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Budget 2012 ought to reflect a commitment to do certain things:
- Improve the productive potential of competitive enterprise;
- Transform the learning journey of New Zealand children; and
- Reduce the size of both central and local government.
To achieve these things the Government needs to deliver a Budget and subsequent legislation that is transformation in its design and impact. This is also necessary to ensure that New Zealand can compete and win against its major OECD trading partners.
New Zealand’s business community creates jobs. Supporting business starts with creating a tax environment that is neutral rather than favouring different types of investment categories based on tax advantages and disadvantages. Secondly the business community needs to trade in an environment where the rights of property owners are sacrosanct. Finally, businesses need less rules and less regulation so as to enable growth and investment.
It is said that New Zealand’s education system is one of the best in the world. But any education system that does meet the needs of every child is one that requires work. Seventy percent is not good enough. Eighty per cent is not good enough. The most important person in any classroom is the pupil, and their needs must take precedent over all other needs.
Here is the kind of Budget necessary to inspire transformational growth and improve living standards in New Zealand:
Workers need the certainty of future employment. The workplace should be defined by a contractual relationship between employers and employees, with a commitment to boost productivity so as to maintain the viability of firms. The New Zealand Government should:
I. Provide for greater freedom to negotiate individual employment conditions, including those provisions that relate to the dismissal of employees.
II. Extend the enforceable mutually-agreed probationary periods for new employees from a maximum of 90 days to a new maximum of 180 days.
III. Reintroduce youth minimum wages.
Foreign Direct Investment
New Zealand needs foreign capital to support the development of infrastructure. Concurrent to a deepening of New Zealand’s capital market, foreign capital remains an important source of revenue when improving the productive potential of firms located in this country. The New Zealand Government should:
IV. Reform the Overseas Investment Act 2005 by restricting the arbitrary role of the Minister in determining applications lodged with the Overseas Investment Office.
Planning and resource management
The failure of the Resource Management Act 1991 starts with its ambiguity. Effects-based law is appropriate. But who determines those effects and the measures to be enacted to mitigate effects? Empowering local government has been to the detriment of New Zealand’s ability to develop both public and private infrastructure that in turn could create jobs and livelihoods for young people. The net effect of New Zealand’s planning laws has been the denial of opportunities to generate wealth and raise living standards. The New Zealand Government should:
V. Widen the scope for the Environment Court to determine consent applications, as well as award costs against territorial authorities and other parties that lodge unsuccessful objections deemed by the Court to by vexatious;
VI. Deny elected councillors the ability to sit on notified resource consent hearings; and
VII. Enable property owners to sue territorial authorities in lieu of plan changes that are proven to have a detrimental effect on the value of their land.
While New Zealand’s social insurance model provides a means for treating those who are subject to an accident, it does not deal with matters such as inequitable treatment costs and a loss of income due to sickness. ACC is an unsophisticated model for insuring against the impact of an accident. The New Zealand Government should:
VIII. Implement a schedule of ACC levies prior to the introduction of competition, which are based on a fair price so as to not undercut private insurers entering the new market;
IX. Mandate the competitive private delivery of compulsory accident compensation insurance in New Zealand through the Work, Earners, and Motor Vehicle account; and
X. Allow for use of experience rating and self-insurance forms, with the requirement for stop-loss cover.
New Zealand is blessed with significant mineral resources, which if extracted could earn significant revenue, create new industry and jobs. A modest amendment to the Crown Minerals Act would enable New Zealand to make significant progress in tapping its resource potential for the purpose of economic development. The New Zealand Government should:
XI. Remove up to 0.2 per cent of land from Schedule 4 of the Crown Minerals Act 1991 for the purpose of mineral prospecting.
Working for Families
Working for Families is a scheme that jeopardises the ability of New Zealand families to prosper independent of the State. The scheme is grown to become very expensive over time. The New Zealand Government should:
XII. Lower the abatement threshold for Working for Families to $20,000
XIII. Introduce a two-tier abatement rate to 35 cents in the dollar between $20,001 and $50,000, and 50 cents in the dollar for $50,001 and above.
New Zealand’s tax system needs to reward hard work, initiative and innovation. It should also enable New Zealand’s productive sector to reinvest capital so as to grow the economy. The New Zealand Government should:
XIV. Reintroduce depreciation deductibility for non-residential property classes to bring New Zealand back into line with other OECD countries;
XV. Introduce tax deductibility for seismic strengthening in lieu of changes to the Building Act 2004 and Building Code following the 2010 and 2011 Canterbury Earthquakes; and
XVI. Recommit the mutual recognition of imputation credits between New Zealand and Australia to support closer economic relations as well as investment between both countries.
Education ought not to be a debate about the pay and work conditions of teachers. Education should be about the learning journey of every child and young person. Education should promote excellence in learning, academic and vocational achievement, and it should enable people to gain skills that will prepare them for life-long learning. The New Zealand Government should:
XVII. Adopt charter schools and the introduction of bulk funding;
XVIII. Publish league tables to provide parents with information that enables them to measure the performance of schools in measures of literacy and numeracy;
XIX. Recapitate primary schools as the first step in a two-stage process of eliminating intermediate schools and reintegrating Year 7 and Year 8 students into a full primary education model;
XX. Expand the number of fee-free Trades Academies to allow more secondary schools to partnership with tertiary providers to enable 16 and 17 year olds to move to vocational training courses as an alternative to learning courses designed for university entrance; and
XXI. Introduce interest rates on student loans to price the cost of the loan finance raised to pay for tuition fees and related course costs.
Local government has emerged as a major cost driver for the business community. Ratepayers deserve value for money from local government. The local government sector is a creature of statute, which means reform of the local government sector requires decisive action by Parliament. The New Zealand Government should:
XXII. Amend the Local Government Act 2002 to repeal the power of general competence, and introduce merit-based appeals for development contributions
XXIII. Amend the Local Government Act 2002 to prohibit territorial authorities from appointing elected members to the boards of council controlled organisations and council controlled trading organisations;
XXIV. Amend the Local Government (Rating) Act 2002 to prohibit territorial authorities from setting general rates differentially on the basis that businesses can claim GST and a tax deductible expense; and
XXV. Appoint a commissioner to review the composition of the local government sector with a view to making recommendations on local government amalgamation throughout New Zealand (excluding Auckland).