ACT - Ambitious for New Zealand

Address to ACT Upper South Regional Conference
Christchurch
Saturday 13 June 2009

This conference is a celebration for us. The last election gave us three more MPs.
Our Confidence and Supply Agreement with the National Party helped form a government.
Heather Roy and myself became Ministers.
We have more resources, more people, and the opportunity to get better policies for NZ.
National was elected with policies devised before the worst of the global crisis had emerged.

Well, the world has changed. And New Zealand was not in good shape to face this crisis.

The National Party’s pre-election policies were in large part business-as-usual policies. They were pretty timid. They were not what I would call ambitious for NZ.

The task for this new government is to turn around the decline under nine years of Labour:
- the falling productivity growth rate that is widening the income gap with Australia:
- the regulation of everything that moves,
- our failing social institutions.

Public spending was, and still is, out of control. That is why the deficit and public debt projections are appalling over a 10 or more year outlook. It’s a fundamental, long-term problem, not just one due to the current recession.

Consider the state of our social policies. Think of the disastrous educational outcomes for the bottom third of the school population. The truly astounding decline in Health sector productivity in the past decade. The unwillingness to address the welfare trap - the source of intergenerational dependency in NZ. The incompetently designed family support scheme - Working For Families - which has middle income households facing marginal tax rates of 53% and 59%. Sometimes higher. The heavy taxation of low risk forms of saving, which drives people into over-investing in housing or into higher risk assets. It is madness.

We have destroyed the ability of households to get ahead from their own efforts. That is what a high marginal tax rate does.

And there was a sustained assault on business over the past decade. We are strangling small businesses, enveloping them in regulation and red-tape.

We have seen all these things. These are what must be changed.

You can judge how well the government is doing by how many of these issues you can tick off as fixed, or seriously addressed, by the end of this 3-year term.

The ACT Party is playing a crucial role in prodding the government into action. We have a new ACT team in Parliament. And we have a comprehensive Agreement with the National Party.

Since the election we have been working our way through the items in that Agreement. We have established a select committee to review climate change policies. The terms of reference we negotiated required a quantified cost-benefit analysis of policies to combat climate change. We fought hard to get this work done by independent economic consultants.

The ETS will cost jobs, and reduce household incomes. It could heavily and unfairly penalise agriculture. It is a huge issue. We will be pushing hard to ensure that NZ, at a minimum, does not get ahead of countries like Australia, and that Agriculture is treated fairly.

To improve the abysmal quality of regulation in this country we established a high-quality taskforce to complete the work ACT started on a Regulatory Responsibility Bill. This is the missing link in the range of constraints on government. It could be as important as the Monetary Policy and Fiscal Responsibility Acts.

The RMA Advisory Group formed as a result of our Agreement has reported already, and a range of reforms are in the process of becoming law. There will be a second round of reforms in due course.

We are currently putting together a group (the 2025 Taskforce) to analyse the productivity decline in NZ, and recommend policies to reverse it. In our Agreement with National, we have a joint goal with National of closing the income gap with Australia by 2025. That goal is meaningless without an annual audit of progress made to achieve it. That is what the 2025 taskforce is for.

We are also exploring the option of establishing a Productivity Commission for New Zealand, like the very successful Australian one. I have met with Gary Banks, the Chair of the Australian Productivity Commission, to explore an association with them.

Our Agreement with National includes a number of taskforces to review government spending. The first of them is underway, focused on Health, and there will be more to follow.

Our 3-Strikes Bill has passed its first reading and is now before a select committee.

The Inter-Party Working Group on Education is established and will meet regularly. This group will focus on issues central to ACT education philosophy, which features greater choice for parents and pupils, and increased competition via parental choice and greater school autonomy.

Next year we will move forward with work on the Taxpayer Bill of Rights.

In short, there is a huge and important work programme that springs directly from our Agreement with National. And our three new MPs have hit the deck running. They are confident and commanding in the House.

David Garrett is working hard to get our 3-Strikes Bill passed into law. Maintaining law and order, keeping people safe, is the first and highest responsibility of government. We must fix our parole system, and ensure that the most violent recidivist offenders are off our streets. Our 3-Strikes Bill will do just that.

John Boscawen led the campaign against the EFA, and will front our efforts to get better, fairer electoral law. He is also focusing his attention on the rorts that have occurred in the finance sector, and standing up for the rights of savers in this country. And over the past month he has been campaigning hard as our candidate in the Mt Albert by-election, and getting great publicity for ACT.

And Roger Douglas is back. Roger is proving to be a strong but fair critic of government policy - the conscience of economic rationalists.

In our Ministerial positions, we have Heather Roy as Minister of Consumer Affairs, where she is working to get simple principles driving consumer protection law - not just endless ad-hoc interventions. She chairs the Inter-Party Working Group on education. As Associate Education Minister she has responsibility for special education and independent schools. She has wide responsibilities in her Associate Defence portfolio, and is actively engaged in that portfolio.

In my role as Minister of Local Government, my focus is on reform of the Local Government Act to get more responsive and better focused local government, and stop the endless upward ratchet of rate increases.

