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Thursday, 8 July 2010

Reforming Public Services

ACT New Zealand MP and former Finance Minister Sir Roger Douglas today addressed British business leaders, economists, policy makers and political commentators at UK think-tank Reform's policy conference on reducing Government deficit and reforming public services.

Press Release by Hon Sir Roger Douglas, ACT New Zealand
Thursday, July 8 2010.

Sir Roger was invited to speak about the rights and responsibilities of individuals and the Government, and the fundamental changes that must occur to keep Government spending in check.

"The UK and New Zealand are similar in that we both have become accustomed to State funded healthcare, superannuation, education and welfare," Sir Roger said.

"However, looking to the future, the rapidly aging population and the debt incurred through massive fiscal stimulus packages will expose the current system for what it is – a giant ponzi scheme.

"The global financial crisis has seen ballooning government debt around the world as countries scramble to keep their economies afloat. Meanwhile, ever-increasing demands on public heath sectors and government super schemes will see taxpayers facing some tough decisions.

"No Government has an endless supply of cash. Taxpayers will either have to pay for services through substantial tax increases, or dramatically revise their expectations of the services they will receive.

"In New Zealand the only way forward is to move from the current 'pay as you go' system to one in which individuals have the freedom to take more control over these areas of their lives," Sir Roger said.




Rusty Kane said...

Roger sometimes forgets we live in a civilized society that cares for others. Cut the care and we became a barbaric society... Civilized societies will always have social welfare. And will always need to revise its social welfare spending and functions from time to time... Barbaric societies that don't have social welfare are no better off... in fact you will find in every case they are worse off economically than societies that have good balanced social welfare systems... Although I agree with Roger.. reform of the system is necessary from time to time.. but without it overall we would be worse off not being a healthy well adjusted society.. A wealthy society is not just about money in the bank... Its a balance off all things that make up a society which also includes money.. A wealthy country can be measured by its social welfare input. Rogers idea of wealth is to slash and burn all non productivity like social welfare sounds good on paper but in practice it rapes and kills the balance of a good society and destroys its wealth and infrastructure. For the sake of a few short sighted economic society rapists.. so they can feather their own nests... that can't see by cutting the tree they have nowhere to nest.

Steve Baron said...

Sir Roger makes a very good point and it should not be so simply dismissed as selfish Rusty. People need to take more responsibility for themselves rather than always looking to the taxpayers to bail them out. The current system is not sustainable nor efficient.

To create greater wealth, first of all, the attitude of New Zealanders must change. Most New Zealanders have grown up in an age of paternalistic government, many have come to accept that it is the responsibility of the government to continuously look after them, it is not. This attitude has a lot to answer for, given the lack of success our nation has experienced over the last forty years. As long as we continue to look to government to fix our problems, we will not be taking personal responsibility for our own lives and success. Tough decisions need to be made, but they also need to be accepted by the majority of New Zealanders.

Superannuation and healthcare in particular need to, over time, be the responsibility of each individual New Zealander.

All payments to qualifying superannuation funds need to become fully tax deductible. Taxation on Resident Interest Income and Resident Dividend Income need to be removed for individuals (not companies), therefore returning $2,768m back into the hands of New Zealanders (Treasury, 2009).

Healthcare is very much a black hole that will gobble up every last dollar of taxation, if it is not reformed. When a service does not operate in a competitive environment it is rarely efficient and usually lacks innovation. When a service is also offered free of charge it is often abused. We have seen first-hand how the American and British health systems have failed them, and New Zealand is fast becoming comparable. Public healthcare in New Zealand has become inefficient and ineffective (Elshaug, Hiller, Tunis & Moss, 2007). We need to gradually privatise all public hospitals, and citizens also need to obtain their own healthcare insurance. By privatising public hospitals I believe this will reduce the funding burden of an inefficient healthcare system on taxpayers.

That's my 2 cents worth.

Steve Baron said...
This comment has been removed by the author.
Rusty Kane said...

