Latest news with #RogerDouglas
Scoop
14-07-2025
- Business
- Scoop
A Radical Tax Plan To Avoid An Economic 'Car Crash'
Have you ever wished the tax you paid on your income was going into savings, rather than to the government? That's the idea behind a plan developed by former Finance Minister Sir Roger Douglas and University of Auckland economics professor Robert MacCulloch. They first developed the proposal in 2016 but have updated it for 2025. "Back in 2016, the original version said we're going to struggle with paying the welfare bills and there are going to be budgetary problems due to the aging population, from health to pension spending and we have to work out how to protect the welfare state so there are not cuts to those services," MacCulloch said. "At the time, Bill English had an economic advisory group that I used to go to in the Beehive and… he didn't have any interest whatsoever. I remember him saying, 'look that's for future governments to deal with and people will have to adapt'." But MacCulloch said the governments since then had done nothing to address the issue. Treasury and Inland Revenue have both raised questions in the past year about how the government will collect enough revenue to fund the increasing cost of NZ Super and healthcare. By 2060, 26 percent of New Zealanders will be over 65, up from 16 percent in 2021. MacCulloch and Sir Roger said that income tax on earnings up to $60,000 a year should instead be redirected into individual savings accounts to fund each person's healthcare pension and risk cover. That would replace much of the current public system with private provision. People who did not have enough in their individual accounts could still be helped by the public system, which would be funded on taxes collected on income over $60,000 a year. This would mean larger numbers of middle- and higher-income people paying for their themselves, while the system helped lower-income people. "It retains that wealth redistribution - so is not at all like the US system which leaves many low income people without proper healthcare. It's more like France where everyone is covered and everyone can choose whether they go public or private." MacCulloch said that would mean government costs were reduced, the quality of outcomes increased and the plight of low-income earners improved. He said too many low-income people had no savings in KiwiSaver. This model would help to address that. According to the model, an individual could save around $21,000 annually: $9450 into a health account, $7350 for superannuation, and $4200 for risk cover. A drop in corporate taxes would help fund employer contributions. "Our savings-not-taxation reform offers scope for efficiency gains in healthcare. It does so by opening up choice for individuals," MacCulloch said. "Rather than the government dictating where to go, people can choose their preferred public or private supplier." They would keep the pension but raise the age of eligibility to 70 over a 20-year period. Subsidies and interest-free loans for tertiary students would be means tested. They would scrap grants to the movie industry, winter energy subsidies to wealthy households, favourable tax treatment for owners of rental housing, and allowances to sectors such as forestry, fishing, and bloodstock. The money saved from these changes would be directed towards helping low earners build savings and cover the welfare needs of those who are chronically unwell. "Perhaps more than any other feature of our reform, it's the 'miracle of compound interest' that governments like New Zealand's are not taking proper advantage of," MacCulloch said. "If we can do this, it'll help our financial situation." He said the problem the government now had was that it was not set to return to surplus in any meaningful way. "What the government calls a return to surplus is a projection [of] a tiny surplus in 2029 and then [the deficit] blows out again with health and pension spending." He said many countries around the world were having to make changes because of similar pressures. But he said there was still limited political interest. "What I can tell you is by not going down this road, what they're not telling you is a slow motion car crash crisis is enveloping New Zealand and it's not my job to save the country with this. "I did the proposal. They have no interest. I've given up on them. But you know what? Without doing something like this, they're gradually descending into a situation where our entire health system is going to become run down." He said New Zealand had missed a chance to require compulsory retirement savings. "The average KiwiSaver balance is $30,000. A mandatory retirement scheme was set up by Keating around 2000 in Australia and the average balance in the Aussie system scheme is $300,000." He said the power of compound interest meant that large balances grew much faster, which meant New Zealand was being left increasingly behind. But his plan would allow New Zealanders to take advantage of that. Finance Minister Nicola Willis said the Government was not considering changes to the tax system of the sort proposed by Sir Roger and MacCulloch.
