ACT’s alternative budget

May 12th, 2014 at 10:00 am by David Farrar

have done an alternative budget, which is here.

The Herald reports:

Act Party leader Jamie Whyte has produced an alternative budget that would slash Government spending on what he calls “middle-class welfare” and “corporate welfare”.

He said cuts of $4 billion would allow the top personal rate of 33 per cent and corporate tax rate of 28 per cent to be cut to 24 per cent with a view to cutting them to 17.5 per cent by 2020.

Treasury estimates (roughly) that the cutting the 33% rate to 24% would cost $1.8 billion. Cutting the 30% rate to 24% would cost $0.8 billion. Cutting the company tax rate to 24% would cost $1.5 billion.  That’s a total cost of $3.9 billion.

Matt Nolan at TVHE is unimpressed with the alternative budget. Not so much with some of the specifics, but with the claim that this would increase economic growth from 3% to 5%. I agree with him that this is an unjustified assumption.

There is certainly a lot of evidence that over time, developed economies with a smaller proportion of economic activity taxed by the Government, will have a higher long-term growth rate. But it isn’t a magic wand that overnight lifts economic growth by a massive 2%.

The Herald continues:

Act would phase out Working For Families by 2020, lift the age of eligibility for superannuation to 67, cut Kiwsaver kickstart and the tax credit, scrap paid parental leave and parental tax credits, end climate change obligations and reintroduce interest on student loans.

“This spending confers private benefits on politically favoured groups.”

It took money off people in tax then gave it back to them if they fell into one of the Government’s favoured categories.

Dr Whyte said corporate welfare was “a kind of system corruption which compromises a nation’s commercial culture”.

Under capitalism, entrepreneurs were supported to solve their problems by themselves or go out of business if they don’t.

“Labour want them to jump on a plane to Wellington with their hand outstretched to pick the pocket of the ordinary taxpayer.”

Those agencies that would be spared cuts under Act include ACC, Canterbury Earthquake Recovery, the GCSB and SIS, Corrections, Courts, Defence Force, Education Review Office, the Office of the Ombudsmen, Parliamentary Commissioner for the Environment, Police, Serious Fraud Office and Treaty of Waitangi Negotiations.

Three Government agencies would be abolished: Women’s Affairs, Pacific Island Affairs and Tourism New Zealand.

Most government agencies would be required to spend less.

Education, for example, would have to function on 1 per cent less, saving about $24 million. Customs would have to save 2 per cent or $3.17 million.

Treasury would have $7 million cut from its policy advice budget.

The biggest savings would come from cutting funding programmes within the Science and Innovation portfolio, $659 million, and Economic Development, $281 million.

It has also budged for $291 million less for the Ministry of Primary Industries, $196 million less for the Ministry for the Environment, and $111 million less for the Ministry of Foreign Affairs and Trade.

Interesting that ACT is saying money set aside for Treaty settlements should not be reduced.

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23 Responses to “ACT’s alternative budget”

  1. mjw (400 comments) says:

    This claim of an increased growth rate is often achieved by cherry picking. For example, if you slash government spending the economy first contracts. Then it rebounds, and the ‘low government’ growth rate is calculated from the depth of the trough, rather than from the previous level of economic activity before the cuts.

    I have no doubt ACT supporters will trot out this cherry picked justification again over the next week. They have often done so in the past, using the early 1990 period when benefits were cut by Ruth Richardson.

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  2. nocommentkiwi (35 comments) says:

    > Interesting that ACT is saying money set aside for Treaty settlements should not be reduced.

    Market liberals believe in protection of property rights and resolution of property rights transgressions.

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  3. Kiwi Dave (95 comments) says:

    “… were supported to solve their problems by themselves…”

    Almost certainly the original was “supposed to”. If so, is this just a typo or more evidence of reporters’ and editors’ indifference to and ignorance of the issues?

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  4. dime (10,109 comments) says:

    “Treasury estimates (roughly) that the cutting the 33% rate to 24% would cost $1.8 billion.”

    IS THAT ALL??????? ffs!

    the 33% rate really is a punishment tax.

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  5. Huevon (223 comments) says:

    I wholeheartedly support every proposal in ACT’s budget.

    Of course, few, if any, of it will ever be implemented. The rot in politics and society is too deep. The cancer metastasized. Leftism is triumphant.

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  6. Chuck Bird (4,924 comments) says:

    “Market liberals believe in protection of property rights and resolution of property rights transgressions.”

    What property rights did Maori have in 1840?

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  7. Martin Gibson (247 comments) says:

    Finally some policy a weary net tax payer can happily vote for!

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  8. lazza (382 comments) says:

    Au Contraire … I wholeheartedly “reject” ACT’s alternative budget.

    How is it that these very, so termed “bright” (though unmistakeably narcissistic) people can be so dumb!?

    Have they not heard that “politics is the art of the possible”? … not … “the dreams of the improbable”.

    If they think that Kiwis in sufficient numbers to make them politically relevant are going to buy-in to this plain dopey idealogical claptrap then they are “even” dumber than I thought.

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  9. dime (10,109 comments) says:

    “If they think that Kiwis in sufficient numbers to make them politically relevant are going to buy-in to this plain dopey idealogical claptrap then they are “even” dumber than I thought.”

    now give me more of your money!

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  10. andrewcarrot (10 comments) says:

    David, you should drop in to Jamie and Richard’s Wellington budget discussion at Dockside tonight. Then you can ask where Jamie got his ‘numbers’ from. You may wish to reverse your “unjustified assumption” comment afterwards. Just a suggestion.

