'Too radical' - English rejects Brash plan

Catching up with Australia by 2025 isn't a realistic goal, says Bill English. Photo / Mark Mitchell

A plan to close the wealth gap with Australia is "too radical" for Finance Minister Bill English, who says bringing the two countries to economic parity by 2025 is an "aspirational" rather than realistic goal.

The 2025 Taskforce, led by former National Party leader Don Brash, warned that catching up with Australia would be impossible without slashing spending by $9 billion and implementing other right-wing economic measures.

These included cutting the top tax rate to 20c or 25c in the dollar for wage and salary earners, reducing the minimum wage, selling state assets, making widespread cuts to social services and increasing the qualification age for superannuation.

It also recommended the introduction of a congestion charge in Auckland and opening schools to competition by giving private operators the same subsidy for students as state schools.

But the Government yesterday largely rejected the proposals. Mr English, who is Acting Prime Minister, said it would instead look at other ways "to close up some of that gap", and indicated he did not believe closing it completely was possible.

He said catching up with Australia was "an aspiration we should have. If we don't close up some of that gap we will continue to lose businesses and people to Australia."

Prime Minister John Key, who has been in Trinidad, was also unimpressed with the report, saying the Government would consider taking only some "nuggets" from it.

The taskforce said the wealth gap with Australia equated to about $64,000 a year for a family of four.

Dr Brash said if the Government ignored the recommendations, "there may be some other cunning plan, but I'm not aware of it".

He said the Prime Minister had "enormous political capital" and should use some of it to implement the suggested policies, which would be unpopular.

Without them, the Government's goal of catching Australia could not be achieved.

"A little tinkering at the edges ain't going to do it," Dr Brash said.

But Mr English disagreed, saying "there's always more than one way of achieving economic growth".

The Government would go through the report to see what suggestions it could adopt, but it would not break election promises.

The taskforce was set up as a condition of the governing agreement with the Act Party, and Act leader Rodney Hide said he hoped Mr Key would come to see "more nuggets in it than he sees now".

Mr Hide said the taskforce had put down a good marker, and would continue to do so in its annual reports, which would check the Government's progress on meeting the goal.

Sir Roger Douglas, Act's finance spokesman and the architect of the fourth Labour Government's free-market reforms, described the report as a "good start".

Labour leader Phil Goff said the taskforce was a "straw man" being used to frighten people and enable the Government to introduce less-extreme changes.