Sir Roger Douglas has released an "alternative Budget" incorporating radical changes to Government spending and tax the Act MP says are needed if New Zealand is serious about closing the income gap with Australia.

It carries the caveat that the views expressed are Sir Roger's and do not necessarily reflect the views of Act, but it features prominently on the party's website.

It includes a flat income tax rate, of one dollar in six, above a threshold of $31,200 with a higher tax-free threshold for those with dependents.

GST would rise to the same rate (16.66 per cent).

Company tax would be abolished, to be replaced by a flat asset tax of 0.8 per centfor all enterprises and for householdswith assets of more than $1 million.

Sir Roger's Budget would cut Government expenditure by more than a quarter within one year.

People would be expected to pay for their children's primary and secondary education directly; tax credits would be available for those whose tax cuts were insufficient to cover those costs directly.

They would also be expected to take out catastrophic health insurance and meet more minor health costs like GP visits, out of pocket. Accident, sickness and unemployment insurance would also be a matter of individual responsibility.

"This system only works if it is implemented as a package," Sir Roger said.

"It is impossible to reduce taxes without reducing expenditure and it is impossible to reduce expenditure without giving people the wherewithal to provide for themselves."

Other measures would be necessary to enable the country to catch up with Australia. Trade barriers should be unilaterally removed and restrictions on the use of land, from zoning or the Resource Management Act, should be removed.

Labour markets should be further deregulated and immigration rules should be radically changed "allowing hard-working and entrepreneurial immigrants to freely enter New Zealand".