Lecture to POLS 110

Maclaurin 3, Victoria University, Wellington

New Zealand First has come a long way in a short time.

In 1992, Winston Peters as a National Cabinet Minister was becoming increasingly frustrated with the direction of the Party.

What had happened was that the Labour Party had shifted dramatically to the right, forcing National even further to the right.

Many, including Winston Peters and Doug Woolerton increasingly found this difficult. Winston made several statements of dissent within and without Caucus. Eventually the National Party Caucus voted to withdraw the whip from him.

Winston resigned from Parliament, forcing a by-election in Tauranga. He, of course, fought the election and won.

Meanwhile, the Labour Party moved back to its own ground on the left, leaving a wide niche market in the centre of the political spectrum. Many reckon that market was worth about 30% of the vote, and believed that no party was catering for the market.

This is where the birth of New Zealand First started. In the centre, and it's where we've stayed. That 30% is our target.

A group of people, including Winston Peters and Doug Woolerton got together and decided to form a new party. It was launched in Alexandra Park - Auckland, and named "New Zealand First".

This name didn't come about by mistake, it described the Party's philosophy to a tee.

The philosophy of:

New Zealand for New Zealanders
Practical solutions for everyday problems
A strong focus on New Zealand
However, I don't really see New Zealand First as having a single simple philosophy, but as being pragmatic. . Still to this day, that is New Zealand First's prime focus. You won't find us talking in Caucus about the great problems of the world - we talk about New Zealand, because that's what we want to fix.

If you look at our GDP figures, it shows clearly why we needed to look at New Zealand First.

New Zealand GDP is $12,500 per head
Australia GDP is $24,000 per head
Europe GDP is $36,000 per head
Singapore GDP is $40,000 per head.

You simply can't have as good an infrastructure as the rest of the world if your income is one third of other countries.

We wanted to ensure that New Zealand assets were for New Zealand, we didn't want to see our profits going off-shore, lowering GDP even further. We wanted to reduce unemployment, increase savings, and provide a social infrastructure that was equal, if not better than other countries.

The Labour and National parties set out on a mission to free up the economy, to stop inflation. To an extent this has been accomplished. However, they haven't managed to alter GDP.

All New Zealand First Policies are tailored to achieving this. A pragmatic approach to achieving better GDP figures per head.

Ensuring that we won the Maori seats was also an important tactic in New Zealand First's strategy.

Maori make up a high percentage of those in prison, on Welfare and those who are failing in school.

New Zealand First believes that only Maori can help and tell Maori what to do. Therefore, winning the 5 Maori seats was critical to putting our policy planks in place. We needed people on board who were capable of helping us tackle some of this country's most pressing problems.

New Zealand First isn't into winners and losers, but wants to create a productive consumer sector.

The Party itself is interesting. Under MMP several parties have formed, many with the blessing of the National Party. Ones like ACT, United, & the Christian Coalition aren't Parties in a traditional sense, but merely a shell to support the ambitions of politicians.

This is a flawed concept. All of those parties, except ACT, were virtually wiped out. United had it's own peculiar reasons for managing to hang on to one MP. ACT won so many seats through sheer weight of money and backing from business. It really skewed the scales of democracy.

New Zealand First is by no means a shell, but has distinct structures including local and regional committees. MPs in Parliament are answerable to that hierarchy.

We're all aware of what happened at the election. In fact you've probably studied that in greater depth than I have.

The Coalition negotiations were very important for New Zealand First. We had to make sure that we could get the best possible deal for our voters, and try to push as many of the policies that we strongly supported.

We realised from the outset that we would never be able to win all our policies. MMP doesn't work like that. I think people still have to understand that, and especially the media.

I can't believe the number of times the media have questioned me about something, and then said, "but during the election, you said ....".

Maybe I did, and it would have been about what I believed in, but this again fits into New Zealand First's stance. Pragmatism.

We wanted our policies to kick in to make New Zealand better. You can't make a difference on the opposition benches, you need to be in Government.

So, as a party, we had to decide which other party would make the best Coalition partner to deliver our policies to the best possible potential.

