Hon BILL ENGLISH (Minister of Finance) : I move, That the Appropriation (2013/14 Estimates) Bill be now read a second time.

It’s my privilege to deliver the National-led Government’s fifth Budget.

When I stood up to deliver the Government’s first Budget, in 2009, New Zealand faced challenges I think we’re only able to fully appreciate with the passing of time.

The world had entered the worst financial crisis since the Great Depression, from which it has yet to fully emerge.

The New Zealand economy had been in recession for more than a year and some economists were predicting the unemployment rate would go higher than 10 per cent.

The previous government had increased its spending by 50 per cent over the previous five years and that was simply unaffordable.

The Treasury told us that if we kept the policy settings we inherited, we’d never see another budget surplus again and government debt would increase to levels we’re currently seeing in Europe.

That wasn’t the end of it. Few at that time anticipated how difficult the global recovery would be. And no-one anticipated the Canterbury earthquakes which, apart from the terrible loss of life, have been one of the most expensive natural disasters in history.

So, starting in Budget 2009, we set out our plan to get New Zealand out of a deep hole.

We were prepared to run deficits for a few years, to support the fragile economy, preserve jobs and protect the most vulnerable New Zealanders, including families with children, from the worst of the recession. That meant increasing government debt.

But at the same time, we set out a credible path back to surplus and a plan to start paying back this debt.

That plan involved reining in expenses and getting on top of the longer-term drivers of government spending.

We also set out a comprehensive programme to build a more productive and competitive economy that supports higher incomes and more jobs.

This has included our tax package in 2010, our on-going resource management reforms, the introduction of 90-day trials, investment in infrastructure, building on our international trade deals, and a significant investment in skills, training and apprenticeships.

We have been driving for better results from public services. And, since the earthquakes, we have been working hard to support Cantabrians through the aftermath of their disaster and through the rebuilding of their city.

Mr Speaker,

The Government’s plan has not involved radical change. We’ve done what we said we would do, and we’ve taken people with us.

And that plan – using sound and proven economic policies – is working, as international bodies like the IMF have recognised.

New Zealanders can look to the future with well-earned confidence and optimism.

The New Zealand economy grew 3 per cent last year, which is almost the same as Australia, and higher than almost every other developed country.

Wages are growing, cost of living increases have been modest and interest rates are at 50-year lows.

There are 50,000 more jobs in the economy than two years ago, although unemployment does remain too high and attracting new investment that creates jobs is a particular focus for the Government.

The fiscal outlook has improved markedly as a result of the Government’s sound management and we are on track to post a surplus in 2014/15.

These are real achievements that are benefitting New Zealanders and their families.

Budget 2013 is about building momentum in this programme.

But there is a risk that all the gains we are now making could be lost in the future, by going back to policies that have failed in the past.

We know what these are – high and wasteful government spending, more costs and more taxes on households and businesses, and more state control of the economy that chills private sector investment and destroys jobs and growth.

New Zealanders were conditioned in the 2000s to believe that Budgets should be about the novelty of new, expensive spending programmes that held out promises of economic and social transformation, arranged by the Government.

Those promises were illusory. There was no sustainable revenue stream to pay for the increased spending, and there was nothing genuinely transformational to show for it.

In contrast, this Government believes that Budgets are about careful stewardship of public money, and investing wisely in programmes to improve people’s lives and help grow the economy.

In the end, it is the effective use of public money, not the amount of it, that makes a positive difference to the lives of New Zealanders and their families.

Mr Speaker,

The Government has four priorities this term:

responsibly managing its finances;

building a more productive and competitive economy;

delivering better public services; and

supporting the rebuilding of Christchurch.

Across our programme, we are working constructively with the ACT, United Future and Māori parties, and I want to acknowledge their support and assistance.

I intend to talk about each of the Government’s four priorities in turn. But first I want to summarise the economic outlook for the next few years.

The Budget forecasts show annual growth of between 2 and 3 per cent over the next four years.

These forecasts include the impact of the recent drought, which is expected to reduce economic activity by 0.7 percentage points in 2013.

Low interest rates, increased activity resulting from the Canterbury rebuild, and strong commodity export prices will all contribute to growth. And across the Asia Pacific region, growing numbers of consumers will be demanding the goods and services New Zealand produces.

The New Zealand economy is expected to grow more strongly over the next two years than many other developed economies, including the United States, Canada, the United Kingdom, Japan, and the Euro area.

Budget forecasts also show an improved outlook for jobs and for wage growth. As a result, household disposable income is forecast to rise by almost 20 per cent over the next four years.

The current account deficit is forecast to rise gradually to over 6 per cent of GDP in the next few years, driven by stronger investment by businesses and households, including investment in the Canterbury rebuild. If investment in the rebuild is excluded, the current account deficit remains below 5 per cent of GDP.

New Zealand’s net offshore liabilities will worsen slightly as insurance pay-outs for Canterbury continue. However, national saving is expected to rise, led by the Government getting its finances in order. Household saving rates are expected to retain the gains made over recent years, following the large dissaving over much of the 2000s.

In summary, New Zealand is well placed.

However, a number of risks and challenges remain. The recent drought, for example, may have a more persistent effect than expected, and rapid house price growth, if sustained, may place more pressure on the domestic economy.

Internationally, risks for the global economy appear to have receded over recent months, although global conditions continue to place upward pressure on the New Zealand dollar.

Budget decisions have been made with this economic context in mind.

Mr Speaker,

I want to talk now about the first of the Government’s four priorities, which is to responsibly manage the Government’s finances.

The Budget shows that the Government is on track to meet its two key fiscal targets.

We are on track to get back to surplus by 2014/15.

And we are on track to reduce government debt to 20 per cent of GDP by 2020.

Budget forecasts show an operating surplus before gains and losses of $75 million in 2014/15.

We are achieving this while still spending $5.1 billion on new initiatives in the current year and over the next four years in Budget 2013 – funded, in part, by reprioritising existing spending.

A surplus is forecast because tax revenue is picking up and the Government is continuing to restrict growth in expenses. Core Crown expenses are forecast to drop below 31 per cent of GDP in 2014/15 – down from 35 per cent of GDP just two years ago – and then remain well under that level.

The Government’s return to operating surplus is not dependent on the Mighty River Power share sale. The share offer programme effectively swaps one type of asset for another – electricity company shares for cash – so its primary effect is on the mix of assets and debt that the Government owns, rather than on the operating balance.

Budget forecasts also show net core Crown debt peaking at 28.7 per cent of GDP in 2014/15 and declining thereafter. Longer-term projections show net debt dropping to 17.6 per cent of GDP by 2020/21, in line with the Government’s target.

This is a remarkable turnaround in the books. Projections in Budget 2009, for example, showed that if the Government had maintained the spending track it inherited, and hadn’t made policy changes, net debt would exceed 60 per cent of GDP by the early 2020s.

But I would remind everyone that forecasts and projections are, by definition, about the future. While the fiscal outlook has improved markedly over the last few years, a lot of work is needed to make the forecasts a reality, particularly when it comes to reducing debt.

Taking on more debt has been appropriate to support the economy and cushion New Zealanders and their families from a number of major shocks including the recession, the global financial crisis and the Canterbury earthquakes. And, as a percentage of New Zealand’s GDP, our level of debt is still well below most of the countries we typically compare ourselves with.

But, in dollar terms, net government debt is still rising by around $130 million a week and is expected to reach $70 billion in 2016/17, which is the equivalent of around $15,000 for each and every New Zealander.

As households around the country know, carrying substantial debt is neither comfortable nor financially prudent. Annual interest payments on our debt will this year cost about as much as total spending on the Police, early childhood education and the Unemployment Benefit combined.

A sizeable debt also risks keeping interest rates and the exchange rate higher than they would otherwise be, and in turn crowding out the internationally-competitive sectors of the economy.

So the Government is firmly focused on capping, then reducing, its debt.

And, alongside debt reduction, future surpluses will also give us more choices. These choices will include, for example, investing in public services, reducing costs on businesses, and helping families get ahead.

Mr Speaker,

Three key changes have been made to the Government’s fiscal parameters.

First, the operating allowances for new spending have been slightly adjusted.

The operating allowance is $900 million in Budget 2013, compared with the $800 million signalled in the most recent Budget Policy Statement, and will be $1 billion in Budget 2014, compared with $1.2 billion in the BPS. From 2015 onwards, operating allowances will grow by 2 per cent per Budget.

This change to future allowances will mean bigger surpluses and a greater ability to pay down debt.

In addition, new capital spending in this and the next three Budgets will continue to be funded from the Crown’s balance sheet, including from the proceeds of the Government’s share offer programme.

Second, the Government intends to delay contributions to the New Zealand Superannuation Fund until the long-term debt target is reached – that is, until net debt is no higher than 20 per cent of GDP.

This means Super Fund contributions are now expected to resume in 2020/21. This is two years later than was projected in the most recent Half Year Update, but is the same time as was expected when contributions were initially suspended in Budget 2009.

I want to stress that this change in no way affects New Zealanders’ entitlement to New Zealand Superannuation, either now or in the future.

The choice for the Government is whether to use future cash surpluses to reduce debt to more prudent levels, or whether to put money into world sharemarkets while holding higher debt. The first option is clearly more responsible.

Third, and finally, the Government is now satisfied there is scope for significant reductions in ACC levies.

I will outline these proposed changes in a moment. The impact on the Government’s books, however, is to reduce total Crown revenue, and therefore the total Crown operating balance. This has already been built into the Budget forecasts.

Mr Speaker,

I now want to turn to the second of the Government’s priorities, which is to build a more productive and competitive economy that supports higher incomes and more jobs.

The Government’s plan for building a more productive economy is set out in the Business Growth Agenda.

This focuses on six key elements that businesses need to grow: access to export markets, innovation, infrastructure, skilled and safe workplaces, natural resources, and capital markets.

Each of these areas involves government investment and regulation, and with regard to the second of these I acknowledge, in particular, the contribution of Regulatory Reform Minister, and ACT Party leader, John Banks.

The Budget adds a number of new initiatives to the Government’s existing agenda.

In particular, the Budget contains a $100 million-a-year internationally-focused growth package.

This growth package acknowledges New Zealand’s need to pay its way in the world through increased trade and investment, which in turn creates jobs and opportunities for New Zealanders.

The largest part of the package is a $200 million boost in funding, over four years, for science, innovation and research.

This extra funding will be invested in expanding current business R&D grants, as well as establishing a new repayable grant for start-up businesses to assist them to become investment-ready. There is also new funding for the National Science Challenges and the Marsden Fund.

The internationally-focused growth package also provides a significant boost for tourism, as the Prime Minister recently announced.

The Government will invest $158 million over four years to attract more visitors to New Zealand, particularly high-spending visitors. This includes funding to attract high-end visitors from emerging markets and funding to attract international business events to New Zealand.

The growth package also includes additional funding of $40 million over four years to market and promote New Zealand’s international education sector, which already contributes more than $2 billion to our economy each year.

Mr Speaker,

When the Government took office in 2008, we were confronted with significant financial problems at ACC and we took action to rebuild its long-term sustainability.

The Government is now satisfied there is scope for significant and sustainable reductions in ACC levies.

We have therefore made an allowance for levy reductions of around $300 million in 2014/15. Final figures will be determined after ACC consults on levies later this year.

ACC’s improved performance, and an on-going review of its funding policy, mean the Government has also allowed for levy reductions to increase to around $1 billion in 2015/16.

When combined with the $630 million reduction in levies in 2012/13, these proposed changes amount to around 40 per cent lower ACC levy rates for households and businesses.

Mr Speaker,

The Budget also confirms a number of revenue measures, and I want to thank Revenue Minister, and United Future leader, Peter Dunne for his work in this area.

These measures include proposals to let loss-making start-up businesses claim tax losses on R&D expenditure, together with proposals allowing tax deductibility for certain types of ‘black hole’ expenditure.

Changes to thin capitalisation rules will help to ensure that multinational companies investing in New Zealand contribute their fair share of tax.

