The economic plan

08/10/2008

National’s economic plan includes:

* a boost for superannuation. John Key said:

“Because superannuation is calculated on the average wage, our economic package and our commitment to maintain superannuation rates at 66% of the average wage will see a subsequent rise in the incomes of retired New Zealanders receiving superannuation.”

* enduring and affordable Kiwi Saver.

National Party Finance spokesman Bill English says changes announced to the KiwiSaver scheme are designed to ensure it is fair and affordable for New Zealand now and in the years ahead.

 

“National’s KiwiSaver package strikes the right balance between savings and supporting economic activity in today’s environment.

 

“National will ensure that KiwiSaver is accessible, and contains incentives, to enrol and retain as many New Zealanders as possible.

* no added borrowing and no service cuts:

National’s Finance spokesman Bill English says the party’s economic management plan begins to improve the Crown’s financial position and the longer-term productivity of the economy through careful revenue and spending initiatives.

“National will not slash spending at a time when people are looking to the government for a sense of security. In developing our economic management plan, we have concentrated on the fundamentals of the economy, and particularly on laying the foundations for a future increase in productivity.

“We are also beginning to peg back the operating deficits revealed in the pre-election fiscal update.

“New operating allowances will be the same for National over the next three years as they would be under Labour. National’s rebalancing of the tax system is self-funding and requires no cuts to public services or additional borrowing.”

* a tax package  for the times. John Key said:

“Taxes affect decisions to work, save, spend, or invest, so tax can have a big impact on economic growth and future prosperity.

“Our tax policy is one of responsible reform. People want to know that valued public services will be protected and that effort will be rewarded. Business wants to know that competitiveness will be maintained and that consumer confidence will be supported.”

Mr Key has reiterated that the package announced today requires no additional borrowing, or cuts to frontline services to fund it.

“There is, in fact, a small saving to be made, of $283 million, which will be used to begin reducing the operating deficit.

* discipline, growth and security

National Party Leader John Key says the challenges facing the New Zealand economy require a focus on disciplined government spending and a plan for future growth.

. . . “The surest way out of the red ink is for the New Zealand economy to grow faster. I am absolutely committed to ensuring that happens, and today I am announcing tax and fiscal policies which demonstrate my intent.

“New Zealand’s economic recovery must be built on improved productivity and a better environment for investment in jobs and growth. To ensure this happens, New Zealand needs a government with a strong economic management plan.

“Our economic management plan will provide the needed fiscal stimulus while strengthening New Zealand’s position in the longer term by boosting economic growth.”

National’s plan has five essential components:

1. Improving productivity across the public sector by ensuring a strong focus on the provision of frontline services.
2. Stopping the massive rise in head office bureaucracy that Labour has encouraged, and we will deal with the regulatory and compliance issues that smother Kiwi businesses.
3. A programme of ongoing tax reduction. We will pass these tax changes into law before Christmas.
4. A step-up in infrastructural investment in vital national assets like roads and an ultra-fast broadband network.
5. An unwavering focus on lifting education standards. New Zealand simply can’t afford to tolerate the long tail of underachievement in our schools.

“I have always believed that given the opportunity to choose a path to a more successful, enterprising, and prosperous nation, New Zealanders would sign up to policies that would bring a brighter future. But with the current world economic situation, the choices have become starker.

“The Treasury forecasts released earlier this week paint a very bleak picture of the future, for a long way ahead, if we remain on our current course, if we keep our current policies, if we keep our current government.

“My colleagues and I are offering a very different way forward. It involves some clear choices. It requires us, as a nation, to be prepared to back ourselves. That is what the package that I have put before you today is about.”

Voters have been offered a clear choice – stick with Labour which got us into this mess, or opt for National which has a plan to get us out of it.

In commenting on National’s plan, Keeping Stock says:

Key’s comments on us, “as a nation, to be prepared to back ourselves” are excellent, and provide a strong contrast with Labour’s strategy – to go away and think about the situation some more – known in some circles as “paralysis by analysis”.

The choice is clear – the party of procrastination or the one of action.


