Dialogue: Prebble's predictions for 2001

Never prophesy, especially about the future, is advice given to politicians. Yet every year I risk ridicule and give predictions about the state of our nation.

So far my track record for predictions is pretty good. Last year I predicted a major drop on Wall Street, and if I had known the date I would now be wealthy.

My predictions for 2001 are:

* I am optimistic about the economy.

* The slowdown of the United States economy will have a knock-on effect in Asia.

* The kiwi dollar will continue its rocket climb and could reach US50c in April.

* The Closing the Gaps policy will remain in disarray.

* Inflation has been underestimated and could reach 5 per cent.

* It will be a more difficult year for exporters.

These predictions bring challenges. This year will expose a curious fact - the Government has run out of policy ideas.

The credit card pledges were just slogans that could fit on a card and are not the basis for a sound Government programme. Where are the policies to create the "new" knowledge economy? Helen Clark, the master of spin, has disguised this lack of vision by calling 2001 a year of consolidation.

The export recovery is built on a low dollar. A dollar worth over US50c will devastate rural confidence. The unstable kiwi dollar has made international trade a gamble.

I am calling for a debate over the viability of a small trading nation having its own currency. Adopting the Aussie is just changing a small currency for an equally small currency. We should look at adopting the American dollar to give our exporters confidence. I predict the Government will do nothing.

President Bush's proposed tax cuts will put taxation back on the investor's agenda. New Zealand is the only country in the world to have increased income tax. The result has been the lowest investment for a decade, a brain-drain of talented New Zealanders and a quiet exodus of companies to Australia.

To reverse the brain-drain, we need a lower tax rate than Australia's. Act is pressing for tax reductions not just for increased investment, jobs and growth, but to create a just and fair society.

Labour's 18 per cent increase in income tax is unjust and unfair. If you invest in an international passive fund - something that does nothing for the country - under Labour, the increase in value is tax free. But if you start your own business, Jim Anderton wants to be your partner, sharing none of the risks but taking nearly half the profits.

High income tax acts as a toll gate on social mobility. High taxes penalise entrepreneurship, the route taken to close the gaps by an increasing number of Maori, women and young people.

Lower taxes do not just bring more investment, jobs and growth, they create a free and just society. A well-designed tax cut can give direction to our economy, and promote independence, accountability and opportunity. A tax cut would be the first step in attracting our young people home.

Superannuation will again be on the agenda and Michael Cullen deserves credit for at least doing something. In super schemes the devil is in the detail. The Cullen scheme creates a huge fund controlled by politicians that locks New Zealand into a high-tax future.

Act accepts the challenge to put forward amendments. We support savings-based superannuation in accounts of people's choice in their own names, much like the scheme MPs have created for themselves. Let's create a nation of stakeholders.

Act says that we always have a choice. The other parties want to make that choice for you. Act says we need to promote the New Zealand values of independence, that those who can take responsibility should and those deserving of our assistance should receive the hand-up they deserve.

We have a choice. The surplus can be used for the care and feeding of the Government or for the creation of jobs, prosperity and wealth for all New Zealanders.

To help our families and communities, we should give them options, not orders. What is wrong with trusting people to make decisions about their education, welfare and superannuation? The Government's objective is to redistribute, the pet project of all social engineers.

Act's vision is in the opposite direction. Let's use the free market to promote the common goals we share as New Zealanders, the values of hard work, thrift and personal responsibility.

We should welcome debate about our values as a nation. What no one wants is for 2001 to be dominated by scandal.

We live in a country of enormous opportunity and it is within our ability to create a nation that is not just the envy of the world, but its inspiration.

* Richard Prebble is the Act Party leader.