Speech by Don Brash
National Party Spokesman on Finance

A Nation in Peril

An address to the ACT Upper South Regional Conference
Christchurch, 27 September 2003

Mr Chairman, Ladies and gentlemen,

I'm delighted to be the second National MP this year to address a major ACT conference, and I greatly appreciate your invitation.

Today I am speaking to you as a member of the National Party of course, but first and foremost I am speaking to you as a New Zealander, passionate about our country but desperately concerned about where we are heading.

Many of us here today see National and ACT as natural coalition parties, along with others who broadly agree on the fundamental issues facing our country, and the need to address them - urgently.

At the least, we agree that the Labour/Anderton Coalition is destroying the New Zealand that has been, and - more importantly - the New Zealand that could be.

And I use the word "destroying" without any qualification. We are a nation in peril. The destruction of our country is something that is happening progressively: it does not happen overnight. But it is happening, and any complacency about it - encouraged by the Government's shameful spin - makes it worse, and makes it more difficult to address.

We need to send a wake-up call to a smug, complacent Government and its smug, complacent allies.

As New Zealanders, there are certain expectations that we share, and which, in many ways, define us as a nation.

With the World Cup beginning in just two weeks, perhaps the first of those expectations worth mentioning is that we expect the All Blacks to win every match they play!

As New Zealanders, we expect foreign visitors to be stunned by the natural beauty of our country.

More importantly - and with the exception of some of the more famous South Island trails - we expect that we will be able to enjoy our pristine natural environment free of charge: our mountains, our rivers and of course our beaches.

As New Zealanders, we expect that, when we are in need, there will be both state and voluntary-sector safety nets, to give us a helping hand..

We expect that, when there is a new advance anywhere in the world in medical technology or pharmacology, we will have access to it here in New Zealand.

We expect the health status of our kids - and, indeed, of all of us - to be right up there with the best in the world.

We expect our kids to have teachers and school resources as good as anywhere in the world.

In tertiary education, we may not expect a university degree from one of our universities to have quite the same prestige as one from Oxford, Cambridge, Harvard or Chicago, but we certainly expect it to be as well-regarded as one from Sydney or Melbourne.

And we certainly expect that our young people will be able to take up those additional opportunities that the world has to offer - whether it is being able to afford our brightest and best to study at one of those top universities, or to go on the same sort of overseas adventures that people from other developed countries enjoy.

In essence, we expect that our economy will deliver to us a living standard that is as good as or better than that to be found anywhere in Australia, or the United States, or Europe, or Canada, or Japan or Singapore.

Economically, we expect to be in that club.

We expect that our young people are entitled to the same hopes and aspirations - the same expectations - as people growing up in those other countries.

When we talk about economics, I think it is important that everybody understands that economics is simply shorthand for those hopes, those aspirations, those expectations.

And this is why I say that the Labour Government is destroying the New Zealand that was, and - more importantly - the New Zealand that could be.

Because if, as a nation, we are defined by our expectations, then our nation is being destroyed.

None of the expectations I have mentioned is remotely possible if the gap between our living standards and those in other developed countries continues to grow.

Fifty years ago, New Zealanders enjoyed a living standard not too dissimilar from that enjoyed by Americans, and somewhat higher than that enjoyed by Australians.

That meant that my generation - and Helen Clark's generation - were able to enjoy the same opportunities, the same experiences and the same goods and services as those enjoyed by the Americans and Australians who grew up at the same time.

It simply isn't true any longer.

Today, we enjoy a living standard only three quarters that of Australians, and little more than half that of Americans.

For every opportunity a New Zealand family has, the average American family has double it.

We see this around us already.

In recent decades, we have propped up our living standard by borrowing from foreign savers, to the point where we have become - by a substantial margin - the most heavily indebted developed country on the face of the planet.

Despite that, we have a health system which, in the opinion of our leading cancer specialists, is more akin to a Third World system than that of a developed country.

We have an education system which leaves substantial numbers of people - children and adults - almost totally illiterate and innumerate.

Our tertiary institutions are gasping for help, squeezed between limited government funding and the extraordinary Soviet-style price controls that Steve Maharey imposes upon them - for perceived short-term political gain.

And it is not just core health and education services which are failing.

We have, in this country, 350,000 working-age adults and their children - in total, equal to the population of Christchurch and Dunedin combined - out of work, on welfare, and seemingly condemned to a life of dependency.

We have a continuing exodus out of this country of our brightest and best, and also of people who simply think they'll have better opportunities elsewhere.

Every single year since 1979, more New Zealanders have left New Zealand than have returned.

Over that period - less than 25 years - there has been a net outflow of over half a million New Zealanders.

And, even with the threat of terrorism and a slow global economy, that net outflow has continued in the last two years.