And Inland Revenue will receive additional funding of $7 million a year so it can better pursue tax compliance in the area of property investments. This is expected to return about $45 million a year in additional tax revenue.

Mr Speaker,

Proceeds from the Government’s share offer programme – including from the Mighty River Power float last week – are being placed in the Future Investment Fund, and will be used to pay for new public assets.

The Budget confirms another $1.5 billion of investment from the Fund.

$426 million will be invested in redeveloping Christchurch and Burwood Hospitals which, as previously announced, will be the biggest building project in the history of New Zealand’s public health system.

Contingencies totalling over $700 million have been set aside for key projects that include new, modern schools, Christchurch’s justice and emergency services precinct, and Canterbury tertiary education institutes.

The rest of the $1.5 billion investment includes $50 million for school network upgrades, $94 million for the fourth year of KiwiRail’s turnaround plan, and $80 million for irrigation infrastructure.

Overall, across multiple Budgets, the Government intends to spend a total of $1 billion from the Future Investment Fund on 21st Century schools and classrooms, and $1 billion on priority health investments.

Mr Speaker,

Investing in hospitals, schools and other public assets depends on money coming into the Future Investment Fund through further share offers.

Today I can announce that Meridian Energy will be the next company to be prepared for a partial share offer in the second half of 2013.

As with Mighty River Power, New Zealanders will be at the front of the queue for shares in Meridian and we will be targeting widespread New Zealand ownership.

The Government’s share offer programme remains important for the Government’s books and for the economy.

As well as raising money to invest in new public assets, it benefits the companies themselves through greater market discipline. In addition, the share offer programme gives New Zealand savers the opportunity to invest in large, New Zealand businesses.

Mr Speaker,

Housing can be made more affordable in New Zealand by focusing on the key areas that actually make a difference: land supply, consent processes, provision of infrastructure, and productivity in the construction sector.

The Government is working with councils on these issues, because the decisions they make about housing affect the entire economy. High housing costs affect financial stability and create an increased demand for housing assistance.

Today we are introducing legislation to speed up the provision of new housing in areas where the pressure is greatest and housing is least affordable.

Special housing areas will be designated under accords between the Government and councils. Council approvals for new housing in those areas can then be managed under a streamlined process.

Where agreement cannot be reached, or targets are not met, the Government will be able to issue the consents itself.

This legislation, which will apply for three years, is an immediate response to housing pressures in areas facing severe affordability problems.

It gives time for the Government’s resource management changes to bear fruit, and address land and housing supply issues in the longer term.

Mr Speaker,

Alongside the Budget, the Government is confirming measures to help ensure New Zealand’s financial stability.

Earlier this week, the Reserve Bank Governor and I signed a memorandum of understanding that gives the Reserve Bank the ability to require banks to:

hold additional capital on their balance sheet as a buffer during an economy-wide credit boom;

hold additional capital against loans in specific sectors if risks emerge in those sectors;

use more stable sources of funding to avoid short-term funding shortages; and

restrict high loan-to-value ratio lending in the housing sector.

These measures will be available – if required – to help protect the economy and the financial system from boom and bust cycles.

Mr Speaker,

The Government’s third priority for this term is delivering better public services within tight fiscal constraints.

Spending restraint is not a handbrake on providing better public services. In fact, big increases in spending have often been a measure of failure, rather than a measure of success.

Our approach has been to spend well, not always to spend more.

The Government’s spending increases have been modest and focused on programmes that will achieve results and improve the lives of New Zealanders and their families.

Last year, the Prime Minister set 10 challenging results for the public sector to achieve over the next few years, in areas such as reducing long-term welfare dependency, supporting vulnerable children, boosting skills and employment and reducing crime.

These results span the public sector and the Budget contributes to meeting all of them.

Mr Speaker,

I want to start with the Government’s support for vulnerable children and families. This is already very substantial, with billions of dollars spent on income support, as well as targeted support for families with complex needs.

The Ministerial Committee on Poverty was established under the confidence and supply agreement between the National and Māori parties, and I want to acknowledge my fellow Minister and Māori Party co-leader, Tariana Turia, for her support.

The Budget confirms several important initiatives in this area.

Funding of $100 million over three years has been provided for the Healthy Homes insulation programme, targeting low-income households with children or high health needs. The extended programme is expected to insulate around 46,000 additional houses.

More than $21 million has been provided over the next four years for rheumatic fever prevention.

Another $1.5 million has been provided next year for budgeting services for low-income families, on top of the $8.9 million that is already provided.

The Government is also exploring a warrant of fitness programme for social housing, and will investigate and pilot a low and no interest loan scheme for low-income borrowers.

Some of these initiatives were included in the Children’s Commissioner’s child poverty report, which the Government will be responding to in the next few weeks.

Mr Speaker,

It is widely acknowledged that paid employment is the best way to lift vulnerable families out of poverty.

That’s why the Government is focused on helping those families by creating conditions where businesses are prepared to invest and to take on new staff. And it’s why the Government’s welfare policies have an unrelenting focus on supporting people into work.

The Budget provides $189 million over four years for the next stage of welfare reform.

This includes funding for more intensive case management for people who are able to work, and means that Work and Income staff will be actively working with over 40 per cent of beneficiaries.

Mr Speaker,

Despite the Government’s $15 billion investment in housing, some people cannot get social housing assistance when they need it. The provision of social housing is also dominated by Housing New Zealand, with relatively few other providers.

The Government is therefore announcing three major changes.

First, we will begin developing pathways for New Zealanders in social housing to regain independence and self-sufficiency in housing as their individual circumstances permit and as alternatives allow.

Reviewable tenancies, which already apply to some Housing New Zealand tenants, will then be progressively extended to all social housing tenants.

This will mean people can be in social housing when they have high needs, and for as long as those needs persist. But they will be given support to move into alternative housing when their situation improves and they are in a position to take that step to independence.

This will free up houses for other people and families with high needs, who would otherwise be shut out of social housing.

The Budget contains funding of $47 million to support this policy, starting in 2015/16.

Second, the Government is increasing its spending on income-related rent subsidies by $27 million over four years and will make this available as a capped pool to community housing providers.

Opening income-related rents up to community housing providers puts them on an equal footing with Housing New Zealand and opens the door for much greater participation in the social housing sector.

Finally, housing needs assessments will be shifted from Housing New Zealand to the Ministry of Social Development. This means needs assessments will be independent of any housing provider, and people seeking different types of government assistance can get it from one organisation.

Mr Speaker,

The Government has made frontline health services a priority, and this is benefitting many more New Zealanders and their families.

Elective surgery procedures, for example, have increased significantly, emergency room waiting times have dropped, more MRI and CT scans have been performed and more children have been immunised.

The Budget continues the Government’s focus on better healthcare and prevention.

It includes $1.6 billion over the next four years for new initiatives and to meet cost pressures and population growth.

$1 billion of that funding, over four years, will go to district health boards to cover demographic growth and cost pressures. $70 million has been set aside for aged care and dementia services, $48 million for more elective operations, $36 million for heart disease and diabetes care, and $25 million for preventative screening services.

The Government is also providing $92 million over four years to pay family members who care for their disabled adult children.

The additional funding in the Budget takes the total health budget next year to $14.7 billion.

Mr Speaker,

The Government is helping more New Zealanders get the skills they need to build successful careers and fulfil their potential.

We are lifting student achievement at all levels of the education system, making more information available to parents and lifting the quality of teaching and professional leadership in schools.

We have set ambitious targets for student achievement. In particular, we want to have 98 per cent of school entrants having participated in early childhood education, and 85 per cent of 18-year-olds achieving NCEA Level 2 or equivalent qualification.

The Government’s total investment in education will next year increase to over $9.7 billion.

Over the next four years, the Budget provides new operating funding of $173 million for early childhood education and $215 million for schools, including nearly $80 million for operations grants. It also provides $134 million in capital for new school property.

Our particular focus is on supporting children who have too often missed out on educational opportunities. The Budget therefore provides $41 million to support vulnerable children to participate in early childhood education and $6 million for a new mentoring programme to help vulnerable students achieve NCEA Level 2.

Mr Speaker,

The Budget also includes over $130 million of new investment, and reprioritised funding, in tertiary education over the next four years.

Extra funding is provided for Māori and Pasifika trades training, to boost science and engineering courses, and to increase the proportion of young people with higher-level qualifications.

The Budget also confirms funding to support the new and expanded apprenticeship system the Prime Minister announced earlier this year.

The reprioritisation of tertiary funding includes initiatives to increase repayments of student loans from overseas-based borrowers and reduce defaulting.

The Government is also reining in big rises in student allowance costs by focusing on younger learners and on people studying for their first degrees. People aged 40 and over will be restricted to 120 weeks of student allowances, while people aged 65 and over will no longer be eligible for an allowance.

Students of all ages will continue to have access to the interest-free student loan scheme.

The Budget also invests in expanding the Māori cadetship programme, which will increase the number of cadets from 250 to 350 each year. I want to acknowledge Māori Affairs Minister, and Māori Party co-leader, Pita Sharples for his leadership and support in this area.

Mr Speaker,

Over the last four-and-a-half years, the Government has had a comprehensive programme of reform to protect communities, prevent crime and put victims first.

This is delivering results.

Reported crime has fallen by almost 17 per cent over the past three years.

And our justice agencies are focused on areas that will get the best results in the future.

The Department of Corrections, for example, is investing $10 million over two years to reduce offending by prisoners after they are released.

And, as previously announced, the Police are investing more than $160 million over a number of years to give frontline officers access to new technology such as smartphones and tablets, which means they can deal with issues on the street without having to return to the station to do paperwork.

Mr Speaker,

The Government’s fourth priority is to support the rebuilding of Christchurch.

Since the first earthquake, almost three years ago, the Government has made it clear that it will stand beside the people of Canterbury as they rebuild their lives and their communities.

I want to pay tribute to my colleague, Canterbury Earthquake Recovery Minister Gerry Brownlee, and the many public servants, community organisations and families who continue to work so hard to help each other through the many challenges that remain in their community.

Considerable progress is being made. The SCIRT Infrastructure alliance has completed $700 million worth of work, with another $400 million under construction. The demolition of nearly 1,000 buildings in the Christchurch CBD has almost finished and the cordon will be removed at the end of June. And, by the end of this month, the Earthquake Commission will have completed 38,000 repairs and paid out more than $5.3 billion in claims.

The Treasury has recently increased its estimate of total rebuilding costs from $30 billion to $40 billion – the equivalent of almost 20 per cent of New Zealand’s annual GDP.

The Government’s share of that total cost will be significant.

On current estimates, around $7.6 billion will be incurred by the Earthquake Commission and other Crown entities.

Direct government support amounts to another $7.6 billion, making a total Crown contribution of around $15.2 billion.

Of the Government’s direct support, $5.5 billion has already been allocated through the Canterbury Earthquake Recovery Fund, which was established two years ago and is now fully committed.

This Budget confirms an additional $2.1 billion of operating and capital spending to further support the rebuilding of our second-biggest city.

Over $900 million of this funding comes from the Future Investment Fund, for projects including redeveloping Christchurch hospitals, establishing a justice and emergency services precinct and supporting tertiary education institutes.

The Government is also investing $300 million in anchor projects for the Christchurch city centre. And almost $650 million of additional capital funding from departmental balance sheets will be used for health and education projects in Canterbury.

Mr Speaker,

New Zealand is on the right track.

The Government’s books are the envy of most developed countries.

The economy is growing and families are benefitting from that.

The country is seeing the benefit of improved public services that are focused on getting results.

Things haven’t always been easy. But as a nation, we have coped with adversity and we’re now making real progress.

We are seeing the benefits of the Government’s programme of sensible, responsible change.

There are a lot of opportunities ahead of us as a country.

Providing we stick to the plan the Government has set out, I’m confident we will grasp those opportunities and keep building the brighter future New Zealanders deserve.

Mr Speaker,

I commend this Budget to the House.

