Rodney Hide speech: Trust The People

ACT Auckland Regional Conference; Saturday November 6, 2004

Ten years ago this weekend, the ACT Party was formed. As founding Party president, I remember those days well.

The party was driven by Sir Roger Douglas and the Honourable Derek Quigley's vision for all New Zealanders to have access to world-class education, superannuation and health services. They wanted policies that would drive up all New Zealanders' standard of living. They wanted to ensure more money in everyone's pocket.

In just two years, ACT was in Parliament. The media wrote off our chances then, and have continued since. ACT has proven them wrong at each election. We will prove them wrong again.

In this the age of pragmatism, political parties are apparently meant to go with the flow and bend to the opinion polls. But ACT is different - it's always been different. It's not going to change. It's only our image that needs some work.

Our philosophy doesn't waver. We are principled. We are committed. We are passionate. We nail our colours to the mast. Everyone knows what we stand for, and what we stand against: we stand for freedom; we stand for personal responsibility. We oppose State control; we oppose Helen Clark's Government.

Under the leadership of Richard Prebble, ACT quickly established itself as the party of ideas - standing up to Government, and punching well above its political weight in the House and the media, with its ability to influence.

A failing National-New Zealand First coalition saw many turn to ACT as a preferred coalition partner in the future. ACT was re-elected, and then re-elected again.

Fast forward to Election 2005: it is imperative that ACT is in the next government. We must ensure that Don Brash doesn't have to compromise. We can't allow Don Brash to be held hostage by Winston Peters or Peter Dunne. We will be driving the party vote hard.

New Zealand needs Don Brash, and Don Brash needs ACT. The more ACT MPs there are, the more power Don Brash will have for good policies. To succeed, we must broaden ACT's appeal to working New Zealanders - the battling Kiwis who work hard and pay for everything. We need to show them that their beliefs match ours.

Reaching out to these people is what my leadership is all about. ACT isn't about the rich - its MPs aren't rich, and there certainly weren't any silver spoons around when I was a boy.

The ACT Party I am privileged to lead believes in encouraging and rewarding hard work and enterprise - the values I grew up with. ACT wants every Kiwi to reach their full potential in a country that can punch above its weight in the global economy. We can only achieve our potential when the people are trusted and the State is not relied upon.

A strong private sector, creating strong economic growth and jobs, is the only way to diminish people's dependency on the State. ACT believes in freedom. We are opposed to open ended-welfare, which gives dignity to no one.

In a modern country like our's, the government's focus must be to create a prosperous economy. It must be to provide the opportunities and incentives for every citizen to enjoy a fulfilled and independent life. But for this Government, prosperity is not a priority - in fact, it is quite the reverse.

Nearly six months ago, a young couple stopped me on the street outside my Epsom electorate office. They literally felt sick to the stomach over Dr Cullen's latest budget. At age 30, they had a $350,000 mortgage, and 12-year-old student loans. They were both paying the top tax rate and were saving to have their first child.

Their take on the 2004 Budget was that Labour was coming unstuck, and that 12 months out from the general election they simply dished out some dosh - in the form of increased welfare and family support payments - in a hopeful exchange for votes. The young couple's cynicism was alarmingly bang on the button.

But could Labour have helped this couple by cutting tax rates and curbing predicted interest rate and price hikes? Yes - absolutely.

Where was Labour's plan for a growing and prosperous country? It didn't have one. This was an old-fashioned $13.1 billion `tax and spend' Budget. Do they `trust the people'? No way!

This year, the Government had its best opportunity to silence those who criticise its economic management. Never before in New Zealand's history did a government have such a significant surplus. Never. What an opportunity for Dr Cullen.

The reforms of the 1980s and 1990s had, for the first time, delivered a 4.3 percent surplus of GDP.

The years of reform have paid off. Through grit and determination, New Zealanders have turned our country around. How proud we can be of what previous governments have done, and how we Kiwis have responded.

But, on Budget day, any pride was quickly deflated. Some had seen this Budget coming, but many were surprised just how sidelined their interests had become despite their productiveness.

Labour has been the lucky beneficiary of growth. But it has opted to milk it, rather than try to grow the cake. It has milked it by raising the top tax rate to 39 cents, and by introducing or increasing over 20 levies or charges - despite promising no new taxes. It also promised no golden handshakes ... but I digress!

Labour is committed to taxing success. Higher tax makes it harder for young couples to save; it means less investment, less entrepreneurship, fewer jobs, lower growth and less prosperity.

This year was the perfect time for Labour to cut tax.

I would not have expected it to have the economic foresight to adopt ACT's 20 cents in the dollar personal and company tax rate, but what a signal it would have given - and what a king-hit Dr Cullen would have made if he'd dropped the old fashioned Labour Party `Cradle to the Grave' dogma and adopted more progressive ideas, such as slashing compliance costs and relaxing our employment laws.

Sadly Labour couldn't help itself.

Labour's strategy, to expand welfare and family support payments, is all about expanding the pool of Labour voters. With beneficiaries already onboard, thousands of middle-class families now receive Government pay cheques for the first time, as well as increases in payments to working families already receiving support.

