ACT’s The Letter 23 May 2005
WHAT’S THE HAPS?
What budget? It is not just the commentators who were caught by surprise by the non-budget, so was the Labour caucus.
The Nats and ACT now feel there is a point of difference. Talk of a July election has evaporated as parliament goes into
a one-week recess. There is little sympathy for Benson-Pope.
THE BUDGET
The government is being hammered because journalists, who while not among the highest paid, are finding that inflation
has put them in the 39-cent tax bracket. The 40% of NZ’ers who pay nearly all the tax have realised that after five
years of Labour they are no better off. The Australian government in just two budgets have adjusted tax brackets
creating expectation of some adjustment here.
CAUCUS DISMAYED
The Labour caucus was convinced that Cullen was going to deliver an election tax cut, steal the issue and go early.
HE HAS SPENT IT
Cullen did not cut taxes for two reasons. The finance minister really believes that governments can spend our money
better than we can and he refuses to accept that tax rates have any effect on behaviour. In any event he has spent the
money. 38,000 extra civil servants have chewed up the surplus.
CLOSED THE GAPS?
The word Maori does not appear in the Budget. Remember five years ago when progress in closing the gaps was the way
Labour wanted to be measured? Labour has decided to write off the seven Maori seats. MPs like Tamihere are talking about
their next career, in his case broadcasting.
TAX CUTS?
The so-called business tax cuts are depreciation schedules that better fit economic reality and are offset by the carbon
tax. And the personal income tax cuts? Adjustments for inflation in three years are equivalent to a packet of chewing
gum. Why bother?
A REAL FIGHT
Within the opposition the budget was greeted with relief and delight. National feared that if Cullen announced the 39
cent threshold was being lifted to say $70,000, the party would have little to campaign on. ACT, which has a tax policy,
has already launched a tax petition. See www.act.org.nz/taxpetition.
ACT TAX POLICY COSTED
Readers may recall we told you of the effort by Labour in the Public Expenditure Committee to embarrass ACT by asking
Treasury to cost the party’s low flat tax policy. Cullen told the committee that convention prevented him from asking
the civil service to cost an opposition party’s policies but nothing prevented the committee from requesting such a
costing.
While Rodney Hide was absent on ACT’s leadership primary, the committee chair moved to ask the Treasury to do the work.
Richard Prebble, who replaced Rodney, welcomed the request. The civil service was horrified but the committee was stuck
with its request. MPs then realised the request covered every party’s election tax policies.
John Key who knows that National by accepting the Cullen super fund can only promise significant tax cuts by deficit
spending, and the old claim that the cut in revenue will be recovered by faster growth, refused to allow the Treasury to
cost their policy. While Winston Peters may seem fiscally illiterate he knows that NZ First’s policy does not add up and
also declined.
IT’S AFFORDABLE AND CREATES GROWTH
Treasury’s response was that ACT’s policy to introduce a low flat tax is affordable, requires no expenditure cuts apart
from scrapping the Cullen fund, creates a surplus and will increase growth by at least 1%. As growth is forecast to slow
under Labour to just 2.5%, ACT’s tax policy alone would increase growth to an above OECD average of 3.5% even before
welfare reform, cutting red tape and reducing the size of government. The research is on www.act.org.nz/ taxcosting.
OVER TO THE SPEAKER
Benson-Pope’s future is in the hands of the Speaker. Everyone accepts the Police will not prosecute an old complaint
against a teacher. Even putting a tennis ball in a pupil’s mouth may not have been illegal. The law never allowed
teachers to cane, but to exercise parental authority, which includes reasonable force.
The Minister’s problem is he foolishly lied to parliament. If he had said “I was the tennis coach, what do you think I
did, roll the balls along the ground?” he would have been safe. In the past when media have accused Ministers of lying,
Speakers have sent the issue to the Privileges Committee - but then Clark chose this Speaker!
NO SYMPATHY
There is a lack of sympathy for Benson-Pope. From Labour’s backbench because he knew the question was coming and refused
to take advice to admit it was true. His refusal to admit fault and his outrageous toadying to the PM make him
unpopular. From the Opposition because he is the House’s worst offender in making personal attacks.
Yes, worse than Mallard. The whole House has no doubt that as a teacher he would have been a sarcastic bully. Under any
other Speaker his career would be over but everyone expects he will get off. Even if he’s sent to the Privileges
Committee don’t expect an expulsion. No MP in the history of the NZ Parliament has ever been found to have lied by the
Privileges Committee. Even in the UK there has never been such a finding but there it’s because MPs like Profumo who are
caught lying resign. No one expects a Labour MP to resign from parliament.
OUR POLL
Last week 97% of readers agreed that Police Minister Hawkins should resign. We even had Labour MPs telling us he should
go. Helen Clark refuses to listen on this one. This week, “Was it a good budget?” Vote on www.act.org.nz/ poll. We will
pass on your verdict in the budget debate.
ENDS