Sean Plunket & Sir Roger Douglas on CGT & more: Whaleoil transcript part 1

Sean

And, well, a bit of a blast from the past for me and maybe for many of you but perhaps a man who is very worthwhile talking to at this time and place in NZ?s history. He was, I think, the most revolutionary radical politician of my lifetime.

He came in ah? with David Lange? ah? in that snap election in 1984 called by a rather tipsy Rob Muldoon, and it seemed to me at the time that anyone who was a free marketeer had left National and joined Labour because there was nowhere else to go. And for the next three or four years we had the most remarkable transformation of our economy that we had ever seen.

And behind it, running it all, coming up with the ideas, and I must say being uncompromising about it at times, was the Finance Minister, Roger Douglas.

It all came to grief when David Lange called for a cup of tea, and maybe a lie down, and he axed the idea of a flat 25% income tax regime for everyone. And that was it. The party was over and Labour, I think, started on for another term? ah? Jim Bolger took over for National but the heydays were over.

However, we still live, I think, with the benefit, some would say, with the consequences of Roger Douglas. And as we again debate, as a nation, whether or not we need some drastic transformation, particularly in our taxation system, I thought what better time to reacquaint ourselves with Rog? now Sir Roger Douglas, and he joins me in the studio now. Mind if I call you Roger, its?

Sir Roger

Absolutely! No one calls me ??sir? so I feel more comfortable with that.

Sean

Now Roger, 81 now, eh?

Sir Roger

Yes, I?m 81.

Sean

You?re looking pretty good for it, I?ve got to say.

Sir Roger

Well, I?m staggering along, you know. Can?t bend quite as well as I used to but not too bad.

Sean

All right. You still based in Auckland? You look pretty happy and you?re still into this? You?re still into tax, economics and looking at what the government is?.

Sir Roger

I?m still looking at all those issues. Ah? um? you know? I?ve quite a bit of spare time ah? and um? I wonder sometimes where the country is going. I know a lot of people and it?s always reported that our financial position’s in great shape. Ah? let me tell you, we are not in great shape financially. Um? and maybe that?s a good place to start.

Sean

Well? well look, before we get there, I just want to ask you? CGT tax working group? you?ve had time to read the report back? broad-brush and what?s your response? What?s your response?

Sir Roger

I think broadly it?s a joke. Um? you have Cullen now saying that? um? you know? he doesn?t really hate the rich ah? but what he hates is poverty. And he is? um? inferring, of course, that if we have this capital gains tax that somehow, it?s going to eliminate poverty, or at least ah? help the position.

Sean

It?s kind of a zero-sum game, isn?t it?

Sir Roger

Well? um? not yet. But let?s talk about? ah? what he?s claiming to do. He?s going to give them? people? a tax reduction. He?s going to extend the $14,000 bracket up to 20. It?s 400 bucks a year. Tell me how 400 bucks, $8 a week, is going to solve poverty? Ah, it?s not going to solve poverty in income, and it?s certainly not going to solve poverty in terms of capital. This is really another um? um? move for the government that wants to hold? it?s all about power and that the government makes the decisions rather than you and I.

And I think the big issue, and one which I wouldn?t mind talking about a little bit, the big issue that faces us really is ?are we going to continue with central planning and where the government spends your money or mine, or are we going to allow individual New Zealanders, like you and I, to make our own decisions?. And that situation is getting worse.

We?ve got an absolute obsession with redistribution, which is negative, pull people down, ah? rather than getting rid of ah? red seating and introduce more competition. I mean, if we actually got rid of ah… all the um? handouts that Clark and Cullen put in place largely?

Sean

That?s for the middle classes, things like working for families you are talking about?

Sir Roger

Well not even working for?. well for instance, interest free loans to? ah? students. Um? ah? handouts to businesses. All those things add up to about five billion dollars if you take the two. Ah? um? so we?ve got waste money that?s ah? um? that is being spent on unnecessary items, we?ve got handouts to the rich mates and interest groups. Ah? and we?ve borrowed when there was no need ? ah? that was Key and English. And if you look at those categories I can? that adds up to twelve and a half billion. You got two and a half billion in corporate welfare that?s largely Cullen and Clark ah? and Joyce, you got two and a half billion in tertiary education bribe ? that?s largely the rich families. You know, tell me the fairness they talk about? That was Clark and Cullen. But you?ve got a family at university, two children both ah? the children of two lawyers who are earning half a million each and we are giving them an interest free loan? Where?s the fair?.

Sean

Or giving their kids the first year of tuition free.

Sir Roger

Where?s the fairness in that compared to a truck driver ah? in Otara wants to take his son into business and has to buy a truck and it costs him 15% interest. Tell me where the fairness of all that is?

And then you?ve got ah? tax subsidies for KiwiSaver. Now, who got that? It was the children of the affluent who were able to? you know, deposit the money for them. And that?s a billion dollars. Um? and there?s no need for the two billion we are going to set aside for NZ Super and the existing fund, the 40 billion, we don?t have. So, if we take that 12 billion and spread it around, we could do ah? wonders, and I?d like to talk about what we would do. We could really help the poor.

Sean

We could do wonders without hitting a whole lot of New Zealanders with a new tax, with the CGT, right?

Sir Roger

Exactly. Well, we could take that 12 billion and redistribute it so people have to decide. They lose that 12 billion dollars of expenditure and I probably don?t need to go over it again but? let me? what we could deliver. We could deliver, once the programme was fully implemented, one million dollars in retirement to every New Zealander. Even someone who?s on the minimum wage all their life, would get a million dollars because we?d give them $5,200 each. Everyone would get $5,200 to save. They?d have to put their 3% in. The employer would put their 3% and any balance, any shortfall, would be made up by the government.

Sean

Right.

Sir Roger

So, everyone has $5,200, everyone after 45 years would have $1.2 million to about $2 million, depending on the rate of return. Now that would actually help poverty.

Sean

Yeah.

Sir Roger

And? and ah? a little more than the Cullen proposal. And it costs 3,600 million, I mean billion, to do that. No 3,600 million or 3.6 billion. How do we pay for it? We get rid of the billion dollars that it costs us to give the Kiwisaver subsidy, we get rid of the two billion they are going to put in the fund because you don?t need it if people are going to retire with a million, and you get rid of 600 million dollars of the Shane Jones circus and you?ve got the 3.6. Now my question to the people is: would they rather have a million dollars in their hand or do they want to go? have it in the government?s hands?

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