Sixty percent of the 540,000 New Zealand families with dependant children will now receive welfare of sorts, including families earning up to $100,000.

It is beyond reason that a young school leaver is paying tax on their minimum wage job earning $9 an hour gross to help fund a welfare payment to a family on $100,000 just because that family chose to have six children.

Labour draws its support out of poverty and dependency. That's what Labour sponsors. ACT wins its support out of prosperity and freedom. That's what we promote.

The saddest thing about this Government, and its `classic Labour Budget', is that it doesn't help any one's long-term prospects. In fact, it locks in big government, traps more families into welfare, forces dependency, offers no dignity, and squashes any ambition for people to improve their lot.

It is born out of a socialistic philosophy that has never delivered. It does not belong in the new millennium. It does not belong in a country of entrepreneurs - but, sadly, it is now Government policy and we are all paying for it.

Middle-class families are now also unnecessarily receiving Government pay cheques - forced into welfare when a lesser tax rate would be a better boost for them and the country.

But the biggest losers are those working families with dependent children who won't receive anything, yet continue to pay too much tax, and watch as the Government grows huge surpluses.

In fact, two million adults get nothing from Dr Cullen, not even minor tax relief.

His Budget is solely redistributive. It takes money from taxpayers at large, and hands it to a select group of households. It does not create a single new job, encourage a single extra dollar of investment, or do anything to retain or attract the skilled workers this country desperately needs.

Inflation of 12 percent under Labour has pulled taxpayers into higher brackets; meaning tax revenue grows faster than wage growth. With the workers' net wages growing slower than their gross wages, their real take-home pay is less, their spending power diminished, their ability to save seriously weakened.

You will often hear me talk about Labour's shoddy economic mismanagement. Some may say it's easily for an Opposition MP to throw around such labels.

But the reality is that Cullen does have options - credible options he could easily choose which would avoid mismanagement.

Firstly, he should swallow his pride and consign his 39 percent top tax rate to the history books.

Secondly, his most fatal error is that he should have acted by now: reducing tax rates and setting New Zealand on a higher growth path through stimulating investment, work, enterprise and saving.

Income tax could have even been dropped to 20 cents in the dollar, and Dr Cullen still would have had money to waste! At a cost of $1.7 billion of the Government's $7 billion surplus, it could have had a top rate of 30 percent, for $3.5 billion a top rate of 25 percent, and for a cost of $5.5 billion a top rate of 20 percent.

Labour has not only squandered the opportunity, it has made things worse. Labour has simply chosen to redistribute Kiwis' hard-earned money in the wider plan of locking in political gain. It's politically clever, but economically very dumb.

Clark is an astute political manager but, increasingly, her poll-driven politics are leaving New Zealand dangerously behind.

When that young couple I ran into outside my electorate office were born, New Zealand was 9^th in the OECD's GDP per capita rankings alongside Australia - and both countries' average take-home pay was about the same. Today, New Zealand is 9^th to last - between Spain and Italy - and the average Australian earns $175 more than the average Kiwi.

Labour has abandoned any ambition it may have had to get us back in the top half of the OECD. Labour has no aspirations to catch up to Australia. It knows its policies won't get us anywhere close to producing the growth rates needed. At the very best, Labour will deliver growth rates of 2.8 percent over the next four years. That's simply not good enough, but Labour has no ambition to do any better.

Labour has many options to lock in growth and, as I've said, this year was the best opportunity to really invest in our country and its future. The Government chose the handout option, in an attempt to win a short-term battle in the fickle polls - but it will see Labour lose the war.

New Zealanders have grown up. They now want to be trusted. They know that a Nanny State is not in their best long-term interests. They are increasingly sick of the back-door taxes, the rules and regulations that are being loaded onto them, and the political correctness that is forced upon them. They are not going to lump it much longer.

New Zealanders are descendants of spirited migrants who took a huge risk to come here, people who built our country through their own courage, hard work, thrift and enterprise. Such a basic formula to success has not changed.

I am proud to lead a party that promotes freedom, independence and success. We have a big vision for this enterprising country of ours, and ACT will be there to ensure every Kiwi has every opportunity to reach their full potential.

We want better outcomes for Kiwis. That's what drove ACT's founders 10 years ago, and that's what drives this party now. ACT cares about the everyday Kiwi. We represent the strivers and the battlers, but we need to get this message across. We need to put an end to the misconception that we're somehow elite or remote. My aim is to broaden our party's support.

We have the best team in Parliament - we're feisty and energetic, and we're looking forward to running a humdinger of a campaign to once again defy the pundits.

Over the coming months we will be campaigning hard to ensure that no hard-working New Zealander will have to pay more than 20 cents in the dollar in tax come the new government's first Budget. Now that's what I call an investment in this country's future prosperity, and a real reward for everyone - not just for those who are likely to support us at the ballot booth.

As well as low taxes for all working New Zealanders, we want our streets safer, and we don't want raced-based law. We won't stand for mediocrity and low standards. We are ambitious for New Zealand.

What this Government has dished up over the past five years is not our lot. This country can, and deserves to, do so much better.

Government does not know best. ACT is the only political party prepared to trust the people.

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