Speech by ACT Leader Don Brash
ACT Wellington Campaign Close
Thursday, November 24 2011

Good afternoon. 

Lewis Carroll once said,

‘If you don’t know where you’re going, any road will get you there'.

The question of where we need to go as a country is very much one of what you believe the most urgent problems are. 

Some will say that our most urgent problems are dirty rivers, child poverty, and the possibility of some power companies being sold.

The first two of those are certainly important.  But I’ve argued, and will continue to argue, that our economic decline is equally important, and much more urgent.

The reason is, looking after the environment and our most vulnerable citizens takes money.  The wealthier we are, the better we can do so. 

Our most urgent priority should be to retain and attract people and investment.  If we fail at that challenge, then a lack of money will ensure that we cannot solve the problems other parties identify either.

As I will argue in a moment, the most important question that we need to answer is whether or not what we’re doing to close the gap between our incomes and those in Australia is working.

But if we don’t know how we’re doing, any approach will seem to work.

Anyone who doubts the urgency of lifting our economic performance should consider how our competition with Australia for people, investment, and jobs is playing out.

As reported by the 2025 Taskforce two years ago, Australians were earning 35 per cent more on average than we were in 2008.  That was the best calculation possible taking into account differences in currency and the cost of living. 

The New Zealand Herald recently reported that the gap between workers in Auckland and Sydney was 38 per cent.  Based on Australia’s faster economic growth in the past three years, we can guess that the gap is now approaching 40 per cent.

For decades, there has been a strong relationship between the exodus of New Zealanders across the Tasman and the gap between New Zealand and Australian incomes. 

When the gap grows, New Zealanders leave faster.

Statistics New Zealand reports that the net loss of New Zealanders across the ditch was nearly 300,000 in the past decade.  On our current path, we can expect to lose a further 400,000 New Zealanders - equivalent to the entire population of the greater Wellington region - by 2025.

The exodus is pernicious because it creates a cumulative effect. 

Every time a New Zealander leaves, they take with them hundreds of thousands of dollars’ worth of healthcare and education that taxpayers have invested in them.  They also take with them their future potential as wealth creators and taxpayers.

The incentive for still more people to leave increases, and we find ourselves in a downward spiral.

If we keep allowing this to happen, we will be facing a total collapse of New Zealand as we currently conceive it.

But our economic performance isn’t like bad weather.  We do have the power to change it if we make the right policy choices.

Over the past three years, no party has had a better record than ACT in pushing the economic growth agenda.  This is what we achieved:  

First, we helped to change the government and make John Key Prime Minster.

Had ACT not contested the last election, some of ACT’s voters would likely have voted National.  But given the electorates’ allergy to single party government under MMP, it seems unlikely that National would have governed alone.

Would the Maori Party have made John Key Prime Minister anyway?  The simple answer is no.

Without ACT, Helen Clark would still be Prime Minister today. 

Without ACT this time, it’s quite possible that Phil Goff will be Prime Minister by Sunday, supported by a coalition of borrowers, spenders and no-hopers who will accelerate our economic decline.

ACT not only helped make John Key Prime Minister in 2008, but were responsible for achieving many of the important policies to improve our economic performance passed by the Government since then.  

ACT pushed for long over-due reform of the Local Government Act, improving the transparency and efficiency of councils for ratepayers.

ACT convinced the Government to extend the 90-day trial period for new employees from firms employing fewer than 20 people only, to all firms, increasing employment opportunities for people who might not otherwise have been hired.

ACT convinced the Government to start work on opening up the ACC to competition, giving employers more flexibility, choice, and reward for safer practices.

ACT supported the Government to reform the Resource Management Act, leading to improvements in compliance costs for developing and using New Zealand’s greatest resource, its land.

ACT had the Productivity Commission established so that, like Australia, New Zealand will have a government agency that actually advocates for the wealth creators in the country rather than the government sector and its direct beneficiaries.

ACT also pushed for the establishment of a new Ministerial position, Minister for Regulatory Reform, and in that role Rodney Hide was responsible for taking the secateurs to red tape for the benefit of New Zealand business.

In addition to these positive initiatives, ACT has also been the leading opponent of bad policies, such as the Emissions Trading Scheme and the refusal of the Government to reinstate a youth minimum wage.

There is no doubt that a vote for ACT in 2008 was a vote for steering the Government towards better policies for economic growth.

Unfortunately, this has not been enough to address our economic malaise.

This week, Statistics New Zealand reported a near-record net exodus of 35,000 New Zealanders across the Tasman.  Over the past three years, the net exodus has averaged 25,000 per year, up on the average of 21,000 during Helen Clark’s time in office.

Similarly, the wage gap that was supposed to be closing has been reported as widening.  Over the past three years, the Australian Bureau of Statistics reports Australian wage growth of 12.6 per cent compared to New Zealand wage growth of 11 per cent.

John Key meanwhile claims that New Zealand wages have grown faster because tax cuts leave Kiwi workers with more take-home pay, even as the government borrows $300 million per week to prop up its spending.

New Zealand clearly needs to do more if we’re serious about closing the income gap with Australia.

There’s no doubt in my mind that ACT is by far the most serious and credible party on the question of closing the income gap with Australia.

In my speech at ACT’s campaign launch, I announced a series of priorities that ACT would pursue in any future coalition government. 

ACT would continue to pursue the passage of the Spending Cap Bill.  This bill would constrain government spending to rise no faster than the rate of inflation plus population growth, aside from national emergencies.  It would remove the incentive for the kind of election bribe spending practised by the Clark Government in its last three years, and reduce taxation on wealth creators.

