Fran O'Sullivan: Ten ways to beat our snowballing debt

There's plenty Prime Minister John Key could do before the election. Photo / Steven McNicholl

Speaking frankly, aren't we all starting to get a bit concerned that the National-led Government seems asleep at the wheel when it comes to dealing with our snow-balling debt?

Yes, there are working groups galore which will produce recommendations that the National Party will campaign on at the next election.

But there's plenty an action-minded John Key could get on with before the election rolls round.

Here's my Top 10: This list does not include asset sales or "co-ownership", as the in-term now goes.

Nor does it include axing the DPB, or other beneficiary imposts. But most fair-minded New Zealanders would surely agree to the following.

1 - MASTERMIND A REAL TAX SWITCH

Ramp up GST to 20 per cent. Sure it's regressive - but essential food items could easily be omitted. Introduce a 20 per cent tax rate for small businesses which will encourage them to get into growth mode and employ more people.

As a sop to an increasingly socialist-minded New Zealand, introduce a high-earner surtax coming at around $250,000. Promote the tax regime overseas and incentivise exporters.

2 - REVAMP SUPER

Means-test New Zealand Superannuation and move the qualifying age for the able-bodied to 67 by 2017.

Retirement Commissioner Diana Crossan reckons it should be gradually increased from the year 2020 so that it reaches the age of 67 by 2033.

But frankly, the first baby-boomers start getting National Super next year and the numbers of new superannuitants peak in the late 2020s.

This is one bubble we should deflate fast instead of creating more headaches for future generations.

It's hard to credit that John Key, who worked on the global foreign exchange markets, doesn't have the cojones to front this relatively small gambit.

Pocket some quick gains by axing KiwiSaver incentives.

3 - SLASH MOST PUBLIC SECTOR PAY RATES BY AT LEAST 10PC

In truth, Kiwi public sector bosses have been on the pig's back since the global financial crisis hit home. The Key Government put the acid on state chief executives to cut their budgets. But managerialism still predominates.

Just ask Cabinet ministers (including Key) who are heartily sick of the tick-box approach to government policy-making with its tediously long time-frames and emphasis on "outputs" "rather than "outcomes".

Most top state bosses could usefully take a 30 per cent - or more - haircut. The reality is they have all done very well indeed in the payrate states during the past decade.

It is complete rubbish that the pay escalation was because of the need to match private-sector rates. Employees at the lower end of the salary scale should get annual top-ups.

The major point is no significant pay increases should take place until the Government's profit and loss is back in the black. If nothing else, this will concentrate bureaucrats' minds.

4 - AXE THE MINISTRY OF ECONOMIC DEVELOPMENT

Let's face it, the ministry was mainly a sop to Jim Anderton.

And it's been a pretty expensive toy, too, with its emphasis on all manner of acronyms: GIF (Government and Innovation Framework), TOW (Treaty of Waitangi) instead of concrete results.

Better to reinstitute a commercially focused Ministry of Commerce and put the heavy-weight policy advice back in Treasury where it belongs.

While on the subject, what was the point of having an MED deputy-secretary warning a parliamentary select committee that too many of the finance companies were Ponzi schemes after they had crashed?

A results-driven and outcome-focused commercial enforcement agency wouldn't be able to get away with such extraordinary behaviour - roll on the new Financial Markets Authority.

5 - INTRODUCE A CAPITAL GAINS TAX AND/OR LAND TAX

The best time to introduce a capital gains tax is probably right now when values are relatively static.

It is quite simply a nonsense to continue to run a system which protects the asset-rich.

While on the topic, which Government is going to have the guts to put an end to the "family trusts" rort that enables well-advised citizens to "live off the state" while many less fortunate pay too much of their fair share.

6 - MEANS TEST GOVERNMENT GRANTS FOR CREATIVE INDUSTRIES

Given the state of the Government's books, it is absurd that NZ on Air stumped up $50,000 for Annabel Fay (daughter of multi-millionaire Sir Michael Fay) to make an album.

The $50,000 is chump change for Sir Michael (Put your hand in your pocket, Sir). Reality show funding - please.

Axe all top-up student funding for topics such as "gender studies" and the like. This country needs to produce more hard-headed graduates who are not risk-averse and don't expect New Zealand to owe them a living.

7 - INCREASES IN TAXES

Savagely increase excise taxes for alcohol and tobacco. Particularly, the obnoxious "RTD" products that are hurting too many teenagers who are sucked in by peer pressure and liquor advertising.

The liquor lobbyists - who have privately wound up MPs over the proposal to change the drinking age - need a kick in the proverbial. Unfortunately, the anti-liquor campaigners don't get the same look in.

This is one area where Parliament should be exercising its collective conscience.

8 - TELL LEN BROWN TO GET THE AUCKLAND COUNCIL TO FUND ITS OWN RAIL INVESTMENTS

Disclosure: As an Auckland ratepayer myself, it would be simple to jump on board the "beat the Government up on transport funding" bandwagon. In truth, the Auckland Council's balance sheet is big enough to fund the CBD rail loop via debt (yes Len, Auckland Council bonds are debt).

If the council was smart it would simply sell down its Auckland International Airport Holding and/or Ports of Auckland and realise some equity to invest in 21st-century infrastructure. But hard-headed realism is mysteriously absent in our commercial city.

9 - BRING IN A BANKING PROFITS LEVY

Yes, British Prime Minister David Cameron did this first. But isn't he the Tory poster-boy PM that Key admires so much? Many New Zealanders think bankers are bastards.

But with the Australian banks about to do rather nicely indeed out of their New Zealand customers it might be time to get more sportive. Step-up prudential supervision so banks can't fund another era of excess.

10 - ROLL BACK LABOUR'S ELECTION BRIBES

The Government has already closed some of the Working for Families loopholes. But come on, we know we can't afford this scheme in its entirety. Nor can we afford interest-free student loans.

And just one more: Rebuild the Earthquake Fund. Let's face it, Christchurch wasn't even on an active faultline.