ACT: The Future (adovates "sink or swim" for NZ Maori - applies to US minorities as well)

Delivered at the ACT New Zealand 10th Annual Conference Christchurch 6 March 2004

Firstly by acknowledging that Brash was right in what he said. We have to ask ourselves why this one speech overshadowed 7 years of similar statements by ACT; why it reduced Peters from being a threat to National to being a non-entity.

Answer - voters believed Brash meant what he said. That comes from having a consistent message which leads to credibility and ultimately confidence.

Richard, in difficult circumstances, ran ACT's best campaign at the last election. Unfortunately, the policies run during the election have subsequently been overshadowed by irrelevant side issues.

Secondly, by reminding Brash and the public that in the main the Brash speech while dealing with some important issues of principle was not about solutions to the issues facing New Zealand today.

"One fundamental problem I see is one of public apathy, of defeatism, of believing that our problems are so big that we can't do anything about them.

The same sort of things are happening all over the world - gangs in Los Angeles, endemic poverty in a deteriorating Britain, violence and an unravelling society everywhere - and we think this is inevitable. I don't believe it is.

I've talked to a lot of people about what they feel is going on in New Zealand. There is an extraordinary agreement about what is right and what is wrong. I've seen what happens in focus groups that research New Zealanders' attitudes.

The interesting thing is that for the first twenty minutes, research groups of every persuasion - left and right, young and old - all talk about Maori and nothing but Maori.

Even more interestingly, they don't use the word 'Maori'. They use words like 'youth', 'crime', 'unemployment', 'drug abuse', 'violence'. In the context of these polite research groups these are the code words used for Maori. These problems affecting Maori are worrying New Zealanders deeply. The relationship we have between our two races is fundamental to our national identity; it is part of what makes us New Zealanders.

I remember a touching piece in a magazine written by a man remembering his nervousness at his first day at his first school. But then a little Maori boy came up to him and put his arm around his neck and said, "You're my mate". And so they were all through primary school. That's what our relationship should be. It's a part of our heritage and part of our living culture.

I know this is true because I've seen young New Zealanders overseas, and if they're celebrating it's not long before someone starts doing a haka. Most of us older types remember the warmth between Maori and Pakeha. This relationship between us is central to our identity as New Zealanders.

And people quite rightly perceive that this relationship is deeply threatened by what is happening, by the unravelling we see all around us. So my view is that people's perception of social decay is absolutely accurate.

While the underclass that has developed is largely Polynesian and Maori this is not a racial issue. It is a family one, and it has an economic and social root not a racial one. Studies show that children (Maori or Pakeha) born into an unstable home are equally at risk of offending against society. For both races, a dysfunctional family increases those chances a hundredfold.

The assumption that race and crime go together is totally false. (San Francisco story) Realising this makes the problem quite approachable. Solutions are possible. All it requires, like other economic and social problems, is constructing circumstances in which people's natural vitality and natural ambition to do well for their family can be expressed.

The central paradox this country faces today is that you don't cure poverty by simply throwing money at the problem. 60 years ago the emphasis of the welfare system was to make people independent - the problem is that exactly the opposite has occurred.

The emphasis today is on the State and people's welfare is incidental (e.g. Government's attitude to providing education, health and prisons).

The system has become a monstrous perversion of what was originally intended. The State unfortunately has become husband, father, provider, employer and big brother to hundreds of thousands of New Zealanders, and in the process, our values as a country have been changed profoundly.

We hear about the violence in the home and in the pubs, the statistics of abuse, battery and rape. We see the signs of:

1) Boredom, low self-esteem, hopelessness, alienation, drug abuse, crime, a high youth suicide rate all around us.

4) The creation of an underclass on subsistence benefits in perpetuity beyond the pale of a productive, self-respecting society.

When you spoon-feed people all their lives, you rob them of the incentive or even the ability to get out and make a living for themselves and their families. Just giving people money makes them poor.

To break the cycle we've got to set people up to take care of themselves and their families with dignity and independence.

The only moral or ethical policy is one that works. The rest are lies - and in the case of social welfare, expensive, dangerous and deeply damaging lies as well.

The fact is you can forget unemployment, poverty and ethnic background as causes of deep family problems like these - the popular tags are superficial symptoms rather than fundamental causes.

The pivotal issue is the quality and nature of the family and its ability to bring up children well.

Studies show that when we look at multi-problem kids, kids from what we might call chaotic families, they are fifty times more likely to be severely disturbed than those who suffer simply from poverty or simply from unemployment.

