Sir Roger outlines plan to save NZ from borrowing

The Government is spending more money than it has and is "mortgaging our children" to finance spending increases, says ACT finance spokesman Roger Douglas.

In response, the children are leaving New Zealand for higher paying jobs in Australia.

In his speech to the Orewa Rotary Club today, Sir Roger said the international finance crisis was not to blame for New Zealand's recession.

New Zealand was already in a "bad economic situation" and the financial crisis "has simply made that situation worse".

Households have continued to spend outside their means, mortgaging their homes to pay for consumer products, and now many families will struggle to pay the interest on their debts, he said.

The Government has followed suit -- borrowing to fund spending and tax cuts -- and is also in debt.

"When international credit is particularly tight, the Government has announced plans to borrow and spend on infrastructure projects.

"We have now been put on notice that our credit rating may be downgraded."

Sir Roger said New Zealand needed lower spending and lower taxes.

Unless both measures are adopted our children will have to pay back the borrowed money, and interest, in the future, he said.

"The Government is now mortgaging our children for the next round of spending increases."

Citizens have become more concerned with "dividing the pie rather than growing it" and politicians "merely mirror the sentiment" of voters.

Sir Roger outlined his solution in the form of a new income tax system.

He wants a tax system where an individual's first $30,000 would be tax-free, above that they would be taxed at a flat rate.

The flat rate, and company tax, would be reduced to 15 percent over the next 15 years.

Families with children would receive their first $50,000 tax-free with an increased tax-free threshold based on the number of children.

Families would be guaranteed a minimum income boosted by tax credits if they earned below the threshold.

The flip-side is that individuals would have to foot the bill for their own retirement, healthcare and insurance.

Sir Roger said people would "be expected" to take out catastrophic health insurance, covering emergencies, and injury, sickness and job loss insurance.

They would then be "free to choose" other insurance coverage.

"Some say this system will help the wealthy. It will. But not as much as it will help the poor."

People would be able to chose whether to opt into the new system or remain in the old one. The system offered a new approach to help New Zealand increase productivity and combat the current economic climate, Sir Roger said.

It is similar to flat tax and guaranteed minimum income policies Sir Roger championed in the 1980s.

"It's time to quit fiddling with cents and start looking at dollars; we must shift our focus from the short-term and start looking at the big picture."

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This address shows how unrealistic Douglas's view of teh 'Real World of NZ' is.
At least three generations have been raised on the philosophy that 'the state will provide'; I doubt if there is a teacher in the mainstream NZ schools who doesn't promote this concept. How on earth does Douglas propose to change peoples thinking.
Human beings are inherently lazy, and will always look to someone elses wealth to provide them with a lifestyle; look at socilist NZ over teh last fifty years.
What NZ equires is real productive manufacturing 'value added' employment; very similiar to that which Douglas destroyed during his term as Minister of Finance.
i would love to live in a society where people provided for themselves, my grandparents did; but that was before socialisim and social engineering 'high jacked' the education system in particular, and society in general.
Succesful countries have always borrowed to 'build the future'; how many homes does Douglas think would have been built in NZ over teh last 100 years if people hadn't borrowed money to pay for teh house in the first place.
Douglas is a dinosoaur.

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Maybe you should have listening a little more closely to those "socialist" teachers. This is a PARALLEL tax plan. You can choose tax-free and throw yourself at the mercy of the insurance broker, or you can pay tax and receive exactly what you have now. So those who are "inherently lazy" can go on just as they were before, and the "movers and shakers" of this world can reap the benefits of not being taxed to the hilt for the stupidity of others. How can you argue with his logic?

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Dear Sir, flat rate tax sounds okay, until we are at mercy of those mercenary insurance companies whose levies rise year on year, covering citizens for less and less. I dont want to replace what we have with 3-400%+ insurance increases over next 5-10 years.
I dont want to see a system where 5 million people have no access to health insurance, are homeless etc.
Insurance companies will refuse to provide service at the drop of a hat; only wealthy politician types can afford that scenario. And to far the right i reckon.
Give me a public health system like medicaid in aussie here in NZ.
I'd vote for that.
What you suggest is pie n the sky sir roger
with love
kiwiboy

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It is in short a brilliant and cunning plan.

If you don't like the plan you can stick with what you are doing now, so at least there are options and choice.

Indeed, the insurance companies would need to be watched in some way so that they don't hike their premiums and make their calculations based on a fair assesment of risk and that they don't refuse to pay for a proceedure that they initially said they would cover.

Been there and got the T-Shirt.

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Wool production from Approx 560M-kg to 350M-kg. Lamb kill from 38-9M to 16-17M, 156 farmers took their own lives\ family split up farmers livelihoods destroyed. work opportunities in new industries destroyed;much social upheaval & uncertainty =family split ups etc had to increase police by1000units to keep law and order, NZ debt increased against falling export returns, His brilliance destroyed the exports gained from agriculture& new industrial exports, that I think from memory was at some $4B-NZ (quite a genius!!)I if my memory serves me correctly all the members of Parliament took a 33% increase in salary social security became biggest employer in NZ--crime out of control and more

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Roger's ideas are quite interesting, however in our household we already have Medical, Income Cover, Life, TPD, and Trauma personal insurance. We also insure our cars and our household goods, so if tragedy befalls us we have funded ourselves - unlike many NZ'rs.