DAVID SHEARER (Leader of the Opposition) : This is a blackjack Budget. This is a Budget where Bill English holds all the cards but has stacked the deck against ordinary, hard-working New Zealanders. It is a game of winners and losers, and those who lose out are the millions of Kiwis slogging their guts out every day. Those people are the backbone of this country and the engine of our economy, and they deserve a Government that is better than this. Do not get fooled by the scraps that are falling off the table in this Budget. This is, and always has been, a Government for vested interests, for casino giants, for movie moguls, for investment bankers and sharebrokers, and for big noters, self-promoters, and National Party no-hopers. If there was any doubt about that, we see today that Mighty River Power executives are getting $1.2 million in share bonuses—just a few hours ago. That is whom this Government stands for. That is why I move an amendment, That all the words after “That” be omitted and substituted with the words: “this House has no confidence in the National-led Government, because it has failed to deliver on its promises and because it has put vested interests ahead of the interests of hard-working New Zealanders.”

This is not a Budget for the people. It is certainly not a Budget for the couple that I know of who are approaching 40, with two kids, who still cannot get into their own home—afford their own home—because they do not have parents who can stump up with the deposit. That is becoming the way, and the only way, you can get into house ownership in Auckland. I know another family whose soccer fees are $100 for each kid, which means that only the eldest of their three will get to play this season. These are parents who are well educated, who are hard-working, but who no longer believe that things are going to get better for them, because under this Government all they have seen are broken promises. They have been let down by what has become a game show Government, with host John Key, glamorous assistants John Banks and Peter Dunne, and together you will see them on your TV screens at night hosting “Fire Sale of the Century”. On “Fire Sale of the Century”, everything is up for sale: farmland, Mighty River Power, Genesis, Meridian Energy, Air New Zealand, labour laws, gambling licences—you name it. It has all got to go.

We have even had Deal or No Deal, with special guests, of course, Skycity. Big prizes are on offer. We have got hundreds of new pokies, gaming tables, and a one-time-only 35-year extension to a gambling licence, if you happen to know the right people—if you happen to know the right people. To the taxpayer, what do we get? Well, we get a convention centre—except that Skycity still owns that as well. And it does not stop there. John Banks takes over the show Would I Lie to You, and he is playing it as an in-court special. Peter Dunne stars in the ultimate Survivor. Sometimes he outplays; he never outwits, but somehow he always seems to outlast.

Behind this game show there is actually a very tough and serious reality in our country. I have criss-crossed this country over the last year, meeting thousands of people. They are decent people and they cannot understand why, when they are doing everything right, when they are doing what their parents said would get them ahead, they still feel like they are failing. They are starting to understand that John Key cares more about his mates than their mates, because the only time they have seen this Government stand up for anything is when it is fighting to protect its own privileges; not for those working hard—like the cleaner I know of who was working 40 hours at a hotel on a minimum wage. She was not able to make ends meet, so she took on extra hours at a hotel down the road. But she was told that she could not do that, because it was a conflict of interest. She is cleaning toilets, for heaven’s sake. What conflict could there possibly be? But that is why this Government wants to be “more flexible” with our labour laws. It is easier to squeeze the little people like her, who just want to get ahead with their families.

And what about our vulnerable kids? Well, I am like everybody else: I am surprised. Why? There is no food in schools in this Budget. It is because John Key would rather spend $40 million on private schools than spend it on kids who need to go to school with full stomachs. That $40 million would go a long way to feed a lot of vulnerable kids.

But I have to say it is welcome that the Government has finally woken up to the fact that there is a housing crisis—woken up after we announced KiwiBuild’s plan to build 100,000 affordable homes. But when you go through this Budget, there is nothing in there that will guarantee more affordable homes—more homes for National’s mates, but no more affordable homes. So if you are a first-home buyer, or wanting to be a first-home buyer, out there today watching this Budget, I am sorry, but it is nothing but disappointment in front of you. The only way to guarantee Kiwis affordable homes is to roll up your sleeves and build them. That is the only way you are going to get more affordable homes. We have had 4 years of this Government fiddling with the Resource Management Act, and nothing has changed. House prices are continuing to skyrocket, and the Government will do nothing to tax the speculators—the speculators who are making a killing, pushing prices up.

This Government’s only plan for getting ahead is to sell New Zealanders what they already own—already own. In 2017, because of the sale-down of our assets, our books will be in worse shape financially than they are now, because the dividends will have gone. Just a week ago, or 2 weeks ago, Mighty River Power was 100 percent Kiwi owned. Now 2.5 percent of owners own half of our asset. The reality is that this is a Government for the well-heeled and the well-connected.

The reality is that this Government has been exactly that from the time that it came to office. This Government gave $2.25 billion in tax cuts to those people at the very top—at the very top. That is 40 percent of the cuts to the top 10 percent of New Zealanders, and while other Kiwis are doing it tough—so tough that just last week the 200,000th Kiwi got on a plane and flew to Australia with a one-way ticket. Two hundred thousand Kiwis have gone to Australia since that Government came into office, because they cannot see a future here, because the only future John Key is worried about is Skycity.

When it comes to the future of millions of New Zealanders, it is just too hard and he is too busy. Let me give you an example of that, on why he will not be able to secure superannuation: “2020 is a long way away and there are a lot of things on my plate that I need to deal with in the here and now, rather than things in 2020 and beyond.” He knows things need to change, but he will not do anything about it, because it is just too politically expedient to sit on his hands. In 2 more years, according to this Budget, our superannuation bill will exceed our education bill—in 2 years—and this Government will do nothing about it.

So what does he think is more important than that? It is payouts, bailouts, and golden handshakes. It is breakfast with Ian Fletcher, a cup of tea with John Banks, and dinner with Skycity. Every time that man sits down for a meal with anybody, they get something out of it. There is something in it for their mates. Just like the MMP review—if it is not about protecting John Banks and Peter Dunne, then what is it about? He has ignored what New Zealanders actually voted for, and there is a word for that—there is a word for that—and the word is “arrogant”.

This Government is mired in broken promises. Budget after Budget, its promises simply have not stacked up. In 2010 John Key promised a step change with 170,000 jobs, but since the last election the National Government has come up with only 8,000. In 2011 it promised unemployment would be at 4.8 percent; it is at 6.2 percent. For 3 years we have been promised wages would grow by about 4 percent. Last year it was 1.7 percent, and nearly half of Kiwis got no wage increase at all. Every year National promises a brighter future, and every year New Zealanders are let down. This year will be absolutely no exception, because National has created a two-speed economy: a fast lane for property speculators, and a slow lane for first-home buyers; a fast lane for power company bosses, and a slow lane for people who are struggling to pay their power bills; a fast lane for foreign and corporate investors buying our assets, and a slow lane for our manufacturers and our exporters. Bill English keeps on saying that we are on the right track, but, quite frankly, it is a track to nowhere.

What we have heard today in the Budget is about tinkering. It is about pilot projects. There are more pilots in this Budget than in the entire population of Air New Zealand—

Hon Shane Jones: Soon to be sold.

DAVID SHEARER: And soon to be sold. We needed to hear today a Budget for every New Zealander—one that would have made a difference to everybody’s lives, and one that would have given people real hope. That is what a Labour Government is committed to doing. We have the courage to make the big changes. We have the bold and innovative ideas that show what a smart, active, hands-on Government can really achieve, because I want to create and build, not just trade and sell off. Our ideas are practical, they are responsible, and they will change people’s lives for the better.

Here is what Labour will do. We will bring down power bills for Kiwi families. National says: “No, electricity prices aren’t too high.”, apparently. We will reduce power prices for businesses so they can invest and create more jobs. National says: “No, just let the prices go up.” We will build 100,000 affordable homes. What does National say?

Hon Members: No.

DAVID SHEARER: Exactly—“No, get back to us after the election.” We will tackle the high dollar that is crippling employers, and what will National say about that? “No. You exporters, you’re on your own. You get off and you are on your own.” We will expand KiwiSaver and secure New Zealand superannuation, and what does National say to that? “That’s just too hard—that just doesn’t suit our vested interests.” We will raise the minimum wage to $15 an hour, and champion a living wage. What does National say to that? “No, we’re happy with a low-wage economy, actually.” We will pay employers the equivalent of the dole to take on an apprentice, but what does National say to that? “Let’s cut young New Zealanders’ wages, instead.”

We will live within our means. Has National been able to live within a budget for the past 5 years? No, it has not. For 5 years it has run a deficit—unlike Labour, which produced surpluses 9 years in a row. How is this Government going to get to surplus this year? By overcharging you on your petrol tax and overcharging you on your ACC levies. So the next time you fill up with petrol, just remember where that surplus is coming from. It is coming out of your petrol tank. Our Budgets will get in behind hard-working Kiwis, create jobs, and they will grow the economy. People are doing their bit, and they expect the Government to do its bit as well. That is what should shine through every Budget, year after year. That is what I am committed to.

In a minute you will hear from John Key and we will hear the one-liners, the weak excuses, and the scaremongering, and most of it, of course, will focus on the Labour Party, with little about what he will do, although I am sure he will try to convince us about the nirvana that is waiting at the end of the tunnel, after we sell off all our assets. But at the very heart of this Budget there is another deficit, and that deficit is one of ideas, because what this country really needs is a Government that has the courage to take on the big changes, a Government that will give hope—a Labour Government. We have had enough of the game shows and the “Wheel of Misfortune”. Someone should give John Key a vowel, because his Government is “O for awful”.

In the immortal words of Aaron Gilmore and General Patton: “Lead, follow, or get out of the way”. Well, John Key, you have had your chance. Follow Aaron Gilmore, and get out of the way, because I will lead a Government that puts the interests of New Zealanders first, ahead of vested interests—a Government that puts people first. Thank you.

Rt Hon JOHN KEY (Prime Minister) : That was truly awful. It was like watching MY SKY on half speed. I found myself desperate to change the channel, but under Labour you are allowed to watch only one channel. That is the way it goes. That contribution from the Leader of the Opposition was a contribution he made after he recently returned from his economic fact-finding mission to North Korea. You see, I thought that the days when a Labour leader no longer wanted New Zealand to be a Polish shipyard were gone, but in fact it is quite the contrary. Mr Shearer yearns for New Zealand to be a Polish shipyard. But I have got a bit of bad news for Mr Shearer. Firstly, Poland has already moved to partial privatisation. It has abandoned the single buyer of electricity, and, by the way, it has a convention centre. Anyway, credit where credit is due.

The Labour Party has finally adopted one of the very sensible policies of the National Government, and that is the mixed-ownership model. That is right. These days, the Labour Party is 51 percent owned by Labour and 49 percent owned by the Greens. Yes, these two parties have come together in this happy little place, where fruit meets loop. That is where they are. Like one of the most famous combinations of all time, Sherlock Holmes and Dr Watson, it is “Sherlock Shearer” and “Dr Norman” in search of solving the mystery, and this one is The Hound of the Baskervilles. According to them, Bill English is the devil-beast that haunts the moors that New Zealanders live on. Sadly for our two would-be crime solvers, it turns out that the devil-beast is not only a thoroughly competent Minister of Finance but the envy of the Western World. Far from being someone who wants to haunt the moors, he wants to build tens of thousands of homes, well-insulated and affordable, on the moors. He has got this funny, quaint little notion. He wants New Zealand to earn money, not print it. That is the way he wants to go. He wants to support enterprise. He does not want to regulate for monopoly. He is a man who supports businesses, big and small. He is a person who cares about individuals, rich and poor, and that was on display in his Budget here today. Like all great Sherlock Holmes mysteries, there is a twist in the tale, and the twist is as simple as this: the devil-beast is the Opposition, not the Minister of Finance.

Let us have a little history lesson, because you did not get any of that in David Shearer’s speech. We came into Government in late 2008. This is the fifth Budget that has been delivered by a National Government and by Bill English. It is a sensible and thoughtful Budget, and I do want to start by thanking the Government’s support partners, John Banks and the ACT Party, Peter Dunne and United Future, and, of course, Tariana Turia, Pita Sharples, and the Māori Party, who have worked hard for solid, stable progressive Government in this country.

