Monday 12th Jul 1999
Richard Prebble
Speech - Economy
Speech to Southland farming representatives, Gore, 7.30 pm Mon 12 July 1999
HON. RICHARD PREBBLE, MP
LEADER OF ACT NEW ZEALAND
ACT seeks rural vote
The ACT New Zealand Party has set itself the goal of replacing National as the party to represent rural New Zealand.
National has taken the rural vote for granted for too long. Over the last ten years National has consistently put
winning votes in the cities ahead of vital rural interests.
Both National and Labour have lost confidence in the primary sector's future. We have been treated to the sight of
National Ministers spending, or should I say misspending, millions of dollars promoting tourism but refusing to spend a
dollar promoting the primary sector. The National Government's golden handshakes to two ex Tourism Board members cost
more money than the National Government's total assistance to the mid Otago's worst drought in years.
As part of my research for my new book 'I've been writing' I had the total number of new laws and regulations affecting
the primary sector added up. There have been in the last decade some 5,200 new laws and regulations passed affecting
business. Farmers are being swamped with paperwork, red tape and bureaucratic waste.
Laws like the Resource Management Act, passed by this National Government, have turned some farmers' properties into
National Parks. The socialists are not nationalising our property anymore. They have found a new way. They are taking
over our land by regulation but leaving us with the title deeds and the rates bill.
In this Parliament again and again ACT has been a lone voice speaking out for rural New Zealand. ACT alone voted against
the high country leases law - high country farmers have a better conservation record than the Crown. ACT voted against
the Ngai Tahu legislation. ACT voted against the so called electricity reforms and next week we will again.
National, Labour and the Alliance will all support a new bureaucratic gun law. Every farm has a gun, it's a tool of
trade. Make a mistake filling out the gun licence and you become a criminal. We have a problem in this country with
illegal unlicensed firearms. Penalising lawful licensed firearm holders is as silly as making taxi drivers pay $300 for
a taxi license because there are some unlicensed drivers on our roads. The firearms legislation is symbolic. National
knows the law won't work.
National MPs know it's anti rural. The firearms legislation is National saying to rural New Zealand when there is an
issue of principle involved concerning rural New Zealand or votes in Titirangi - Titirangi suburban votes win every
time.
Well ACT would like to win votes in Titirangi and Wellington Central too, but to the best of my knowledge no constituent
of Wellington Central has ever been shot by a licensed firearm holder. The proposed law is nonsense.
ACT is a party that puts values ahead of politics. ACT points out to urban New Zealand that over 50 percent of our
export earnings comes from the primary sector. We must revive the bottom line profitability of agriculture.
We cannot change world prices but we can review compliance costs. Let's have a look at some of these compliance costs.
The OSH Act - it's bureaucratic and it gives powers of entry and inspection that are close to police state measures.
This Act tries to make farms and other workplaces safer by specifying a lot of duties and penalties for employers. This
leads to farmers avoiding penalty by avoiding risk. Farming is a risky business. In a free society, adults should be
able to assess and take responsibility for risk. But the OSH Act prevents consenting adults from making their own
choices.
Like the risk of a child having an accident on a farm, for example. It's a fact of life that a farm is a risky place,
but when I hear farmers tell me that because of the OSH Act they won't hire young sharemilkers with families - because
it's not possible to make a working farm child proof - we can see bureaucracy has gone too far.
Then I visit the rural school that is threatened with closure because there are not enough pupils. The OSH Act is
basically discouraging farmers and other business owners from employing people - and this is part of the reason for the
decline of rural population.
Here's another compliance cost - the Employment Court. It also discourages small business owners from employing people.
It panders to grievance cases - giving fat payouts to workers who have been dismissed for incompetence or dishonesty or
worse. National has been promising reform to the Employment Court to end these golden handshake payouts but has failed
to act.
But top prize in compliance costs would have to go to ACC. ACC has cost the New Zealand farmer four times more than
workers compensation costs a farmer in the state of Victoria. ACT has supported National in reforming ACC though they
have not gone far enough. I would like to talk about ACC for a few minutes.
The ACC policy that Labour announced last week will cost the average New Zealand farmer $8,583 a year in extra costs.
That $8,583 will come out of the farmer's bottom line, out of the farmer's pocket. As the average farm would be lucky to
make $30,000 a year $8,583 is a lot of money to lose from just one Labour policy.
But this one Labour policy puts our whole export trade at risk. Labour's ACC policy could, by itself, ruin farming.
These are very strong words. Let me prove it to you. Let me tell you exactly what Labour is promising. A Labour
Government will re-nationalise all private accident insurance schemes.
What does that mean in reality? First, the ACC reforms are rolled back into a single monopoly. Labour's policy, as the
left wing commentator Chris Trotter put it, is a plan to nationalise the workers compensation insurance industry without
compensation. Labour has said ACC will take over the contracts of insurance companies - but that will not compensate
them for their loss of business, or for the costs they have borne in entering this market.