RNZ News
14-07-2025
- Business
- RNZ News
A radical tax plan to avoid an economic 'car crash'
Photo: RNZ Have you ever wished the tax you paid on your income was going into savings, rather than to the government? That's the idea behind a plan developed by former Finance Minister Sir Roger Douglas and University of Auckland economics professor Robert MacCulloch. They first developed the proposal in 2016 but have updated it for 2025. "Back in 2016, the original version said we're going to struggle with paying the welfare bills and there are going to be budgetary problems due to the aging population, from health to pension spending and we have to work out how to protect the welfare state so there are not cuts to those services," MacCulloch said. "At the time, Bill English had an economic advisory group that I used to go to in the Beehive and… he didn't have any interest whatsoever. I remember him saying, 'look that's for future governments to deal with and people will have to adapt'." But MacCulloch said the governments since then had done nothing to address the issue. Treasury and Inland Revenue have both raised questions in the past year about how the government will collect enough revenue to fund the increasing cost of NZ Super and healthcare. Sir Roger Douglas. Photo: Celebrity Speakers By 2060, 26 percent of New Zealanders will be over 65, up from 16 percent in 2021. MacCulloch and Sir Roger said that income tax on earnings up to $60,000 a year should instead be redirected into individual savings accounts to fund each person's healthcare pension and risk cover. That would replace much of the current public system with private provision. People who did not have enough in their individual accounts could still be helped by the public system, which would be funded on taxes collected on income over $60,000 a year. This would mean larger numbers of middle- and higher-income people paying for their themselves, while the system helped lower-income people. "It retains that wealth redistribution - so is not at all like the US system which leaves many low income people without proper healthcare. It's more like France where everyone is covered and everyone can choose whether they go public or private." Finance Minister Nicola Willis has been approached for comment. MacCulloch said that would mean government costs were reduced, the quality of outcomes increased and the plight of low-income earners improved. He said too many low-income people had no savings in KiwiSaver . This model would help to address that. According to the model, an individual could save around $21,000 annually: $9450 into a health account, $7350 for superannuation, and $4200 for risk cover. A drop in corporate taxes would help fund employer contributions. "Our savings-not-taxation reform offers scope for efficiency gains in healthcare. It does so by opening up choice for individuals," MacCulloch said. "Rather than the government dictating where to go, people can choose their preferred public or private supplier." They would keep the pension but raise the age of eligibility to 70 over a 20-year period, Subsidies and interest-free loans for tertiary students would be means tested. They would scrap grants to the movie industry, winter energy subsidies to wealthy households, favourable tax treatment for owners of rental housing, and allowances to sectors such as forestry, fishing, and bloodstock. The money saved from these changes would be directed towards helping low earners build savings and cover the welfare needs of those who are chronically unwell. "Perhaps more than any other feature of our reform, it's the 'miracle of compound interest' that governments like New Zealand's are not taking proper advantage of," MacCulloch said. "If we can do this, it'll help our financial situation." He said the problem the government now had was that it was not set to return to surplus in any meaningful way. "What the government calls a return to surplus is a projection [of] a tiny surplus in 2029 and then [the deficit] blows out again with health and pension spending." He said many countries around the world were having to make changes because of similar pressures. But he said there was still limited political interest. "What I can tell you is by not going down this road, what they're not telling you is a slow motion car crash crisis is enveloping New Zealand and it's not my job to save the country with this. "I did the proposal. They have no interest. I've given up on them. But you know what? Without doing something like this, they're gradually descending into a situation where our entire health system is going to become rundown." He said New Zealand had missed a chance to require compulsory retirement savings. "The average KiwiSaver balance is $30,000. A mandatory retirement scheme was set up by Keating around 2000 in Australia and the average balance in the Aussie system scheme is $300,000." He said the power of compound interest meant that large balances grew much faster, which meant New Zealand was being left increasingly behind. But his plan would allow New Zealanders to take advantage of that. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
14-07-2025
- Business
- RNZ News
Tax plan to avoid looming economic 'car crash'
Photo: RNZ Have you ever wished the tax you paid on your income was going into savings, rather than to the government? That's the idea behind a plan developed by former Finance Minister Sir Roger Douglas and University of Auckland economics professor Robert MacCulloch. They first developed the proposal in 2016 but have updated it for 2025. "Back in 2016, the original version said we're going to struggle with paying the welfare bills and there are going to be budgetary problems due to the aging population, from health to pension spending and we have to work out how to protect the welfare state so there are not cuts to those services," MacCulloch said. "At the time, Bill English had an economic advisory group that I used to go to in the Beehive and… he didn't have any interest whatsoever. I remember him saying, 'look that's for future governments to deal with and people will have to adapt'." But MacCulloch said the governments since then had done nothing to address the issue. Treasury and Inland Revenue have both raised questions in the past year about how the government will collect enough revenue to fund the increasing cost of NZ Super and healthcare. Sir Roger Douglas. Photo: Celebrity Speakers By 2060, 26 percent of New Zealanders will be over 65, up from 16 percent in 2021. MacCulloch and Sir Roger said that income tax on earnings up to $60,000 a year should instead be redirected into individual savings accounts to fund each person's healthcare pension and risk cover. That would replace much of the current public system with private provision. People who did not have enough in their individual accounts could still be helped by the public system, which would be funded on taxes collected on income over $60,000 a year. This would mean larger numbers of middle- and higher-income people paying for their themselves, while the system helped lower-income people. "It