But let us put a bit of a reality check into this debate. The Opposition members have got their heads down because they do not want to acknowledge the facts. They have got their heads down because they do not want to know what really happened. We came into Government in late 2008 and Treasury said to us: “This is what’s happening—there is a global financial crisis.” Actually, it turned out to be the worst crisis since the Great Depression. That is what happened. We came in and inherited basically a decade of mismanagement by the previous Labour Government and wasteful spending it could not afford. We came into office when economists were saying the unemployment rate would rise to 10 percent or maybe 11 percent. And all of that happened before the Christchurch earthquakes, which we now know cost the economy north of $40 billion overall. That was before there were droughts, before there were floods, and before there was a recession so deep that it claimed yet another victim in Europe earlier this year in the form of Cyprus.

So what does Budget 2013 tell us? It tells us that this Government and this country will be back in surplus by 2014-15. Actually, next year the deficit will be under 1 percent of GDP. This is a country that will have a deficit of $2 billion. In case no one noticed, I point out that a couple of days ago in Australia they announced a Budget deficit of $20 billion, and they have had commodity prices rising much faster than we have had in New Zealand.

But it gets a little more interesting than that, because when we came into office—and Labour members know it; that is why they are looking in their books, because they are trying to work out where they went wrong—Treasury said: “This is the way it is: a decade of deficits. You’ll never be back in surplus. Debt to GDP in this country will be 60 percent by 2020.” What does Budget 2013 tell us? Under the economic leadership of Bill English, this country will be back to having a debt-to-GDP ratio of 20 percent—not 60 percent, but 20 percent. So when David Shearer says that Bill English and the National Government do not care about the people of New Zealand, well, guess what? We care enough to make sure that they do not have an additional $60 billion or $70 billion worth of debt around their necks. That is how much we care. We care enough to ensure that we have now got an unemployment rate that is 6.2 percent—the 11th lowest in the developed world. We have a growth rate that was 3 percent last year and is predicted to be 2.5 percent or 3 percent. We have an inflation rate under 1 percent, and we have interest rates at 50-year lows.

Mr Shearer had the audacity to get up and try to argue that under a Labour Government New Zealanders got more money. Well, no, they did not. It all went away in inflation—the whole lot. They paid interest rates twice as high as under this Government. They went backwards. The only reason Labour could finance its wild spending patterns was that New Zealanders borrowed tens of billions of dollars. The party is over, and it is New Zealanders who are having to pay it back, because they did not get any progress under a Labour-led Government. You did not hear David Shearer saying what external analysts think of this National-led Government—not a word, not a peep, not a sound out of him about what the rest of the world is saying. When Christine Lagarde, the chief executive of the IMF, came out and said: “I like what this Government is doing. This Government is getting the big issues under control.”, there was not a word from David Shearer about that.

The week before last something pretty interesting happened. Standard and Poor’s said this country is the ninth least risky country in the world to hold Government debt in—the ninth least risky. That does not sound like failure to me.

So let us just take a moment to talk about some of these policies. Let us go to housing, and I mean a real solution to housing, not some illusion that is purported by people who started at one position, said something was affordable and they would deliver at one rate, and backtrack within 5 minutes before they could even get anywhere near there. No, no, I am talking about a real, comprehensive solution. So what has the Government announced today?

Phil Twyford: Tinkering with the RMA.

Rt Hon JOHN KEY: Well, OK, let us talk about that, then. So now we are going to have a National-led Government that, with the support of Auckland Council, will produce 39,000 new dwellings—real dwellings—in the next 3 years. That is way above what is currently being delivered. In terms of social housing and helping people in need, Labour reckoned it cared about those people, but it did not care enough to insulate their homes. It did not care enough to make sure there was not mould on the walls. It did not care enough to make sure they were actually upkept. Labour members just said: “We’ll come into the Parliament and tell people we’ll build a few more houses, and we will just forget about the fact that 70,000 people are living in homes that are not fit to be lived in.” Labour members did not care about those people.

This week this Government announced Project 324. You did not hear that from David Shearer, but this Government stood up and said we will be building 2,000 extra bedrooms on existing houses in Auckland, which will help ensure that larger families have more accommodation so that issues of overcrowding and rheumatic fever can be dealt with. It is worth hundreds of millions of dollars. This Government cares about all New Zealanders. This Government, when it came to the issue of insulation, did not just talk about it. We did not just talk about it. Oh, Labour had plenty of money to spend on all sorts of wasteful things, but when it came to New Zealanders being warm, oh, it did not care about that. It had 9 years in Government and did basically nothing. This Government will have 230,000 homes insulated in 4½ years. And, what is more, $100 million in this Budget, with the support of the Māori Party, is going out to the most at-risk families in New Zealand, with 46,000 extra homes to be insulated. But, oh, no, that did not get a mention from David Shearer, because he does not want to admit to those families that, actually, a National-led Government cares about all New Zealanders—it cares about all of them.

If we want to talk about homeownership, the fastest way to ensure that someone can afford a home is to make sure that they can afford their mortgage, and to do that, you need good fiscal management. You need to make sure inflation is under control. You need to make sure that interest rates are low.

This is a Budget that cares about growth. It puts $158 million into tourism and attracting more tourists from new emerging markets like Latin America, Indonesia, and China—high-end tourists, tourists coming for business, tourists coming to a convention centre. So let us just talk about that convention centre. That is right. Labour had 9 years where it sat around and did very little. Oh, that is right—no, it did do one thing. It built a convention centre, which Helen Clark went out and opened, which was paid for by 230 pokie machines, and Labour members all celebrated because of the economic measures. But when National gets one, which, by the way, is three times larger and a way better deal, it is an outrage—an outrage. I will tell you what: Helen Clark will come to the opening of this one if she is in town, because she knows that it is good for the economy. She knows that it is good for New Zealand.

Hundreds of millions of dollars in this Budget will be pumped into science and innovation—for example, to Callaghan Innovation. Right across New Zealand, $200 million over 4 years will be put into science and innovation. There will be more money for research and development grants, for National Science Challenges, and for the Marsden Fund.

Let us move to the mixed-ownership model, and what a success the float of Mighty River Power was. What a success. We hear all this nonsense that New Zealand has given some asset away. New Zealand has given New Zealanders a chance to invest. Majority control has been retained by the Crown. By the way, it is the same model under which Air New Zealand has been operating, established under a Labour Government. It never ever campaigned to buy back the bit that it did not own, even in the 2011 election. Mighty River Power has more retail investors in it than any other stock on the New Zealand Exchange. And where do we want those New Zealanders to invest? Well, I say New Zealand. I say New Zealand. David Shearer wants them to invest in Australia. He wants them to invest in other markets. He does not want them to invest in New Zealand.

The doozy of all the statements in his speech came when he said: “Oh, by the way, the accounts are going to get worse because the Government won’t be getting the dividends.” Does he remember that about 3 weeks ago he announced a policy with his mate there, “Dr Watson”, that he is giving away the dividends? They will not be arriving in any form to a Labour-led Government. Oh yes, the Labour members talk tough about Mighty River Power, Meridian, and the other shares, but will they talk tough to the people of Christchurch, who are getting a state-of-the-art hospital facility? No, no, no, no, no—that is all OK. That magically appears when Russel Norman prints some money. That is all fine. It does not really matter.

What about the $50 million that is going into internet connections for our schools up and down the country, so that young learners can get internet connections? You will not see David Shearer or Grant Robertson going out to those schools and saying: “Hey, kids, you can just have dial-up.” Because that is what you would get under a Labour-led Government. It is like MY SKY on half speed. Do not worry, because the Labour Party will not mention that. You will not get the $80 million going to irrigation around New Zealand. There is a lot happening in this Government.

Let us look at health and education for just a moment, because they are critical issues. In health, this is a Government that has delivered. This is a Government that has hired 1,000 extra doctors and 2,000 extra nurses. There is more money for rheumatic fever, more money for maternity care, and more elective surgical operations. This is a Government that has spent health dollars well. This is a Government that has gone out there and said that we care about that. This is a Government that is also going out there and saying to the most at-risk New Zealanders that we care about them. There will be insulation for their homes. We will be making sure there is money for rheumatic fever. Yes, there will be some money for hungry kids. Yes, there will be money for better budgeting services. Yes, there will be a whiteware procurement policy that helps people out.

This is a Government that says to business that we will get on top of those ACC costs that you inherited under the mismanagement of Labour, and we will cut them to the tune of $1.5 billion. And in education we will carry on the great work we have done of getting more kids into early childhood education and more kids into National Certificate of Educational Achievement, making sure that our schools have 21st century learning capability and literacy.

Let me finish with this. Budget 2013 shows that after 5 years of a centre-right Government, this is what building a brighter future looks like, delivering for New Zealanders. And, by the way, guess what happened today? That is right. The manufacturing numbers came out, and the Performance of Manufacturing Index showed that the sector is expanding again, month after month after month. The only crisis, I tell you, is not in the manufacturing sector; it is in the leadership of the Labour Party. But do not worry, because there is only 51 percent of its leadership. It has got 49 percent over there with Russel. And speaking of Russel Norman, when the unemployment rate dropped to 6.2 percent from 6.8 percent, he said that that was an epic failure. I would hate to think what he thinks success is. It is as simple as this: the election will be fought in 2014 on the economy. Bill Clinton once said: “It’s the economy, stupid.” People will be looking at a Government that has managed to work its way through by making sure that this country earns more money and does not have to borrow it or print it.

This is a Government that has delivered competitiveness to our economy. This is where real jobs are delivered and where real growth takes place. The election will be about National versus that devil-beast. I know whom I will be voting for, and it will not be the devil-beast.

Dr RUSSEL NORMAN (Co-Leader—Green) : That was a particularly angry and bitter Prime Minister for a Prime Minister who has just delivered a Budget, but there you have it. I guess when you are the Prime Minister of a Government for the 2 percent and of the 2 percent, that is how you feel about your Government.

The Government gifted billions of dollars in tax cuts to the top 2 percent. It then transferred ownership of Mighty River Power from the 100 percent of New Zealanders to the 2 percent. The other 98 percent—well, they got to pay higher GST and higher electricity charges while the 2 percent—[Interruption]

Mr SPEAKER: Order! The level of noise from the corner over there is too loud and unreasonable for the member trying to give his speech.

Dr RUSSEL NORMAN: Thank you, Mr Speaker. National Party members do not like the truth. They do not like to hear the truth—that National is a Government of the 2 percent, for the 2 percent. It was 2 percent of New Zealanders who got given ownership of Mighty River Power, and it was 98 percent of New Zealanders who lost ownership of Mighty River Power and who have to pay higher taxes, higher GST, and higher electricity charges.

The three key challenges facing the New Zealand economy are how to deal with the growing current account deficit, how to deal with the growing environmental deficit, and how to deal with the growing social deficit. This Budget makes all three deficits worse. It is another triple deficit Budget. New Zealand’s external deficit with the rest of the world is now over $10 billion a year and rising under this Budget to $17 billion a year by 2017. We are funding that by more offshore borrowing and by selling assets to foreigners.

Our environmental deficit can be seen in our growing greenhouse emissions and the widespread contamination of fresh water from Northland to Southland. Groundwater in Canterbury is now so contaminated with dairy runoff that it could literally kill an infant if they drank it, according to the medical officer of health. Our social deficit is seen in the rapid growth in inequality and poverty, Third World diseases like rheumatic fever, and an impossibly expensive housing market. This Budget from the Government of the 2 percent makes economic, environmental, and social deficits worse. But, before I deal with these critical issues facing the New Zealand economy more broadly, I want to discuss the Government’s much-lauded possible return to surplus by June 2015.

After the National Government’s record $46 billion borrowing spree to pay for, amongst other things, tax cuts for the wealthy and pork-barrel motorway projects, the National Party is slowly, finally, getting its out-of-control borrowing under control. But Bill English still plans to borrow $70 billion by 2016-17—that is right, $70 billion. That is $15,000 for every person in the country under this big-borrowing Government. Future New Zealand taxpayers will pay dearly for this borrowing spree, one of the worst in the OECD.

