Brash has eight-point formula for growth

By COLIN JAMES

Holding Government spending growth to no more than the rise in population and prices is one of eight goals proposed by National Party finance spokesman Don Brash.

He stated his goals at National's conference in Christchurch yesterday. They are not yet party policy.

Although leader Bill English told the Herald he was "relaxed" about the goals, he described them as "proposed".

The eight goals pose some tough challenges for middle-of-the-road National supporters. They are:

* Restrain Government spending to its present level per person in inflation-adjusted terms. Over 10 years that would reduce Government spending as a proportion of GDP by 5 per cent, not allowing for any increase in growth resulting from the lower Government share.

* Reduce company tax and the top personal tax rate to 30 per cent.

* Reduce regulatory burdens on business, "most immediately by reforming the Resource Management Act and by making it easier for employers to end an employment relationship".

* "Move quickly to resolve serious problems of road congestion, especially in Auckland and parts of the Bay of Plenty."

* Sell "Government-owned commercial enterprises which no longer need to be owned by the state".

* Allocate more resources to reduce the risk of disease and pests becoming established.

* Encourage immigration "by those who can add to the standard of living".

* "Encourage a culture in our schools and society more generally which values business and businesspeople and recognises the importance of enterprise."

The goals follow a discussion paper Brash issued in February and take into account responses to that from National members, business and the public, which generally agree with his diagnoses.

But Brash, who is often considered closer to Act than to the core of National thinking, drew a clear distinction between the two.

He described National as a party of "limited but not minimal" Government.

For example, he did not agree that health services should be allocated "through the price mechanism" and, while people should not be shielded from the consequences of their actions, he doubted that National would insist people with diabetes through overeating should pay for dialysis or that drink-drivers who have accidents should pay for hospital treatment.

But government, he said, should be limited to: maintaining Macro-economic stability; defending the country from threats from abroad; protecting the lives and property of citizens; ensuring markets are actually or potentially competitive; ensuring provision of public goods that the private market would never provide on a purely commercial basis (he instanced sanitation and some roads) and protecting the environment - plus a safety net for those "unable to provide basic necessities for themselves".

Beyond those services, Brash said further expansion of Government activity "can damage economic growth".

He warned that in the next 30 years, under present policies, Government spending on superannuation would rise from 4.5 to 9 per cent of gross domestic product, and on healthcare from 6 to 10 per cent, taking total core spending from 32 to 40 per cent.

Doubling GST to 25 per cent would not pay for that increase.

The alternative, he said, was "major changes" in state-funded superannuation and/or healthcare and/or other items such as social welfare.

"Are you still committed to limiting the growth of the Government sector?" he challenged delegates.

"Don't leave this conference thinking that a little tweaking here and there will do it [increase growth to 4 per cent]."

Reducing Government spending - leaving citizens with more freedom - was crucial to economic growth, Brash said.

Four per cent growth was necessary to stop New Zealand living standards falling further behind Australia's, as they would on current projections.

Brash's challenge to the party is a stiff one.

He said the public was complacent and New Zealand lacked a culture of celebrating success in business and enterprise - a culture that country comparisons had demonstrated was "crucial" to economic growth.