Economics and Freedom: Why New Zealand is on the Wrong Path

Speech to ACT New Zealand Regional Conference, Christchurch: Delivered 10am

Thank you very much for having me along and thank you so much for coming out today to the ACT New Zealand Regional Conference.

I want to thank you too for all the hard work that you put in at the election, because I believe the result that ACT got was a fantastic result and it was the efforts of the members that delivered that result You should be very proud of your achievement in maintaining ACT's presence in Parliament.

But there is another thing that you should be proud of and that's the members of Parliament that you have elected. It must be a terrible thing for a United Party worker to see what they have got - or for a New Zealand First Party worker to see what they didn't get, given that their MPs are not allowed to speak.

And then you see the ACT parliamentary team walk into Parliament and it makes you very proud of your Party because you have elected a very fine bunch of MPs and everyone recognises that.

It's a huge achievement, and what does it mean? Well it means that we have a Liberal Party with a beachhead in Parliament and that is no mean feat given contemporary politics.

And we should also acknowledge the Party President who has done so well to keep us MPs and our Party focussed on what it is we stand for.

The easiest thing in the world is to become a political party that just chases votes and power. The hardest thing is to be a party in Parliament keeping yourself grounded in your philosophy and what you stand for. We can see how hard it is because we only need to look at every other political party in New Zealand to realise that they are philosophically bereft.

And what actually is this liberal vision? Well, it's what we want for New Zealand. That's why we are here today. We want a New Zealand that is proud, we want a New Zealand that is prosperous and we want a New Zealand that is free. And we look at the current direction of our country and we say we are losing it. How can we be a proud people when so many of us are dependent upon the state? How can we be a prosperous nation if our Government is sucking up 40 percent or more of all that we produce and driving out the very entrepreneur spirit that we need to produce more wealth? And how can we be free if a taniwha down the road can stop us using our land and our resources as we choose?

My particular focus is upon the economy. And in the liberal conception of the economy, we're for a free market, we're for an open market, we're for competition. We are for fiscal discipline, understanding that each dollar Government spends is first taken off a citizen through tax or some other means. We are in favour of, and this is an important phrase, "Good Government". We are not anti-Government - we're opposed to big Government, we're opposed to wasteful Government, we're opposed to useless Government - but we are in favour of Good Government. And the definition of Good Government is a Government doing a limited number of tasks well. And I say what we have now in New Zealand is big Government doing a multiplicity of tasks, all poorly. That's not the liberal vision of Government.

And we are also interested in the sharp distinction between the Government and business. We like a strong line between the two.

All these things with Labour have been fudged, and the direction has changed. After the reforms of Roger Douglas and Richard Prebble, Lange took his cup of tea, we then had another period of reform with Ruth Richardson, and then Jim Bolger and Bill Birch took another cup of tea, and it just stopped. And New Zealand is sitting there, like on a bicycle, but not pedalling, trying to balance and maintain our economy.

And now we have had a left wing Government since 1999 and the trend has been backwards. I don't see it as a sharp swing to the left. I view it as serious slippage and it's important to see why. We've had some great successes that we should recognise and celebrate. Number one - the Reserve Bank Act, Number two - the Fiscal Responsibility Act. Every day in Parliament I feel like getting down on my knees and blessing Ruth Richardson for the Fiscal Responsibility Act because we know that Jim Anderton, Michael Cullen, Helen Clark would like nothing better than to spend more on their pet projects and throw more taxpayers' money at every social ill. That's their route to power. But they are boxed in with the Reserve Bank Act and they're boxed in with the Fiscal Responsibility Act and thank heaven for that.

Think about this concept of the free economy and what the Government has done. Remember ACC, opened up to competition? And why is competition important? Because it allows entrepreneurs to come in. Anyone could come in to compete, and the result was dramatic. A two hundred million dollar drop-off in premiums for a year. Goodness me, the number of workplace accidents fell, and even someone like me that adores and loves freedom, was surprised at that result. Because everyone had an incentive to reduce the number of accidents for a change. The time in which workers were getting back to work was radically shortened. Ninety percent of workplaces went over to the private sector leaving the Government with just ten percent of the business. So what does the Labour Government do? Shut it down, renationalise and re-monopolise that market and so we are back to all the poor results.

Fiscal discipline. This Government's first move was to put up taxes. They didn't actually need the money, they didn't want the money, it was symbolic to their voters. Thirty-three cents to thirty-nine cents. But it makes a difference to those who now have to pay it. And it was symbolic too because it sent a sharp message to investors about the new Government's economic direction.

