Todd McClay: Economy gathers steam

For the past three years, the National Government has provided responsible economic management in extremely difficult economic times. Strong positive action was needed to get the economy growing again. That's what National delivered, and the benefits are now starting to be enjoyed.

The economy is starting to gather momentum. The latest GDP data shows that economic growth was much higher than expected in the March quarter, despite the Christchurch earthquake.

In contrast, when I became your elected MP three years ago, New Zealand had been in recession for nine months - well before other countries and the onset of the global financial crisis.

We inherited flat exports sales and government spending was out of control. The Treasury's books showed never-ending budget deficits and spiralling government debt.

Even taking account of finance company failures and the Canterbury earthquakes - the economy is much stronger than it was three years ago and is far better placed to meet future challenges. The platform has been set for strong economic growth while protecting our most vulnerable.

An improved tax system rewards hard work and encourages savings, rather than providing incentives to hide income or head overseas. Tax structure reforms have made sure that after-tax wages have, on average, risen faster than the cost of living. In fact, after-tax wages went up 7.1 per cent in the past year - faster than the rate of inflation.

The Government-run sectors of the economy now function more efficiently and the Government's books will be back in surplus by 2014/15. Red tape has been cut to encourage enterprise and reward Kiwi ingenuity. Investment has been made in vital infrastructure including roads, broadband, and the electricity network. An improved education system means that our schools and tertiary institutions will produce better skilled workers.

Budget 2011 forecasts 170,000 new jobs and 3 per cent average annual growth over the next four years. Business confidence is now positive rather than negative, contributing to a much more optimistic outlook.

New Zealand needs more taxpayers in jobs, not more taxes, to build on signs of faster growth shown in this encouraging GDP data. Phil Goff's tax promises will be a boon for the armies of bureaucrats and tax accountants needed to administer them, but a millstone to the next generation of workers and business owners trying to make a positive contribution.

Under Labour, New Zealand would have six income tax rates; a GST system that applies to some things and not others; a big gap between the company rate and the top personal tax rate that encourages tax avoidance; and a capital gains tax on productive industries that raises virtually no revenue in the first few years.

Kiwis don't want to put their future at risk with a switch back to the unaffordable and big-spending ways of the past. Tax and spend policies helped create much of the mess that has had to be cleaned up over the last few years. New Zealand needs a strong and growing economy that provides more opportunities, better wages, and the high-quality public services. That's exactly what National will deliver.

As the economy improves, we must also continue to build on a sound platform of higher savings, exports and productive investment, rather than the excessive borrowing, consumption and government spending of the past. The days of tax and spend are behind us!