These are the more obvious things stemming from the gradually widening gap between our living standards and those of other developed countries.

But the effects of our slow relative decline impact on what many might see as less related issues.

Take the racial tension that seems to be growing in New Zealand.

Do we really believe that Maori, Pakeha and other New Zealanders would be so focussed on racial issues, or on immigration, if our relative living standards hadn't fallen so sharply over the last generation?

If we had more successful, thriving, Maori businesses - like some of Ngai Tahu's tourism, fishing and farming interests here in the South Island - do we really believe we would have the same fierce debate over the seabed and foreshore - over customary rights many had assumed to be extinguished - let alone over more obscure Treaty claims?

If we had more internationally-successful, thriving Maori people, would we really have such fierce argument over the $1 billion for Treaty settlements which, in the context of the overall size of our economy, is almost irrelevant - about what we spend on social welfare benefits and New Zealand Superannuation every month?

The issues would still exist, but if New Zealand had performed better economically over the last generation, I believe we would see Treaty settlements - for example - as being important steps in accepting our history, restoring property rights, and moving forward to take up opportunities together, rather than something to fight over ad infinitum.

Whatever your interest is - whether ensuring we have a business environment conducive to international success, with well-educated, internationally-valuable people keen to live here; or addressing race relations; or ensuring our national parks are well conserved, with pests eradicated and tracks and huts properly maintained; or ensuring our arts scene can attract the world's best; or even just ensuring that our best young rugby players can be kept in New Zealand for the 2007 World Cup - our economic performance is acting as a brake.

And we have a Government that is doing absolutely nothing about it, and is indeed making things worse at every turn.

There was a time when the Government did claim to be interested in addressing these issues.

There was a time when it promised to get New Zealand back into the top half of the developed nations' club within 10 years.

To do that, our living standards would have to rise at a faster rate than those in Australia, the US, Canada, Europe, Singapore and other developed nations.

And in the 1990s, we did lift our growth rate, to the point where living standards were improving by an average of over 2% annually - a huge improvement on the '70s and '80s, when living standards crept up at not much more than ½% annually.

It was progress. Our growth was right up there with many of the other developed countries.

But having a similar growth rate is not enough for us, given our poor performance for so long.

To achieve the Government's top half of the developed world promise, we need faster growth than our peers, and that for a considerable period.

And the reason the Government has dropped its promise in recent months is because - right now - there's not a snowball's chance of getting back into the top half of the developed world, within 10 years, or 20 years, or even 30 years.

I repeat: with current policies, there is no hope at all of achieving the Government's promise in this generation or the next. None at all. And Helen Clark and Michael Cullen know it. That's why they dropped the promise.

Almost everything the Government does creates barriers to raising living standards.

They have raised existing taxes, and introduced more weird and wonderful new taxes.

They have done nothing to fix the Resource Management Act, which makes it so cumbersome to do anything at all in New Zealand.

And, can you believe, they've raised compliance costs on 98% of businesses over the last 12 months. The biggest single issue that every politician hears about every day: compliance costs. And they've raised them!

They have operated a deliberately anti-American foreign policy, which - after this month's failure of trade talks in Cancun and New Zealand being the only country in the Cairns Group not on the US's list for a Free Trade Agreement - means New Zealand is being cast utterly adrift in the world economy.

The Government has signed up to the Kyoto Protocol, ahead of most of our trading partners, and introduced the ridiculous flatulence tax. There is no reason at all to do this, except to make Helen Clark look good at Scandinavian conferences.

And now they want to change employment law and holidays legislation - which are already far from optimal - to make life even more difficult for the wealth-creating members of our society. Quite deliberately and knowingly, the Government is going to make it less likely businesspeople will employ more staff.

The cumulative effect of all this is that, according to the Treasury, the fastest growth we will experience in the decade starting in April 2002 was the growth in that first year, to March 2003. In other words, we've already had the best economic performance that we'll experience this decade. It gets worse from here on.

That inevitably means a continued widening of the gap in the opportunities available to young New Zealanders as compared to those available to young Australians, young Americans, young Europeans, young Canadians and young Singaporeans.

If that's the best we can do, more and more of our bright, successful, young New Zealanders will want to leave, and increasingly, and in fairness to them, we won't have good arguments why they shouldn't.

If that's the best we can do, we will have to accept that our schools, hospitals and universities will not have the same resources as schools, hospitals and universities in other developed countries.

If that's the best we can do, we will find growing inequality in New Zealand. We will always have to have some internationally-qualified, internationally-valuable, people in New Zealand, and we have to pay them internationally-attractive rates. They'll educate their kids privately, or overseas. They'll have health insurance. And, relatively speaking, they will take a greater and greater proportion of our slowly growing national income from those with fewer internationally-marketable skills.