And here is another one. We are on the edge of a huge fiscal problem called superannuation and health care for the elderly. We have 450,000 people over 65 years now. The number is going to go to 1.2 million in thirty years. It is going to more than double. The previous administration had dropped the pension down from 65 percent to 60 percent of the average wage. So Labour put the pension back up to 65 percent. That was fiscally irresponsible. There is no way that can be sustained.

And then they do the great trick of politicians. They say "Don't worry, I'm going to set this Fund up and this Fund will pay for it". Hang on, how does that work exactly? Well remember, Michael Cullen says we can't afford ACT's tax cuts, can't do this, can't have that, ACT's policies don't add up. Well, suddenly he has got two thousand million dollars a year which he is going to put aside each year into a Fund. He is going to put it in there for something like twenty-five years, a total of sixty five thousand million. Sixty five thousand million dollars. It is going to gather interest hopefully and then he is going to pay it out. And its supposed to be a wonderful thing, because it means that we care for our elderly into the future and everyone says "Thank God because isn't it awful when you have to worry about the future and isn't it great that Michael Cullen's got this Fund and that we will all be looked after".

Well, I am sorry, it doesn't work like that. All we are getting back is the money we put in plus interest. There's not one extra job created, there's not one extra dollar of output created, there's not one extra dollar of tax revenue created. All it does is shift the cost forward. That's all. It's all mirrors and smoke. The Fund does not reduce the cost of pensions one iota. It does nothing to help with the problem. But what does Michael Cullen care? We know that even in his wildest dreams Michael Cullen knows he is not going to be Minister of Finance for ever and it's not his problem.

But it is every New Zealander's problem. Because we are in for another thirty years of politicians' lies, another thirty years of our elderly feeling upset and another thirty years of working, not certain what the future will be.

The costs of super are going to more than double. But that sixty-five thousand million dollars represents only ten percent of the future cost of pensions. So picture it now, a huge Fund run by the State, deforming New Zealand's capital market, but it is actually only shifting 10 percent of the cost, when the cost is going to more than double. It is fiscally irresponsible.

And think of Good Government. I actually quite like listening to our national orchestra. But it is not the first priority of the taxpayer's dollar. The first priority is defence. It is having the people safe in the street - providing for safety at home, providing for safety at work and providing for international security. That is the number one role of any Government. And Helen Clark's got all the money for this, that and the other in the world, but not for the Police, not for the Defence Forces. It's hard to believe that a Prime Minister of New Zealand could so casually disband the air combat wing. I am afraid that we are going to pay for the rundown of our military in the lives of our young men and women, because politicians will be committing our Forces in the future - that is one thing we can be sure about, and they'll be going off ill-trained, ill-equipped and inexperienced with our traditional allies.

Helen Clark said we couldn't afford it. Helen Clark says the Government saved $85 million dollars a year by getting rid of the combat air wing. Well, I'm prepared to pay my share of that as a citizen, indeed, more than that. Rather that than the Kiwibank. And then Air New Zealand gets into trouble and Helen Clark says "Life without Air New Zealand is unthinkable" and writes a cheque on your behalf for $800m. Well, I would rather have Qantas flying here in New Zealand and the combat air wing defending us. Because it is not Government's role to run an airline, but it is Government's role to run a proper Defence Force.

Helen Clark believes we live in a benign security environment. She then sends Te Kaha to the Gulf. Prime Minister, the Persian Gulf is not a benign environment. We are sending our young people into harm's way. They are vulnerable because our defence equipment policy has been based on a lack of threat in our region. Our Orions are ill-equipped because there are no submarines in New Zealand waters. What about the Gulf?

Helen Clark can't have it both ways. She can't say we live in a benign environment and therefore neglect maintaining our military capability, and then in the next breath try and achieve international brownie points by deploying a frigate to the Persian Gulf. Of course we should be side by side with our American and Australian allies but we should make sure that our servicemen and women are adequately equipped, trained, and supported. Helen Clark has failed them.

What are Helen Clark's priorities exactly? It seems to be to follow what the polls say, rather than looking hard at what Government can and can't do and saying "This is our priority, this is the first call for the taxpayer's dollar and these things, well, they might be quite nice if we could afford them, but they are not the number one call".

