Michael Cullen: Not a Safe Pair of Hands

Monday 22 Jul 2002

Rodney Hide: Speech to Auckland East Rotary, Tamaki Yacht Club, Auckland

Speech 5:30 pm.

The polls are pointing to a nightmare scenario: Michael Cullen atop the economy propped up by the fundamentalist Greens and the ever-erratic Winston Peters.

Business confidence is down, interest rates are up, the economic outlook is bleak and Wall Street has taken a dive.

New Zealand could be in for a rough ride economically.

Michael Cullen is not a safe pair of hands, especially if he has to secure the support of the Greens and Winston Peters.

Michael Cullen is a "tax-and-spend, lets-have-a-little-inflation" politician. He's upped taxes as Finance Minister. He's upped government spending. A dozen Maori protestors threaten to walk to Parliament and Michael Cullen is panicked to reply with a cash hand-out.

Michael Cullen rejects all advice and analysis. He steadfastly believes that the level of tax has no effect on growth and has even perversely suggested that higher taxes produce higher growth rates. Michael Cullen is completely swimming against the tide on this one.

Michael Cullen's answer to our dismal growth is to go soft on inflation. He thinks that by printing money we can all get richer. The policy is daft. It has never worked. And Michael Cullen has damaged his own credibility and our nation's by even suggesting it.

The independent review of monetary policy that Michael Cullen commissioned from Swedish economist Lars Svensson specifically considered Cullen's proposals to go soft on inflation and roundly rejected them. That's part of the problem. Cullen thinks he always knows best and so fires a half-baked proposal to go soft on inflation in the middle of a snap election.

After two years of "hard" Labour the average worker's hourly earnings is up only 0.1 percent in real terms. This is because inflation under Labour has been nudging three percent. It's pathetic. National achieved a real increase in hourly earnings of six percent.

Workers don't feel any better off under Labour and Jim Anderton -- because they aren't. The apathy among traditional Labour voters is considerable and their failure to vote will have a significant effect on the election night outcome.

Michael Cullen has no intuitive grasp of business or of the economy. Both are a mystery to him. He thinks he understands both, which makes him incapable of listening or learning. He is an academic, an historian, a politician and a socialist. He has no grasp or experience of the business world where growth is powered and wealth is created.

His are not a safe pair of hands in times of a down turn (which we have) or a crisis (which we may face). Michael Cullen can be relied on to take the wrong decision every time as he has already shown.

Propped up by the Greens and Winston Peters, he would prove a disaster. The Greens don't want growth. I am confident that if they are ever in power they will get their wish. Winston Peters only wants Winston. He has failed to do anything positive for the economy despite his long time in politics. His entire career has been Winston First, politics second and the economy a distant . . . . well, he does mention it in his speeches.

New Zealand is a great country, with great people and great potential. We have been frittering away our economic chances. Our economic outlook at best is to splutter along at two percent a year. We need four percent plus.

We need to recognise first and foremost the importance of growth. It will be our level of prosperity that will determine how well we care for the sick and our elderly, and how well we educate our children. We must be prosperous to have thriving arts and culture. The success of our sports teams will depend on how well we do economically.

We need to recognise that wealth is generated by private entrepreneurs, not committees, not government departments.

We need to recognise that our government is imposing a huge deadweight upon business in New Zealand through hefty taxes and unbelievable red-tape.

We need to recognise that the only way we can achieve four plus percent economic growth is by reducing compliance costs and taxes.

The ACT party believes in limited government. We believe in a government that takes its key functions seriously and does them well - the functions such as law and order, defence, and the building of infrastructure like roads.

We do not believe that government should attempt everything and do everything poorly, as our government does at present. Government should not be involved in business decisions. It should not be trying to run an airline and a bank. It should not be taxing businesses hard to turn some back as handouts to those businesses that are favoured and can be bothered with the paper work.

ACT believes that the rights of private property owners should be upheld and private contracts protected. In that one phrase, much of the regulatory burden placed upon business is sent up in smoke.

The ACT party has shown that we can go immediately to a business rate of tax of 28 cents, and a top rate of tax of 28 cents. We have shown too that we can take the middle rate of tax down to 18 cents. We can and we should. That would deliver a tax cut for every worker and put our company tax rate below that of Australia's.

We need to do that -- and more. We need a bonfire of regulations. We need to reign in government spending. We need to be looking five and ten years ahead - looking to achieve a flat rate of tax of eighteen cents in the dollar.

We can and we should do so much better. Whether we do or not is in the voters' hands this Saturday. Tax cuts or tax hikes? More red tape or less? Richer or poorer? It's always a big decision when people go to the polls. It's another big decision this Saturday.

Thank you.

ENDS

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