At the moment, what we are not doing is the more important question. We are not even admitting they exist - and that seems to me to be a catastrophic lack of moral or even practical purpose.

Perhaps because the group is largely Polynesian and Maori we haven't dared confront the issue. We comfortable New Zealanders have this sense, as in a dream, of something chasing us, gaining on us, and we daren't look behind to see what it is.

When being chased in a dream I am advised that you should stop, turn around and face whatever is chasing you. You ask it to do small service and all the fear goes out of the situation. So it is in life. The first point of action is to stop and confront the problem.

2) Recognise if we don't do something about it, it will cripple New Zealand. It is in a real sense the cancer within.

3) Recognise that doing something about it helps us all. We are even now paying the cost in terms of police, social welfare, special teachers, probation officers, jails etc.

4) Recognise also that help can only be provided when people have decided to help themselves. So real help has to be in the form of a carrot and a stick. It cannot be all carrot as it is today for those who want to remain dependent.

The incentives are all wrong. And while exceptional individuals may rise above the system, people will generally behave as the incentives drive them.

And let us embrace the fact that the DPB is the worst job creation scheme in the world.

Thirty years ago the illegitimacy rate was negligible (six percent for Maori, to be precise). This year the figure is seventy-eight percent. It is not widely known these days that eight out ten Maori babies are born out of marriage. The Statistics Department says it's a Maori cultural thing.

We all know this is not true. The reason is not cultural but economic. Maori girls leave school poorly equipped for the workplace. They lack confidence. Their school has not given them any skills that people want to pay for. The girls feel rejected, unwanted by the working world. They can't find a place in society or a role to play. So they get pregnant. They find the state a far better provider than their equally poorly skilled classmates. So they don't get married.

Many of these girls having children are hardly more than children themselves. And the problem is compounding. Children born to a solo mother are three times more likely to be solo parents themselves.

And the results are - crime, unemployment, poverty, drug abuse, violence, and mental illness. Maori are all over-represented in these categories and children from solo parent families are extraordinarily vulnerable to suffer these effects.

If money solves these problems New Zealand would be the safest and most successful country in the world. We've spent $171 billion on social welfare in the last twenty-five years and yet crime, violence, and poverty are all increasing.

I believe that the state has actually given up. Tired old parties and tired old politicians repeat themselves - and repeat their mistakes. I believe the reason they are continuing to pour money into social welfare is either because they can't be bothered to think about it or because they're ashamed that all their efforts have made things worse. Now Maori have more dysfunctional families than at any time in our history.

And the glaring fact about these dysfunctional families is not that they are Maori. It is how often they are solo parent families, with pathetically young mothers, hardly grown-up enough to look after themselves.

That is why the DPB for teenagers should be abolished. I am not saying we should do this retroactively. We can't leave young girls whom we have trapped in dependence in even worse circumstances.

Neither will we wash our hands of responsibility for unwanted pregnancy in teenage girls from extraordinary circumstances - rape, incest or suchlike.

But what we have to do is stop enticing more young girls or ever-younger girls into the same hopeless predicament. In practical terms we should say that in one year's time no young teenager getting pregnant would be eligible for the DPB. But those who already have the DPB get to keep it.

That's phasing out this damaging, demoralising, dangerous policy that has been the cause of so many problems in Maori people.

Now there may be parents out there who don't mind if their teenage daughter has a baby. In that case I totally support their right to arrange their family affairs as they want - but it is a private matter. If they want early grandchildren then they can support their child and their grandchild.

They should take their child and grandchild back into their whanau - support and cherish and nurture them both.

The second big issue New Zealand has to face is the question of retirement. How do we fund health and pensions 20 years from now?

I have with me a paper I prepared about 18 months ago on the issue of retirement. My recommendation to the caucus was that they get off the fence and start advocating a funded scheme. I won't have time to deal with it in detail today. (It is on my website www.rogerdouglas.org.nz or contact my office rdouglas@xtra.co.nz and I will email you a copy).

3) how in solving it we can largely solve the problem I have already spoken about (welfare and its consequences).

Let me quote what Treasurer Peter Costello had to say: "Demography is destiny" as he warned that taxes would have to rise by up to 40% unless the economy grew more quickly to generate the income needed to fund the ageing population"

Australia have a problem and obviously so do we because our growth rate over time has been more inferior to theirs, our income less, and our pensions in relative terms, more generous.

Australia's projected increase in spending on age pensions to 2050 is 2% of GDP, New Zealand 6%. Their taxes could go up by 40%. New Zealand's, you guess.

