Sunday 14th Nov 1999
Richard Prebble
ACT Leader Hon Richard Prebble today set out ACT's vision for the economy with
the two key priorities to bring the top rate of tax down to twenty cents and to
cut red tape and compliance costs to businesses.
ACTÆs economic goals are:
- New Zealand to have the highest growth, and lowest unemployment, in the OECD,
and to have the highest living standards in the Asia-Pacific region and
- To foster wealth creation by reducing taxes and eliminating stifling
regulations
ACT believes
- Prosperity comes from an open economy, low spending and taxes, minimum
regulation, and honest and stable government
- Our tax system, Government red tape and bureaucracy are destroying far too
many jobs and businesses
"After low flat tax, cutting red tape is the most important economic priority
to secure real job growth and keep New Zealand businesses competitive and
growing.
"It is estimated that 2.5% of GDP goes on compliance costs - that's just form
filling and nonsense, a millstone around business' neck, a drag on the economy
and costing us this year the equivalent of 23,000 people working full time just
to fill out tax forms alone.
"In the 1990's, Government has hammered businesses with 5200 NEW laws and
regulations. 13% of average small business revenue is sucked into compliance
costs. And that's before you even take into account the impact of things like
the Employment Court.
"What's shocking is that Government has no idea of what its regulations are
costing business. As a first step in a major assault on compliance costs and
red tape, ACT in Government will commission a study of the real cost of
compliance. We are also proposing a regulatory responsibility act to require a
proper cost-benefit study of all new legislation.
"Cutting red tape and excess bureaucracy is essential to restoring our rural
profitability, to encouraging our entrepreneurs, to attracting investment and
most importantly, making New Zealand competitive and a country where businesses
want to stay and trade.
"Infometrics has confirmed that ACT's programme of tax reductions to a low,
flat tax of twenty cents can be achieved in five years without cuts to
government services through restraint, not reduction in overall spending.
The IRD's own studies confirm that this will create 80,000 real, sustainable
new jobs.
"ACT is the only Party saying that it is the private sector, not government,
that grows the economy and that employs our people. The fundamental difference
between ACT and the left is that the jobs they claim their policies will
create are illusory and unsustainable. Tariffs, risky government make-work
schemes and trying to pick winners with handouts for business are all failed
policies of the past. The Left also want to let the government grow out of
control. Labour alone has promised 160 new Ministries, offices, funds and
quangos, and 97 inquiries.
"Labour and the Alliance are refusing to listen to the businesses like Artel
Industries in Levin that are telling those parties that their plans to hike up
tax, re-nationalise ACC and repeal the Employment Contracts Act are threatening
thousands of real jobs up and down the country. At Artel alone, 380 jobs are
at risk if Labour and the Alliance become the Government.
"Under the economic policies of Labour and the Alliance businesses will be
queuing up to buy a one-way ticket out of New Zealand.
Under ACT's economic policy, businesses will be queuing up to come home.
"This week's National Business Review poll on the issues of most concern to
voters this election put the economy as number one. It is ACT's top priority
for the same reasons. We want New Zealand to be a strong, prosperous nation
that has the businesses and jobs to give our brightest young people every
reason to stay," said Hon Richard Prebble.
ENDS
[Infometrics updated report on ACT's economic policy attached]
Comparison of ACTÆs 3 November 1999 alternative Budget with InfometricsÆ
assessment of ACT tax policy prepared for the New Zealand EmployersÆ
Federation
David Grimmond
Infometrics Ltd
On the information provided by ACT in their 3 November 1999 press release,
their fiscal projections for their alternative budget appear to be reasonable
and consistent with the assumptions that they have used.
The fiscal position forecast by ACT for 2004/05 in their ôalternative budgetö
is very similar to that modelled by Infometrics in its assessment of the ACT
PartyÆs tax policies as prepared for the New Zealand EmployersÆ Federation.
Both approaches result in Government spending less than 30% of GDP (our
assessment is 29.6% of GDP, ACTÆs 29.5% of GDP) and an operating surplus of
around $1.5 billion. The key difference is that the more aggressive spending
reduction assumed in the Infometrics report results in a lower net public debt
position.
By lowering government spending sooner plus receiving more revenue from asset
sales [1], the Infometrics projections accumulate $3.3 billion more in
operating surpluses than projected by ACT over the five year period. This
difference seems to be consistent with the different input assumptions used.
The ACT projections assume a $1.8 billion lower amount of revenue from asset
sales, and do not include the $1.25 billion in spending reductions assumed by
Infometrics to take place in 2000/01 and 2001/02. The remainder of the
difference is consistent with the compounded affect of carrying these expense
cuts forward in the following years.
[1] Infometrics assumed more asset sales but at very conservative prices.
Asset sales have an impact on the operating balance to the extent that the
Crown receives more (or less) than the assetÆs book value. Infometrics had
assumed a $3 billion boost to the operating balance over this period from asset
sales. The ACT numbers incorporate a $1.2 billion contribution from the sale
of TVNZ.