And here is another thing: the blurring of the distinction between what is Government and what is business because in the socialist scheme of things, the Government is everything. It is the totality of society, and so Helen Clark sees no distinction between the private realm and the public realm. And so we have the amazing experience of $75,000 of taxpayers' money going to The Warehouse, which I think is a great company. In fact recently I wrote a letter to Stephen Tindall and said, I am looking forward to your post-Christmas sales already, with eager anticipation. So why did we taxpayers have to give $75,000 to The Warehouse?

Why are we expecting hard working New Zealand families to pay their taxes to get second rate services so a retail outlet that turns-over $1.4b a year can have an extra $75,000? The Government quickly came back and said, "Oh, it's not actually for the Warehouse. Yeah, we gave it to The Warehouse, but they would give it to twelve of their suppliers." Well, I said to Steve Tindall on radio, "who are these suppliers?" He said "I'm not prepared to name them". Well, I said "why is that", he said "oh, well all the adverse publicity". Well, hang on, that's your money. So I said "You're quite prepared for the taxpayers to cough the money up but not to tell us where it is going, so you're some sort of department of Government now, deciding on where the money will go?"

It turns out that the grant has been granted but it is still not decided which of the twelve suppliers The Warehouse will pass the grant to. They have the grant. They just haven't decided who will get it.

One last comment on that. Jim Anderton was the best. He said, "this is a great programme, Mr Hide is anti-business, he won't get alongside and support business and this is a fantastic programme because we're going to invest $75,000 in taxpayers' money, $75,000 of the Warehouse money, into these twelve companies and each year as a consequence they will save $350,000 a year. Each and every year".

So I've offered Stephen Tindall a cheque for $100, saying please, please, if you can get 233 percent on your money, can you take some of mine and invest it. And heaven knows, given that he feels that he can't put his own money in, what other projects he is investing in - because that is a fantastic return.

In fact, Serious Fraud Office boss Mr David Bradshaw has warned investors off schemes touted giving those sorts of fantastic returns. A warning Jim Anderton clearly never heard.

So here is the situation for New Zealand and for the ACT party. We have a left wing Government too scared to implement its full programme and now bereft of ideas. Helen Clark could not put a programme together for the election. There was no manifesto; she has no mandate for what she is going to do for the next three years because she hasn't told anyone. And in politics, its funny isn't it, because inertia gathers its own momentum. So what we have now is a left wing Government not doing anything, rather than the National Government not doing anything. It just took the lefties less time to run out of ideas.

We have over here the National party, and I don't think they're bereft of ideas, I think they're chock a block of ideas, they just don't believe any of them, if you follow me. So, you know, you talk to them and you say, how do you feel about private property? "Ooh, good, good, yes". But you've actually got to stand up for it, don't you? How do you feel about taxing less? "Yes, yes, good, good, good". But you've actually got to do it, don't you? And so they're not bereft of ideas, they just don't believe in them.

And here you have the ACT party with the ideas of a long tradition, a leadership that believes in them and a caucus that can deliver on them.

Now, I want to point out what our role is. The reason we are here on this sunny Sunday is not because we just like votes. If you want votes - Winston Peters, he's got better hair than me, whiter teeth, a more winning smile.

We want something more than that because we want to win the hearts and minds of New Zealanders for the vision of what our country can be. Because just winning votes is not enough in order to achieve what we want to achieve for our country. And always remember that when you are out campaigning, votes are nice, but hearts and minds are better.

We don't want people just to support the ACT party; we want people to support the classical liberal vision of what New Zealand can become. And ladies and gentlemen, we don't want to just win Government; we want to fundamentally change the direction of New Zealand. We want to put it onto a path where we are prouder people, where we are a more prosperous people.

And the way to do that ladies and gentlemen is to be a freer people.

And I believe that we are winning, because overwhelmingly when I look at history and the experience of countries around the world the thing that always amazes me is the power of ideas. Ideas win. And our party is the party of ideas. Not ideas just dreamed up after a Helen Clark focus group but ideas that have been rooted in philosophy and economics and politics for hundreds of years.

And I look at the caucus, and I haven't told them this, but I look at our caucus marching into Parliament and I am lucky because I am there and my heart beats with pride when I see them and I think what a great crew. I look around that motley collection of the other parties in Parliament and then in walk Heather Roy and Deborah Coddington, so happy and proud of their ideas, not once do they waiver, not once do they falter, and they win. Because of the power of good ideas.

And every now and then ladies and gentlemen, our caucus and our MPs are in the pot getting boiled - and they keep at it ladies and gentlemen - and you should be so proud, and they certainly deserve your support.

Thank you very much.

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