Last weekend's Sunday Star highlighted New Zealand's problems under the heading:

Included in The Periodic Report Group's 2003 report to Finance Minister Cullen had this to say:

"Healthcare costs will almost double to $13 billion, a jump from 6.3% of GDP to 11.1" and increase of 5%.

Add to this the fact that the cost of pensions will rise by 6% and you have a major problem.

Currently, simply to sit on the fence. We used to have a policy called Compulsory Savings for everyone.

What happened to that policy? Our finance spokesperson Rodney Hide decided he could no longer support such an approach. In this view he was support by Ken Shirley with Richard sitting somewhere in the middle of two clear factions within caucus.

We need to get off the fence and decide once and for all - do we favour immediate tax cuts or a super policy which would lead to even lower taxes over time?

Both approaches have advantages, but for my part I favour the superannuation approach because I believe it would go a long way to solving the social crisis we face in New Zealand. It would also differentiate ACT from all the other political parties in New Zealand. We would clearly have our own niche in the political spectrum, and we need it badly.

1) Does nothing to fix other big issues: - The social crisis we face : Super, Welfare, Health and Education.

3) Retirement benefit levels would need to be reduced as a percentage of average wages over time.

1) $4,000 real a year saved for 47 years = approximately $1m real capital savings in retirement. (See appendix 1)

3) Alters the incentives faced by those on benefits - 200,000+ back into workforce over 3 to 4 years.

4) Allows you to package changes to Education and Health to reduce government spending over time to no more than the annual increase in the cost of living not the 3½ and 6½ a year real (last 10 years) increase in these respective costs.

5) Enables you to get to a 15c flat company and personal tax rate within 10 years.

7) Major economic benefits flow from superannuation saving of $7-8 billion a year:

(a) Reduction in numbers on welfare. (b) Better use of state assets. (c) Elimination of wasteful government expenditure. (d) Elimination of government debt. (e) Students with no chance of passing university or technical institute exams not enticed to try. (f) Budget surplus reduced and therefore not available for the Labour Government to waste.

Dealing with the issue of retirement also provides us with the opportunity to largely solve the social problems facing New Zealand.

The yearly superannuation contributions are the key to changing the current welfare state incentive system.

How? By making people worse off i.e. they lose money when they are on welfare or accident compensation, rather than receive an income from the government or a government body.

People are rewarded when they are providing for themselves and their families by way of lower taxes and a $4,000 contribution to the individual's superannuation account. A non-working partner whose husband or wife is in work would also receive a $4,000 contribution to their superannuation account.

However people not in work between the ages 18-65 (on accident compensation, sickness or unemployment benefit, at university or a technical institute) would have to draw down on the superannuation contributions they would otherwise have received that year before any other help is provided by the government or in the case of a couple, both their contributions.

2) People retiring over the next 5 years to receive existing rights plus superannuation savings.

3) From year 6, retirees receive their superannuation savings plus a slightly smaller government pension (phase out of government pension to take 40 years). Super + pension for those who worked for the majority of the time they were between the ages of 18-65 would be considerably higher than today. Today's 18 year olds would be much richer when they retire.

4) A safety net pension for those who were on benefits for most of their working life would be provided.

1) Every New Zealander of working age will need to take out catastrophic insurance (beyond 6 months). Such cover would be for:

2) Minimum cover to equal existing benefit levels. Cover beyond minimum level required by law would be up to the individual.

3) Those New Zealanders unable to get immediate cover (e.g. existing long-term unemployed) would be given cover by the government until they are able to get private sector cover.

4) New Zealanders will be responsible for the payment of the insurance costs involved in having cover beyond 6 months. This will be made possible by:

(d) Government tax credits for low income earners (e.g. families with children).

(e) Lower premiums as a result of individuals covering the first 6 months of being off work.

5) New Zealanders would be responsible for meeting the costs of their first 6 months of work via:

i) Employer responsibility - (awards, legislation) ii) Individuals - any stand down period (unemployment).

(b) Draw down on government superannuation contributions for year (up to equivalent benefit level in any week).

Over time, as these elements of welfare are privatised, the cost to government of meeting accident, sickness and unemployment benefits would reduce to around 10% of what it is today.

1) Existing DPB would draw down on their own superannuation rights for the year.

2) Depending on circumstances of each case, the father's superannuation rights might be drawn upon before any government contribution made.

3) Given the fact that most schools - pre-school, primary and secondary, now open for business around 7.30 am and remain open until at least 5.30 pm solo parents would be expected to look for part-time or full-time work. Given that 60% of mothers in two parent families work either part or full-time, it seems reasonable to expect solo parents to do the same.

