2025 Taskforce: A Good Starting Point

Published: Mon 30 Nov 2009 03:16 PM
2025 Taskforce: A Good Starting Point
Press Release by Hon Sir Roger Douglas, ACT New Zealand
Monday, November 30 2009
The first report from the 2025 Taskforce grapples with the complex issues surrounding New Zealand’s economic decline, and goes some way to proposing ideas that may help solve them, ACT New Zealand Finance Spokesman Sir Roger Douglas said today.
"The report makes a number of very good recommendations. In particular, it advocates opening up the educational market to private competitors, which would deliver quality education, ensuring all children leave school able to read, write, and in a position to give back to society. It advocates for a divestment of business assets – which will lead to productivity gains in these enterprises. Changes around employment law and resource use are also positive," Sir Roger said.
"However, the report has some significant weaknesses. When it comes to health, superannuation, and welfare, it argues for reduced Government expenditure - yet it leaves the control of these areas in politicians’ hands. These politicians will inevitably succumb to temptations to bribe the electorate with unsustainable promises at election time.
"In addition, the Taskforce makes the valid point that effective marginal tax rates are too high, encouraging destructive behaviour. But at the same time, it argues for more targeted health and welfare expenditure – the exact kind of policies that would increase effective marginal tax rates, as these benefits would abate as individuals earned more income.
"There is also a real level of unfairness in their suggestions for superannuation. Lifting the age of superannuation entitlement will mean that some individuals – in particular, Maori and Pacific Islanders – will pay into the scheme their whole lives and receive lower payouts - if any - due to their shorter life expectancy. The cost today of benefits to those over 65 amount to 60 percent of all personal income tax – 33 percent for superannuation and 27 percent for health. The only solution to the superannuation problem is to move away from the current system, and introduce individualised savings account so individuals - not politicians - determine when they should retire.
"In the long term, the political structures that the Taskforce leave in place would come to undermine their reforms. Superannuitants would be bribed, the healthcare system will suck up more money as people complain about the rationing of healthcare, and welfare time limits will be rejected as harsh. Only if we move from the current system, dominated by politicians and bureaucrats, to one where individuals are free to choose will we deliver the kind of environment that is needed to beat Australia," Sir Roger said.

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