Rule out tax rises, go on

With PWC NZ Chairman John Shewan saying GST would have to go up to 15% and the top tax rate to 45% to fund the big spending promises of both parties, you do have to wonder if that was a strategic press release designed to undermine Labour's one time pledge to spend up large.

Thankfully that seems to have evaporated, perhaps as taxpayers didn't respond well to the government spending up big when others can't afford to.

Curiously, John Key didn't rule it out, just saying that if National does a half decent job at growing the economy, raising GST wouldn't be necessary. He should have said that National would rather cut waste and be more efficient than increase tax.

ACT - no tax cuts for two years?

ACT's launched its campaign, it's clearly aiming for the disenchanted National supporters who want more than Labour lite. With Sir Roger Douglas at number three on the list it definitely tempts those who want less government to give Roger a second go, if only to give National the coalition partner it ought to have, instead of the Maori Party or Peter Dunne.

Rodney Hide's interview with the NZ Herald certainly seems promising. For the first time in ages I have seen an ACT leader prepared to be honest about health:

"I believe that the state health system has been a failure and that what it does is take our money and then ration health care by queuing us up in pain and agony. "

Indeed.

"I much prefer that we use the private system and focus the Government's attention on ensuring that everyone has access."

Sounds a lot like Unfinished Business, and is half of the libertarian solution. It is one I can see being a big leap forward for healthcare. So what else is new? Well it's all in this policy PDF.

Well ACT wants to keep growth in government spending capped to inflation, EXCEPT for law and order and a one off injection into health spending. Hardly ambitious, something National ought to embrace if we were lucky. This means government growing slower than GDP. Oh how far we have slipped back when this is seen as radical.

39% top tax rate would be gone immediately, again good, but National voted against this tax rate and isn't promising to abolish it.

Then two years of NO tax cuts. Yes ACT offers you nothing till 2011. Presumably it's about fiscal prudence, because after then there is a rolling programme of cuts to a flat rate of 15% by 2018 (12.5% on the first NZ$20,000). Yes 10 years from now! Yes better than nothing, but this ought to be mainstream. National supporters should be embracing this.

GST down to 10% as well, in the same timeframe. Hmmm, public servants really have nothing to fear.

However there is one gem in ACT's policy, but not one I expect the mainstream media to publicise widely.

It is offering a taxfree threshold of NZ$25,000 for those who want to opt out of ACC, the right to claim sickness benefits and state healthcare. It talks of offering a top up for such people to cover their children too for all of that, and education.

So, a chance to opt out of nanny state. THAT is revolutionary, but in parallel with two years of no tax cuts, it is hidden in the mix.

This is what National should be offering, at the very least slower growth in government spending, progressively lower tax cuts to a low flat level, and the chance to opt out of state provided health cover. However ACT should be offering more. ACT offered a flat tax in 1996. It should be pushing for tax cuts every year. It should be calling for serious cuts in spending.

I did think that there was much promise with Rodney Hide, and with Roger Douglas back on board, and yes, ACT shows National what a change in direction could be.

However, it remains profoundly disappointing. I do not see the point in voting for no tax cuts for two years, besides abolishing the 39% top rate.

Zimbabwe writhing like a tortured corpse

The world turned away for a while, after Robert Mugabe and Morgan Tsvangirai signed a power sharing deal - a deal that seemed incredible to most of us, that the murdering tyrant would surrender any real power to his popular nemesis. I wrote at the time that I feared Tsvangirai being cauterised like Mugabe did to Joshua Nkomo in the early 1980s. Mugabe wants Tsvangirai for two reasons:
1.) To shut up the international community and present the facade of power sharing, whilst maintaining a monopoly grip on power;
2.) To obtain booty in the form of loans, aid and trade from the world to boost his destroyed economy, claiming credit for as President for the revival, and being able to damn Tsvangirai if it goes wrong.

Tsvangirai isn't playing ball, much to the chagrin of Mugabe and his idiot mate, Thabo Mbeki.

Mbeki remains confident, he can't see why his murderous mate can't have what he wants, and can't see the absurdity of a negotiation between a murderers and the one leading the victims, led by a friend of the murderer.

Mugabe chose to hold onto defence, foreign affairs, home affairs (Police, courts, media, local government, land policy and the mining sector) and offered to hand over finance. Tsvangirai insisted on also having home affairs. He could not countenance the corrupt judiciary, electoral system and police forces remaining in the hands of the man who used them against his own people.

