Don Brash responds to Garth George

Don Brash wrote a let­ter to the Her­ald regard­ing the seri­ous errors about the 2025 Task­force report that Garth George had in his col­umn. The Her­ald has refused to pub­lish it, prov­ing once again that the repeaters and the edi­tors of our media are seek­ing to con­trol the message.

Accord­ing Don has asked that I and other pub­lish his let­ter. I have agreed.

GARTH GEORGE HAS IT SERIOUSLY WRONG

Garth George was way off beam in his attack on the first report of the 2025 Taskforce.

Leav­ing aside the per­sonal invec­tive, he claims that the “biggest absur­dity” in the report is the propo­si­tion that New Zealand can and should catch up with Aus­tralia.  He says that “there is just no com­par­i­son between the two coun­tries”, with Aus­tralia hav­ing five times our pop­u­la­tion, 32 times our land area, and huge resources of min­er­als.  Well, those are fac­tual state­ments about Aus­tralia, but they ignore some impor­tant facts which he would be aware of had he read the report.

First, there is no cor­re­la­tion between liv­ing stan­dards and pop­u­la­tion – if there were, India would be super-rich and Sin­ga­pore would be poor.

Sec­ond, there is no cor­re­la­tion between liv­ing stan­dards and land area – if there were, Rus­sia would be super-rich and Fin­land would be poor.

Third, there is no cor­re­la­tion between liv­ing stan­dards and min­eral wealth – if there were, the Congo would be super-rich and Japan would be poor.

In any event, a recent World Bank study showed that, in per capita terms, New Zealand has more nat­ural resources than almost any other coun­try in the world.

For most of New Zealand’s his­tory, our stan­dard of liv­ing has been very sim­i­lar to that in Aus­tralia – some­times a bit ahead, some­times a bit behind.  And the Task­force didn’t off its own bat decide that catch­ing Aus­tralia again by 2025 would be some good idea: the goal was set by the Gov­ern­ment itself, and the Task­force was set up both to advise on how best to achieve the (very chal­leng­ing) goal and to mon­i­tor annu­ally progress towards achiev­ing it.

Too often in the past, gov­ern­ments have announced grandiose com­mit­ments to lift liv­ing stan­dards – such as the last Government’s com­mit­ment to lift us into the top half of devel­oped coun­tries within 10 years – but then totally ignored those com­mit­ments, hop­ing that nobody would notice it.  It is to the Government’s credit that they made a com­mit­ment and then estab­lished a mech­a­nism to hold them to account.

Garth George accuses the Task­force of rec­om­mend­ing a whole range of things which we do not rec­om­mend.  For exam­ple, he accuses us of rec­om­mend­ing a flat per­sonal income tax, and notes that if such a tax were estab­lished a whole range of low income peo­ple would have to pay more tax.  But what­ever the mer­its of a flat tax, the Task­force did not rec­om­mend such a tax.  What we did say was that, if core gov­ern­ment spend­ing were cut to the same frac­tion of GDP that it was in both 2004 and 2005 (29%), the top per­sonal rate, the com­pany tax rate, and the trust tax rate could com­fort­ably be aligned at 20%.  Under such a tax struc­ture, all those earn­ing above $14,000 a year would pay less income tax, while nobody would pay more income tax.

Nobody seri­ously argues that gov­ern­ment was vastly too small in New Zealand in 2004 and 2005 (the end of the Labour Government’s sec­ond term in office), so why the ridicu­lous reac­tion when the Task­force sug­gests reduc­ing gov­ern­ment spend­ing to that level?

Mr George also sug­gests that we rec­om­mended abol­ish­ing sub­sidised doc­tor vis­its, and implies that we are advo­cat­ing an Amer­i­can approach to health­care.  This is again utter non­sense.  We sug­gested tar­get­ing sub­si­dies for doctor’s vis­its at those who need them, either because they have low incomes or have chronic health problems.

He sug­gests that we favoured remov­ing sub­si­dies for early child­hood edu­ca­tion.  Again, not true.  What we said was that those sub­si­dies – which have tre­bled in cost from $400 mil­lion a year to $1.2 bil­lion a year over the last five years – should be focused on those who need them.

The rec­om­men­da­tions of the 2025 Task­force are actu­ally totally in line with ortho­dox think­ing in most devel­oped coun­tries, and are almost entirely con­sis­tent with the rec­om­men­da­tions of the recent OECD report on New Zealand.

Don Brash
Chair­man of the 2025 Taskforce

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