Land in places like Queenstown, for example, or the most beautiful parts of the Marlborough Sounds, will become out of reach of New Zealanders. Those areas will ultimately be almost entirely foreign owned. New Zealanders will holiday in less desirable parts of the country.

Race relations will deteriorate further.

Our ability to tackle the problems of our growing underclass will be further undermined.

I am not even going to mention our ability to pay adequate superannuation to a growing elderly population.

This is the path we are on. This is the path the Government has put us on. We are a nation in peril. The expectations that define us as a nation are being eroded.

Today, I am speaking to the converted.

It is very clear that the country we are becoming is not the country we want. But, more importantly, it is not the country that those who currently put their faith in Helen Clark want either.

Our challenge is to stop speaking to the converted, and attract some new converts.

We have to start by accepting the fact that we have both been spectacularly unsuccessful, politically, in recent years.

Between us, we have, today, the public support of barely one-third of the adult population.

That is down from the almost 50% National alone enjoyed in 1995, despite all the upheavals of the early part of that decade.

Why?

I don't think that our philosophy has been inherently unattractive to the electorate.

In their heart of hearts, most New Zealanders agree with our principles, both because of what those principles deliver in terms of economic and social benefits and because, as a nation, we value freedom and choice.

New Zealanders don't like the PC, we-know-best, arrogant, bullying attitudes of the Government, and our self-proclaimed popular and competent Prime Minister.

But, despite the Prime Minister's hubris - hubris which has the potential to bring down her Government - New Zealanders haven't yet placed their confidence in us so that it will happen.

The reason for that - as I've said - is not so much unpopular policy, but poor politics and poor communication; an inability on the part of both parties to inspire the sort of excitement New Zealanders are looking for.

To do better, we who share broadly similar philosophies need to provide that inspiration, and we need to be united in our determination to bring down the Government.

It is increasingly clear that if New Zealand is to have a Government that understands the peril our nation faces, and has plans to address it, a constructive working relationship between National and ACT will need to be at its core.

Even getting to the point where we could form such a Government after the election will require a constructive working relationship between our two parties - and perhaps others - prior to the election.

It is beginning to happen.

We are already working together more effectively in Parliament, to hold the Government to account.

The Government really is under pressure for the first time in a considerable period. It is only a subtle effect, but their morale takes a hit every Question Time, and it is corrosive.

Key National and ACT spokespeople are talking, and working well together on a variety of initiatives.

The presidents and leaders of our two parties have met over dinner.

All this contact is an important start towards ensuring that our policies, while different and distinct in some respects, are broadly complementary, and that our political strategies are compatible.

For both parties, political strategy has to have one objective: getting the party list votes; getting people who voted Labour in 1999 and 2002 to vote for one or the other of us next time.

That party list vote is all that counts, and we in National made the mistake of forgetting that last year.

What needs to guide us, as our relationship develops, is identifying areas and issues on which we can cooperate, not just for the sake of our respective parties, but for the good of New Zealand.

We need to communicate the fact that we are able to cooperate and, indeed, to work with other centre-right parties also as appropriate.

It would be grossly irresponsible to go into the next election with the public having no clear idea of what the alternative to the Labour/Anderton/Green crowd might be.

I have not the slightest doubt that we can form a stable Government.

At our constitutional conference earlier this year, the National Party membership re-affirmed its commitment to values which, though different from those of ACT in some respects, are quite compatible with yours.

We both believe in lower taxes, limited government, personal responsibility and an open and competitive economy.

We both believe that, fundamental to a free and democratic society, is the promotion of property ownership and the protection of property rights.

We both believe in the rule of law, and equality before it for everybody, regardless of race or creed.

We both believe that government should help those who genuinely need help, but that our current social welfare system is failing both beneficiaries and our wider society.

We both recognise that New Zealand today has no international allies and that, even as we develop closer relationships in the Asia-Pacific region, restoring our relationship with traditional allies - Australia, the United States and the United Kingdom - is vitally important both to our long-term security and to our economic prospects.

We both believe that one of the most fundamental responsibilities of the state is to protect people and property from criminals.

We both believe that too many more years of creating barriers to growth, of treating those who create wealth with contempt, of encouraging dependency, of antagonising our traditional allies, and of encouraging Maori New Zealanders to believe in the myth that their future depends on special treatment under the law - too many more years of this dangerous nonsense will destroy New Zealand as a place worth living in, the New Zealand that could be, and the New Zealand that we expect.

That degree of commonality surely creates a sound and stable basis for a centre-right coalition.

What is needed now, from both our parties, is leadership and vision to make this potential partnership a reality, and from there to build our support to save New Zealand from the peril it faces.

I have no doubt that both parties can rise to the challenge. New Zealand's future depends on our doing so.

ENDS

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