retains that wealth redistribution - so is not at all like the US system which leaves many low income people without proper healthcare. It's more like France where everyone is covered and everyone can choose whether they go public or private." Finance Minister Nicola Willis has been approached for comment. MacCulloch said that would mean government costs were reduced, the quality of outcomes increased and the plight of low-income earners improved. He said too many low-income people had no savings in [ KiwiSaver. This model would help to address that. According to the model, an individual could save around $21,000 annually: $9450 into a health account, $7350 for superannuation, and $4200 for risk cover. A drop in corporate taxes would help fund employer contributions. "Our savings-not-taxation reform offers scope for efficiency gains in healthcare. It does so by opening up choice for individuals," MacCulloch said. "Rather than the government dictating where to go, people can choose their preferred public or private supplier." They would keep the pension but raise the age of eligibility to 70 over a 20-year period, Subsidies and interest-free loans for tertiary students would be means tested. They would scrap grants to the movie industry, winter energy subsidies to wealthy households, favourable tax treatment for owners of rental housing, and allowances to sectors such as forestry, fishing, and bloodstock. The money saved from these changes would be directed towards helping low earners build savings and cover the welfare needs of those who are chronically unwell. "Perhaps more than any other feature of our reform, it's the 'miracle of compound interest' that governments like New Zealand's are not taking proper advantage of," MacCulloch said. "If we can do this, it'll help our financial situation." He said the problem the government now had was that it was not set to return to surplus in any meaningful way. "What the government calls a return to surplus is a projection [of] a tiny surplus in 2029 and then [the deficit] blows out again with health and pension spending." He said many countries around the world were having to make changes because of similar pressures. But he said there was still limited political interest. "What I can tell you is by not going down this road, what they're not telling you is a slow motion car crash crisis is enveloping New Zealand and it's not my job to save the country with this. "I did the proposal. They have no interest. I've given up on them. But you know what? Without doing something like this, they're gradually descending into a situation where our entire health system is going to become rundown." He said New Zealand had missed a chance to require compulsory retirement savings. "The average KiwiSaver balance is $30,000. A mandatory retirement scheme was set up by Keating around 2000 in Australia and the average balance in the Aussie system scheme is $300,000." He said the power of compound interest meant that large balances grew much faster, which meant New Zealand was being left increasingly behind. But his plan would allow New Zealanders to take advantage of that. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Scoop
09-07-2025
- Business
- Scoop
Economists Moot Bold Income Tax Plan
What if your income tax didn't go to the government but into your own savings account? A bold proposal makes the case. New Zealand's ageing population and ballooning welfare and health costs are piling pressure on the public purse. In response, former Minister of Finance Sir Roger Douglas and University of Auckland economics professor Robert MacCulloch are reimagining their ambitious 2016 proposal to overhaul the country's tax, health and welfare systems by shifting income taxation to mandatory savings. In their research article, the pair argue that income tax on earnings up to $60,000 should be redirected into individual savings accounts. These accounts would fund each person's healthcare, pension and risk cover, replacing much of the current public system with private provision. By 2060, 26 percent of New Zealanders will be over 65, up from 16 percent in 2021, which will intensify the strain on superannuation and healthcare. 'We need to change the way we're doing things so government costs can be reduced, quality of outcomes increased, and the plight of low earners, who are most vulnerable to public cuts, improved,' say Douglas and MacCulloch in their paper How to change the welfare state from a taxation to a savings-based model. The economists attempt a politically feasible plan that maintains total welfare funding from both public and private sources, while opening up more choice and competition in the supply of healthcare services. 'We need to adjust the tax system so the vast majority of New Zealanders of working age can provide for themselves,' says MacCulloch. 'The first step is to build mandatory savings accounts for health, pensions and risk cover via the transfer into them of current taxes paid on income up to $60,000.' According to their model, an individual could save around $21,000 annually: $9,450 into a health account, $7,350 for superannuation, and $4,200 for risk cover. A drop in corporate taxes would help fund employer contributions, and the government would retain sufficient tax revenues so it could act as 'insurer of last resort', paying for people who can't meet their welfare costs out of their savings accounts. 'Our savings-not-taxation reform offers scope for efficiency gains in healthcare. It does so by opening up choice for individuals,' says MacCulloch. 'Rather than the government dictating where to go, people can choose their preferred public or private supplier.' The researchers point to Singapore, which employs mandatory savings accounts and has one of the highest-quality healthcare systems in the world, yet spent 5.6 percent of its GDP on healthcare in 2021 (including both public and private sectors), compared to New Zealand's 10.1 percent. 'Our reform keeps the pension but would raise the retirement age gradually from 65 to 70 years old over a 20-year period,' says MacCulloch. The authors would do away with fee subsidies and interest-free loans for tertiary students from well-off families. Instead, a means test would see only students from low-income, low-capital families receive aid. They would scrap grants to the movie industry, winter energy subsidies to wealthy households, favourable tax treatment for owners of rental housing, and allowances to sectors such as forestry, fishing, and bloodstock. The money saved from these changes would be directed towards helping low earners build savings and cover the welfare needs of those who are chronically unwell. 'Perhaps more than any other feature of our reform, it's the 'miracle of compound interest' that governments like New Zealand's are not taking proper advantage of,' says MacCulloch. 'If we can do this, it'll help our financial situation.' MacCulloch notes that the proposal isn't without flaws, but says bold change and ideas are needed, and fast, if Aotearoa New Zealand is to create a resilient economy in the face of an ageing population.
