Guest Post: ACT’s Alternative Budget
A guest post by ACT Leader David Seymour:
This Budget week, we face a stark choice in how we respond to the economic fallout of Covid-19. There are two basic strategies.
The first involves the Government taking on significantly more debt, running the rebuild from inside the Beehive, and raising taxes to pay for it all. This approach nearly bankrupted us in the 1980s.
On the second path, we harness the energy of businesses, workers, innovators and investors with lower taxes and less red tape. The result is higher growth and wages and lower unemployment and debt.
Earlier this week, ACT released an Alternative Budget showing how we can unleash New Zealand’s potential and come out of Covid-19 as a richer country.
Our first priority is getting New Zealanders back to work. Businesses are hurting and will be cautious about entering new employment relationships. We would remove barriers to hiring by allowing businesses to employ workers on 12-month trial periods, returning the minimum wage to its 2019 level, and placing a three-year moratorium on minimum wage increases.
Second, we would refocus government on its core job of protecting New Zealanders. For years, politicians spent billions on buying votes while at the same time leaving us unprepared for a pandemic.
Our Budget reduces spending on corporate and middle-class welfare. We can no longer justify nice-to-have spending that was affordable in good economic times. It is irresponsible to further indebt future generations without asking what savings we can make today.
We would invest $816 million over the next three years in fighting the next pandemic with stronger border measures, better research, and more protective personal equipment.
ACT would restart the economy, not with low-value handouts and Phil Twyford-run public works, but by cutting taxes and red tape.
Our Budget temporarily cuts GST to 10 percent until June 2021 to spur consumption. We permanently cut the 30 percent individual tax rate to 17.5 percent, delivering a $1,300 tax cut to workers on the median wage, and encouraging New Zealanders back to work.
These fiscal changes would get us back to surplus by 2024. We would take on $13 billion less debt that the Government.
ACT also proposes an ambitious programme of pro-growth reforms by cutting red tape in housing, primary industries, energy, transport and infrastructure, and overseas investment.
We would create a construction boom and reduce housing costs by replacing the Resource Management Act and amending the Building Act.
ACT proposes to replace the Zero Carbon Act with a simpler, cheaper alternative that ties our emissions price to the efforts of our trading partners, and we would repeal the bans on offshore oil and gas exploration and genetic engineering.
We would replace fuel taxes with smart road pricing and take infrastructure decisions away from politicians and give them to a new, independent Infrastructure Corporation.
We would also remove barriers to investment from friendly OECD countries to boost productivity, wages and jobs.
And that’s just the start.
New Zealand can respond to the current crisis, as we did in the 1970s, with protectionism and bigger government – that is, more debt, higher taxes, politicians picking winners with taxpayer money, and more barriers to employment, trade and investment.
This would mask the economic pain temporarily, but it will leave us behind in the global economic recovery. Fortress New Zealand took us from being the third richest country in the world to 21st. Think Big proved to be an economic and financial disaster.
Instead, we can unleash New Zealand’s potential with lower taxes and regulatory barriers. We can have a job-rich economic boom in the wake of Covid-19 for the benefit of the next generation.
Government can create the environment for growth, but it must be the innovators, investors, businesses and workers who drive our response through a bottom-up recovery. History shows that an economic recovery is much stronger when it is led by people on the ground, rather than politicians and bureaucrats.
We need to put our trust in the people. Our economic recovery will come not from the Beehive, but through millions of New Zealanders making a difference in their own lives.