As we are taking responsibilty for ourselves why then can we not claim back at least some of the cost our premiums against our tax now?

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The average Kiwi is too dumb to ever accept such a sensible tax system. It will never happen as the bulk of NZ has no financial skills- hence the raping of investors by finance companies- need I say more!!

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Responding to Bob and Kiwiboy it is tragic but true that the general public have a paranoia about what this type of proposal entails.

What an opportunity lost (to get us back to the very very top of the OECD tree)

That is absolute rubbish about the insurance companies raising premium and changing terms without notice.

There is no better example of rampant rate increases and a 'shifting of the goalposts' when it comes time to pay out than the ACC. Insurance companies are in the real commercial world where being sly about the way you do things soon brings you comeuppance.

And that's not to mention a health system bloated by bureaucracy and where a bloke can walk away with $15m and nobody really notices.

I haven't often agreed with Douglas but he sees an opportunity here and boy we are mugs not to look at it very carefully

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Poor Rodney Hide. I heard much of Rogers rant last week on the radio - just as awful as ever. The days of trusting insurance company managers has passed. Example: AIG is propped up by a socialist US treasury in an international environment where private sector losses racked up by greedy risk taking managers can only be socialised by the ordinary tax-payer "so we don't suffer systemic collapse". Can we hope that the underlying scam the "bailouts" represent can be quickly absorbed and an enlightened <fresh> structure for allocating capital resources conceived and established. What we have now is a broken system. Forget Roger quickly.

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I think its half a plan - but it's NZ's place in the world that is more important. We have a big advantage in being small but don't seem to use it. Why not adopt the US Dollar (at an easy two to one) and have say a 20 percent Corporate/flat personal tax immediately. Increase GST to 20% to cover shortfall. And bring in a 1% or 2% property tax too.

We then would gain lots of Aussie head ofices and the rest of the world would actually know our currency. And get the population up to 10 million or so - we have tons or room - still would be a tenth of the UK.

Instead we are myopic and buying into the world recession like the good leemings we are. Thes are the times of opportunity!! You can't change things in the good times - can you Rog??!!

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Are you implying that our ACC and health sectors are in tip top shape? You must have your blinkers on. It only takes a quick google search to find the thousands of ordinary, tax paying New Zealanders left totally out of pocket by this train-wreck of an organisation. And as for the public health system, last time I was admitted to hospital I spent 4 days in the corridor of an acute ward because they couldn't find me a room. There are thousands of New Zealanders on waiting lists for operations, which under Rogers system could be slashed if we were given a real incentive to take out private insurance. We need to drop this "the government will look after us" ideology. I see a lot of people saying Roger is devoid of the "Real World of NZ". Well the real world of New Zealand is that ACC isn't working, public health isn't working. But the real world of New Zealand is also that we are trapped by our socialist ideals, gripped by fear that the softest of right wing notions will make us a mini America. Roger has thought outside of the square. He's given people choice. Freedom to choose whether to fund themselves, or carry on under the governments wing. How can you disagree with that?

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What a pathetic bunch of wimps. Low tax low government interference in citizens lives is the only way to be free. At present you numb skulls work 65% for the Gumint and 35% for you and your families.the Gumint then wastes half what they take from you and makes a pigs breakfast of utilizing the balance.

You are robbed blind because you are too frightened to change. I want the Gumint outta my life as much as possible.

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Those who like the current rip-off can stay with it. Those with a bit more brain can opt for their own cover that suits their needs. Those who do not like Douglas plan do not need to take part. Those who shop around and are not lazy and want freedom can have it.

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We need serious debate and Douglas as a high profile figure who has little possibility of further high office - at this stage of his life - is providing it.

We should thank him not abuse him.

But we need to see figures too - simplified ones showing trends and comparisons.

Teachers certainly do not have all the answers, and neither do MPs.
As one comment accurately says, MPs broadly reflect what the public says, so they can win votes.

Public opinion in an open society like ours is led by a few. What worked in the 1930s in NZ or USA will probably differ from today.

The ability for hard work and enterprise to win out over a class based or religious based system was what many current Kiwis grandfathers sought when they risked all by moving in sometimes leaky boats to NZ.

We need leaders and others with bold ideas who can PERSUADE, not shoot those who disagree. And we all need to be open to changes in policy while not unduly scaring most people. A crisis is before us. We cannot escape.

Times change and so do effective solutions.

Although I do not agree with all Douglas says, its a plan. Many are scared to stand on their own, and accordingly it may not fly. But lets look at the real choices.

Abuse will not help. Don't play the man, play the ball (the ideas).