Scoop
31-05-2025
- Politics
- Scoop
The Regulatory Standards Bill: Neoliberal Shackles Disguised As 'Good Law'
Press Release – Aotearoa Workers Solidarity Movement We argue that the bill is not about making regulation better or fairer, but about handcuffing future lawmakers to an ideology that privileges private property, contract law, and the capitalist right to profit. When the New Zealand Parliament debates 'better law-making,' most people yawn. It sounds procedural, technocratic — even boring. But beneath the jargon of 'clarity,' 'predictability,' and 'transparency,' lurks a political agenda. The Regulatory Standards Bill (RSB), first introduced in 2011 by ACT Party founder Roger Douglas's disciple Rodney Hide and continuously revived in various guises since, represents a stealth weapon in the arsenal of neoliberal capitalism. It is a Trojan horse for embedding pro-market ideology into the very machinery of the state — making it harder for any future government, let alone a radical movement, to challenge the dominance of capital. We argue that the bill is not about making regulation 'better' or 'fairer,' but about handcuffing future lawmakers to an ideology that privileges private property, contract law, and the capitalist 'right to profit.' Its passage would mark a dangerous deepening of bourgeois legalism, constraining any collective attempts to democratise the economy or dismantle capitalist structures through parliamentary reform — let alone revolutionary means. The Origins: ACT's Neoliberal Dream To understand the Regulatory Standards Bill, we must start with ACT. Founded in the 1990s as the ideological successor to Roger Douglas's Rogernomics project, the ACT Party exists to finish what the Fourth Labour Government started: the total commodification of public life. With its roots in Chicago School economics, ACT idolises the free market, loathes the state (except when protecting capital), and views regulation as an obstacle to 'freedom' — defined narrowly as consumer and investor liberty. In 2009, the National-ACT confidence and supply agreement commissioned a taskforce led by arch-neoliberal Graham Scott to look into 'regulatory responsibility.' Its conclusion: regulation should conform to a strict set of principles designed to prevent the state from interfering too much with market activity. This taskforce gave birth to the Regulatory Standards Bill. Rodney Hide introduced the first version in 2011. It was met with scepticism, even from centrist legal scholars, who warned that the bill would judicialise politics and constitutionalise neoliberalism. While the bill didn't pass, its zombie-like persistence over the years shows how committed the New Zealand right remains to embedding capitalist ideology in law. What the Bill Proposes: Rights for Capital, Not People At first glance, the RSB reads like a list of nice-sounding principles: laws should not be retrospective, should respect property rights, should avoid creating unnecessary costs, and should be clear and accessible. But a closer look reveals its insidiousness. 1. 'Property Rights' as Sacred One of the central tenets of the bill is that laws should not 'take or impair property' unless justified. This may sound reasonable, but in practice, it elevates private property above public interest. It would give courts — not the people — the power to decide whether environmental protections, housing controls, or land use laws unduly infringe on property rights. It shifts power from democratically accountable institutions to unelected judges, many of whom are steeped in commercial law and capitalist ideology. This is a direct threat to mana whenua struggles for land justice. Imagine if land reform legislation, urban rent controls, or even a future law to nationalise fossil fuel companies were struck down because they infringed on 'property rights.' The bill constitutionalises the most reactionary legal principle of all: that the right to own and profit from land or capital is inviolable. 2. 'No More Than Necessary' Another clause says that regulation should not impose 'obligations, costs, or risks' that are more than 'reasonably necessary.' But who decides what's 'necessary'? Under capitalism, this often means what's necessary for profit. Environmental laws, workplace protections, or rent freezes could all be challenged for being 'too costly' to business. The bill invites judicial activism — not in the progressive sense, but as a means of protecting capitalist interests from redistributive policies. 