Task Force creates a new gap

Editorial One

Former Reserve Bank Governor and Opposition Leader Dr Don Brash may have done a handful of people proud with his 2025 Task Force Report, but according to a majority of people, it punishes the poor and rewards the rich.

The Report has understandably pleased Regulatory Reform Minister Rodney Hide and his ACT Party colleagues who subscribe to the extreme right views. They believe in private ownership of all assets, that Governments should stay out of commercial enterprises and businesses in general and that all activities should be in the private sector.

The Task Force has recommended that Government spending should be reduced to 29% of the Gross Domestic Product (GDP) immediately, capping the Crown’s operating expenses per person in real terms.

It also called for an amendment to the Public Finance Act, requiring the Finance Minister to specify a medium-term target for core Crown operating expenses.

The Report advised the Government to reduce income tax rate to 20% across the board.

John Key is keen to close the ‘Australian Gap’ by 2025, which in fact motivated the formation of the Task Force but the route to achieving it will cause public outrage.

For a start, Dr Brash has recommended lowering minimum wage (he says for the youth) should be brought down to the level prevailing in 1999.

He does not recognise the fact that wage increases are driven by Consumer Price Index and the average New Zealander knows the extent to which prices of essentials have risen over the past ten years. These include not just food items. Mortgage rates, bank charges, household items, in fact the cost of almost all items has moved up in the last ten years.

The Task Force has also suggested dismantling the Superannuation Fund, charging market rate of interest on student loans, reducing subsidies for prescription medicine, and slashing expenditure on education and health, to mention a few.

Mr Key may have caught himself in a tricky situation, appointing a Task Force at the behest of Mr Hide.

While no one questions the need to move forward, one issue must be answered with honesty and openness: “Why do we have to compare ourselves with Australia?”

The size of the New Zealand economy is only a fraction of that of Australia, while our resources (natural, financial and human) are far less compared to our cousins across the Tasman, and a majority of commercial undertakings are foreign-owned (mostly by Australians), leading to transfer of profits and capital.

In these circumstances, the report appears more ideological than practical.

For, how can any Government think of policies and programmes that are detrimental to a majority of people? Can the poor be robbed to make the rich richer?

In this connection, the submission made by Independent Business Foundation, an organisation that caters to the interests of small and medium enterprises is relevant.

It has asked the Government (through 2025 Task Force) to consider ways and means of promoting a work environment that is conducive to growth.