Dialogue: Business deserves full backing

By RODNEY HIDE

We must get 100 per cent behind businesses to improve New Zealand's dismal prospects for economic growth and material advancement.

Entrepreneurs provide the jobs and wealth that the rest of us enjoy. We need to recognise that.

Business, not Government, creates wealth. We need action, not words. We must make doing business in New Zealand more profitable and less risky.

The Government can do both. Income tax now takes one-third of all business profits. We should drop the top rate of income tax to 20c in the dollar. That would increase business profitability 20 per cent. Investors and entrepreneurs would then get to keep 80 per cent of their profits instead of 67 per cent.

The result would be increased investment, more business, more growth, increased prosperity and more jobs.

Two big risks New Zealand businesses must confront are also Government-sponsored. The first is the Resource Management Act. The act means private property owners simply cannot know what they can and can't do with their property as of right - they must obtain permission. The Resource Management Act is a serious risk for anyone investing in New Zealand.

The Government's key role is to protect private property rights: it should return to that role and provide full compensation to property owners wherever property is taken for the common good.

The second big business risk is employing people. Specialised Employment Courts now apply the test of good faith bargaining - a test that remains undefined and elusive.

Employing staff is now a big risk. There is an entire industry pursuing personal grievances against employers and it's next to impossible to dismiss unsuitable staff.

Making it hard to dismiss someone because they are unsuitable or because of a business downturn, makes it less likely that they will be offered a job in the first place. Employment contracts should be simple, and overseen and enforced by ordinary courts.

We must reform welfare. For every two people working we have one on welfare. Open-ended welfare has spawned a nation of whinging state dependents. It's wrong that able-bodied young men can choose not to work and live off everyone else. It's wrong that young women can choose to have a baby as a career choice.

Over half of all income tax now goes directly to welfare. This compares to just 3 per cent spent on policing. But the personal and social cost of mass dependency is far greater than the financial cost. Entrenched welfare dependency is the key determinant on every measure of poor outcomes for children. One child in four now lives in a benefit-dependent household.

We need time limits for the dole. We should expect those who are able to work to work. And, at the very least, we should eliminate the DPB for teenage girls. It is wrong to entice young girls into having children with the promise of money.

In the longer term, our economic success depends on our success in the classroom. Teachers must be paid properly. Schools must be held accountable for learning.

The way forward is to break up the state monopoly and pay for the students, not the schools.

That would open our schools to competition, it would mean more parents could send their children to private schools if they chose, and parents now sending their children to a private school would not have to pay twice - once through their taxes and again through school fees.

The Government needs to focus on doing the basics and doing them well. That means the police and the military must be funded to do their job.

What Helen Clark has spent this year on arts and culture would have kept our combat air wing flying for five years. A 10 per cent reduction in welfare would enable defence spending to be more than doubled.

The Government must also ensure that basic infrastructure is supplied. That means completing the motorway network and ending Auckland's gridlock. Failure to provide the motorway network Auckland needs has placed huge costs on business and huge frustrations on motorists.

The Government must get right behind mayor John Banks and his council to provide the basic infrastructure Auckland needs to remain a first-class city in which to live and do business.

New Zealanders are a fabulously productive and entrepreneurial people. There is so much we can do and achieve. We can have a future that is both prosperous and free. But we have to work for it.

* Rodney Hide is finance spokesman for the Act party.