My biggest task this year has been responding to the Royal Commission Report on Auckland. The Government made a number of high-level decisions as a consequence of that report. Since then we have been explaining them to the people of Auckland, working with officials to draft the legislation, getting that legislation passed under urgency, and setting up the Auckland Transition Agency to implement the decisions made.

I’m not someone who believes that bigger is necessarily better, but I believe simple is certainly best. I never understood why it took so many politicians to run Auckland, and why it needed seven mayors and a chairman. With this structure, if the Mayors can’t agree on some regional issue, then nobody is accountable for the regional failings.

This reform is all about getting good governance in Auckland - about transparency and accountability.

It seemed to me that as Auckland is one region, the simple solution is to have one council, one Mayor, and one plan. That’s what the Royal Commission recommended, and what the Government is implementing. But I was determined to also ensure strong local representation, because it seemed to me that a risk of having one big council was that it could get distanced from the people. So we pushed for local boards to have some real influence and decision-making ability in their communities.

We knew we needed to hear more from the public on this, so have left the final decisions on Local Boards until after we hear submissions to the select committee.

These moves alone won’t ensure that rates are under control or we get better for money. It will help, but reform of the Local Body Act is the most important issue longer term. The objective here is to get more accountability and transparency in local government. And to give more power back to the ratepayers - the people who pay the bills.

My other Ministerial hat is as Minister of Regulatory Reform, a portfolio that overlaps with most others. Regulations are pervasive and powerful, both for good and ill.

Regulatory reform involves issues across a number of dimensions of economic activity. Regulations such as competition law, tax legislation, and contract law impact on entrepreneurship and on incentives to innovate. Regulations such as the Securities Act and Overseas Investment Act impact on the level of business investment.

Legislation such as the Immigration Act and occupational regulations affect the access of businesses to skilled labour. And regulations such as the Resource Management Act have a powerful influence on the allocation of natural resources.

There is a huge amount of work to be done in all these areas.

The government is now reviewing 11 major regulations: the Building Act; electricity institutional arrangements; Employment Relations Act; Foreshore and Seabed Act; Holidays Act; Overseas Investment Act; Resource Management Act; Telecommunications Act;
Weathertight Homes Resolution Services Act; Climate Change Response Act; and Dairy Restructuring (Raw Milk) Regulations).

It is one thing to have a review, it is another to make the tough decisions needed. But at least it is a start.

As well as these reviews of major legislation we have what I call the "low-hanging fruit".
These are issues such as pool fencing laws and shop trading hours regulation. The fixes to these laws are usually reasonably straightforward - it is just a case of getting a commitment to make regular changes to the more obviously foolish regulations.

The quality of new regulation is important and I have officials working on a set of quality assurance measures that can be established within government, including a Government Policy Statement on regulation.

We also need a systematic approach to reviewing the existing stock of regulation - which is vast - to make sure that it is still relevant, and is implemented efficiently. Officials are working on proposals for us to consider.

That is a summary of what your ACT team in Parliament have been working on. We are having an influence beyond our numbers, and making a difference. You can reasonably say that, with ACT, you get more bang for your voter buck.

I want to conclude, as Leader, by coming back to the ACT vision for a more prosperous and socially cohesive nation. So here is what we need to do in this country.

We face huge challenges, but we have enormous resources. The greatest resource we have is the energy and enthusiasm, the talent and the drive of ordinary people. What we have to do is unleash it.

We have crazy planning processes, huge delays in getting consents to do things. We put up blockages to initiative all over the place. Take those away and you will see what can happen.

And remember this. You can cut out wasteful government spending, you can improve our infrastructure, and you can certainly improve our social institutions. And we must do all these things. But it is entrepreneurial activity that really makes an economy grow.

It’s the realm of ideas, innovation, imagination and initiative that matters. It’s entrepreneurs who start new businesses and new industries; who create not just new jobs, but new sorts of jobs.

Think about it. Much of today’s economic activity didn’t exist 10, 20 or 30 years ago.
It might be somebody who bought into a franchise and made it grow. Another bunch of people might have contributed to building a new industry - the Central Otago wine industry, or the new olive oil industry, or small companies innovating in the telecommunications or biotech industries.

Others are inventing new products, like the Blo-kart I had great fun riding last week at a visit to their business in Tauranga.

You can see it in the software and film industries. And in hundreds of small businesses in the tourism industry. Or those many new companies focused on fashion and design. A theatre company, or an artist or writer, or a rock band, all are engaged in entrepreneurial activities.

These people are putting everything on the line, taking risks, backing themselves.

Government doesn’t drive these things. It tags along for the ride.

This is what happens in the private sector: it is the world of work and risk-taking, of innovation, of turning ideas into businesses that employ people. This is where new jobs come from.

There is plenty of excitement and vitality here, and we need to ensure that our young people know it, and can feel that they can be a part of it, and do well here in this country. Otherwise that initiative, imagination, energy and flair will be exercised in a country other than New Zealand.

In the ACT Party we embrace free markets, competition, and entrepreneurship. We want people to have a go; we want them to succeed; and we will celebrate that success.

Fixing the problems that this government inherited, and unleashing kiwi initiative and our entrepreneurial spirit - that is what I call being ambitious for this country.

Thank you