Holding government spending growth to no more than the rise in population and prices is one of eight goals proposed by National party finance spokesman Don Brash.
Brash stated his goals at the National party conference in Christchurch yesterday [Sunday]. They are not yet party policy. Though Leader Bill English told the Herald he was “relaxed” about them, he described them as “proposed goals”. Detailed policy is still some distance away.
Brash’s eight goals pose some tough challenges for middle-of-the-road National supporters. They are:
* Restrain government spending to its present level per person in inflation-adjusted terms. Over 10 years that would reduce government spending as a proportion of GDP by 5 per cent, not allowing for any increase in growth resulting from the lower government share.
* Reduce company tax and the top personal tax rate to 30 per cent.
* Reduce regulatory burdens on business, “most immediately by reforming the Resource Management Act and by making it easier for employers to end an employment relationship.
* “Move quickly to resolve serious problems of road congestion, especially in Auckland and parts of the Bay of Plenty.”
* Sell “government-owned commercial enterprises which no longer need to be owned by the state”.
* More resources to reduce the risk of disease and pests becoming established.
* Encourage immigration “by those who can add to the standard of living”.
* “Encourage a culture in our schools and society more generally which values business and businesspeople and recognises the importance of enterprise”.
The goals follow Brash’s issue of a discussion paper in February and take into account responses to that paper from National party members, business and some of the public, which generally agree with his diagnoses.
But Brash, who is often considered closer to ACT than to the core of National party thinking, drew a clear distinction with the party to National’s right.
He described National as a party of “limited but not minimal” government. For example, he would not agree that health services should be allocated “through the price mechanism” and, while people shouldn’t be shielded from the consequences of their actions, he doubted National would insist people with diabetes through overeating should pay for dialysis or drink-drivers who have accidents should pay for hospital treatment.
But government, he said, should be limited to” maintaining macroeconomic stability”, “defending the country from threats from abroad”, “protecting the lives and property of citizens”, “ensuring markets are actually or potentially competitive”, ensuring provision of public goods the private market would never provide on a purely commercial basis (he instanced sanitation and some roads) and protecting the environment — plus a safety net for those “unable to provide basic necessities for themselves”.
Beyond those services, Brash said further expansion of government activity “can damage economic growth”.
He warned that on current policies over the next 30 years government spending on superannuation would go from 4.5 per cent to 9 per cent of gross domestic product and on health care from 6 per cent to 10 per cent, taking total core spending from 32 per cent to 40 per cent. Doubling GST to 25 per cent would not pay for that increase.
The alternative, he said, was “major changes” in state-funded superannuation and/or health care and/or other items such as social welfare. “Are you still committed to limiting the growth of the government sector?” he challenged delegates. “Don’t leave this conference thinking that a little tweaking here and there will do it” (get growth up to 4 per cent).
Reducing government spending — leaving citizens with more freedom — was crucial to economic growth, Brash said. He said 4 per cent growth was necessary to stop New Zealand living standards falling further behind Australia’s, as they would on current projections.
However, Brash’s challenge to the party is a stiff one. The public is complacent, he said, and there is not a culture of celebrating success in business and enterprise — a culture which he said country comparisons have shown is “crucial” to economic growth.