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  11. Kea (13,359 comments) says:

    Act would phase out Working For Families by 2020, lift the age of eligibility for superannuation to 67,

    I agree with that much. WFF was an election bribe that was never affordable. Raising the superannuation age to 67 is a good thing and not just for economic reasons. As we live longer the 60’s are the new 40’s

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  12. SPC (5,775 comments) says:

    It’s interesting that WFF tax credits, parental leave etc are called “spending confers private benefits on politically favoured groups.”

    Then identifies a group that ACT will politically favour.

    So no change to Super (apart from age increase to 67) but taking the $20B in the Cullen Fund to repay debt – ignoring the fact the Fund is growing at faster than the cost of debt. Hardly smart. And infers no ACT support for the National plan to make contrinutions when back in surplus.

    Apparently ACT sees children of the low waged as an expense (in support of those who do not support ACT), that can be avoided by importing replacement labour, whereas the middle class retirement lifestyle as appropriate and required pandering to a group that might vote ACT.

    Principled and smart, no not at all.

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  13. mavxp (492 comments) says:

    I disagree on removing the Science and Tech funding, which in NZ is tiny.

    There is no way our business community is going to fund decent R&D, or encourage people to study science and tech through grants (which they benefit from through having smart innovative employees).

    They are too tight, and the people who end up in senior financial positions in companies (many of them accountants) too ignorant of the value of R&D and see it as a cost not an investment. NZ will become a scientifically illiterate backwater in short order – more so than it already is. The smart people we have in Sci/Tech will leave in droves, and the ones we need will never come here.

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  14. Tauhei Notts (1,747 comments) says:

    Huevon at 10.41.
    Spot on!

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  15. rg (214 comments) says:

    You need to read the whole budget David and you will see what benefit the slashing of red tape will do. It is not just tax cuts that will create the growth. Matt Nolan made the same mistake

    Refreshing budget from ACT. All the critics are trying to justify why they should get money from the govt for their own benefit. What they are actually asking for is for us taxpayers to work hard and then give some of our money to them to support their lifestyle choices. It is sheer greed. When did we become such a nation of layabouts and bludgers?

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  16. SPC (5,775 comments) says:

    Kea, the National Party tax programme of 2005 was more expensive than WFF.

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  17. wiseowl (934 comments) says:

    I think they made a mistake over the Waitangi roundabout.Policy should read

    ‘money set aside for Treaty Settlements should not be’.

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  18. Jack5 (5,157 comments) says:

    Spells out what ACT thinks, but otherwise, what’s the point of an alternative budget by ACT?

    Under coalition governments, and given its tiny polling, ACT is never going to be able to bring about drastic change.

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  19. stephieboy (3,400 comments) says:

    Huevon (123 comments) says:
    May 12th, 2014 at 10:41 am
    I wholeheartedly support every proposal in ACT’s budget.

    Of course, few, if any, of it will ever be implemented. The rot in politics and society is too deep. The cancer metastasized. Leftism is triumphant.”

    Or is Paranoia triumphant. ? I challenge ACT supporters to now get out there and try and convince the ordinary voter instead of the usual whinging.
    Their current weak polling ( 0.05% ) suggests the voter rejects their extremist libertarian agenda similar to the way libertarian Ron Paul was rejected by GOP supporters with his totally failed Presidential bids.

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  20. andrewcarrot (10 comments) says:

    Stephieboy

    ACT is a classical liberal party. That is a considerably different philosophy to libertarianism. Read Popper for an explanation.

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  21. CrazyIvan (90 comments) says:

    Surprised to see the budget eliminates the entire Tourism Vote ($105m) but keeps NZ Trade and Enterprise almost fully funded ($170m), it seems to be okay to have government support, including overseas offices, for the export industry but not for tourism. I’d be interested in seeing he reasoning for that.

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  22. Harriet (5,131 comments) says:

    LOL……… under ACT and Jamie Whyte’s ‘leadership’ working families, the retired, students, et el, have to pay for themselves – so to do smokers and drinkers.

    Yet as I’ve said often before, Jamie Whyte & ACT won’t make the hypersexuals pay for their sexual healthcare costs like smokers and drinkers currently have to do.

    Under ACT the hypersexuals will still be allowed to ruin their rectums, contract STD’s, and contract the very costly AIDS, have abortions and other operations – and all will be paid in full by the taxpayer!!!!!!!!!

    The hypersexuals will then walk out the door of the taxpayer funded healthcare services, spend their own money on health spas, facials, massages, liposuction, tit jobs, haircuts ect – and then repeat their irresponsable hypersexual behaviour – and the taxpayer will then pay in full again for the hypersexuals ‘sexual health care’!!!!!!!

    Smokers and drinkers get taxed to pay for their ‘irresponsable behaviour’ whereas you cannot have a ‘bedroom tax’ for hypersexuals, so the answer to the problem is to treat sexual healthcare like dentistry – pay as you go!!!!!!

    Taxpayers should not be paying for irresponsable sexual behaviour.

    Jamie Whyte is a fucken piss poor ACT leader!!!!!!!!!!!!!!

    Vote for the Conservatives! :cool:

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  23. Couchpotatoe (35 comments) says:

    Boldly stated policy safe in the knowledge that it will never be enacted..

    Are these clown ever going to get over 1% polling?

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