Since the global financial crisis the increase in net Government debt as a percentage of GDP by this Government is worse than Australia, worse than Poland, worse than Italy, worse than Denmark, worse than Canada, worse than the Netherlands, worse than Chile, worse than Austria, worse than Belgium, worse than Hungary, worse than Estonia, worse than Germany, worse than Mexico, worse than Korea, worse than Finland, worse than Israel, worse than Switzerland, worse than Sweden, worse than Turkey, and worse than Norway. I suppose we should take heart that National did not borrow quite as much as the Governments of Greece, Spain, Portugal, and Ireland. National inherited Government accounts that had virtually zero net debt.

The previous Labour Government had paid down Government debt against the opposition of the National Party, who said that the surpluses should be used to pay for tax cuts for the rich rather than to pay down the Government’s debt. The Labour Government did not do so well on current account deficit, but on Government debt reduction, you really could not fault it. If the then National Opposition had had its way, the New Zealand Government would have hit the 2008 global financial crisis with high Government debt, and, hence, less fiscal headroom to buffer the effects of the global downturn.

So, after opposing the reduction in Government debt, Bill English came into office inheriting zero Government debt. The first thing Key and English did was to give away $2 billion a year to upper-income earners. Then they came up with a wish list of $12 billion in pork-barrel new motorway projects without business cases—they just picked them for electoral reasons. The Government books then turned savagely into the red and National started to build up Government debt once again.

It then told us, after the big tax cuts for upper-income earners, that there was not enough money in the Budget, so there would have to be cutbacks, there would have to be asset sales, and it would have to increase GST for middle and lower income New Zealanders. So there were cuts to night classes, cuts to the Department of Conservation, and we were told that we had to sell electricity assets to pay for school buildings and for irrigation subsidies for National’s donors.

Today the Nats crow about the projected potential Budget surplus. Only in an Orwellian world would the party that did everything to undermine the Government’s accounts get any credit for any potential return to surplus. But the more important issue is whether the Government’s Budget balance is the biggest issue facing the New Zealand economy, anyway. Bill English certainly did not think so in the past. He said in his Budget 2010 speech: “New Zealand’s largest single vulnerability is now its large and growing net external liabilities.” He said that the growing interest bill from that rising debt was a drain on our incomes and a drag on the economy.

Later that year he promised more saving, less debt-fuelled consumption, and a continued shift away from leverage property investment. Well, we saw what came of that in the housing market. He used a Treasury chart—because Treasury backed him on this—to show how the tradable sector, the internationally competitive part of the economy comprising exports and import-competing industries, actually shrank in the 5 years from 2005 to 2010. By contrast the non-tradable sector, the spending part of the economy, grew by 15 percent.

All these statements from Bill English highlighted the imbalances in our economy as a major problem that National planned to fix. We publicly agreed with Bill English’s analysis of the problem, even if we were sceptical of his solution. Of course, the Greens had been calling for action to rein in the current account deficit for many years before with the then Labour Government, when the country also had massive current account deficits. Today, after 4½ years of a National Government, we are holding National to account. Has National’s management of the economy produced a rebalanced economy?

Treasury and Bill English no longer produce the tradable versus the non-tradable graph—surprise, surprise—so we had the Parliamentary Library update it. It turns out that things are getting worse. If you look at the spending side of the New Zealand economy, according to Bill English’s graph, that is growing at a great pace while the internationally competitive part of our economy has stagnated. In fact, in the last quarter of 2012 the tradable sector actually contracted. So, using Bill English’s own favourite measure of responsible economic management—that is, the tradable sector versus the non-tradable sector—it is clear that economic rebalancing is failing. That is the real story of this Budget. As a country, New Zealand is borrowing to fund its consumption, and, as with so many things, National has no idea what to do about it. National figures that as long as the top 2 percent are getting richer, it does not matter whether the country as a whole is getting poorer.

The metric that effectively aggregates all measures of rebalancing across the economy is the current account. The current account is the key economic measure of the success or failure of the broader economy. It is a far more important measure than whether the Government is in surplus or deficit, because it tells a story of whether the country is in surplus or deficit. Today we see that the country’s deficit is getting much, much worse. New Zealand’s current account deficit is one of the worst in the OECD, second only to that of Turkey. It is currently 5 percent of GDP and projected by Treasury to continue to widen to 6.5 percent of GDP in 2017. The average deficit within the OECD is less than 1 percent.

The International Monetary Fund estimates that New Zealand’s current account deficit will be the worst in the OECD every year until 2018, which is the end of its forecast period. There are only two ways to finance the country’s massive current account deficit: either through further overseas borrowing to pay the interest on the money that we have already borrowed, or through selling assets to foreigners. Borrowing must be serviced by future generations of New Zealanders. Selling assets means that we are literally selling the productive capital and land out from under our feet. It is no surprise that the Budget today projects that the net debt position of the country will increase to 81 percent of GDP by 2017. That is over $200 billion in net debt that we are going to owe to the rest of the world, or around $43,000 for each and every New Zealander. That will be the legacy of this National Government.

This Government has not made the hard, smart, and courageous political decisions for the long-term good of our nation. It is our children who will ultimately inherit a country that is less economically secure, increasingly owned by foreigners, and offering fewer opportunities for those children to be the dynamic creators of their own destiny. They will leave, as so many have before, particularly under this Government. But I want our best and our brightest to have a reason to come home again.

In 2010 I found myself strongly agreeing and supporting Bill English’s vision for a rebalanced economy, even if we did not believe that his tax cuts for the wealthy would deliver that rebalancing. So now we find ourselves in the slightly unusual position of wanting to finish the work that Mr English identified and then abandoned—that is, the work to rebalance our economy. Economic rebalancing will be a key priority for the Greens in Government, as you cannot have a smart Green economy without it being economically sustainable. Genuine rebalancing can be difficult because you have to manage the economy with a long-term view in mind, not just the next election. Genuine rebalancing is not for politicians focused on the short term. Genuine rebalancing is, as far as the Green Party is concerned, the only responsible way to run an economy.

So how do we propose to rebalance the New Zealand economy? We have a package of solutions, but today I want to focus on just three. Firstly, the Green Party has the courage to implement a comprehensive tax on capital gains, excluding the family home. We have been advocating a capital gains tax for years and it is heartening to see Labour coming on board. A capital gains tax would drive investment from property speculation into the productive economy, assisting rebalancing. A capital gains tax would help take some of the heat out of the rising house prices in Auckland while simultaneously helping the Government to balance the books. A capital gains tax would lower demand for mortgage borrowing partly funded from overseas, easing upward pressure on the exchange rate.

Secondly, we also have to address monetary reform if we want to deal with the housing bubble and the overvalued currency that is destroying the tradable sector. We would give the Reserve Bank a broader legislative mandate to look beyond just inflation and look at the external imbalances. This would enable a lower official cash rate to take pressure off the currency, helping the export and import competing sectors. We would work with the bank to accelerate the use of new tools for managing non-tradable inflation and asset bubbles. The announcement in today’s Budget is a case of too little, too late.

Furthermore, nearly every central bank in the world is getting active about defending their economies, many by using quantitative easing or publicly created money. Having considered all the feedback on our proposal to use quantitative easing, or QE, to help bring down the value of the New Zealand dollar, I still think there is value in running a trial programme of refilling the Natural Disaster Fund with offshore assets paid for by using quantitative easing. The private banks are allowed to create money for private profit; I do not see why the central banks should not be able to create money for public benefit.

At the moment our Natural Disaster Fund is completely empty. In fact, it is negative. If there is another disaster soon, there will be literally no funds to cover the cost, meaning we would need to borrow to pay for it, and, of course, we would be borrowing freshly printed money from offshore central banks—the irony. Using quantitative easing in this targeted way is a good way of measuring how effective it can be at putting downward pressure on the dollar while putting the resource into an important area where it is needed—funds to pay for a potential disaster. The Reserve Bank has finally conceded that you cannot be a pacifist in a currency war, and is currently using its limited reserves to intervene in the currency market in an underpowered attempt to lower the dollar. It needs more firepower, and quantitative easing can provide that firepower.

Thirdly, we need capital market reform. Ninety four percent of our banking sector is foreign owned and constitutes the single largest component of capital drain out of New Zealand. Record bank profits are strip-mining the country of much needed capital. The Government has a market mechanism to slow down the capital drain from New Zealand. It is called Kiwibank. We would strengthen Kiwibank—thanks Jim Anderton—by allowing it to retain more of its earnings so it can grow faster. We would also add further capital injection if necessary, so that it can scale up to really take on the Aussie banks. We want to help build Kiwibank into a sophisticated retail and commercial bank so that it can compete. A stronger Kiwibank is great for economic rebalancing.

I want to move from the economic deficit to the social deficit. When Bill English unveiled his centrepiece tax shift in Budget 2010 he promised it would work to rebalance the economy. We now know that was not true. We do know, however, that the tax cuts for the wealthy and the GST increases for the rest have made New Zealand more unequal. The gap between those who have a lot and those who have a little is now the widest it has ever been. New Zealand has gone from being one of the most equal countries in the developed world to being one of the most unequal. This is a dark social and economic legacy, one that hurts us all but falls heaviest on our children, especially those unlucky enough to be born into the most vulnerable families.

One quarter of all New Zealand children are growing up in poverty—that is about 270,000 kids. They are our friends’ children. They are our neighbours’ children. They are the children of our colleagues and acquaintances. They are our nieces and nephews. They are our mokopuna. They are our children. Bill English told us this week that he does not know how to fix child poverty, even though he knows how to create child poverty. The Budget delivers virtually nothing to address poverty. It is more important to National to deliver a 0.05 percent surplus than to deliver for our poor kids. Budget 2013 feels more like crumbs for kids rather than an honest meal, and maybe it is not even crumbs.

There are solutions to child poverty if you have the courage to find the ways to fund and implement them. We need a finance Minister who understands the economic cost of not addressing child poverty. Child poverty costs $6 billion a year. This is a conservative estimate, and it does not cost that much to end it. To implement our solutions to bring 100,000 kids out of poverty would cost approximately $360 million a year for the next 3 years. A more equal New Zealand is a happier, less divided place to call home.

Then there is the environmental deficit. If you love spending weekends at the beach, exploring our national parks, or swimming in your local river this is not a Budget for you. National is funding the rapid expansion of irrigation before establishing strong environmental standards around water. Since 2007, an area the size of Lake Taupō and Lake Te Ānau combined has come under intensive irrigation. National is planning to increase it by the same amount again. National is toxic to our rivers. National has rolled out the red carpet to foreign oil companies to drill for deep-sea oil before it even knows how to plug a deep-sea oil well if it goes wrong. National is toxic to our oceans.

The Department of Conservation is being forced to cut jobs. In total, 161 Department of Conservation jobs have gone under National’s watch. The jobs are from the front line—the jobs of the people who work to protect our biodiversity. National is toxic to our wild places. The taxpayer subsidies being paid to greenhouse gas emitters mean that New Zealand’s emissions are continuing to increase even as the global level of carbon dioxide hits 400 parts per million. National is toxic to the climate.

When National took office it told us that a key measure of its success was the rebalancing of the economy. Now, 4½years later, we can definitively state, using its own figures, that National has failed to rebalance the economy; that is why the word was never mentioned in the speech. Budget 2013 has focused on the potential end in sight for Bill English’s borrowing binge. I guess that is a good thing, but stripping it back a layer, we see that this possible fiscal surplus is a house built on sand. Tax cuts for the 2 percent and asset give-aways to the 2 percent are not smart ways to run an economy for the long term.

A smart Green economy would involve making some of those courageous decisions that would shift our economy on to a more sustainable and resilient footing. A smart Green economy would protect our environment, because our economy depends on our environment. A smart Green economy would see our growing rates of child poverty as unconscionable. The Greens have the courage to run an economy in the long-term interests of 100 percent of New Zealanders, but more than that, we care not only about the 100 percent of New Zealanders today but also about the generations yet to come. Thank you.