3. Parliamentary Veto in Disguise The bill would require that every new law be accompanied by a 'certification' that it complies with these principles. If it doesn't, it must be justified — and could be challenged in court. This sets up a system where legislation is no longer judged on its social merit, but on how well it conforms to market logic. In essence, it's a regulatory veto wrapped in legal procedure. The aim is to make it politically and legally risky for any future government to pass redistributive or transformative laws. Embedding Capitalist Ideology into Law What makes the RSB especially dangerous is not just its content, but its method. It doesn't ban socialism outright. Instead, it sets up legal roadblocks that make any move toward economic democracy more difficult, expensive, or outright unconstitutional. This is classic capitalist strategy: not just win political battles, but rig the rules. It's the same logic behind investor-state dispute settlement (ISDS) clauses in trade agreements, which allow corporations to sue states for regulating in the public interest. It's the logic behind independent central banks, which remove monetary policy from democratic control. And it's the logic behind 'fiscal responsibility' laws that force governments to prioritise debt repayment over social investment. The RSB is part of this neoliberal constitutionalism. It transforms what should be political questions – Who owns the land? Should rent be controlled? Should fossil fuels be nationalised? – into legal technicalities. It makes revolution, or even reform, illegal by stealth. Aotearoa's Class War by Other Means The Regulatory Standards Bill must be understood in the context of Aotearoa's broader class structure. We live in a settler-colonial capitalist state where wealth is concentrated among a small elite – disproportionately Pākehā – while working-class, Māori, and Pasifika communities struggle under the weight of exploitation, housing precarity, and intergenerational poverty. In such a context, regulation is one of the few remaining tools communities have to fight back. Whether it's tenant protections, limits on corporate land use, environmental regulations, or worker rights, regulation is one of the few levers available within capitalist democracy to redistribute power and resources. The RSB seeks to destroy that lever. It cloaks itself in legal neutrality, but in reality, it is a ruling class weapon designed to foreclose collective action. It represents the judicialisation of class war. One where the capitalist class doesn't need tanks or cops to crush resistance, just well-written legislation and friendly judges. The Limits of Parliamentary Critique It's important to note that opposition to the RSB has come not just from the left, but from mainstream legal figures and centrists worried about the erosion of parliamentary sovereignty. The New Zealand Law Society, in a rare political statement, warned that the bill would shift power from Parliament to the judiciary, undermining democratic accountability. But for anarcho-communists, the issue goes deeper than defending Parliament. Parliamentary democracy in a capitalist state is already limited, corrupt, and structurally skewed toward the ruling class. Our concern is not that the RSB undermines Parliament per se, but that it further consolidates capitalist power within the state, making radical transformation through any legal means even harder. In this sense, the RSB is not an aberration but a logical outcome of a capitalist democracy reaching its authoritarian phase. As global inequality deepens and ecological collapse accelerates, capitalist states are preemptively locking in protections for the wealthy – insulating themselves from the possibility of revolt. A Vision Beyond the Bill Anarcho-communists reject the premise of the RSB because we reject the premise of capitalist law itself. We do not believe the protection of property is a neutral good. We do not believe 'regulatory efficiency' should be the measure of political action. And we do not accept a legal framework that privileges capital over collective well-being. Instead, we fight for a society based on direct democracy, collective ownership, and ecological harmony. We envision a world where land is returned to tangata whenua, where housing is a right not a commodity, and where communities make decisions together, without the distortions of profit or property law. In such a world, the RSB would be unthinkable — not just because it's unjust, but because its very logic would no longer apply. There would be no 'regulators' because there would be no corporations to regulate. No 'property rights' because the land would belong to all. No 'cost-benefit analyses' because human need, not market efficiency, would guide our choices. What Is to Be Done? The Regulatory Standards Bill has not yet passed — but it remains a live threat. ACT and National are eager to revive it, and a future coalition could easily slip it through under the radar. We must oppose it not just with legal submissions or op-eds, but with direct action and radical education. We must expose it for what it is: a blueprint for capitalist entrenchment, not a neutral law reform. And we must prepare ourselves intellectually, and organisationally for the broader authoritarian turn it signals. This means: Popular education in unions, hapū, and community groups about the bill's implications. Legal support for those resisting unjust property laws and regulations. Resisting co-optation by parliamentary parties who offer weak, technocratic opposition. The battle over the Regulatory Standards Bill is a battle over who controls the future: the people, or capital. Let's make sure it's us.