Hager’s Hollow Horror

05/07/2008

John Roghan  says Nicky Hager is carving out a new career in disingenuous political naivete.

Not content with a book based on Don Brash’s emails, since brought to the stage and soon to be a movie too, Hager is running a sequel on the discovery that some of the same “hollow men” are consultants to John Key.

The fact that someone in the National Party must be passing this material to Hager is far more interesting than the use he is making of it, and I have no objection to his using it.

I agree that where the material comes from is the more interesting, and for National, more serious point.

…email, I think, is fair game. A fair reporter, though, could reveal what he learns without feigned horror at the fact that people running for public office hire consultants who try to conceal some of their intentions during an election campaign.

Parties of all stripes are coy on some subjects before an election for good reasons.

The public interest can be greater than the sum of personal interests, sometimes even in conflict with direct personal gains. It is easy to sell benefits to a section of the electorate, harder to explain how the benefits hurt a country in the long run.

Some are minority interests that should be advanced in the national interest. Hager should ponder how much progress Maori would have made in recent decades if every step in their recognition had been an election issue.

Quite.

Public debate usually favours the status quo. Not much could ever be done if every decision was put to the electorate for a prior mandate.

Take the present Government’s biggest economic moves, KiwiSaver and, this week, KiwiRail, which I don’t remember being canvassed, with all their costly implications, at elections beforehand.

Had Labour given an inkling at the last election of the premium they have had to pay to re-nationalise the railway, and the fortune it is going to cost to cover its likely losses, National’s last campaign would have feasted on the information.

If only.

But now that the deed is done, the politics have changed. The purchase is the status quo and National will not dare put re-privatisation before the electorate this year, though that may be what it ultimately does with the trains if not the tracks.

Yep – once something is underway it is difficult to change it, even if it’s because sometimes bad policy is good politics.

Likewise KiwiSaver, a year old this week. At the last election the savings scheme was an essentially voluntary proposal. The following year it was to become compulsory for employers and acquire some costly enticements of dubious economic value.

Not long ago my employers wound up my company super fund. I couldn’t blame them; from April they had to contribute to KiwiSaver if staff favoured it. And who of us were going to turn down Cullen’s $1000 handout and tax credits?

The scheme celebrated its first birthday on Tuesday with 718,000 members – more than double the number predicted in the first year. The only people complaining about it are those annoying economists who see the difference between individual gains and the national welfare.

They fear the scheme will not add to total personal savings, merely displace previous savings schemes.

In the Herald last weekend Maria Slade reported an estimate that as little as 9 per cent of the money in KiwiSaver accounts so far is new saving, a percentage the researcher reckoned would not cover the administration and compliance costs of the scheme.

Is anyone surprised by this?

Westpac economist Dominick Stephens said KiwiSaver had cost the taxpayers $497 million in its first 11 months, an amount that could have added to national savings if it had been left in the Budget’s fund for future public pensions.

Even that fund is questioned by some savings professionals who point out that a superannuation scheme is only as good as the future economy that will have to pay out. From that point of view, the best retirement insurance is the investment made in the economy today.

And not just retirement – health, education and every other service will be more secure in the future if we strengthen the economy now.

Anyone who believes that the best investments are made by those who stand to lose if they get it wrong would argue the economy would be stronger in the long run if the KiwiSaver incentives were turned into personal tax cuts.

And yes again.

Nevertheless, National will have to keep the scheme now that it is replacing private savings on such a scale. The best the party can do is continue to avoid saying whether it will keep the incentives.

It will not be easy, and should not be easy; it is the job of political opponents and the press to pin all policies down. But adroit tacticians can keep the options open and enable a government to come to power with room to move in the national interest. Voters, I think, understand this. They don’t need horrified disclosures that it happens. It is the horror that sounds hollow.

Exactly. National has learnt from the damage done by stupid promises made by Jim Bolger before the 1990 election; and Helen Clark has too which is why she keeps trying to under promise and over deliver.

Parties should be upfront about their philosophy, principles, general  policy, and – sometime before an election – some detailed policy. But they can’t be specific about everything because, once a party is in Government it must have room to adapt to events and circumstances.


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