And a very good 2 cents worth too Steve. People will need to take more responsibility. But you also know paternalistic governments like ours National and Labour won't give it too them.

Tough decisions need to be made, but they also need to be accepted by the majority of New Zealanders.
There lies the problem. And the reason the ACT party are so low in the poles.

Change will happen slowly when accepted by the majority of New Zealanders. Not when it is forced upon them.

Its not that we have to do anything.. its that we need to do somethings more operate in a competitive environment and to be more inefficient... and for a small country of only 4 million people we do this extremely well..

It is easy to say we need to do this and that.. Like we need six times as many people.. we need to export more natual resources.. we need to cut government spending..

But most of all, you need to take the majority of New Zealanders with you.. for it to happen.

Can you really see the majority of New Zealanders wanting government to bring in more people exporting our natual resources or even reducing government services.

Its a bit like that cliche.. It won't happen overnight but it will happen.

I still believe it is a balance of both socialism and capitalism one on its own will fail.

Steve Baron said...

The size of a country is a fallacy Rusty. Switzerland is not that much bigger than NZ and far more wealthier. Quality has always been far more important than quantity.

Kevthefarmer said...

By all accounts, it is perfectly reasonable to dismiss Roger Douglas as "selfish" or, to be strictly accurate, self serving. Douglas was a labour MP for twenty one years and a natural choice for the labour party heirarchy as his family had strong ties with the trade-union movement, and were actively engaged in politics. His father Norman and brother Malcolm were both Labour politicians. During the mid 'eighties, Douglas as finance minister persued economic policies that were fully in step with the neoliberal policies of the Thatcher and Reagan administrations. As a result, he, with the support of the Labour caucus, managed to keep the Parliamentary Labour party in their careers by persuing policies that were in direct conflict with the aspirations of the rank-and-file membershhip of their party. I say this neither to condemn nor endorse those policies, but merely to illustrate the self-serving nature of the political elite.

I agree that people need to take more responsibility for themselves, but to say they are "looking for the taxpayers to bail them out" is simplistic. The tax and benefits system is about co-responsibility and it is a form of insurance which some lucky individuals (like Douglas will never be in the position of needing to avail themselves of. It is these individuals (or, rather, a subgroup of self-congratulatory ideologues) who vocally pursue this attitude of "devil take the hindmost". A few unfortunates will always need cradle-to grave support (or will we leave them on a mountainside to die, like the ancient Spartans?) The fact that there are people out there who abuse the system says more about the lack of moral values in our society which is in turn a result of a lack of social cohesion.

Kevthefarmer said...

Why the emphasis on creating greater wealth?- the era of economic growth is all over bar the shouting. The global per-capita wealth has been falling since 1970, including right through the "efficiencies" of the Thatcher/Reagan/Douglas era and has nothing whatever to do with state versus private responsibilities. It is merely a function of population growth pitted against depletion of the worlds finite resources. Surely the most desirable outcome is resilient communities, from which the above-mentioned moral values, social cohesion and yes, even a full participation in meaningful democratic processes would naturally spring.

It is true that "many have come to accept that it is the responsibility of the government to continuously look after them" but this paternalistic attitude has been deliberately fostered by politicians of all persuasions in order to undermine the notion of citizens as Sovereign. it goes hand-in hand with the "trust us, we know what's best for you" attitude. Neither the established Left or Right has any interest in fostering "personal responsibility for our own lives" as it undermines the power of the Bureaucracy on the one hand, on the other the power of Corporate Capital. People who take "personal responsibility for their own lives" are fine if they are a few high-flying entrepreneurs, but a few million of them equals a revolution! There is no-one, NO-ONE! in the mainstream political arena advocating for rights, responsibilities and sovereignty of individuals. They are weeded out by party apparatus and the electoral system itself.

Kevthefarmer said...

