Fran O'Sullivan: Brash, it's time to be brave

How bold is bold - Dr Brash?

I'm waiting to see if the good doctor will go as far as, say, Russian leader Vladimir Putin in tackling the sacred cows of tax and welfare at Orewa tomorrow.

National, frankly, has been an extraordinary laggard when it comes to tackling the major constraints on New Zealand enterprise in the past 12 months. That goes for both the business and personal level where policy "flip flops" have frequently been the order of the day rather than any attention-grabbing enterprise-promoting agenda.

It is now Brash's chance to reverse that image.

Much of his Orewa speech has been well leaked as spin doctors seek to dampen over-cooked expectation that his "bold speech" would be an "Orewa Mark II" to follow last year's attack on race-based Maori privilege.

National's spinmeisters are running the line that his speech will be geared to "Kiwi battlers" (roughly all workers) who, despite the clement economic conditions, are finding it hard to make ends meet.

These battlers are about to be made annoyed at a raft of unwelcome trends that include immoral single mothers having more babies on the state, or layabouts who persuade immoral doctors to sign fraudulent sickness benefit forms instead of getting jobs in the booming economy. Then there are those pulling state pensions while still in well-paid work, or tough criminals getting financial damages from courts because some officer roughed them up in prison.

Get the picture?

Certainly, official statistics show a huge explosion in sickness beneficiaries - up 38 per cent from 32,869 in November 1999 to 45,569 four years after Labour took power and it happens at a time when unemployment levels are at an almost two-decade low, employment has grown and companies are crying out for staff.

But despite the rationale that attacking welfarism will go down a treat for National with the beleaguered mortgage belt - who stand to see their taxes reduced as a result - there are considerable risks to Brash. He might be perceived as a "Ruth Richardson in drag" if he does not present his policies as ultimately enabling all New Zealanders to enjoy greater financial success and well-being.

Moral suasion - as promulgated by conservatives such as American social theorist Charles Murray who was brought to New Zealand several years back to push the case against single mother beneficiaries - has not worked particularly well at a political level.

This is, after all, a country which has rammed through laws legalising prostitution and cleared the way for gay unions without much protest apart from Brian Tamaki's Destiny Church. Although ironically, it is a country which has also introduced Nanny State laws when it comes to smoking cigarettes.

The plain reality is that it is more than a decade since any New Zealand politician has had the courage to really tackle taxation and spending levels in any meaningful way.

Labour Cabinet ministers still shamelessly bang on about the "failed policies of the past" here and praise them in elitist circles in Europe and elsewhere.

The whole issue of welfare and taxation reform has become bogged down in class warfare ideology at a time when former communist countries such as the Russian Federation are moving to advance private enterprise.

Putin's Russia has introduced the flat tax regime that former Labour finance minister Sir Roger Douglas could not get past his colleagues in the aftermath of the 1987 sharemarket crash.

The Russian President is currently confronting an internal backlash against his radical social welfare reforms. But his 13 per cent flat tax rate on personal incomes exceeded all expectations following its July 2001 introduction.

The corporate tax was subsequently reduced from 35 to 24 per cent, and, small businesses can choose to pay either a 15 per cent tax on profits or five per cent of revenues.

The economy expanded by 10 per cent and the total tax take increased by 50 per cent in the first two years since the flat tax rate was introduced, as workers made the most of the incentives to get out and earn more.

All this after more than 70 years of communist dictatorship.

Back here, Finance Minister Michael Cullen presides over an obscene multibillion-dollar Budget surplus, refuses to cut the corporate tax rate to help this country's businesses be more competitive and continues to snatch the gains off working New Zealanders' enterprise through fiscal creep.

The trouble for Cullen is that too many New Zealanders are now in the top tax bracket to exploit envy as a long-term political stratagem.

Frankly, Brash's speech will fail if it does not also link into an inspirational and cogent "prime ministerial" vision for New Zealand. Two weeks before Christmas he finally signalled he would draw the battle lines on taxation between National and the Government saying New Zealand must have a tax system which rewards enterprise, skill and hard work rather than Labour's system of punishing the "new rich". There was scope for a "tax cut for all New Zealanders".

But Brash's decision to withhold the detail until later in election year simply left him open to attack by Cullen over policy reversals.

Since becoming National's leader, Brash has presided over a series of "flip flops" that come close to outdoing those of failed Democrat presidential candidate John Kerry.

Among them were the nuclear free-ban which foreign affairs sources reported would be "gone by lunchtime", the on-and-off-again tax cuts for top income earners which have annoyed senior business players, his decision to reverse National's opposition to the Cullen Super Fund and the four weeks' holiday leave laws and even his vote on the Civil Union Bill which he voted for at the first reading and then voted against in the final passage of the legislation.

Brash can no longer afford to lose the courage of his convictions. Tomorrow's messages must stick.