Rt Hon WINSTON PETERS (Leader—NZ First) : Our first reaction to this Budget was to call the Serious Fraud Office. Never in the history of this country has a Government so blatantly cooked the books, and it was not even clever. This is financial deceit on a grand scale. The boast about balancing the books would see a company accountant in the court being prosecuted for fraud. Any balance towards the black out of the red is achieved, first, by selling assets like Mighty River Power and, soon, Meridian Energy, in October this year, with more State assets yet to come; and, second, by not spending significant amounts in last year’s Budget on key items like health, education, and overseas aid, as well as deliberately delaying Treaty settlements promised in last year’s expenditure. So why would anyone trust today’s announcement? Last year, for example, the Government got up and said that it was going to spend so much on all these items. Well, this is what happened. NZAID, which is our international standing, underspent by $96 million—a massive amount—deliberately so. Then you have got the Ministry of Business, Innovation and Employment—a massive $91 million underspent. Education—a massive $64 million underspent. Health—underspent by a massive $57 million. It was item after item of non-expenditure on items promised last year, to give you some artificial surplus promises in 2013, 1 year later.

Mr Key, Mr English, and Mr Joyce will claim that this Budget is responsible, prudent, fit for our times, brings gains after 5 years of pain, is next year’s surplus, and is a confidence booster, but I notice that there are a lot of nervous MPs right now sitting in their offices because they know that this rescue craft will not get them home in 2014. That is what they claim of the Budget—that it is responsible, prudent, fit for our times, brings gains after 5 years, brings next year’s surplus, and is a confidence booster. Not one of those claims is true. Here are the facts. This Budget is consistent with every Budget since 2009. But if that has any merit, why, since the 2008 era of the three financial stooges, have more than 200,000 mainly young New Zealanders left New Zealand? Not one of those backbenchers or Ministers can front that bald, glaring, stark fact. What has happened to the 170,000 jobs in 4 years promised by John Key in the 2011 campaign? What has happened to the export-led growth promised in the “rebalanced economy”? If any of today’s claims had merit, there would be positive answers to those three simple questions.

Over 200,000 Kiwis have left New Zealand because they cannot get a job in their own country. Of the 170,000 jobs promised, Mr Key, Mr English, and Mr Joyce have found 8,000—8,000. As for export-led growth, well, the difference between our income from exports against our payments for imports and interest payments is a giant, black $10 billion hole, unparalleled in any other First World economy. It is worse than Portugal, worse than Ireland, worse than Greece, and worse than Spain. Portugal, Ireland, Greece, Spain—the so-called PIGS. Well, if they are pigs, what has National made New Zealand? We know and we will tell you. Again, “The Three Stooges” claim that there will be GDP growth. In short, the economy has grown by somewhere between 2 and 3 percent. Much of that is from the Christchurch rebuild. I notice that now we are second in the Pacific Island countries, after Australia. Australia is first, way ahead of us, then it is New Caledonia, on 3.4 percent, and then New Zealand. How did that happen? Much of the growth would come from the Christchurch rebuild, but, apart from Fletcher’s, who is getting the benefit of this growth? Who is benefiting? An elite handful, domestic and foreign, or the mass majority of ordinary, everyday Kiwis? The answer is clear. Since 2008 the per capita income—that is, wages or earnings per person—has barely moved. Ordinary Kiwis are struggling. Meanwhile, the cost of everyday living has skyrocketed. Electricity, rates, insurance, the shopping basket—you name it; it has all gone up. And do not boast about interest rates. Kiwis are paying four times the home interest rates of the US, Britain, Japan, and Europe, and paying twice the credit card rates.

So what, pray tell me, have these geniuses Mr Key, Mr English, and Mr Joyce turned us into? They have created an economy that reduces the mass majority of New Zealanders to the status of mice on a treadmill. They have created an economy that reduces the mass majority of New Zealanders to the status of mice on a treadmill. It is a bit like this treadmill here, you see? It is a bit like this. They have to run faster and faster to stay in the same place. The rich and powerful elite who run the world’s financial system created a global economic crisis. I know that some of my National Party critics recognise the animal on this treadmill. It is called Steven. It has got hair, so it must be a young Steven. But I know what they recognise. There is something that they see an affinity to.

New Zealanders have to run faster and faster to stay in the same place. Ordinary people pay the price. This is a Budget devised by the rich and the powerful for the rich and the powerful. The rest of us stay like a mouse on a treadmill.

Hon John Banks: You’re the mouse.

Rt Hon WINSTON PETERS: The rest of us stay like a mouse on a treadmill. Mr Banks never even got up to clap for his leader. Oh, he was strangely silent. Oh, mind you, so was the Māori Party and so was United Future. There they were, all sitting, not prepared to salute their leader. The rest of us stay like a mouse on a treadmill. If we look back at our recent history, the road New Zealanders have been forced to follow has always led to this treadmill. Like a mouse chasing a bit of cheese—

David Bennett: You always have been going round in circles, Winston, so it won’t make much difference.

Rt Hon WINSTON PETERS: Look, just because you can see your relation, do not get so excited. It started with Roger Douglas. You know, in the 1980s, when Labour threw New Zealanders to the wolves of the world, goaded by the half-baked theories of mad monetarists, those monetarists came to the conclusion—

Hon John Banks: Winnie, who wrote this?

Rt Hon WINSTON PETERS: Now, Mr Banks, for you it is “Sir” over here. I mean, we are staying here after the next election; you are going. You are a goner. Mr Banks, your party is toast. They came to the conclusion, these mad monetarists, that the only road to success was to secretly restructure the place and sell it. What they actually did was start the first run of the treadmill.

In the 1990s the National Party promised—Mr Banks was there—to stop the treadmill, but in reality we made the treadmill spin faster. New Zealand First slowed it down in 1996 when we came to power, and, to be fair, a reformed Labour tried to keep the brakes on between 1999 and 2008. But of late the same rogues are back in place and the treadmill has started again, and it is picking up speed. We have to stop the treadmill, take New Zealanders off it, and give them a real economic and social future.

Our once great history was one of nation building and looking after our people. This Government is selling Mighty River Power and Meridian Energy to put money in a Future Investment Fund. It is all there in the Budget speech. That fund is used to pay for schools, health, and the like. Those things used to come from the consolidated fund. That means that past generations are paying now to keep the country afloat. So thanks, Grandad and Grandmum—you built those power stations, now you are going to build all these new things while these people try a giant creative accounting fraud on the people of New Zealand. Do not forget, the surplus next year is created by swallowing up nearly all the Mighty River Power float. The surplus is $75 million for 2014-15. What was the price of Mighty River Power? It was $1.7 billion. So it is $1,675 million short, and the Minister of Finance has the audacity—as a Treasury-trained person with a fiscal responsibility bill before a select committee—to get up here and think he can pull that con on the country.

How did we lose our great vision? Why is New Zealand today a high-price, low-wage economy? Many of our workers are in jobs that pay wages upon which they and their families cannot survive. Recently, this Government gave the Mighty River Power directors pay rises of 70 percent, or more than $45,000 a year. The workers were given a rise of 25c an hour—another spin on the treadmill, Mr Banks. There was a time when lead managers of New Zealand power operations got four times the workers’ wages. Today it is 30 times the workers’ wages. If I was in the Māori Party or the ACT Party or the United Future party or if I was a National Party backbencher, I would not laugh at that, because all I can see is electoral suicide when I hear those figures, and you will hear more about that as the months roll by. No wonder these egregious self-serving few are cheering from the rafters due to a few crumbs thrown to the mice today. Even the mice have to be kept alive.

It is really hard for the strugglers. We have already shown the plight of the workers. Not only do they have to survive on low wages but they have to compete against a flood of cheap imports made by cheap labour—[Interruption] If I was going to court shortly to explain why I got 42 cheques and cannot remember one of them, I would keep my mouth shut. I would spend all my time with my barrister. I would get myself a psychologist to try to explain deliberate amnesia. I would not be here barracking the fastest-growing political movement in New Zealand, called New Zealand First.

Hon John Banks: Oh, Winnie, you’re deluding yourself, man.

Rt Hon WINSTON PETERS: Oh, we all know that it is true. Half the ACT Party people wanted to come and join New Zealand First, and I said no, we will not have fascists.

Hon John Banks: Name one.

Rt Hon WINSTON PETERS: Families are hit with higher food costs. Name one? What about the man called Eckhoff who was an MP for the ACT Party? He wanted to join us.

Hon John Banks: Who—who?

Rt Hon WINSTON PETERS: That man Eckhoff who was an MP. John Banks does not even know him, because when Eckhoff was a good member for the ACT Party, John Banks was not even a member of it. He is only a temporary fill-in. We know that. Mr Banks, keep quiet. You never were any good at this game.

The household disposable income forecasts in this Budget are an illusion. What about the manufacturers and exporters running to stand still on a treadmill of soaring costs and an overvalued dollar? You know, sometimes you have got to have luck on your side, because today our Reserve Bank member’s bill got drawn again for the second time in 2 years. This is an all-time record, and we feel that the force is with us. Our message to the manufacturers and to the exporters is “Hang on, men and women out there in manufacturing and on farms, help is on its way.” What about small business—what about small business? Go to the industrial suburbs of our cities, like Pētone. There are streets of empty warehouses and factories. What about the police? We gave them an extra 1,000 front-line police when we last had the reins of power. National is cutting these numbers back. The crime industry is being contracted out to the criminals. Everyone knows, except the ninth floor of the Beehive, that Whānau Ora provides funds to the Mongrel Mob. We all know that. What about health services? What about home help for the elderly? Everyone is on a treadmill except the Government’s fat cat mates. They live off the struggle and the sweat of the mice on the treadmill.

The housing crisis continues with a few patchwork and piecemeal ideas revealed in this Budget. The very idea of cheap infill housing sends a shudder through everybody and anybody who has seen the industrial housing estates of Britain and Europe. The Government’s idea of infill housing will create giant transit camps across Auckland. The results overseas show that these housing estates become breeding grounds for crime, poverty, and misery. What about the elephant in the room about which nobody in this country will speak except New Zealand First? We know that mass immigration is being used to prop up New Zealand’s consumer demand on our economy and to replace the mass of Kiwi flights abroad. Most of these new arrivals are going straight to Auckland. Auckland has got a giant housing, infrastructure, and roading problem—none of which our biggest city will ever solve—

Jami-Lee Ross: We’re solving it.

Rt Hon WINSTON PETERS: —until we address the elephant in the room that a sea of political correctness dares not face. We do not want the young pup from out there in Howick telling us: “We’re solving it.” This fellow knows nothing about these issues. You know, I have seen so many people like you, my good friend, who have come and gone like lightning. I will make you a guarantee. I will be here long after you are gone. I will be here long after you are gone, and I will not have to be here very, very long—

Mr SPEAKER: Order! Order! You are bringing the Speaker into the debate.

Rt Hon WINSTON PETERS: I do not intend to stay here for ever, but I guarantee that I will be here long after he has gone. What has this Budget done for heartland New Zealand—the engine room of the economy and the place that feeds New Zealand’s wealth? Nothing. Doughnuts. The Government’s economic policies are geared to shift the population to Auckland. What about Northland, Hawke’s Bay, Otago, Westland, and Southland—the places that used to have vibrant, thriving communities? What about Wellington? The genius Steven Joyce, the Minister for Economic Development, has been so dynamic that he has destroyed the economy of the capital city. His leader says that it is dying. The regions keep New Zealand afloat, but this Government ignores them.

Last week it was gloating over unemployment figures, down from the record quarter before that, and again clutching at straws. What is the Māori unemployment rate? It is about 14 percent. And Pasifika unemployment? It is 15 percent. The teenage unemployment rate? Twenty-six percent of people aged 15 to 19 are unemployed. What is the National Party’s answer today, backed by the Māori Party? For these thousands of young Māori who cannot get a job, and Polynesians and Europeans and all other people in this country, there are 100 more cadet places, up from 250 to 350 places—not hundreds, not thousands; oh no, just 100 more places. They are standing on the dole still, waiting to go on the treadmill.