Given the chance, any public service will grow to the limit of available resources. Every sectional interest, be it health, pensions, education, defence etc. whether it be run as a bureaucracy or on a business model will seek to enlarge itself at the expense of others vying for the same funds. I do not believe that public sector inefficiencies necessarily cost more than extraction of profit by the private sector. Swings and Roundabouts. We need to decide how much to put in the kitty and what proportion goes to which service. Which we do. One thing is for sure, degenerate lifestyle choices makes for sick, lazy people who are a drain on us all. This goes back to moral values and social cohesion again.

Now is not the time to be encouraging people to be putting their hard earned cash into insurance companies and superannuation schemes run by banks. These loathesome snakes have been sucking the lifeblood out of society for aeons and are very soon going to get their come-uppance on account of the aforementioned "end of the era of economic growth". The banks are desperate to get "Mom & Pop" pension investors on board to justify future bail-outs when crisis comes round again (see here)
(and here)

Rusty Kane said...

Steve Baron @ 21:59
Don't forget to add agriculturally based and isolated.. Studying Political Science and Economics at Waikato University.. should tell you two things.. 1st start learning manderin as China is NZ economics future.. 2nd Switzerland the country is on a steady downward decline. The slowdown in economic activity has softened the Swiss economy. Negative economic changes in the US have a stronger influence on Switzerland than positive ones. Switzerland's banking sector which had in the past contributed an average of around 10.0% to GDP in recent years has seen its fortunes dwindle. The resilience of the Swiss franc on swiss firms is acting as an added burden. In fact, so concerned is Switzerland about the impact of its strong currency that some analysts believe the Swiss National Bank resorting to direct intervention to weaken its currency, making it the first economy within the Group 10 of industrialized nations to do so.

Right on..
We just need 100.000 of you to have 5% of the national vote.
Im in and you makes two advocating for rights, responsibilities and sovereignty of individual.

Steve Baron said...

That may be so but they still have a far better GDP than New Zealand who has been droping on OECD charts for 20 years now.

Chairman 4RDNZInc said...

The discourse on this blog, while relevant, fails to address the root causes of the problems our society faces. Much of it falls into the old trap of being distracted by minutia when radical rethinks of patently inadequate and failing financial and governance structures are essential to address the symptoms listed by kevthefarmer.
Rodger Douglas refers to state funded services as ponzi schemes,I am more sympathetic to the view that the greatest ponzi scheme of all time is fractional reserve banking, that is contributing most to government difficulties in supplying service from the tax base. The solution is twofold.

First... Tax non-productive financial instruments/activities that suck the life from the productive economy (a Tobin tax at circa 2% would provide more than enough capital for government requirements) while freeing business and citizens to utilise the rewards of their efforts in productive activity.

Second... restore citizens individual sovereignty by the use of Binding Citizens Initiated Referenda. Kev rightly points out that top-down governance has failed and the political elite, irrespective of party colour, are united in maintaining their oligarchy functioning for their own short term benefit at the expense of society at large.

We at 'For Real Democracy NZ Inc ' (4RDNZ) have just held a public meeting addressed by the Swiss Ambassador to NZ and by a well known businessman who ran as an Auckland mayoral candidate. We propose ammending the 1993 Citizen Initiative Referenda Act to make it binding on government. No one is suggesting we import the Swiss model in its entirety, but Swiss governance has a lot to offer NZ as an example.
A combination of representative democracy with the insurance and oversight/check of BCIR represents the best possible governance available. We will need to negotiate the Binding Referenda model that suits our society and culture but the present 'top down' model removes the ability of the citizen to engage meaningfully in adressing society's problems... or accept responsibility for them because his/her sovereignty has been submerged in a morass of hypocritical parliamentary verbiage. Until that model is discarded blogs such as this will be full of elegant and meaningless arguments about band-aid fixes to a dying system.
Though 4RDNZ is totally apolitical, we are supporting the petition organised by Larry Baldock to ammend the 1993 Citizen Initiated Referenda Act to make referenda binding on government as the most immediate avenue to achieve that aim. See our website