Big Govt cuts ‘realistic’

Press, 22 July 1989, Page 2

Big Govt cuts ‘realistic’

By OLIVER RIDDELL in Wellington Further big cuts in Government spending are realistic, according to the former Minister of Finance, Mr Roger Douglas.

In the third of three papers prepared as an alternative budget, he has presented a strategy for economic and- social reform in the four years to 1993.

If enough people saw the rewards of lower taxes and greater wealth as worth the effort of further structural change in traditional publicservice sector activities, further cuts were realistic, Mr Douglas said. To achieve the required savings, the Government would need to continue its

present effort to extract full value in output and care for every dollar it spent across a wide range of public-sector activities.

The Government would have to focus its assistance on those who genuinely needed public sector help to achieve dignity and security. Those people must not be hurt by the changes, he said. They were a top priority. The help given would need to be redesigned. It

was not enough just to

maintain people in dependence. They needed positive incentives to find a more rewarding place in the work force of a growing economy.

“Those who do not need public help would have to pay themselves for some of the services they now buy through their taxes,” Mr Douglas said. Their reward would be more choice, lower taxation, a faster rate of real income growth, and rapidly expanding new opportunities.

Real safeguards would

be built in to ensure income security, such as a ceiling of 4 per cent of income a year for all primary health care including dentistry, he said. Beyond that, the State would pay everything. Lew-income people with significant health problems would end up spending less, in many cases, than they were forced to spend at present.

“The evidence is unanimous that we can have more care and better quality care than we have

now at lower cost,” Mr Douglas said.

“But we will need to give the people in the system the right structures and incentives to achieve that outcome.

“I am absolutely not arguing for the abandonment of public care.

“New Zealand has always had a mixed system of public, private and voluntary care,” he said.

“A change in the balance of that mix can now benefit everyone.”