1 Dec 2009

Much of taskforce report impractical - English

8:45 am on 1 December 2009

Finance Minister Bill English says much of the report of a government-appointed taskforce on closing the income gap with Australia is not practical.

The 2025 Taskforce issued 35 recommendations to raise the standard of living in New Zealand on Monday.

Its prescription for the economy include slashing taxes and government spending, widespread asset sales, more flexible labour laws and introducing greater competition in health and education.

Taskforce chairperson Don Brash says a cut in spending of about $7 billion would enable the Government to cut the company and top personal tax rate to 20%.

Dr Brash says cutting red tape would also go a long way toward closing the income gap with Australia by 2025.

Mr English says lifting incomes and closing the gap with Australia is an important aspiration, but the taskforce report is too radical to implement in its entirety.

"There's quite a lot of it not practical from the Government's point of view. There's some good ideas in there, some of which reflect the Government's position - spending restraint and an interesting discussion about the exchange rate and what we can do about the volatility of the exchange rate."

Mr English says some of the proposals would involve breaking promises made by the National Party.

Labour Party leader Phil Goff says he believes the taskforce report will be used as a stalking horse for more spending cuts by the National Government.

Mr Goff says given that the taskforce is headed by Dr Brash, a former leader of the National Party, its recommendations are entirely predictable and he questioned why the Government commissioned the report.

ACT Party leader Rodney Hide says the Government is likely to follow through on some of the recommendations. He believes New Zealand needs to be more ambitious and closing the income gap with Australia will require political leadership.

Business Round Table chief executive Roger Kerr says the Government will have little choice but to implement the taskforce recommendations if it wants to catch up with Australia.

Report return to failed policies, say unions

Health and education unions have dismissed the taskforce's report as a return to the failed policies of the 1980s and 1990s.

The 2025 Taskforce report recommends competitive funding for schools and health services, and the axing of subsidies which have cut the cost of childcare, visits to the doctor and prescription drugs.

It also recommends a voucher system for schools, and urges the abolition of interest free student loans and the cap on university fees.

PPTA president Kate Gainsford says these are old policies which have been proven not to work and they will not close the income gap with Australia.

Tertiary Education Union president Tom Ryan the recommendations will limit access to a university education for many people, which is the opposite of what Australia is doing.

However, the Medical Association says a reduction in primary health subsidies is probably inevitable.

Association chair Peter Foley says the subsidies are an ideal that may no longer be affordable and many health workers accept they may have to be trimmed.

Dr Foley says GP practices are well-placed to decide which patients need subsidies and how much they should be.