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Local Government

Monopoly local government activities continue to increase at a rate well above inflation.

Education

Schools and universities, despite massive increases in income over the last 10 years (already struggling) find it even more difficult to cope as increases in expenditure are now only available if politicians are prepared to increase taxation.  The increased costs of providing for the retired are taking any extra revenue government receives from economic growth limiting increases in expenditure on education to no more than cost of living increases compared to 3½% real increases a year for the past 10 years.

Health

Despite a massive 65% real increase in health vote over the past 10 years, the health system is in turmoil.  The ageing population is expected to need a further $3000 - 4000 million to just stand still (2½ - 3½% of GDP.)  The options this presents the government with are not easy

• increased taxation

• reduced government expenditure in other areas

• reduced expenditure in health (quantity or quality) or

• increased charges.

Welfare

The numbers of long-term beneficiaries continue to rise as a result of this:

• Children born in dysfunctional families.

• The fact that 40% of children coming out of schools are ill equipped to cope with the outside world.  A situation that is getting worse as a result of new technological changes.

• The breakdown of the two parent family.

Retirement

• The growth in the number of people in retirement compared to the working population - the explosion in health care costs results in a government budget under constant pressure.  Consideration is being given to a retirement age of 70-72.

• Slow growth relative to other countries along with high taxation means that 85% of New Zealanders are retiring with little or no capital or other income in retirement.

• All of this has resulted in increased levels of alienation and despondency within New Zealand society.

Summary of Future under choice and a Superannuation Savings Scheme

Incomes - Increasing relative to other OECD countries.

Taxation - Both personal and company tax rates down dramatically.

Education - Competition has led to innovation and dramatic productivity increases.  A Kings College, Auckland Grammar School education available to all.

Health - Competition has improved productivity and resulted in substantial reductions in cost while quality and services levels are up.  The customer has become king.

Welfare - Number of working age beneficiaries has dropped by more than 50% as incentives in sector have changed.

Retirement - Incomes in retirement up and moving ahead year by year.

                  Income generating assets in retirement up with each year's retirees having more and more capital.

                   Health care in retirement improving along with general improvement in health care.

                   Majority of under 30s likely to have $1 m+ in retirement.

 Future under choice Proposals Outlined

Incomes up as a result of:

• Lower taxation 15% flat company and personal taxation.

• Higher levels of productive investment

• Higher savings

• Less government

• Higher workforce participation

• Lower dependency levels

• Better education and health outcomes

• GDP growth of 4%+ a year.

• New Zealanders' income rising faster than other OECD countries

Taxation

Year 1 - Top personal tax rate down from 39c - 33c

Years 2 - 6 - 33c rate reduced by 3c a year both personal and company 21c rate reduced by 1c a year both personal and company

Year 7 - Flat tax rate of 15c

• Relevant tax rates are payable only on income above the tax-free income levels.

• Those earning income below the tax-free income level will receive a tax credit.  (Tax credit = income below threshold times relevant tax rate.)

Education

All New Zealanders are now able to afford to buy the education of their choice for their children. 

 This has been made possible by:

• Previous Education department expenditure being transferred to schools via parents.

• Lower taxation for higher income earners.

• Higher grants for children from lower income families and special needs families.

 Teachers have responded to this new situation by establishing:

• At Primary and Pre-school levels, their own schools, in many cases one classroom schools.

• At the Secondary school level chains of schools are the order of the day as the Auckland Grammar School competes with the Kings College chain and a number of others.

• Hours of day and weeks of year vary from school to school to meet the needs of their consumers (parents).

• Individual contracts between school and parents are now the order of the day.

• Outcomes have improved dramatically.

 Health

• All New Zealanders including retired New Zealanders are now able to afford to buy their own health insurance policy from competing suppliers, most do.

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