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I want to start my speech by quoting extensively from what I said more than 2 years ago, January 2000. Why? Because I still believe it is relevant. I'll tell you when I stop quoting.

"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 November 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 that 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.

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.

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 that 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.

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 Humpty 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.

Our own primary objective as a political party for the next three years is very simple. We did not join ACT to create a political party like New Zealand First, willing, without regard for fact, to run any fickle line capable of grabbing short-term votes or short-term attention. We are not here for the fun of it, or for personal advancement. On the one hand, we need votes to achieve our objectives. On the other hand, the sort of popularity Winston gets by focusing on a few hot buttons will never do what we want. We built this party to do a much more serious job than that, for the benefit of New Zealand.

The 1999 election has delivered a major opportunity to ACT, but more importantly by far, it has imposed on us a huge responsibility. The Nats are wobbling all over the place. We are now, since the election, the people with responsibility for keeping a progressive liberal vision alive and well in the hearts and minds of New Zealanders. Nothing is more important to the long-run economic and social advancement of this country in the 21st century. No other avenue offers comparable gains of income and living standard at every level of society.

In the service of that mission, we need to transform ACT New Zealand, by the 2002 election, from a minor party with 9 Parliamentary seats into a major player with a critical role in policy formation. That will require a substantial increase in the number of seats ACT holds in Parliament.

We have two broad jobs to do. One of them is straight basic education about the principles and policies that deliver ever-increasing progress over time to all New Zealanders, as distinct from those which look good, but in fact over time, destroy the potential for gain. Alongside that, there are four or five areas of specific focus, where ACT has developed advanced thinking about health, education, income, disadvantage and retirement incomes. These ideas have the power to change the future in dramatically beneficial ways and in quite a short period, for all New Zealanders.

At this stage, some of those ideas are not widely understood in the community. They are capable of misrepresentation by unscrupulous opponents. But if we lose our focus

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