Issued on Tuesday before the Government’s Budget on Thursday
Filling The Vacuum
There is not enough debate about the future of economic policy. Labour are about to go on a good old spending spree, New Zealand First want to return to the 1970s, and the Greens keep pushing cycleways as if nothing different has happened lately. Our National Party colleagues are not doing enough to drive the debate New Zealand needs. It falls to ACT to ask hard questions and propose solutions that will make New Zealand wealthier on the other side of the current crisis.
ACT’s Alternative Budget
Released this morning, our Alternative Budget shows how we could cut taxes, balance the budget, boost job creation, attract foreign investment, and build infrastructure, all the while hardening New Zealand’s preparedness for pandemics. This week’s Free Press runs through the ideas, the numbers, and the reasons why. It is set out on our website, where you can download the full document.
This week the Government will hold a lolly scramble. They will hope that, with enough borrowing and spending, they can keep enough people happy through 19 September to ensure their own political survival. The prescription is eerily Muldoonist and leads to bankruptcy. ACT’s alternative is a low tax, high growth, job rich recovery led by the private sector.
Getting New Zealand Working Again
The word unemployment is going to enter the national lexicon in a way we haven’t heard since at least the early 90s. Job creation is going to be critical, and the government simply cannot create real jobs. Only businesses can do that. How quickly they do it depends on how much the government gets in the way. ACT would extend 90-day trials to 12 months for all businesses so they can take a chance employing more people in difficult times. We’d reduce the minimum wage back to the 2019 level of $17.70 so they can afford it and place a three year moratorium on minimum wage increases.
Stimulus, The Right Way
Politicians love to hand out taxpayer dollars, but a fairer stimulus is to take less in the first place. ACT’s Alternative Budget would cut GST to 10 percent for a year, putting an additional $6 billion into circulation to get the economy moving immediately. We would permanently cut the middle tax rate of 30 percent down to 17.5 percent. This would leave only three tax rates, and put between $2 and $3 billion dollars per year into the private sector (depending on economic scenarios).
Balancing The Books
ACT’s fully costed approach shows how we would reach surplus by 2024 in any of the scenarios Treasury has forecast for recovery from COVID-19. It confronts the fact that there is far too much low quality spending on corporate and middle-class welfare that may have won votes for various governments over the years, but has added up to make us all poorer in the long term. Continuing wasteful spending is a disservice to our children and theirs.
Smartening Our Defence Against Epidemics
A lack of preparedness for epidemics meant that our economy was destroyed due to the need for blunt measures. We couldn’t really afford it this time. We definitely can’t afford to do it again. ACT’s Alternative Budget would temporarily double border security funding so we can have the world’s smartest borders that allow international travel to recommence. It would permanently increase public health funding by 50 percent so we can afford to fight the next pandemic intelligently, and partner with friendly countries such as Taiwan so we can do it better next time.
Removing Red Tape And Regulation
Regulation has become the instant remedy to any political problem. The benefits flow to the politician, the costs gradually layer up on the regulated. Our Alternative Budget includes the introduction of ACT’s Regulatory Constitution that applies cost-benefit analysis on new rules and sets a 10-year time limit on them so they must be re-evaluated.
Untying The Natural Industries
Our Alternative Budget proposes replacing the Zero Carbon Act with a simple commitment to match our trading partners’ actual climate change efforts, paring back the water regulations so damaging to rural sector, and repealing the oil and gas exploration ban. If we want the kind of wellbeing and opportunity the Government endlessly talks about, we cannot afford to keep shooting ourselves in the foot.
Building Back To Housing Affordability
When the COVID-19 fog lifts, we will still have a major structural problem in our economy. It is too difficult for the next generation to build affordable homes that are connected to opportunity by quality infrastructure. ACT would replace the RMA in cities with an Urban Development Act modelled on the Productivity Commission’s Better Urban Planning report. The best way to fix social ills and get the construction sector moving again is to remove unnecessary barriers to building.
Attracting Foreign Investment
The history of New Zealand is a history of foreign investment, and not enough of it. We have always paid more for capital and been poorer for it. Even today we have one of the most restrictive foreign investment regimes in the OECD. ACT would remove the requirements for Overseas Investment Office scrutiny of investment originating in OECD countries.
Building Infrastructure For The Right Reasons
One of the worst things we can do at this time is throw money at projects of questionable merit because they are ‘shovel ready.’ ACT would borrow from the Singaporean model, taking infrastructure decisions away from politicians, and placing state highways with a new entity with clear performance indicators designed to drive investment where it will increase traffic flow, and replacing petrol taxes with intelligent electronic tolling.