Fran O'Sullivan: Time to milk sacred cows

Fran O’Sullivan: Time to milk sacred cowsWhat a great opportunity for John Key to show some bottle and tackle the sacred cows that block a major economic resurgence in New Zealand. Risk-taking is in Key’s blood. He’s been a high-flying global currency trader. Unlike his… [NZ Herald Politics]

Fran O’Sullivan suggest milking some sacred cows, I’d suggest a step further. I’ve always thought sacred cows make the best hamburgers.

Instead of shrugging off the OECD’s latest prescriptions as telling Kiwis (or their Government) nothing they do not already know, Key is ideally placed to be more courageous than his predecessors and use the report to drive the essential changes needed to put the economy on a sounder competitive footing.

The report was hardly a harbinger of doom (save those words, please, for a full-on currency crisis).

But it is a much-needed reality check.

By taking some leadership and convincing the New Zealand public it needs to face up to the country’s economic predicament instead of following lemming-like down the Icelandic or Irish paths, the Prime Minister will win on political points, and could save the country from the ignominy of joining the growing list of sovereign downgrades.

Key has strong salesman skills. Kiwis have already bought his frequent line that a “diet of debt” is not sustainable.

It is time to wean ourselves off of fifty years of creeping, stealing, robbing socialism. I think we have had plenty of time to see if handout instead of hand ups work. It is clear as the lists of people waiting for hip replacements, lining up at WINZ, ACC or their doctor for the sickness benefit. Fifty plus years of rampant government spending and socialism hasn’t worked in making poor people better off. Arguably they are worse off and even more arguably we borrowsed for the mad experiment.

I don’t agree with Fran that National should abandoin itrs promises over tax cuts. The prescription shouldn’t be to cancel the tax cuts, it should be to cancel the wasteful, bloated welfare state that isn’t working. Like a household we should cut our cloth according to our income even when that income drops. We shouldn’t be raiding the pockets of the taxpayer to pay for things we can’t afford and never could afford.

So too, the debate over the ownership of non-core assets like electricity generation, the railways and banks.

On this score, Key seems concerned that National should not break its election promise not to advance privatisation in its first term in office. This pledge should not stop the Government from exploring other creative alternatives in the meantime, like issuing State-Owned Enterprise bonds and extracting capital from SOE balance sheets to either reduce the projected debt profile, or reinvest elsewhere.

It was in the initial SOE legislation after all and will be attractive to New Zealand retail investors.

Exactly….and I’d go further and suggest that we should look at some less obvious areas for full privatisation like Corrrections for example. Almost no-one sees Corrections as an asset and yet it is if you look at the balance sheet.

When faced with a decade of deficits we should be looking at ways to increase revenue and minimise expenses. Capital costs for expanding corrections is an area that could and should be funded privately.

Drastic times call for drastic measures.

Then there is the urgent need to focus attention on the looming long-term structural imbalances which will occur as too few taxpayers try to sustain the health and livelihoods of New Zealanders post the age of 65.

With nearly a quarter of the population offshore and not even contributing to the tax base, it is frankly barking to offer universal superannuation to all New Zealanders once they reach 65 years on the condition that they have lived here for a mere 10 years since aged 20 (five of the 10 years since reaching 50).

Given the demographic projections, it has all the makings of a full-scale tax revolt. Then there is the nonsense of the current age of superannuation entitlement. The reality is that in 1950-52, the life expectancy at birth for NZ males (who were the substantial taxpayers) was 67.2 years.

By 2002, it was 76.3 years.

The “retirement” age has not increased enough yet to keep pace with the longer life expectancy.

It is barking barking mad to continue witha universal superannuation scheme that gives peanuts to many monkeys. Far better to scale back universality and reward individuals for looking after themselves rather than having a population becoming bludgers from the cradle to the grave.