ACT New Zealand was founded as a new political party, committed to lift the rate of economic and social progress in this country, on behalf of all New Zealanders. Our members share a personal conviction that this country, for decades under successive National and Labour Governments, has been failing to use its opportunities for economic and social advancement We want to change the culture and habits of thought which have, for much of our lifetimes, put leg-irons on our nation.

Thanks to the energy and dedication of its members, ACT is now positioned in Parliament and the country to promote those ideals and objectives with a strong and increasingly effective voice. ACT members take up their cudgels for the coming battle expecting three years of breath-taking and occasionally horrendous excitement. We are determined to ensure that our ideals play an increasingly important role in public policy.

This document is open for discussion at Act's Annual Conference on the afternoon of the 18th March 2000 at the Centra Hotel, 128 Albert Street, Auckland.

It is important for all of us to understand the context in which ACT will be operating during the next three years. I do not share the shallow optimism expressed, not always with conviction, by financial analysts and the business community. They have suggested, that fundamentally, policy is not going to change very much under the new Government. The view that the members of the Coalition that took power last December are a milk-and-water bunch interested primarily in cosmetic change is, in my view, misguided.

A large number of the people in this new Coalition have, for most of their lives, been regarded quite rightly as economic and social nutters by most of the New Zealand community. The forces battling for control of the coalition are more divided and more extreme than anything we have seen in Government in New Zealand in my lifetime.

The extremists of the left, spurred on by powerful vested trade union interests who funded and organised their campaign for power, will take every step they think they can get away with, to unstitch the reforms of the period since 1984, and return this country to the divisive socially and economically unjust policies of this country's low-growth past. Not least among them are the public sector unions determined to preserve and protect traditional state monopoly services in the education, health and social sectors.

Those interests will have the total communications resources of a Government spending more than $35 billion a year to help sell the one key thought that unites them in their differences that competitive enterprise is bad for New Zealand and New Zealanders.

That's an important consideration because, to sell their policies to the public, they have to systematically misrepresent, discount or ignore the damage they are going to do. They have to persuade people against fact and reason, for example, that a higher minimum wage doesn't reduce work opportunities available to disadvantaged people, or that its impact on them is minor, and unimportant in some wider scheme of national benefit.

To restore special privileges to unions in the workplace over all other bargaining agents, they have to persuade people, against the grain of all past history, that union officials are not going to put abusive pressure on workers who prefer individual contracts, or that individual contracts are anti-social, and pressure is justified on 'scabs'.

You will see this Government using the full power and authority of the State to persuade people that, just as pigs can fly, less flexible arrangements in the workplace will improve the ability of small businesses to lift their earnings and increase the incomes of their staff.

During the next three years, Clark and Anderton are going to spend every cent they can afford, making business dependent on them as far as practicable by providing an ever-increasing range of subsidies to an ever-widening range of firms. Subsidies are, like heroin, addictive. Their availability, and the potential to increase them through political pressure, erodes the business imperative to maintain competitive international efficiency. Once efficiency falls, firms become increasingly dependent on the State. That suits Labour and the Alliance, but it will always ultimately be disastrous for New Zealanders.

I think we can also expect to see developing public misgivings and concern in the face of the dogmatic, bullying posture, which Helen Clark is adopting with increasing frequency since she assumed the power of the Prime Ministership. 1t makes sense to ensure that the public sector provides dedicated and efficient service, and gives value for money. 1t does not make sense to create a climate that sends signals to competent people with initiative that they should steer dear of employment in a public sector under her control.

The new Government has developed a nasty habit of seeking popular approval by looking for buttons that release punitive emotions in the public, then taking instant revenge on individuals to gratify the feelings thus aroused in the voting public. That cheap appeal to the lowest-common-denominator approach is not a constructive way to govern. The worst part of that approach to winning public applause is that it can be very catching. Act's reputation will not be enhanced among people of judgment by following Helen Clark down that road. We should, in my view, avoid it like the plague.

The consequence will be an outflow from these shores of our brightest and best talents which will have enormous long-term consequences for New Zealand. The average working family already resents the extent of free-loading at their expense which has been permitted by past governments. The additional free-loading encouraged by Labour, the Greens and the Alliance will harden social attitudes against the disadvantaged. The people Labour says it wants to help will all be worse off by 2002 than they were in 1999.

Labour still fails to understand incentives. They think earning should be punished, and failure to earn should be rewarded. That approach over time impoverishes everybody.

Theoretically, the Parliamentary National Party, with the experience of Government at its fingertips, should be ideally placed to trash the economic and social nonsense which the new coalition aims to introduce so rapidly. But the past 12 months have profoundly damaged National, not just in the public mind, but also in its own internal relations.

National's fighting capability is corroded by the awareness of their MPs that they were not defeated by Labour, the Alliance or the Greens. They were destroyed from within by the abysmal inadequacies of their own professional performance as Ministers. By November, people were fed up to the back teeth with that incompetence, and decided on the balance of evidence that National had forfeited the right to remain in office.

As the former National Cabinet look round for someone to hold responsible, they have no one to blame but each other. The key players in the National Party are now deeply and personally divided. They differ among themselves on policy, strategy, implementation and communications, and they are at loggerheads in their personal ambitions.

Six months ago, Bill English was visibly in line to succeed Jenny Shipley. Today, nobody inside or outside the National Party thinks he performed well as Treasurer. Creech, the nominal deputy leader, and English both, at the most critical moments of the campaign, instead of mounting a coordinated front with their colleagues, vanished like two puffs of smoke from the national stage. Caucus confidence in them was damaged fundamentally. Succession, instead of being clear, is now wide open and immensely difficult to settle.

The position of Party leader exerts an irresistible magnetic attraction on the ambitions of politicians, many of whom don't have a tenth of the ability required to perform in that role. A lot of hats are being thrown into the ring. For a long time to come, the real interest of the top people in National will be scoring off each other rather than Labour.

They were tatty and divided in Government. They are likely, for the foreseeable future, to be just as tatty and just as divided, in opposition. Jenny Shipley holds her place by default while her senior colleagues jockey and jostle for position against her and against each other. With so many hats in the ring, the task of putting Humpfy-Dumpty together again will take at least two years and it may well take as much as two parliamentary terms.

Moreover, when National does finally get an act together, it is impossible to predict at this stage what policy direction will emerge. The new generation rising to the top of that party does not have any proven commitment to competitive enterprise as the optimal engine for future economic and social advancement. Willingness for the sake of power to compromise past any point of reason brought National to its knees in the last three years.

English has been visibly tempted to rival Clark and Anderton as far as practicable, on Government spending. Firms dependent on State aid fight very fiercely to avoid being weaned off subsidies. National has in the past been happy, for political advantage, to bend with that pressure by extending the subsidies being paid to uncompetitive businesses.

The reforms of 1984-88 and 1991, by transforming New Zealand into an internationally competitive society, have greatly improved incomes and social justice. If we maintain the momentum of reform, greater gains will be available in future. But our new Government aims to blot out all public perception of those gains, and National, as the new Opposition, has, for the moment no idea where on earth it wants to go in the foreseeable future.

National still fails to grasp that power for power's sake is not enough. Until they decide what they stand for, their contribution to progress will continue to be very limited.