2025 and all that [update 2]

When Don Brash published his recommendations for making New Zealand wealthier by 2025 Productivity, the Herald in its wisdom first looked to Garth George for its response (which is sort of like asking your dog to give advice on your relationships) and then refused to publish Don Brash’s reply to the George’s blustering ignorance, which was sent to them the very morning George’s apology for mediocrity appeared in print.

Garth George, by the way, is the chap who maintains that he doesn’t even need to look at the evidence to know whether or not the icecaps are melting, because “every time I see a rainbow I have it confirmed for me. It tells me that God is keeping the promise he made to Noah after the world-drowning flood thousands of years ago recorded in Genesis....”

Facts, for the likes of Mr George, are just something he uses to fit around his pet idiocies. And since Mr George is considered, by the likes of the Herald’s editors, to be such an oracle his views may not even be challenged by those he besmirches, that tells you as much about the Herald’s journalistic integrity as you might have suspected from Cactus Kate’s recent run-in with its editor Tim Murphy recently over their journalistic guidelines [see this series of posts].

And since the Herald would sooner publish Mr George’s rampant idiocy than Dr Bash’s cogent response to it, naturally the blogosphere has been giving The Don’s reply the airing it so richly deserves.  So here it is:

Garth George is Seriously Wrong
    Garth George was way off beam in his attack on the first report of the 2025 Taskforce.
    Leaving aside the personal invective, he claims that the “biggest absurdity” in the report is the proposition that New Zealand can and should catch up with Australia. He says that “there is just no comparison between the two countries”, with Australia having five times our population, 32 times our land area, and huge resources of minerals. Well, those are factual statements about Australia, but they ignore some important facts which he would be aware of had he read the report.
    First, there is no correlation between living standards and population – if there were, India would be super-rich and Singapore would be poor.
    Second, there is no correlation between living standards and land area – if there were, Russia would be super-rich and Finland would be poor.
    Third, there is no correlation between living standards and mineral wealth – if there were, the Congo would be super-rich and Japan would be poor.
    In any event, a recent World Bank study showed that, in per capita terms, New Zealand has more natural resources than almost any other country in the world.
    For most of New Zealand’s history, our standard of living has been very similar to that in Australia – sometimes a bit ahead, sometimes a bit behind. And the Taskforce didn’t off its own bat decide that catching Australia again by 2025 would be some good idea: the goal was set by the Government itself, and the Taskforce was set up both to advise on how best to achieve the (very challenging) goal and to monitor annually progress towards achieving it.
    Too often in the past, governments have announced grandiose commitments to lift living standards – such as the last Government’s commitment to lift us into the top half of developed countries within 10 years – but then totally ignored those commitments, hoping that nobody would notice it. It is to the Government’s credit that they made a commitment and then established a mechanism to hold them to account.
    Garth George accuses the Taskforce of recommending a whole range of things which we do not recommend. For example, he accuses us of recommending a flat personal income tax, and notes that if such a tax were established a whole range of low income people would have to pay more tax. But whatever the merits of a flat tax, the Taskforce did not recommend such a tax. What we did say was that, if core government spending were cut to the same fraction of GDP that it was in both 2004 and 2005 (29%), the top personal rate, the company tax rate, and the trust tax rate could comfortably be aligned at 20%. Under such a tax structure, all those earning above $14,000 a year would pay less income tax, while nobody would pay more income tax.
    Nobody seriously argues that government was vastly too small in New Zealand in 2004 and 2005 (the end of the Labour Government’s second term in office), so why the ridiculous reaction when the Taskforce suggests reducing government spending to that level?
    Mr George also suggests that we recommended abolishing subsidised doctor visits, and implies that we are advocating an American approach to healthcare. This is again utter nonsense. We suggested targeting subsidies for doctor’s visits at those who need them, either because they have low incomes or have chronic health problems.
    He suggests that we favoured removing subsidies for early childhood education. Again, not true. What we said was that those subsidies – which have trebled in cost from $400 million a year to $1.2 billion a year over the last five years – should be focused on those who need them.
    The recommendations of the 2025 Taskforce are actually totally in line with orthodox thinking in most developed countries, and are almost entirely consistent with the recommendations of the recent OECD report on New Zealand.
    Don Brash
Chairman of the 2025 Taskforce

UPDATE 1: Matt Nolan tells me Brash’s letter finally appeared on the Herald website “several hours ago.” No sign yet in its dead-tree edition. Keep an eye out for it, and let us know tomorrow.

UPDATE 2: The frankly pathetic response to Team Brash’s report by the various apologists for mediocrity around the traps threatens to overshadow what Muriel Newman calls “probably the most important question of the decade: do we as a nation want a more prosperous future, or are we prepared to accept the continuing decline in living standards? This is the critical issue that is at the heart of the discussion over the report of the 2025 Taskforce released last Monday.” 

    “The report released by the 2025 Taskforce clearly shows that New Zealand has lost its way. This country that was a beacon for hard working immigrants from around the world, who wanted a better life for themselves and their children, has now become, according to John Key, ‘a breeding ground and giant education facility for Australia’.”

Key is now apparently happy with that status quo condition.

Read Muriel’s full commentary here: Prosperity or Poverty - New Zealand at the crossroads.

UPDATE 3: In a related debate, Eric Crampton explains how adding the various proposals for new taxes to the typical election cycle results in what’s effectively a bullet to the head of any idea of catching anyone.  Even Slovakia.

Read No tax changes without spending changes.