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Here I am where I am on NZ $65,000 working 23 hours a week in a lowly job teaching English I have a house 90% of the internal size of my NZ one at a third of the price. Where I NEVER lock my doors nor my car outside. It is brilliant here in Japan with a Tax and health and retirement system that is one that if you live on the bottom rung you just don't pay much. But a state managed system for both operates. If you provide your own insurance scheme and then you don’t pay (Though pushed to) that is up to you.
The state requires you are on a scheme though.
My tax take directly is Jack Squat Like $50-100 per month And then I just got $500 back at the end of the year.

I am laughing at NZ when I am not Crying that my old country is so Screwed up in its thinking.
I hoped/hope that Key will manage to un brainwash NZers from their STUPID beyond reason thinking where they send all their money through a state washing machine that makes their life hell while it categorically wastes the money without exception.

You can't send your money on a Merry Go round doing nothing and not waste it in the process before it comes out in the end having been shrunk by Bureaucrats, Advisors, Policy analists and Communications Experts that ensure you are deceived and believe you have value for your Tax Money.
Having then been handled so much and shrunk before it was spent by an actual producer of goods and services.
This is why all you mockers without reason of what old Roger says are so
SO SO Deluded.

1+1 still = 2

and the best way to make it equal 3 is to feed it directly to goods and services producers and get the multiplier effect directly going.
You still think someone handling your money will make it better spent! Hahahahahaha! It will only make it shrink!
And there you go. Down the Socialist Flush hole.

I live here in Japan with a, higher life expectancy on the Roger Douglas like health system, Lower unemployment.
And in a country where theft and crime have been on a constant downward slope since World War Two. With a quarter of the chance of being robbed or for that matter killed on the safer roads here.
Where a person is more likely to take out there screw ups on themselves than kill or attack someone else so contributing to a far lower murder and violence rate here than in NZ.
We have far higher land coverage of Green and Wild lands by percentage of the countries area.
No NZ is not amazingly Green Even Japan Kicks your Butt!!
Where we are the second largest economy in the world!!!!
Still bigger than good China that we grovel too
and only second to evil America which is more than twice the size by population and 10 + times in resources and size.
The Key to all this is and get this and compare it to every example above in which we excel here…….

PERSONAL RESPONSIBILITY

and Minimal Govt interference…each day of your life.
A Welfare state should be about a relatively cold and un attractive Backstop the best motivation to get on your feet if you are able bodied and able minded.
Family and not paid people can give the warmth you need any way.
(Look at dysfunctional CYFS for a perfect example of the inability for paid love and care to come from the state)
That in turn forces all to be as productive as they can be even when they are down.
All hand outs should carry obligation demand, gratitude and never Never NEVER be considered a right like weird thinking Kiwis have come to believe.

They should exist but should be seen as response and obligation packed gifts of love from a society that is going to hurt to have provided them.

And NZ does hurt from this foolish false love which is of the same benefit as drug addiction.
NZ’s Social welfare centric society excludes only Rich Pricks. It has to be like that to get enough socialists votes for a socialist system. 50% plus of the population need to be state dependents (or as it would be much more accurately described state Co-Dependents)

Co dependent citizens are prisoners of a failed state.
They are the ones that are neither free nor given the prosperity they deserve.

NZ is packed with resources shared with a handful of folk in small towns and one City and it can’t be rich!!???

That is a ridiculous situation. Socialism that dominates NZ’s ideology has taken us down from the top of the OECD in the 70’s to a point where we are heading out the back door of such an organisation.
Take the reality Check NZ

Join Socialists Anonymous.
Even North Koreans (Out of their country) tell you that Socialism is their Saviour as its state decimates its co dependent’s lives.

We have the light of day… Sober up and set your selves free from this destructive Dogma.

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Some economists suggest that government spending has shown to ease recessions in the past. This is Keynesian economic theory. At the height of it last century, the Swiss people refused to allow extra government spending and were seen as naive and selfish as they were against all popular economic thinking of that time. They stopped this spending through their system of Veto which is a Binding Referendum. History proved that their decision was right when the rest of the world suffered under huge rates of inflation, Switzerland probably had the lowest in the developed world.

Now the Reserve Bank Governor, Dr Bollard is saying he is concerned about the amount of debt we have as show in the current account deficit. If governments spend more in the hope of stimulating the economy they either have to borrow more or tax more. This can only add to debt worries.

I suggest, along with Sir Roger, that less government spending and more money in the pocket of citizens will encourage them to spend. Governments piling up more debt certainly isn't the answer.

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Governments do not have to borrow or tax to inject 'money' into the economy as a stimulant. That kind of mythology needs to be relegated to the rubbish bin of antiquity along with the notion that banks only lend 'money'they hold on deposit for clients.
Funding for infrastructure should be created for that purpose through a mechanism sanction by parliament and it should be created interest free.
The debt as money mechanism currently used by the banking sector is sanctioned by legislation and what is good for the speculative goose should be used for the benefit of the taxpaying gander.
In regard to Roger Douglas and ACT I note the Rodney Hide last month made the remarkable comment that no-one saw the credit crisis coming. Social Credit proponents like myself saw it coming a decade ago.

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