Catching Oz not possible without slashing Govt spending - Brash

2025 Taskforce head Don Brash. Photo / Herald on Sunday.

It will not be possible to catch Australia in the wealth stakes without slashing Government spending by $9 billion, productivity taskforce head Don Brash said today.

The 2025 taskforce report, headed by the former National Party leader and Reserve Bank governor, said the Government's goal of closing the 35 per cent income gap with Australia by 2025 was an ambitious one that would require New Zealand growth to outstrip that of Australia by 1.8 per cent a year.

Even before its release Prime Minister John Key said the radical changes were unlikely to be implemented quickly, if at all.

The only way to implement the vast majority of the recommendations would be to break election promises and Mr Key said he was not going to do that.

Dr Brash revealed 35 recommendations today but the centrepiece was to reduce government spending to 2005 levels of 29 per cent of gross domestic product by 2012-13.

This could be done by:

* Reducing benefit numbers through "ambitious" welfare reform;

* Ending Kiwisaver subsidies;

* Scrapping the New Zealand Superannuation Fund and using the money to pay off debt;

* Raising the age of superannuation eligibility; and

* Cutting universal subsidies for health and education.

Of these savings, $7 billion would be used to reduce all income and business taxes to a top rate of 20 per cent.

Dr Brash said unless tax and spending were slashed the Government's "ambitious" goal could not be achieved.

"There may be some other cunning plan, but I am not aware of it," Dr Brash said.

He said the proposed cuts were "not a massacre", but a winding back of spending that had not been effective since 2005.

The taskforce's other policy prescriptions included:

* Reducing the minimum wage and reintroducing a lower minimum youth wage;

* Changing employment laws to make it easier to sack workers;

* Extending probationary employment periods to a year for all workers;