For the majority of New Zealanders, this Government has done nothing. It is pinning its hopes on asset sales and pandering to rich tourists. While ordinary people struggle, the Government gives cash to casinos and handouts to Hollywood. While Kiwis leave, the Government is repopulating this country from everywhere else, and they are all going to Auckland. The current account deficit is a disaster—the worst in the First World. It is a staggering sum, our Government debt. It is $57 billion now and going towards $70 billion, and private debt is a nightmare. There is nothing in this Budget that starts to develop a pathway out of that debt. It exposes just how incapable the Government is of coming to grips with the economic challenges facing New Zealand. The GDP growth is actually very average, given our low performance in the past. There were some sweeteners trotted out today, but it keeps the mice on the treadmill. It keeps the fat cats feeding on them, and the Ministers keep cooking the books.

Against the cacophony of the clapping of the clowns on the Cabinet benches and the braying of the backbenchers—it would be funny if it were not so serious—we notice that the cling-ons remain strangely mute, strangely silent. We want to make an appeal to the National Party rank and file members. I want to talk to those members of the National Party who were there when I was once a member of a great party called National. I remember that party when it had great policies, great principles, and great, practical politicians and leaders, and when even its enemies used to respect it. But this National Party is not the party of Hamilton. It is not the party of Holland. It is not the grand old party of Holyoake. This is the National Party of Madoff, Merrill Lynch, and money speculators. We appeal to those left with a conscience in the National Party to remember when Keith Holyoake stopped Rupert Murdoch buying the Dominion newspaper. He said we had to own our own country, and we still do. We urge people in the National Party out there to remember what the country was like when their party was great—it is no more. My challenge to them today is this: are we men and women or are we mice, as the National Party and its cling-ons would make us? We are men, and we have a spirit. New Zealand First makes this promise here today: back us, and we will guarantee an outcome that gets you off the treadmill. Back us, and your young people will have hope. Back us, and you will get to decide the outcome of the 2014 election. No other political party can make that promise. Back us, and we will hold the balance of political responsibility, and we will use it properly.

Hon Dr PITA SHARPLES (Co-Leader—Māori Party) : The Māori Party is pleased to acknowledge the initiatives in Budget 2013 that are aimed at addressing some of the inequalities present in our society. I am talking about the many announcements that have been made across all portfolios that focus on increasing housing supply, upgrading housing standards, addressing educational underachievement, addressing health inequities, addressing the issues of unemployment, and many more. These issues directly tie into the drivers and symptoms of poverty.

It is one of the nation’s greatest shames that as a First World, highly privileged country we continue to have great levels of disparity and marked inequitable outcomes for many of our whānau. It was for this very reason that when the Māori Party was invited to become a partner to this Government we placed a high priority on addressing the needs of our most vulnerable whānau and citizens. We pushed to establish a Ministerial Committee on Poverty. Today, as Budget 2013 has shown, we are heartened by the commitment made by all Ministers across the House, who put their money where their mouths were and delivered for our low-income whānau.

I believe that ultimately there are two primary fronts on which we must tackle this issue if we are to address this in the long term. They are through education and training, and, secondly, through supporting people into jobs. I am particularly pleased with the announcement already made by Tariana and Minister Joyce that 3,000 trade training placements will be established for Māori and Pasifika peoples. Not only is this initiative about upskilling people and encouraging them into skilled trade positions; it will go a long way towards addressing the disparity in the unemployment rate between Māori and Pacific and the rest of the country.

Although the unemployment figures are showing a downward trend, both the Māori and Pacific unemployment rates remain at an unacceptable level—more than twice that of the rest of the people of our nation. Māori unemployment sits at 13.9 percent and Pasifika unemployment at 15.2 percent. Before anyone in this House is quick to point the finger on this, I would remind everyone that Māori and Pasifika unemployment has been an issue for many generations. Whenever there has been a recession, a downward trend in the economy, or job cuts at a major factory, it is usually the Māori and Pasifika people who are the most vulnerable—often the first off and the last back on to work.

I am pleased to tell this House that Budget 2013 has extended the Māori Affairs cadetships—and it is all very well for Winston to say “another 100”—to 350 a year. They have been proven to get results in not only getting people into work but keeping them in jobs and moving them up the ladder. Since the programme was initiated in 2009, 87 percent of those participants have remained in permanent employment long past the initial cadetship programme, which lasts only 6 months. A further 9 percent have gone on to further study. So over the next 4 years our cadetship programme will assist 1,400 Māori people into work, and that is something I am really proud to support.

But let me tell you something else about our trade training and cadetship programmes. What makes these programmes successful is not only finding jobs; it is providing support, mentoring, pastoral care, training, and networks. Both of these programmes are marked by a 360-degree programme of support, and that is how it should be if we want to build resilience in our communities.

Trade training has a special place in the minds and hearts of many Māori. From the 1960s to the 1980s thousands of young Māori were enrolled into the Māori trade training schemes of the time. These programmes were run out of the then Department of Māori Affairs, Te Puni Kōkiri, and were one of the most successful Māori work programmes ever run in New Zealand. Those who participated in these programmes were taught skills and trades that kept them employed for the rest of their lives. The skills they learnt also supported them to put kai on the table, to support their tamariki and whānau, and to participate in our communities, and ultimately people remember these times as some of the happiest in our collective history. Whānau from throughout New Zealand participated in these programmes. Many of them were sent to other rohe to learn their trades, and ultimately many of them settled in these new regions, such as in Christchurch and in Auckland where trade training schemes were run.

These stories of migration of those who had moved from one rohe to another are remembered in our stories, in our whakapapa, and in our history. To this day, I still come across people and whānau who have been part of this scheme. For example, while I was in Christchurch helping to establish He Toki ki te Rika, the first modern-day trade training programme down there, the old trade trainees who are now employers and managers of building companies came in to support the programme and formed a group that will help young Māori into employment. In fact, whenever I go down to Christchurch and see someone who has lived there a long time and who is Māori, I just ask whether they are from my place, from Ngāti Kahungunu, because many of the Kahungunu people now reside there.

I wanted to remember this history and I wanted the House to hear this proud history because this is no longer something nostalgic; this is something that this Government is working towards making real again. I particularly want to acknowledge the work that Ngāi Tahu have done in establishing He Toki ki te Rika in Christchurch after the earthquakes. Their trade training model, which enrolled the support of the construction industry, iwi, Te Puni Kōkiri, community providers, marae, and educational institutions, was really ingenious. I acknowledge them for their leadership in Māori trade training. I do not know whether it was by design or destiny or what, but Christchurch was one of the original sites of the old Māori trade training programmes. I remember when Ngāi Tahu launched He Toki ki te Rika that it was a reminder of a great legacy that they had been part of, and, indeed, that we as Māori people from across the country had been part of.

I also want to acknowledge the Minister of Finance, the Hon Bill English, for his role as the chair of our Ministerial Committee on Poverty—

Hon David Cunliffe: Why?

Hon Dr PITA SHARPLES: —because of the outcomes that have come out from that. I have lost the last page, so I will just talk. Because $60 million for Te Reo Māori initiatives is major; $100 million for housing warm up projects is major; diabetes, $35 million—

Hon Trevor Mallard: Where’s Flavell today?

Hon Dr PITA SHARPLES: Hold on. Listen to what I am saying.

Hon Trevor Mallard: Where’s Flavell today?

Hon Dr PITA SHARPLES: Flavell is on the road, and so is Tariana—we have got a by-election going, mate. It is all right—steady. Diabetes gets $35 million, rheumatic fever gets another $21 million added to the $24 million that we have already achieved, and extending the house sizes—3,000 houses—gets $2.9 billion.

You see, the thing about the Māori Party is it is not going in there just for things for Māori culture; it is about seeing needs for New Zealanders, sitting at the table, and boring in and getting support for these projects. A lot of these projects have come from us being there, present at the table, and pushing the case for New Zealand. Kia ora tātou.

HONE HARAWIRA (Leader—Mana) : Kia ora, Mr Speaker. Tēnā tātou katoa te Whare. In 2011 I made the Feed the Kids campaign Mana’s first ever major campaign. I found that whenever I raised it in the House I noticed that although we all know that child poverty exists, politicians were retreating behind glib phrases, saying nasty things about bad parenting, blaming the global financial crisis, or going quiet to fit with the party line. They were refusing to deal honestly and openly with what has become a major disgrace in 21st century Aotearoa.

Unfortunately, whenever they are in Government both major parties struggle to admit that child poverty is a problem, but they happily attack those in power about it as soon as they go into Opposition. So would it not be nice if for once, just this once, both the Prime Minister and the Leader of the Opposition called a joint press conference—and, yes, Russel Norman, Metiria Turei, Winston Peters, Tariana Turia, Pita Sharples, and even Peter Dunne could be there too if they wished—to say “On behalf of the Parliament of New Zealand and the people of New Zealand we want to acknowledge a major problem in our society called child poverty. It’s something we’ve been shuffling to the sidelines for too long, but today we freely admit that child poverty exists here in Aotearoa. We’re not proud of it—in fact, we’re bloody ashamed to admit it—but we’re going to do something about it. And, as the leaders of the two major parties in Parliament, we want everyone to know that as we move to take up our place as a leading nation in the world, we begin that journey by recognising the reality of child poverty and taking steps to eliminate it as the bipartisan priority of the highest order.”

Would that not be great? Would that not be something worth cheering for? Would that not be something to be proud of? And just imagine what a difference that would make to those families living on the edge. I mean, what value is the trade deal with the USA or with the military parade in China if when we get home, we have still got 270,000 kids living below the poverty line?

I would love it if we had a Feed the Kids programme at every school in the country, so no child missed out, with coordinators helping organise local businesses to work with their schools, helping families come in to cook, and getting people in to teach kids how to make a garden and grow kai, prepare kai, cook kai, and even how to clean up afterwards.

To those who say that feeding the kids is the parents’ responsibility, I agree with you. But let us agree also that providing the environment where stable families can function well in our society is the Government’s responsibility. The fact is that in 2013 we have whole communities locked into long-term, intergenerational unemployment and facing crippling welfare cuts. They are having to deal with rising electricity prices, medical charges, school fees, food bills, house rentals, and fuel costs. They are worrying themselves sick lest one of their kids gets ill, the car breaks down, there is a cold snap, or they miss the Work and Income New Zealand appointment. On top of that, we also have the Children’s Commissioner’s Expert Advisory Group on Solutions to Child Poverty telling us that poverty is costing the country $6 billion to $8 billion a year, that we have 270,000 children living in poverty, and that some 100,000 kids go to school hungry every day.

These are not problems caused by bad parenting. These are problems caused by decades of bad economic choices and flawed decision-making at a Government level. Remember, it was not the poor who caused the global financial crisis, caused the banks to go belly up, or bailed out the banks and failed finance companies with taxpayer money. No, those were all macro decisions; big-picture choices made not by bad parents but by bad Governments. That is why Governments must honour their responsibility to provide for our most vulnerable citizens, the kids, until families are able to once again take care of themselves and their children.

I would have been happy to support any effort to eliminate child poverty, however small, because feeding even one child is a good idea. That is why, given all the positive comments from the Prime Minister over the past few days and the bragging from the Māori Party about how hard it is fighting for the poor, I am bitterly disappointed to see that this Budget has set aside not one cent to deal with child poverty. If I could, I would organise Feed the Kids gigs, like we had in Ōtara last month, right across the north—from Moerewa to Mitimiti, from Te Hāpua to Te Atatū, and from Whangarei to Whangaparāoa. Then I would take them on the road right across the country, just to see happy kids. Nothing beats seeing 2,000 kids happy just to get a feed, see some celebrities, jump around, sing and play, and go back to school with a full lunch. I am glad we have more time to take this kaupapa on the road and to take another shot at convincing politicians that the Education (Breakfast and Lunch Programmes in Schools) Amendment Bill is worth supporting, even if it is just to a select committee—thank you, Mr Dunne.

