How can we achieve our goal of 10^th by 2010?

My view is:

• That it can only be done if we find a way to change the attitude and contribution of the 1M+ New Zealanders who currently feel alienated from New Zealand society.

• The only way to do this is to package social policy reform as we did economic reform in the 1980s.

• Some elements of such a reform programme won’t be 100% pure (that was equally true of the economic reforms of the 1980s).

• Our policies need to be practical – we need to start by taking account of where New Zealand is today.

• We need to take account of the goals, aspirations and incentives facing individual New Zealanders.

• We need to advocate a social policy package that has a chance of making a difference to the lives of those 1M+ people who feel alienated from New Zealand society today.

We start by solving the Superannuation problem that faces New Zealand and has done for more than 30 years.

• 25% of New Zealanders have no savings – their debts exceed their assets.

• Another 25% have little or no savings except possibly a small amount of equity in a home.

• Large numbers of these people feel alienated.

• The Government takes $300,000+ from a large number of this group over their working life and then gives them a pathetic pension in return.

• What would the position of these people be if they were allowed to save that $300,000 and earn interest on it?

• How would same people who currently have no capital in retirement feel if they retired with $˝m+?

• My view is that over time it would change the negative attitudes and perceptions of more than one million New Zealanders into positive attitudes and perceptions of New Zealand and their role in it.

• In addition, the majority of the 400,000 New Zealanders of working age not currently employed and their families costing working New Zealanders well over 12 Billion a year ($6000 a year for each working person) would become contributing members of society.

Only ACT is free enough in its thought process to do it. I say let’s do it – I know there is debate within the Parliamentary party about the merits of such a proposal – I understand the economic arguments made by some but given where New Zealand is today, the social and economic advantages of such a proposal far outweigh any negative aspects. The following facts remain relevant:

• One Million New Zealanders who have no savings could retire, in time, with $˝m+.

• The social benefits flowing from this fact in terms of lower crime and the way people behave and feel about themselves would be enormous.

• These benefits, on their own are huge, and merit making the changes suggested for their own sake, but of even more importance is the fact that they hold the key to successfully changing the negative incentives of New Zealand’s current welfare system.

• We finance the current and future cost of superannuation out of the Forecast Surplus and Government contingency allowance, 5˝B in 2004. To the extent this is not available, we do it from new income and expenditure savings as follows:

• Immigration – (i.e.) By tendering places available $2B a year

• Saving in Government Expenditure including Social Welfare $2B a year

• Privatisation $2B a year

• This would then allow us to allocate the present cost of Superannuation among the 2 million New Zealanders between the age of 18 and 60 i.e. $2500 each.

• $2500 saved for 47 (number of working years between 18-65) at 6% real = $665,000 available in retirement. This amount would increase over time as current retirees start to meet some of the costs of their own retirement. This would result in individual savings per year rising from $2500 to well over $3000.

• Having solved the Superannuation issue we could move to choice in Health and Welfare by way of a 100% tax rebates (or tax reduction) for those aged 18+

Money available

• Health (60%) of current expenditure = 4000 million

• ACC = 1400 million

• Unemployment = 1200 million

• Sickness = 400 million

• DPB (˝) = 1000 million

• This would be divided amongst the 2 million people of working age, taking into account, size of family, age, employment and health record etc. This money would be banked along with their superannuation.

• From their Superannuation/Welfare Account, New Zealanders would be required to take out private insurance to cover sickness, unemployment, ACC and health problems of a catastrophic nature.

• They would self-insure for minor costs e.g. day to day health costs and short-term periods off work for sickness, accidents or unemployment, self-insurance would start at 2 weeks a year and moving to 26 weeks over 12 years.

• Government would become insurer of last resort i.e. where an individual could not get cover.

• New Zealanders with families would also be eligible for tax credits equivalent to the amount of money the Government currently spends on their children’s education, provided they spent money on an approved school (Public or Private).

The benefits that would flow from such a programme (capable of being introduced over a two-year period) would be enormous.