5 point economic plan for New Zealand

I'm glad to have faced such a serious challenger! Now to my summary. In this debate I raised five points. First, I proposed that New Zealand indexes tax brackets to the inflation rate. My opponent was so impressed by this point that even he conceded it was "reasonable", with no further rebuttals. Secondly, I said that income tax on the rich should be reverted to pre-John-Key levels. Con objects that there is a lack of evidence that our economy is currently undertaxed. First of all, it's not so important how much tax revenue is received, it's more important who's giving it - the idea is to reduce inequality. Secondly, I actually provided such evidence in round two, when I explained that all other more successful economies around the world have higher personal tax burdens, and indeed the only one that has a lower personal tax burden is Mexico. Third, it's theoretically bad for the economy if the government keeps spending money it doesn't have, running up a deficit year after year, both because that causes inflation, and because that bankrupts us. Thirdly, I said interest-free student loans should be swapped for student allowances. Con countered that the government does not need to borrow to spend. That's factually incorrect, especially the part about invented money - the government's books are audited and the money all comes from somewhere. The New Zealand government had over $71 billion of debt at the end of 2011 (. http://www.stuff.co.nz...). Since the RBNZ never prints money, the government cannot conjure money out of nothing. If it's money being "held" by the RBNZ, they need to get it off them by borrowing from them to their account (which is held by Westpac bank). The other option is to use bonds. How much is borrowed from the RBNZ and how much sold in bonds is not determined by the RBNZ but a unit in the Treasury called the New Zealand Debt Management Office. The crucial thing about this system is that the RBNZ reserve is separate from the government's account. That would be like saying the assets of a bank are equal to the money that all of their clients have banked with them. So when the government pays interest to the RBNZ (at the OCR), that's a deadweight loss. No student gets a benefit from that, and neither does any taxpayer. When the government uses bonds there's interest on that bond - bonds are like a "give me $100 and I'll pay you $110 in a year" kind of deal. Either way, there is a deadweight loss when the government has to spend all this extra money to keep student loans interest free. Why not give that money directly to students? That would seem like a more fair system, even if the government wasn't losing money off it (which they are). Fourth I said New Zealand could save a lot of money by abolishing the military. Con says that's laying off 12,000 people (actual number 13,795 plus 1608 bureaucrats, of which about 2500 are part-timers with other full-time jobs - see . http://www.nzdf.mil.nz...). Excellent! Right now the rest of the country are short on many areas of skilled labour that military people are trained to provide, such as engineering and ICT, and particularly for the civilian units, doctors (. http://www.immigration.govt.nz...). It's not like they'll leave the military and become beneficiaries for life - these are people who are likely to help fill our crucial shortage of police officers, or our shortage of skilled mechanics. It's better for the economy if they fulfil that for the market than that we spend the money and they don't really provide a service for anybody in return. Fifth I said that we need a capital gains tax. Con uses exactly the same objections as for my second point, which I have already rebutted. It seems, therefore, that my points will overall lead to a fairer and stronger economy for all. Con also gave you five points. First he proposed "monetary reform", that is, arbritary tax rates and unlimited government spending. This has been tried and has failed so often (Zimbabwe, communist China etc) that it's surprising anybody still advocates it. Most dangerously, it means the government stops guaranteeing the value of money. That's bad because the financial system collapses. Secondly he said the government should be an employer of last resort. I showed that this comes with the opportunity cost of looking for real jobs. Thirdly he advocated free engineering in in-demand faculties, which creates all sorts of perverse incentives, making my far superior. Fourth we heard about more hi-tech grants, which the government already does, except more of it. That's essentially a promise the government cannot afford to keep. Fifth he talked about establishing a charter development bank, which we already have. So as voters you have two alternatives. One is a stronger economy. One is worse. The choice is simple.