The Economist writes that Mbeki should stand down, as he is a lame duck politically, and that Kofi Annan should step into the mediating role. Meanwhile, 80% of the population is unemployed, a quarter of the population has fled across the porous borders, the media remains tightly under Mugabe's control, spreading lies about the negotiations, and people are on the verge of mass starvation.

Inflation is 231 million % per annum. That's over 5% a day, every day, cumulative. Doesn't sound much? That means prices double in just over nine days. After another six weeks, prices have gone up tenfold. In another 6 weeks it is one hundred fold.

Zimbabwe is sadly an ongoing disaster, and more power to Tsvangirai if he can hold Mugabe to account - but it still shows the place will be better when the old tyrant has a bullet through his skull, and his murderous comrades can be strung up and their ill gotten gains given back to those who they stole them from.

Economist gives McCain one last chance

The Lexington column in this week's Economist gives John McCain some advice. I can only hope he takes it.

Basically it reminds us that Reagan was 8 points behind Carter 10 days before the 1980 election. Tells him what not to do (forget dumb populism, forget attacking Obama's links to dodgy people) and to look forward in three ways:

1) Obama is one of the least business-friendly Democrats in a generation. Obama has been close to the union movement, which has strongly supported his campaign. It is calling for the end to secret ballots and the removal of laws prohibiting closed shops. During these times of low business confidence this is the last the USA needs, and Obama's credentials for letting business be free are low.

2) Having one party control the Presidency and both houses of Congress is not preferable if you want to ensure accountable government. McCain could usefully veto pork barrel budgetary matters, but most importantly Americans have rarely allowed one party to control both legislatures and the White House.

3) Obama has never taken on his own party, or even seriously tried. As a Senator he has voted Democrat 97% of the time, an astonishing result. McCain is known to be a maverick in his own party. The odds are Obama could be the vehicle for the most leftwing administration since the 1960s. Obama has not at all demonstrated that he can be a maverick and confront the mainstream of his party - defeating Hilary Clinton was a personal not a philosophical mission.

McCain can fight a respectable campaign and could, on balance, win, just. However he is running out of time, and chances.

Powell and Hitchens nailing more into McCain's campaign coffin

The Sunday Telegraph reports that long standing Republican, former US Secretary of State Colin Powell is endorsing Barack Obama. Powell talked of Obama's "ability to inspire, because of the inclusive nature of his campaign, because he is reaching out all across America". This contrasts with McCain's lacklustre approach to the economy "Almost every day he had a different approach to the problems we were having". I suspect Powell is looking to be part of the incoming administration, and indeed it may be the case that if an Obama victory happens we would all be better off if Powell was part of it.

Meanwhile, strong supporter of the war to topple Saddam Hussein, writer Christopher Hitchens is also backing Obama in his Slate column. Hitchens loathes the Clintons, and is no friend of Bush, but backed Bush over Iraq. He feels pity for McCain's performance:

"Anyone with eyes to see and ears to hear had to feel sorry for the old lion on his last outing and wish that he could be taken somewhere soothing and restful before the night was out."

It appears that McCain's selection of Sarah Palin has been the death knell of McCain's credibility to Hitchens:

"It turns out that none of her early claims to political courage was founded in fact, and it further turns out that some of the untested rumors about her—her vindictiveness in local quarrels, her bizarre religious and political affiliations—were very well-founded, indeed. Moreover, given the nasty and lowly task of stirring up the whack-job fringe of the party's right wing and of recycling patent falsehoods about Obama's position on Afghanistan, she has drawn upon the only talent that she apparently possesses."

So, Hitchens supporting the man who opposed the war in Iraq? Well he believes Obama can be convinced to change, Hitchens is no "true believer":

"I used to call myself a single-issue voter on the essential question of defending civilization against its terrorist enemies and their totalitarian protectors, and on that "issue" I hope I can continue to expose and oppose any ambiguity. Obama is greatly overrated in my opinion, but the Obama-Biden ticket is not a capitulationist one, even if it does accept the support of the surrender faction, and it does show some signs of being able and willing to profit from experience. With McCain, the "experience" is subject to sharply diminishing returns, as is the rest of him, and with Palin the very word itself is a sick joke."

Only a few weeks ago Hitchens called Obama "vapid, hesitant and gutless" in that he doesn't ask questions straight and clear. I suspect Hitchens has largely been too disappointed by McCain and angered by Palin to go anywhere else.

Now I want to know what the Ayn Rand Institute thinks. I'm betting it will back Obama too. It's backed Kerry and Gore in the last two elections.