4) The educational tax credit available to solo parents who work either part or full-time could be adjusted to take into account the extra costs involved.

1) All benefits and allowances for young people under the age of 18 will be abolished and support for young people aged 16 and 17 without income, e.g. DPB or unemployed will be the responsibility of parents who will in special circumstances be able to draw down on their superannuation fund contributions and those of the father.

2) Emergency assistance in special circumstances will be available for those estranged from their families. Government would draw down on families superannuation rights for that year to help meet any costs.

(a) Their own superannuation rights for the year (b) The father's superannuation rights for the year before (c) A government benefit was available.

2) Given the fact that most schools - pre-school, primary and secondary, now open for business around 7.30 am and remained open until at least 5.30 pm solo parents would be expected to look for part-time or full-time work.

3) The educational tax credit available to solo parents who work either part or full-time could be adjusted to take into account the extra costs involved.

1) Given the hours schools are now open both parents would be expected to continue to work.

3) If non-caregiver failed to meet any support payments due, then non-caregiver's super would be available to caregiver.

(a) Own super rights (b) Non-caregiver's support payments (c) Non-caregiver's super rights (if b not paid) before (d) A government benefit was available

3) The educational tax credit available to solo parents who work either part or full-time could be adjusted to take into account the extra costs involved.

These changes would reduce the cost to government of meeting DPB payments to less than 40% immediately and 20% over time.

1) Lead the charge in demonstrating to people that a viable alternative to current policies exists.

ACT's job is to put its alternative approach to the voter in a straightforward but stark way e.g. :

1) Is the present welfare, education health and government ownership system worth what it costs you i.e. $1million in capital in your name on retirement?

2) Is it worth the loss of income you will thereby suffer in retirement (i.e. $800 a week)?

3) Is it worth losing the right to send your child to the school of your choice?

4) Is it worth losing the right to have your own and your family's choice of health insurance?

5) Is owning the Post Office, Broadcasting Services etc. worth $200,000 in capital to you and $10,000 a year in retirement?

1) We have to start putting people ahead of state owned and operated institutions.

3) In the social policy area, we need to do more for consumers by changing the environment in which the service providers operate - more than simply just adding to our so-called investment in the existing institutional set-up.

4) I believe my strategy can deliver on all of these scores. That it offers the means of changing incentives and attitudes so that providers faced the incentive to work in ways that best achieve our goal of putting people - the consumer in the system - first.

My problem now is having to learn about English politics - it's really frustrating, coming from a country where i have been immersed in politics since i was small, to somewhere where, although i know the basics, i don't feel that i can participate properly in debate because i haven't been there through it all and i don't understand all the subtleties. it's fun to Blair bash though!

god knows - my mum hopes forever, so she has a bond fide excuse to come over once a year. i'm sure i can find myself a nice english boy and settle down!

if labour stays in at the next election, there's certainly no reason for me to be itching to get back home - Blair is better than Clark!

,,, Klark would be with the GREENs like a shot but she knows it's too fringe for most voters. She has to stay in what most centre left voters perceive to be the mainstream option to keep power, which is all she's there for. Sitting where he is, with the GREENs, Keith Locke has more credibilty. At least he's not masquerading.

<< My problem now is having to learn about English politics - it's really frustrating, coming from a country where i have been immersed in politics since i was small, to somewhere where, although i know the basics, i don't feel that i can participate properly in debate because i haven't been there through it all and i don't understand all the subtleties. it's fun to Blair bash though! >>

Good luck. With politics and with ridding world politics of the multiplicious fascissocialist, Blair. [And his gang]

British politics, sadly, has no conservatives in the American sense of what one of those is and has pretty-much degenerated to a bun-fight among woosses and ponces [Not including the beautiful Boris] as to how to squander the loot piled high by the obscene confiscation of the wealth of Britain's few remaining [And very seriously work-ethic-challenged] industrious and productive -- its creative and innovative having long ago become Americans.

Perhaps you might introduce them to libertarianism and start an ACT-styled party of your own?

Beware of muggers and robbers who seem to have no fear and to get very little visible police attention.

My son lives in Bristol and I visit quite often. Although Bristol is still quite delightful, the continuing deterioration of London's standard of living is palpable on every visit -- and since my first [1962!] visit: unbelievable!

And, it goes without saying, beware of them-thar FR-abusing virtual "romeos!"

Kia Ora and Blessings -- Brian

[G'Day, shaggs, how's it going in the Windy Capital? P says, G'Day, too -- and to H. -- Love and fellowship -- B A]

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