“The Government must address four key issues if we are to achieve growth in real incomes – the first being to improve workers’ skills. Skilled workers are more productive, yet far too many students continue to leave school unable to read or write. A comprehensive reform of the education system which puts students’ needs first – as set out in ACT’s ‘Free To Learn‘ policy – is needed to ensure a highly skilled workforce,” Sir Roger said.

“Experience is also crucial. Easing constraints to entering the job market – for example reinstating the youth minimum wage – will result in more young people gaining employment. This will enable them to gain experience, and set them up for a far more prosperous future.

“The second issue that must be addressed is capital formation. The Government’s wasteful spending on unproductive investments – such as KiwiRail and interest-free student loans – has seen little return on investment. This has stifled our growth. If we want to see real increases in our incomes, the Government cannot keep throwing money into poor investments. 

“Third is improvement in technology. Sound investment in technology will result in huge productivity gains as we are able to produce more with less. Increases in technology investment will only occur when we have strong property rights and when the Government encourages private enterprise through regulation and low taxes.

“Finally the Government must improve our economic organisation – which can only be achieved by improving regulation and getting rid of red tape that restricts business unnecessarily. ACT’s Regulatory Responsibility Bill would go some way toward achieving this.

“If National is serious about closing the wage gap between New Zealand and Australia – as it claimed during the 2008 election – it must adopt policies that address these four key issues. Any failure on the Government’s part to do this will see the wage gap continue to grow,” Sir Roger said.

ENDS

“While I can sympathise with students over the costs imposed on them by a bureaucratic education system, it does not excuse placing the burden of interest free student loans on all taxpayers,” Sir Roger said.

“Individuals who seek tertiary education are the primary beneficiaries upon completion of their studies, through better job prospects and higher wages. Most people receiving costly tertiary education courses are from relatively wealthy families. Those who leave school and get a job, pay for those who go on to get a degree. The less well-off subsidise the wealthy. This is Robin Hood in reverse.

“There is no free lunch. The cost to individual taxpayers of interest free student loans is considerable. For example, if interest was charged and students repaid their loans, we could lower the middle tax rate by 7-10 cents or the lowest tax rate by 3-4 cents.

“It may well be true that tertiary education helps the nation. But, so too does someone who leaves school and starts up their own business. Why should the Government tax these business activities, while massively subsidising student loans?

“ACT believes that a low level of interest should be reinstated onto student loans in conjunction with a comprehensive reform of both the tax system and Government expenditure.

“By reducing Government expenditure and substantially lowering income tax, students will be far better off in the long term – regardless of the fact that they are paying interest on loans,” Sir Roger said

ENDS

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.

ENDS

“In surveys undertaken for the Ministry of Education in the late 1990s, it was revealed that 94 percent of respondent schools felt that they had been mostly advantaged by bulk-funding, and 80 percent confirmed that their school would prefer to continue with bulk funding.

“Moreover, the idea that this would help high-decile schools is nonsense. The previous model of bulk funding was optional, and 36 percent of bulk funded schools came from those in low-decile areas – deciles 1 to 3. Why would so many low-decile schools opt in to the scheme if it harmed them?

“Over 80 percent of bulk-funded schools used the money to hire extra teaching staff. This shows that schools used the increased flexibility in order to increase teacher quantity and quality. Why should schools be prohibited from doing this?

“Far from being a bad chapter in education, school autonomy has increased around the world in the past 20 years – it is New Zealand’s education system that has been moving in the wrong direction.

“Teachers’ unions and interest groups should want good quality teachers to be well-remunerated. I am staggered by their belief that every area of school budgets – except teacher salaries – should be bulk-funded,” Sir Roger said.

ENDS

“The reality is that one of the only ways to attract the best teachers to a school is to offer them more money. Currently, the only way to offer them more money is to have them spend more time administering, rather than teaching. It’s a national tragedy that our best teachers end up doing very little of it.

“Labour seem concerned that so-called ‘rich’ schools will poach the best teachers. However, low-decile schools are the ones that receive the most Government money, and yet they are prevented from spending the money on the one thing that will have the most impact – better teachers.

“My Bill will allow Boards of Trustees to control and manage all the Government money that they receive – and if they want to pay teachers more to attract better staff, they will be free to do so. We all want the best education for our children, and this atmosphere of incentive will drive teacher performance, improving the education that our children receive.

“If the Labour Party really cares about the children from low-income households – and not the Teachers’ Unions – then they will support this Bill,” Sir Roger said.

ENDS

“At present, teachers’ salaries are set by the Ministry of Education with national pay scales being predominantly based on length of service – rather than on teachers’ ability or performance.

“Unfortunately, in the current system there is little scope for schools to recognise and reward high performing teachers with higher wages. As such, there is no wage-based performance incentive to encourage poorer performing teachers to improve. This simply isn’t fair.

“We fund low-decile schools at a much higher rate than high-decile schools, but then we prevent those schools from spending the money in the one place that would make a difference – decent teachers.

“It is a real shame that many people who would be excellent teachers are dissuaded from entering the profession because of lack of performance incentives. Teachers should be treated just like every single other public servant – performance should be the basis for pay.

“Rather than Ministry of Education bureaucrats dictating salaries from their offices in Wellington, ACT believes that the Board of Trustees at each school is in a far better position to determine who should be paid what, as they will know who the best teachers are and who is getting the best results,” Sir Roger said.

ENDS

“The supposed ‘creation of jobs’ argument is a fallacy as in reality the cycleway will not create any additional jobs at all,” Sir Roger said.

“The Government must either use taxes or debt to finance the $50 million cost of the cycleway. A tax of $50 million reduces both consumer spending and private savings by $50 million – thereby destroying as many jobs as the Government spending will create.

“Alternatively if the cycleway is financed by $50 million dollars of debt, the borrowing will help lead to higher interest cost and a decline in private investment – again destroying jobs.

“The result is merely job shuffling not job creation.

“Does this mean his project should not go ahead? Not necessarily – but the project should stand or fall on its overall benefit to tourism, not whether it creates more jobs,” Sir Roger said.

ENDS

“A recent study of almost 40 years of OECD data showed that countries which grew the most were the countries in which public sector expenditure was lowest. If we review New Zealand’s statistics against this, it paints a bleak picture for our future.

“Countries that spent below 25 percent of GDP enjoyed average annual growth of 6.6 percent, while those that spent 25-30 percent experienced growth of 4.7 percent. However, countries that spent over 50 percent, which is where New Zealand is sitting now, grew by less than 2 percent.

“To put it another way, over those 40 years the wages in those countries with growth of 2 percent rose by approximately 120 percent (from $10,000 to $22,080 annual income after 40 years), while the wages in those countries that grew by 6.6 percent went up by 1289 percent (from $10,000 to $128,910 annual income after 40 years).

“New Zealanders need to realise that there is no such thing as a free lunch. You can have all the Government handouts you like, but they come at a cost. That cost is measured in the lost opportunity of economic growth, lower wages, and fewer goods and services.

“Government spending must be reduced in order to increase New Zealand’s growth potential. If we cannot get public sector expenditure under control, it will be our grandchildren that will be paying the price of our excess,” Sir Roger said.

ENDS