In this case, National fitted the bill. The Labour Party just weren't into this idea of MMP.

There is no doubt, and both sides know this, the Coalition is a marriage of convenience. It is a happy marriage, and working well. Both parties want the same thing. We want to turn our policies into action.

I think New Zealand First has done well. We managed to write, at a guess something like 70% of our election promises into the Coalition Agreement. For a Party that began with one person only 5 years ago, we've done incredibly well.

The Coalition isn't really built on trust, it's probably built on a certain level of mistrust. That's why we had to have the Coalition Agreement written down and public. I think that's healthy.

New Zealand First is low in the polls just now, there's no disputing that. We've been there before, and we then climbed to our election high. One of the reasons that New Zealand First is doing so badly in the polls just now, is because people haven't yet seen the action.

The effects of our main policies are still to hit home. Compulsory Superannuation, free health care for under 6's, abolition of the surtax, our employment initiatives .... they will all start to kick into gear later this year. We also have a series of initiatives that will be announced in the Budget.

These main policies are what many call the New Zealand First "brand". They're what New Zealand First got elected on. We need to deliver these, and we need to demonstrate that we've delivered them.

Another obvious reason we have plummeted in the polls is the media attention that has been focused on New Zealand First and the Coalition.

There is no doubt that some in New Zealand First have made mistakes. Many of us in the Party are inexperienced, and perhaps that has shown. It really is unusual for new MPs to immediately be appointed as Ministers, but in a small and new party, that's inevitable.

We are now working hard to try and reverse that image, but it isn't easy. The media are just hanging out there, waiting for every utterance and movement that any of us make. It's unusual, and I have to say, National MPs and Ministers are nowhere near under the pressure that their New Zealand First colleagues are.

Perhaps our inexperience makes us easy targets.

The media really don't seem to understand MMP. They can't seem to grasp the idea that we have moved and are now agreeing to the Coalition Government's policies. We have to, otherwise we couldn't govern. National are in the same situation, they are having to agree to some of our policies.

The media are of course always looking for splits in the Government. People always disagree, even within long established parties, let alone new Coalitions.

The media are taking the approach of speaking to a Minister and then going to their counterpart in the other Party and checking out that their stories match.

This is a new phenomenon for New Zealand Governments, and as a result we've had to put new systems in place to deal with this. You'll have read about the "buddy system". There is also now a comprehensive communication system, ensuring that issues are dealt with in a Government arena rather than the media. In reality, there are differences of opinion, it would be strange if there weren't, but there still has not been any issue that has been so major to even cause the glimmer of a potential split. It's not going to happen either.

This is a decisive time for MMP, and New Zealand First. If this Government can't work, it bodes badly for the future of MMP. I think MMP is right for New Zealand, but we all need to work harder to ensure that it works.

One of the most important issues facing New Zealand this year, is the referendum on compulsory superannuation later this year.

The debate has already started, and a few politicians have already thrown their hats in the ring. I'd like to share a few of my thoughts with you.

You've heard it said that the current superannuation scheme is unsustainable.

Even opponents of the compulsory superannuation savings scheme suggest that changes need to be made to the current scheme.

In fact, just the other night, the Hon Jenny Shipley confirmed that the sustainability of the current scheme, for those aged 45 and under, was an issue.

Opponents of the scheme suggest that one way of tackling the retirement dilemma is to increase the age at which you become entitled to claim superannuation.

To increase the age of entitlement is merely a band-aid approach, stopping the initial flow. We can't continue to do this. It's irresponsible.

Some have suggested that we could extend the entitlement age to 70. We could, but where do we stop? The situation will continue to be untenable.

We need to stop tinkering and produce a scheme that will last.

The age of entitlement has slowly been increased since the current scheme was introduced. Age 60 in 1979, 63 now, 65 by 2001. How much higher will it have to go to cover up politicians incompetence?

This method of keeping the scheme alive is a con. If we carry on this track, without planning for the future, then most people will probably be dead before they're entitled to claim.

That's not good enough.

