By Alex Tarrant
ACT Party leader Don Brash has taken a swipe at KiwiSaver, metropolitan urban limits (MUL) , the emissions trading scheme, the pension age and Resource Management Act, while also saying the minimum wage should not apply to people under 20.
If the party gets back into Parliament following the November 26 election, ACT is a likely coalition partner in government for the National Party, with Prime Minister John Key indicating he would look to do deals with minor parties even if National could govern alone. Whether ACT makes it back into Parliament hinges on its Epsom candidate John Banks winning that electorate - something that looks likely given past experience and an indication from National that it will just chase the party vote in right-leaning Epsom.
In a speech to a Workplace Savings forum in Auckland, the former Reserve Bank governor and National Party leader hit out at KiwiSaver, saying it was nothing more than a Labour election bribe, like others such as Working for Families and interest-free student loans.
"Let me make it quite clear that KiwiSaver is a wonderful scheme for savers – the subsidies from the government are so generous that if you’re a New Zealand resident under the age of 65 and don’t belong to a KiwiSaver scheme you don’t understand it," Brash said.
"But does KiwiSaver increase national saving? Almost certainly not. The only study I’ve seen suggests that KiwiSaver has probably increased private sector saving to a very modest extent – most of the private contributions coming not from reduced spending but from a diversion of saving from other areas – but at the cost of very substantial dis-saving by the government, because of the scale of those subsidies," he said.
"It’s certainly very hard to see the logic in the government borrowing a billion dollars a year – the cost of the subsidies – most of it from overseas, to achieve a very small increase in private sector savings and the creation of a bunch of KiwiSaver schemes most of which invest most of their money overseas.
"This is not to say that New Zealanders wouldn’t be better off if they saved more than they have historically. I’m simply saying that KiwiSaver is probably on balance reducing national saving – and indeed, I’m saying that governments all over the world have discovered that they don’t actually know how to increase private saving," Brash said.
Raise the pension age
Brash said it was inevitable New Zealand would have to raise the pension age - something Prime Minister John Key and leader of the Opposition Phil Goff refuse to look at.
"For the very long term, it will be important to take steps to ensure the fiscal viability of New Zealand Superannuation. New Zealand Superannuation is, by international standards, a very good scheme – it’s a major factor in New Zealand’s having some of the lowest rates of poverty among over 65 year olds in the developed world, at a relatively low fiscal cost.But of course, that situation is going to change as the baby boomers hit 65 about now," Brash said.
Brash, aged 70, is himself old enough to collect New Zealand Superannuation. Fellow ACT MP Roger Douglas is 73.
"Every objective observer can see that the age of entitlement has to rise gradually over the next 10 years or so, as is happening in many other developed countries," he said.
"Of course, that does not mean that the retirement age needs to change – people are, and should be, free to retire when they choose. It just means that the age at which other taxpayers pick up the tab will have to gradually rise, and it’s an indictment on both John Key and Phil Goff that neither of them seems willing to be honest with New Zealanders about that reality."
Urban limits 'nuts'
ACT wanted to scrap the Resource Management Act which, together with poor actions by local government, had provided major obstacles to improving living standards in New Zealand.
"One of the ways this has happened is through the way in which this interaction has pushed the price of housing well beyond the reach of far too many New Zealanders – or more accurately, has pushed the price of residential land well beyond the reach of far too many New Zealanders," Brash said.
"We know, from the annual surveys undertaken by the Demographia organisation, that housing in our major cities is now among the most expensive in the world, relative to household incomes. And why? In large part because too many local governments have quite deliberately limited the supply of residential land," he said.
"Arthur Grimes, now chairman of the Reserve Bank, found that the effect of the Metropolitan Urban Limit imposed by the Auckland Regional Council had increased the price of land just inside that Limit by some 10 times compared with the price of land just outside the Limit.
"This is absolutely nuts, in a situation where New Zealand is one of the most under-populated countries in the world, and where Auckland is one of the most densely populated cities in the world – in terms of people per square kilometre, Auckland is more densely populated than Vancouver, Melbourne, Portland, Adelaide, Perth or Brisbane," Brash said.
The emmissions trading scheme should also be done away with, given none of New Zealand's major trading partners had one, and as it increased the cost of living.
Get rid of youth minimum wage
Meanwhile, Brash continued the ACT Party's long standing opposition to the decision to abolish the youth minimum wage.
"ACT would promptly re-introduce youth minimum wages – or better still, abolish minimum wages entirely for those under 20," Brash said.
"The most important thing for a teenager coming straight out of school or tertiary education is to get into a job without delay, whether that job pays NZ$8 an hour or NZ$13 an hour. We know that Labour’s abolition of the lower, youth minimum wage in 2008 has hugely increased unemployment among teenagers, as the National Party predicted it would at the time. It’s a scandalous indictment on the Government that they’ve failed to reverse that cynical decision," he said.
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