Wednesday, April 15, 2009

An Open Letter to the National Government

Three tangible ideas to turn the country around.

This is an open letter from an Average Joe that wants to see New Zealand move through the current recession but also wants to look to see how in two of three years, hopefully when we are in better times, we can still be a country that the world looks on with envy at our success. The three ideas cover off areas of personal/national wealth, education and tourism.

Idea One – bringing people out of poverty
This is not entirely mine, but one that was mentioned on talkback a few weeks ago that I have extended on and investigated. I think that we should adjust the State Housing system. A story on TVNZ in 2006 listed the cost of repairs to State Houses in NZ at $21 million, for the purpose of this idea let’s assume its similar now, and round it to $20 million.

Tenants don’t get anything from this relationship with the government that helps then to move forward in life, it’s an ambulance at the bottom of the cliff that helps day to day, but doesn’t address the poverty issue. I propose that the government starts building more state houses, from there the house gets sold to what would today be a tenant, it’s sold at cost, and the government negotiates the mortgage with a 0% to 2% interest rate. The payment of the mortgage would still be income tested as is rent currently for a State House, and if an owner reneged on the mortgage then like any of us they could lose the house and the money they have paid for it thus far.

The benefits of this would be numerous, but initially it would start the low income earner building equity, and in doing so wealth which would build wealth for the whole country. Secondly it would reduce the bill each year for repairing State Houses. Under the new system the owners would be responsible for everything a homeowner would be expected to pay for. The current State Housing system should not be gotten rid of, this would be supplementary to what is currently happening.

Idea Two – ‘free’ education
Education is the cornerstone for moving this country forward in the next generation. We may never stop the ‘brain drain’, but we could start to look at replacing them with people who are already here, but are maybe missing the opportunity, or motivation for further education. The idea is simple, a school leaver, chooses to join one of the armed forces for one year, straight out of school. They are guaranteed that they will not be deployed internationally; they are serving their country from within for the year. For this the get a $20,000 credit for their tertiary education.

The current salary for a recruit in the armed services is $31,894. Take $20k out and pay the recruit the remaining 12,000 for the year. $231 a week when you have no expenses should keep someone in money to play with.

The other tangible result we would see from this is some teenagers, who currently may be lacking in discipline would come out of a programme like this, different people, they would need to have a fitness level to get in, and have completed schooling to a certain level. What would be better motivation than, ‘stay fit, keep your grades okay and we’ll give you a free degree/diploma’. I also think you’d see that the number of those in the armed services would go up as some would find it as their career in the years ‘service’ they gave.

Idea Three – build tourism through free airfares
One in ten jobs in NZ are connected to the tourism industry. Therefore if tourism is successful then NZ is successful, if tourism is making money, NZ is making money.

On average a tourist spends $131 per day, which means they pay $14.56 a day in GST.

We own 84% of Air New Zealand, the government should offer free airfares to international visitors, using a formula that makes the GST cover the airfare. For example, a return airfare from Sydney is around $350, theoretically that’s around 3 weeks visit. So the formula is if you spend 4 weeks in New Zealand you get a free return flight from Australia. A similar formula could be used for the UK, USA or anywhere else. There is the possibility of attracting people who may not be the kind of tourist that pays the $131 average per day, you could add other conditions in to minimize the chances of this happening for example, you’d need to be 40 or older to apply.

We have been told by John Key that $50 million dollars will be allocated for the building of a cycle way the length of the country. If we add our estimate of State Housing repairs on top of that we have a pool to start these initiatives of $70 million, which will build a lot of houses, especially if government owned land is used, or purchase a lot of airfares to reap the GST reward at a later date.

These ideas are the kinds we need to hear about when it comes to moving the country forward, the cycle way (due respect) isn’t going to do it. These ideas will help all areas of life in NZ, educating our younger New Zealanders, helping the issue of poverty with a tangible solution and helping an industry that employs 10% of our population, and maybe even in this time of recession, may even grow it.