By David Seymour, ACT Party leader
OPINION: Parliament is back after giving the country a glorious break from politics. On Tuesday, the Prime Minister laid out her Government’s plan for 2019.
But there was one thing missing from her speech. That was an answer to the question: “Where do higher living standards come from?”
The answer isn’t complicated, but it seems we have to repeat basic truths to keep them alive.
Prosperity comes from combining better ideas, more investment, and more skillful workers. That’s how you produce more valuable products and services and how New Zealanders can afford better housing, education, and healthcare.
On the other hand, the more governments throw tax, regulation and compliance costs in the gears of the economy, the slower the wheels of prosperity turn.
So, what did we hear from Jacinda Ardern this week? Did we hear how New Zealanders will be working on better ideas with more capital and greater skill? Well, no. Instead, we heard that there’ll be more tax on investment and more rules on employment.
A country can’t sustainably increase wages by wishing or by legislating.
One of Labour’s big ideas for raising living standards is so-called ‘Fair Pay Agreements’.
These are national awards, where everyone in an industry, regardless of employer, gets the same collective agreement. They can be initiated by just 10 percent of workers in an industry, or 1,000 workers, whichever is smaller. They can also be initiated in the ‘public interest’, but we don’t know what that means.
A country can’t sustainably increase wages by wishing or by legislating. The Fair Pay Agreement Working Group – led by former National Party Prime Minister Jim Bolger – argued that collective bargaining might raise productivity, but then admitted there’s no real evidence for this claim.
Instead, Fair Pay Agreements will be more sand in the gears of business, meaning people will spend more time complying and less time producing. The exact opposite of what is needed for prosperity.
National awards would take us back to an era where wages aren’t linked to effort and initiative. It is a misguided policy that would destroy incentives, tie people up in red tape, and make us all poorer.
When the economy does change, the indulgent policies of this Government will not be sustainable.
In fact, the Government’s approach is full of policies that will undermine, rather than promote, prosperity.
A capital gains tax on successful New Zealanders that will see less investment in capital in a country with an already shallow capital base. The $3 billion Provincial Growth Fund that compels taxpayers to put their money into commercial businesses that banks won’t touch. A government-run housing programme – KiwiBuild – that has been a distraction from the real task of freeing up land for new developments. Reforms that will make it easier to stay on welfare when 1 in 10 New Zealanders are already on a main benefit. Education reforms that will take control of schools away from parents and communities and give it to the very bureaucrats who have failed to raise educational standards.
These initiatives all involve more taxing or regulating of productive activities, the opposite of what’s needed for greater prosperity.
Many experts are now predicting global and domestic economic conditions to worsen. When the economy does change, the indulgent policies of this Government will not be sustainable.
New Zealanders may decide that Australia offers better prospects, just like under the last Labour Government. That would be a great shame.
ACT will keep standing for opportunity through freedom. Those are the values that enable prosperity.
David Seymour is leader of the ACT Party.