The Insurance Council of New Zealand has said that the insurance industry has so far invested over $100 million in ACC
insurance. Much of the money has come from overseas and from some of the world's biggest insurance companies.
The insurance companies have already made it clear they do not accept that a Labour Government has the legal right to
nationalise their business without compensation. The Insurance Council has stated that the claim for compensation will
be a massive one billion dollars.
Both the United States and the EU have made many statements that countries that nationalise the property of US or EU
nationals will force trade sanctions. In the case of the United States, the laws, which were passed against Cuba but can
be used against any country, are already in place.
The tariffs against lamb, which is just $140 million out of our over a billion plus trade, gives us an idea of the
devastation to New Zealand's economy if such tariffs are imposed. Trade experts that I have spoken to say that with the
enormous political clout of the international insurance companies, trade sanctions of an economically devastating level
are a very real possibility.
If Labour persists with its plans, it will either put the whole country as an exporting nation at risk or the Government
will be forced to compensate the insurance companies at a price that they dictate. The billion dollar cost will go on to
the ACC bill.
A disproportionate amount will go on to the country's primary producers because farmers are at the end of the supply
chain. The extra ACC charges that the freezing workers, wharfies, dairy factories and others pay, is passed on to the
farmer. A cost of $5,000 per farm is a conservative estimate.
So we would have a one-off cost of $1 billion, equating to $5,000 for the average farmer.
But on a yearly basis the costs mount up too. Federated Farmers has conservatively estimated that the ACC reforms are
worth $1,183 per farm. So under Labour's ACC policy, the average farm would lose $1,183 just for starters.
But it does not end there. Labour proposes to introduce lump sum payments of up to $100,000 in addition to ACC payments.
Labour says it is going back to the original ACC concept even though the Woodhouse Commission recommended against lump
sums.
Lump sums were removed because they were being abused. There is something wrong with lump sums in a no fault system that
sees the drunk driver who kills innocent people in a motor accident being rewarded with a $100,000 lump sum. For
$100,000 some people would have an accident. Even the Alliance leader Jim Anderton has said the proposal would cost $400
million a year and raised doubts about its workability.
Labour would turn ACC into some form of lotto where the careless, the foolish and the fraudulent will be rewarded. It
could add another $2,000 to every farmer's ACC premium.
But there is more of this lunacy. Ruth Dyson announced that Labour will abolish experience rating. Experience rating is
the well tested insurance principle that those who have accidents have their premiums increased, while those who have
fewer accidents have their premiums lowered. Removing experience rating will mean that careless, reckless and dangerous
employers will pay the same premium as the safe responsible and careful.
Why Labour wants to make this change makes no sense but then neither does the rest of their policy. The affect of the
proposal will be to increase the premium of the safe employer by at least 25%.
Over time, as there is no penalty for having accidents, the rate of accidents will increase significantly. It's
reasonable to say that this policy will add a further $400 to the average farmer's ACC policy.
But there is worse to come. Labour has promised to extend the ACC scheme to cover sickness as well. The present sickness
benefit cost us $435 million last year. You only qualify for the present sickness benefit after you've used up your own
sickness entitlement and meet stringent guidelines. Ask any employer - they'll tell you the quickest way to get a sick
workforce is to have a badly designed sickness scheme.
There are many companies where 90% of the workforce are sick 14 days a year - which just so happens to be their sick
leave entitlement. A sickness scheme where you can get 80% of your wage will lead to New Zealand becoming the sickest
country in the world. Overnight we would see a collapse in health standards.
I think it's reasonable to say that costs of sickness benefits would at least triple under such a scheme, so let's say,
conservatively, it would be another $1 billion a year. That equates to another $5,000 out of the pocket of the average
farmer.
So in just one Labour policy the primary producers of the country have a massive $8,583 added to their ACC policy - if
we are lucky. If we are unlucky, the policy will destroy the export sector completely.
So don't let anyone tell you there is no difference between the parties.
It's true there's not much difference between the two main parties' tax policies. Labour's tax increase is $350 million;
National's tax cut is $400 million - not much between the two. Indeed, a National Government that was on the ball would
not be fiddling around with 1 cent tax cuts.
But the difference in the two parties' ACC policies is worth much more money than that. Labour's ACC policy will cost,
just as a down payment, a billion dollars. The pity for National is that they won't be able to capitalise on Labour's
crazy ACC policy - because National's ACC reforms did not go far enough.
National has basically failed to cut back on compliance costs - and that is why the productive sector is listening to
ACT, not National.
National cannot campaign on red tape and bureaucracy because they have covered the country with red tape. ACT has become
the party dedicated to cutting red tape and bureaucratic waste. As cutting red tape and bureaucratic waste is the
quickest most effective way to help the export sector - this is the reason why ACT is going to win the vote of rural New
Zealand.
After the 1999 election, ACT will be the party of rural New Zealand - ACT will hold the balance in Parliament and
because we mean what we say - we will slash red tape and liberate the productive sector.