (13,197 comments) says:

    “In light of that expectation, I think that National, with Key leading, should be laying out the arguments now”

    All very well said Mr. Hunter, but the problem is not really what should be done. IMHO you’re correct in all you say, and if we followed that path, there would be massive improvements. The problem is that Key and National JUST DO NOT GET IT AND NEVER HAVE GOT IT. They’re black hole stupid. Bereft of ideas, bereft of leadership, bereft even of personality. They articulate nothing except more of the same threadbare socialist twaddle.

    Let’s face it- they won election by default, and since the election they’ve shown that’s all they should have won it by. A sorry collection of losers incompetents and dummies without a political clue. Intellectually stunted by their blinkered group think beltway perspective, they’re nothing led by nobody.

    Apart from traitors perhaps to those NZers who still support them because of their core principles, ideals now twisting helplessly in the wind of socialist totalitarianism and soft tyranny. Disgusting and contemptible and cowardly really. Feeble scuttling crustaceans when we so badly needed heroes. National are a complete disaster for New Zealand.

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