Taskforce report gets the thumbs down - again

The latest report setting out ways to close the income gap with Australia has been brushed aside by the Government and described as "ideological claptrap" by the Labour Party.

The 2025 Taskforce released its second report yesterday, warning that unless the Government quickly changed direction there was no chance of catching up and stopping the brain drain.

A year ago, in its first report, the taskforce put the gap at 32 percent.

In its second report it says that on current policy settings it will grow to 42 percent by 2025.

Chairman Don Brash, former Reserve Bank governor and National Party leader, said unless the Government was serious about closing the gap up to 400,000 New Zealanders could emigrate during the next 15 years.

The taskforce is still promoting the policies it set out in its first report, which the Government said at the time were too radical and would break election promises.

They include slashing government spending by $9 billion, cutting taxes, reducing beneficiary numbers by "ambitious" welfare reform, raising the pension age, cutting subsidies for health and education, reducing the minimum wage, selling state-owned assets and vigorously encouraging foreign investment.

Finance Minister Bill English made it clear those recommendations were still politically unacceptable.

"Any changes must meet the tests of fairness and equity, be consistent with our election promises and occur at a sustainable pace," he said.

"The Government will consider some of those ideas, alongside the range of other advice we receive, and make practical decisions."

Labour's finance spokesman, David Cunliffe, said although the report's recommendations were nonsense it did show that the income gap was growing which the Government was trying to deny.

"If we are going to persuade Kiwis not to follow their dreams on the other side of the Tasman we need to be promoting a value-added and high-tech economy, monetary policy that assists our exporters, policies that address the savings gap, and tax and social policies that are fair for all Kiwis," he said.

"National is doing none of this. Instead it is wasting money on this taskforce. It should scrap it now."

BusinessNZ chief executive Phil O'Reilly said the Government was gradually reducing its spending but to close the gap it needed to do more.

"It could be done in a way that reduces the burden on taxpayers while still providing social services for those in genuine need," he said.

Dr Brash isn't backing off the recommendations, even though they find no favour with politicians.

"The taskforce wasn't asked to find ways to close the gap that were politically acceptable," he said.

The taskforce was set up by the Government in 2009 under an agreement with the ACT Party, and has a life of three years.