John Key crossed the Tasman to learn from Kevin Rudd, but it’s Key who’s showing Rudd what to do according to an op-ed in The Australian.
. . . Key came to visit to see how Australia did things, why Australians enjoyed salaries one-third higher than those of their Kiwi neighbours, what NZ should emulate to match the better living standards. Despite Key’s substantial commercial success in banking before entering politics, his self-effacing nature made it look like a case of little cousin with modest goals meeting big cousin, the ambitious and supremely confident Kevin who had everything to teach little John.
How the tide has turned. Rudd is polling poorly after lacklustre reforms while Key, along with Minister of Finance Bill English, passed down an impressive budget last Thursday and surprised everyone. And perhaps what Rudd will envy the most is Key’s approval rating in the polls. . .
The writer, Luke Malpass, is a policy analyst with the New Zealand policy unit of the Centre for Independent Studies. He explains the Budget and concludes:
These changes are broadly fiscally neutral over the forward estimates for the next three or four years. The cuts to the personal tax rates are deeper than expected and designed, along with spending freezes in most areas (except the big three: health, education and welfare), to return some integrity to the tax system that was lost under the previous Clark government. The reductions also reflect the present administration’s conviction that growth and efficiency, not redistribution or morality, is the purpose of good governance.
Those who accuse National of being Labour-light haven’t recognised the change of focus. This government’s much more concerned about policies which will make a bigger cake. That’s a pleasant change from the previous one which concentrated on cutting it into smaller pieces and telling us how much we could eat.
The strategy of Key and English is the opposite of that of Rudd, who has used his full arsenal of rhetoric to justify meagre changes to the tax system, especially changes that will not be funded without the proposed resource super-profits tax. . .
Malpass also approves of the tax changes:
Key has quietly and substantially rebalanced NZ’s tax system, far more so than in Australia.
The tax reform in NZ’s budget may seem a bit tame to many Kiwis but is radical compared with what the Rudd government is contemplating. Australia seems to be inexplicably averse to increasing its GST or giving it some integrity by getting rid of frivolous exemptions. Indeed, the GST was deliberately omitted from the Henry review’s terms of reference.
This is surprising given that by raising the GST to 12.5 per cent and cutting exemptions, the government would have a highly effective revenue-raiser and could do away with most of the 115 economically damaging taxes, which raise only 10 per cent of government revenue in any case. . .
Anyone tempted by those trying to sell the idea of complicating our GST by exempting fresh fruit and vegetables should take note of the cost and benefits of those frivolous exemptions.
This is quite unlike the Clark Labour government, which was more concerned with the principle of progressivism than its actual effect on tax take, growth or the resources wasted to gain tax advantage.
The Rudd government, unfortunately, is falling into the same trap with the RSPT. This has been demonstrated by invoking unhelpful notions of class war (big fat miners and their profits) and redistribution (by being somehow related to helping superannuation and mining companies at the margin), as well as a good dose of unhealthy jingoism (attacking multinational miners).
Where the Rudd government has tended to make bold claims about weak reform, the Key government has been quietly creating an atmosphere for more growth, foreign investment and a tax system that doesn’t penalise higher earnings. Even more impressive is the government’s projected 10-year spending reduction plan to reduce spending as a proportion of gross domestic product from 35 per cent to 29 per cent, and this is without any big-bang reform or swingeing cuts yet.
Those who criticise National for not going far enough ignore political reality – bit bangs usually cause more pain than the electorate will tolerate.
Despite only these modest, conservative and “steady as she goes” efforts, Key’s personal net satisfaction poll ratings (approval minus disapproval) are stratospheric at about 50 per cent compared with minus 12 per cent for Rudd.
Perhaps little John can teach big Kevin a thing or two after all.
Is it too much to hope that the left in New Zealand could learn from Rudd’s mistakes so that if/when they’re back in power they don’t repeat them?