Sunday, August 16, 2009

Five reforms that, deep down, N.Z. (and most of the West) knows have to happen

1. Capital Gains Tax

Pointless, delusionary, inequitable and inefficient to keep selectively subsidising residential investment while crowding out other investment and ramping property prices. Pick a date from which such new investment will be taxed like any other gain.

2.  Superannuation at 65

Actuarially unsound and a fiscal disaster, the age this wealth transfer starts has to increase. The supply side will ensure many unexpected benefits flow. Pick a date, sunset incumbents and start the walk toward realism in this area.

3. ACC

Unlimited no fault liability on a perpetual basis is a fiscal disaster, generates uncontrollable costs and enriches producers at the expense of patients and taxpayers. Rip it back…. starting with no ACC for alcohol related traffic accidents.

4. Co operative Ownership in Export Industries

Maximising returns to suppliers means driving dividends down. Driving dividends up means driving supply prices down. When the only owners are both at one and the same time its schizoid, destructive, and leads to capital inadequacy. Fonterra has to have outside capital, outside thinking, competition and a way for owners to be rewarded for their risk. Ditto other co ops.

5. Vouchers for Consumers Not Riches for Producers

In education and in health consumers with vouchers choosing what to spend and on whom to rely for services generate competition, prevent unjustified wealth transfers to producers and promote innovation. It’s all over for producers who don’t want to be measured on performance.

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