ACT would push the Government to reduce government spending relative to the size of the economy to enable radical tax reduction, and a lower exchange rate.   ACT would push for a radically lower company tax rate of 12.5 per cent, with the top personal rate as low as revenue will allow, perhaps 25 per cent.

ACT would push to sharply reduce bureaucracy, opening up more opportunity for wealth creation by cutting back the kind of bureaucracy that sees councils employing people to enforce such inane regulations as those which stipulate what colour people must paint their homes.

ACT would also push for better quality regulation through our Regulatory Standards Bill.  This Bill sets out principles for responsible regulation that all proposed regulations must be measured against.  Ministers or MPs wishing to pass regulations not up to standard must explain to the public why the regulation should still be passed.  This public accountability would see a reduction in poor-quality regulation that currently costs our country so much. 

ACT would push to axe to the Emissions Trading Scheme, saving $100 per month for the average family of four and sparing a very considerable cost for the most important export sector of all, the farming industry. 

We would seek to stop the carbon price being doubled as is currently scheduled for 2013, have biological emissions written out of the legislation, and ultimately put the scheme on ice until our major trading partners catch up and implement their own equivalent schemes.

ACT would promote a multi-party consensus on superannuation, because almost everybody who thinks seriously about the subject knows that the age of entitlement must rise. 

As I announced yesterday, we would push for a referendum on the age of eligibility as part of any future Confidence and Supply Agreement with the National Party.

But there’s one more elephant in the room that I’ve not mentioned so far.

I started out quoting Lewis Carroll, but I might just as well have quoted the Management 101 mantra,‘what isn’t measured isn’t managed’.

If we wish to be serious as a country about retaining and attracting people and investment by closing the income gap with Australia, then a good starting point is to have agreement about what that gap is.

Keen observers will notice that I’ve quoted several sets of figures regarding the gap. 

I’ve given the 2025 Taskforce’s figure of 35 per cent in 2008.  I’ve given the result of a recent New Zealand Herald study which found it to be 38 per cent.  I’ve given my personal assessment that the gap is probably close to 40 per cent by now. 

The reality is no one knows for sure exactly what the actual figure is. 

Listening to Phil Goff and John Key making claim after counterclaim in the House about the size of the gap is tedious, or at least that’s the most polite way to put it.

The truth is that calculating the gap is not a trivial exercise. 

It requires understanding living costs, tax systems, currency differences, and employment laws, among other things.  Getting a proper reading on the gap is not a matter of simply looking on the websites of Statistics New Zealand and the Australian Bureau of Statistics.

In fact, performing just such an exercise was part of the Confidence and Supply Agreement between ACT and National in 2008. 

The 2025 Taskforce, which I had the privilege of chairing, was designed to measure the income gap with Australia, suggest ways to close it, and report annually on progress in closing it.

John Key’s decision to axe the 2025 Taskforce earlier this year was supposedly because I had decided to seek re-election to Parliament.  But while I was the chair, I was obviously not indispensible.  There was no reason it couldn’t have continued, albeit with someone else at the helm — perhaps David Caygill, already a member of the Taskforce, somebody who is clearly not aligned to either the National or the ACT parties, and somebody eminently well qualified to undertake the task.

It might be that the Prime Minister thought the Taskforce’s recommendations were too extreme.  He’s entitled to that opinion of course, just as he was able to ignore or accept its advice.

But I don’t think that’s what disbanding the Taskforce was about.

Whatever the reason, the most important result is that this election year, the income gap between New Zealand and Australia has not been measured by the Taskforce. 

Without repeating the measure made in 2008, it’s possible for politicians of all stripes to use a variety of figures to muddy the waters on where we’re really headed.

‘If you don’t know where you’re going, any road will take you there’

For this reason, I’m announcing today that one of ACT’s top priorities in any Confidence and Supply Agreement with the National Party will be the reestablishment of an arms’ length taskforce with the mandate of measuring the gap between Australia and New Zealand and reporting on it on a regular basis.

Whether or not government statisticians know there’s a gap, New Zealanders do.

Grandparents who must visit their grandchildren overseas know it.

 Young tertiary graduates who are considering joining the 24 per cent of their friends who currently live overseas know it.

Working people who see dramatically higher wages know it.

Aroha Ireland, the girl whom John Key took to Waitangi in 2008 when he was campaigning on closing the gap and who has just moved to Melbourne, she knows it too.

Perhaps most surprisingly, the 27 per cent of Year Nine students who said they wanted to permanently leave New Zealand know it too.

Why can’t our politicians get the message?

In 2008, 2025 seemed like a time frame by which we could close the gap.  It gave us 17 years to do so.

Given that we have fallen further behind in the past three years, and the Prime Minister does not want to move as fast as the Taskforce proposed previously, it seems we will need more time. 

And so it is with great sadness that I call for a 2030 Taskforce, to measure the gap between New Zealand and Australia, and give suggestions for closing it by 2030.

This Taskforce should publish an independent review of living standards in New Zealand compared to Australia every year.  Only by doing this can the nation keep politicians honestly focused on the urgent challenge of closing the income gap.

 

Only by achieving that can we hope to deal with the problems that other parties identify, by having the resources to better look after our environment and our most vulnerable citizens.

Ladies and gentlemen, the ACT Party is committed to closing the income gap with Australia.  We believe that doing so is essential to stemming the flow of people across the Tasman and is therefore essential to securing New Zealand’s long term future.

If you believe that good economic management requires good economic measurement, and that important challenges don’t go away just because they’re ignored, please give your party vote to ACT this Saturday.

A Party Vote for ACT is a vote for closing the gap with Australia like we mean it.