We need an alternative approach to providing for retirement. The infamous 'baby boom' generation will start to reach retirement age from around 2010, "greying" the population. People in general are living longer. There will be fewer workers supporting each retired person than ever before.

By the year 2040, there is expected to be about two working age people for every superannuitant compared with the five working age people we have today.

If we do nothing, we will end up needing to spend a lot more on health and New Zealand superannuation at a time when there are fewer people of working age to pay for it.

If most New Zealanders were to rely solely on the present pay-as-you-go funded New Zealand Superannuation for their retirement incomes, there would be a significant disparity of tax burden between generations.

Future tax revenues are in danger of only being able to afford inadequate retirement incomes.

Opponents of the compulsory scheme need to state what the realities of the current scheme are:

the current scheme is compulsory ... you have to pay taxes
it is expensive, absorbing 20% of the government's tax take from GST and income tax
it will continue to become more expensive
The Treasurer, Winston Peters, has recently been talking about some of his ideas, and the possible direction of the scheme. His initial thoughts are promising, and look as though they can deliver a sustainable future for our retirement.

The Government will guarantee a top-up to buy an annuity for the superannuatant.

To ensure that the scheme is affordable, there will also be tax cuts.

It will be a scheme which covers all people and all types of income.

The scheme will take into account the effects on beneficiaries and low income earners ... for example, ability to pay, work incentives and equity all need to be considered.
In introducing the proposed scheme we need to be careful not to sacrifice the competitive features of our financial markets. It is vital:

That existing savings should potentially be able to comply with the Retirement Savings Scheme;

That there will be no restrictions on investment patterns, for example New Zealand versus overseas;

That investment should be broadly defined to include, at a minimum, most securities;

That there will be no government guarantee - the market needs to stand on its own performance;

That it is equitable for all, especially women.
The current national superannuation funds could be plundered by irresponsible governments in the future.

No doubt Helen Clark will promise the world to electors at the next election. But if she were to get in to Government, and found she couldn't deliver her promises, she might be tempted to dip into national superannuation funds.

This is unacceptable.

The new process of superannuation will ensure that this can't happen. The savings will belong to you, and you only.

Helen believes that individuals can't be responsible for themselves and wants the State to manage their affairs.

The funds should belong to the contributor and no one else.

Ultimately, each of us is responsible for our own welfare and the welfare of our family. Seeking work opportunities plays an important part in that, but taking a more active interest in planning for retirement is also important.

It is unfortunate that we need to compel people to save. If there were another option, I would like to see it. However, we need to be realistic and responsible and ensure that everyone is provided with at least a basic safety-net on retirement. This needs to be done while continuing to balance social spending and tax revenue.

The alternative to the Retirement Savings Scheme is the current compulsory scheme that faces an uncertain future in the face of mounting costs. Lets not forget - the current scheme is compulsory, we all have to pay tax.

The proposed scheme seeks to achieve a fair transition between the generations.

When today's young people retire, there will be a much smaller working age population to pay for their retirement. This creates a risk of insufficient funds for retirement.

The Retirement Savings Scheme will not interfere with a person's estate.

Under the current system, if your spouse dies all of their taxes are lost. Under the proposed scheme, if a partner dies before retirement, all of the partner's contributions go to the estate. If they die within 10 years of retirement, the remainder will go to the estate.

To say that this is bad for women is certainly not true.

Under the proposed scheme a partner gets support on death, under the national super they get nothing.

Our policy to introduce compulsory super was based on four principles - fairness, sustainability, a comfortable retirement income, and the national interest. And we were voted in on this policy.

I want individuals and families to support themselves and save for their futures. We need to continue to provide an affordable safety-net and assistance for those in genuine need.

I want to enable more people to look forward to a properly funded pension. A pension that grows with the economy and is free from dependence on taxes paid by future generations.

The Superannuation Accord bought politicians some time. It may have appeared to have cross party support, but in reality it was an attempt to cover up cross-party incompetence. The time that was bought is now quickly running out.

That's where I stand on compulsory superannuation. All I ask of you, is that regardless of political bias, you wait until the design team reports in June, before deciding whether you are a yes or a no.

ENDS