While I am talking about kids at school, let me talk about what is happening in the field of education—specifically, Māori education. Yesterday I blasted the Māori Party for voting for ACT’s charter schools when charter schools will have no accountability to whānau, to the Reo, or to Te Aho Matua, no obligation to put registered teachers in front of our kids and no transparency under the Official Information Act or the Ombudsmen Act. And they are going to get heaps more money than kura kaupapa ever got. Yes, of course I can hear Māori calling for different options from mainstream schools, but why do you suppose they are doing that? It is because the racist education system we have got right now sucks, that is why, and because for the last 5 years the Māori Party has done bugger all to change it. That is why.

The Māori Party does not have any options. Because it does not have the power to get money for kura kaupapa Māori, to keep kotahitanga going, or to get manaaki tauira reinstated, it is left pasting a Māori name on an ACT policy and then trying to sell it to Māori. I mean, really? Charter schools will have no accountability to whānau, no commitment to the Reo, no responsibility to Te Aho Matua, and do not have to accept Māori kids. There will be no appeal if they throw Māori kids out, and no obligation to put registered teachers in front of our kids, after telling all of our nannies that they cannot teach in kura kaupapa Māori until they got a degree—and the Māori Party calls that a good idea.

Instead of attacking me, why does the Māori Party not—with its millions of dollars in departmental money and hundreds of staff—actually come up with some basic bottom lines, like Mana does? Mana wants a formal commitment from the Government on a date to implement the tribunal’s recommendations on kōhanga reo, equal funding for kura kaupapa Māori, elimination of the racist rules applied only to kura kaupapa Māori, compulsory Māori language in schools, specific increases in achievement for Māori students at school, specific reductions in suspension and expulsion of Māori students from school, reinstatement and expansion of the Te Kotahitanga programme to help teachers understand how to get the best out of Māori students, and reinstatement of the manaaki tauira funding to help all Māori students get into university.

Mana will work with anyone to help grow Māori medium education and develop viable policies for mainstream education, but know this: anyone wanting to call themselves a Māori party and talk so much about kaupapa Māori should be ready to be congratulated on their ability and challenged on their inability to deliver on kura kaupapa Māori. The Māori Party got nothing in last year’s Budget for kura kaupapa, and, to nobody’s great surprise, it got nothing in this year’s Budget either.

In terms of housing, let us be clear: Aotearoa has a housing crisis, fuelled by property speculators and supported by this Government’s refusal to impose a meaningful capital gains tax that would force the speculators to offload properties and put houses back on the market. This would lower house prices, enable first-home buyers to buy in the affordable housing market that the Government is talking about, and allow the Government to build proper homes for those on low incomes—because that is where the real need is—as a commitment to ensuring that every family in Aotearoa has a warm and comfortable home to live in, and then develop a home purchase programme based on the same universal family benefit that gave every Kiwi an opportunity to own their own home and made Aotearoa such a great place to live. The need exists at the bottom end, and that is where the change has to take place.

What is required is a simpler, more committed strategy. Impose capital gains tax on those with two or more properties, to bring more houses on to the market at a price that enables first-home buyers to get in. Build 10,000 State houses a year for the next 10 years for families on low incomes, with a policy that encourages tenants to plan for home purchases and enables them to do so through a universal family benefit. Apart from a commitment for more money to fight rheumatic fever, this Budget has nothing but crumbs to deal with the massive problems facing Māori, Pasifika, and Pākehā people struggling to make ends meet or deal with the ever-growing plight of our hungry children. As far as this Budget is concerned, all we wanted was to feed the kids. We did not get even crumbs for kids. Kia ora tātou.

Hon JOHN BANKS (Leader—ACT) : I rise on behalf of the ACT Party and the people of Epsom to support the Appropriation (2013/14 Estimates) Bill. ACT will support this Budget and associated legislation over the next couple of days. The Minister of Finance Bill English’s Budget represents an oasis of fiscal sanity in the face of Opposition parties, whose primeval instinct is to spend, to regulate, to impose new taxes, and to print money.

The Budget is a good Budget in very difficult times for this country, but it is not a great Budget. On the OECD’s measure, the Government sector is spending about 43 percent of everything that New Zealanders produce—that is 43 per cent. In Australia it is 34 percent. The Government is taking too much and is making us poorer. We have lost many of our productive young people to Australia because their economy offers a better future. The 2025 Taskforce found that the income gap with Australia was 35 percent in 2008. The latest statistics for 2011 indicate that it has risen to 41 percent. The gap is unprecedented. Unless we close this gap, we can expect to see more and more New Zealand grandparents crossing the Tasman to visit their grandchildren. There is no mystery. They are richer in part because more of the wealth of Australia is left in the hands of the people, yet the Labour Party wants even more spending. You would have to go back to the 1970s to find a Labour Party less ready for Government. Labour is not serious about addressing the challenges faced by New Zealanders. The future is not about outbidding the “old dudes” and “young fogies” of the Green Party.

When I first came to Parliament all those years ago—10 Parliaments ago—the Government of the day was trying a command and control approach to the economy. It did not work then and it will not work today. How does this Budget measure up in terms of getting the Government off the backs and out of the pockets of hard-pressed, hard-working taxpayers? Well, first the good news. The size of the Government is set to decline under this Minister of Finance, providing we can continue to restrain expenditure. Spending growth has been reined in, despite the Christchurch earthquakes. This Budget continues that trend. The Government has not blown out the fiscal deficit like so many other countries and the last reckless Labour Government. The Government has stayed the course on partial privatisation, despite court action and the dodgy referendum by the Labour Party and its mates the Greens.

There have been significant welfare reforms. We are starting to tackle the culture of dependency and hopelessness. There is no tampering with the Reserve Bank of New Zealand Act. There is a willingness to improve the quality of regulation. We will have a regulatory standards proposal for this House to consider in the very near future. There will be meaningful change to the Resource Management Act. The Government recognised that house prices are too high because land values are too high. The Government is moving to free up the supply of land, which ACT has long called for.

In education, partnership schools are on the way. The Budget provides just under $19 million over the next 4 years for partnership schools. Partnership schools will be a paradigm shift in education and opportunity for our poorest families. I want to thank Cabinet and the Minister of Education for making partnership schools happen. The Government will spend $9.7 billion on education in this Budget. The annual funding for partnership schools makes up less than 0.5 percent of that $9.7 billion. From 1999 to 2008 Labour increased spending on education by 47 percent. It spent billions and had no significant impact on the tail of underachievement in our schools—47 percent increase in spending by the Labour Government, and no significant increase in the outcome for our most vulnerable, the bottom 20 percent, who are consigned to oblivion.

Partnership schools are a new and innovative option specifically focused on raising achievement for our most disadvantaged students, and I am glad to be associated with that. The only fear that the trade unions in the school movement have, and schoolteachers up and down this country have, is that partnership schools could be a great success. Anyone who opposes spending less than 0.5 percent of the total education budget on a new initiative to raise achievement for our most disadvantaged students is playing petty politics—petty politics.

So now for the not-so-good news. The macro outlook—growth and unemployment—is still mediocre. We look good because most member countries of the OECD look bad. We will not close the gap with Australia without lifting growth and productivity. The balance of payments outlook points to an international competitiveness problem. Taxes are too high because of wasteful and unnecessary Government spending. The more expensive the Government, the poorer the citizen. Let me say that again for the record: the more expensive the Government, the poorer the citizen. The Government needs to roll back Labour’s poor-quality programmes—interest-free student loans and Working for Families, to name just two.

Here is what the ACT Party will be urging National to do, in a great Budget. We regard $78 billion of gross public debt to be far too high, so we need to reduce debt through less spending, as the first initiative—less Government spending. We need to put the “avgas” into asset sales programmes. I welcome the announcement that Meridian Energy is up next. Air New Zealand is performing well. Running an airline is a risky and tough business. We do not need to issue a prospectus. Why not sell the Government’s shares immediately? National should dump the Cullen fund. Let us use it to pay off our debt. No one has savings in a bank account at home while they have a big mortgage on their house. Progressively raising the age of eligibility would help make superannuation much more affordable. If you want to save $1.7 billion a year, every year, year after year, then raise the age of eligibility for superannuation from 65 to 67.

We have stopped the growth in Government spending. That is good. It is time to start tackling the size of the Government. We have to aim for around 30 percent of GDP on OECD measures. That means confronting middle-class and corporate welfare. We need to confront middle-class and corporate welfare. The 2025 Taskforce found that given the surpluses at that time, reducing core Crown operating expenses to 29 percent of GDP, as it was in 2009, would allow a top personal and company tax rate of 20 percent.

The Budget projections through to 2017 start to make this lost opportunity available again, and that is good. That is a long haul, but it is a goal worth pursuing. Spending reductions and partial use of surpluses could fund tax cuts. Tax cuts would improve economic growth and international competitiveness. The risk with future surpluses is that they simply are used to expand the size of Government.

Finally, this House needs to be more brave on regulatory reform. Further regulatory reform would help New Zealanders to understand how dopey policies like the nationalisation of electricity would be. Regulatory reform would highlight how poor policies lead to poor laws, and that results in poorer citizens. We have the Regulatory Standards Bill on the Order Paper, and that is on its way. The ACT Party and the people of Epsom back this Budget. We say it is a good Budget in difficult times, but, in order to tackle the challenges New Zealanders face, we need great Budgets. Unfortunately, the most significant risk we face is from bad policy and bad politics generated from the Opposition benches. My job, indeed, is to ensure that they do not get their hands—that is, the Opposition parties—on the levers of power.

Hon PETER DUNNE (Leader—United Future) : This afternoon I sat through the 30th Budget that it has been my privilege to hear presented in this House. There has been a range of Budgets over the years. I think that, in terms of my involvement, there are two Budgets that stand out. The first was the 2006 Budget delivered by the Hon Dr Michael Cullen. That stands out because it introduced the concept of KiwiSaver, the long-term national savings scheme, and in many senses it put an end to what had been three very ugly decades of debate on the superannuation issue.

The second Budget that stands out is the Budget presented earlier this afternoon by the current Minister of Finance, for an entirely different set of reasons. Unlike Sir Roger Douglas’ “great rescue Budget” of 1984, which had to deal with the excesses of Muldoonism—in other words, the internally generated problems in having the most regulated economy at that time, outside the communist world—today’s Budget deals with positioning New Zealand for the future, in the context of an international situation that has been far from certain in recent years.

We have been through, as the Minister of Finance pointed out in his speech, the greatest international economic crisis since the Great Depression. If that is not bad enough, if that is not something any of us have any direct experience of previously, add to that the greatest natural disaster the country has ever seen, and, in terms of cost, one of the greatest natural disasters the world has ever seen, in the form of the Christchurch earthquakes, and the Government’s problems compound dramatically. But it does not stop there. We have just been through a summer of enormous drought, which is expected to make a significant impact on GDP and on our economy.

So when you put all those factors together, I think it is a remarkable achievement that today in the Budget we see the Minister of Finance project with confidence a return to a Budget surplus of modest proportions in the next financial year, but considerably stronger in the out-years from there. When one bears in mind all of those upheavals and the fact that that process of change is occurring in just 5 years, that is a remarkable transformation for this economy.

For those who say that we have not seen the benefits, I think that part of the problem, in a funny sort of way, is that we never got to the pits of despair. We never saw the depth of recession in New Zealand that we are seeing in France at the moment, that we have seen in Cyprus, and that we have seen right through Europe. We never got to the depths of despair that we are now starting to see even in Australia, where, earlier this week, a strong projected Budget surplus has suddenly amounted in election year to a massive Government deficit.

New Zealanders, through prudent management over the last 5 years, have been insulated from the worst of those economic impacts. Although unemployment has moved upwards and is still unacceptably high, it is about half what it was projected to be and it is about a third of what it is in most other countries of our type the world over. We are still, none the less, now well-positioned for the challenges that lie ahead. I think they contain some opportunities and some risks.

Let me deal with the risks first. We heard in the speech of the Leader of the Opposition this afternoon—one of the weakest Opposition leader’s speeches I have heard in recent times, I might say, but be that as it may—what was essentially an ideological prescription, such as it was, for the nation’s cures, such as higher taxes, picking on certain groups of the population, and setting them against each other; the politics of envy returning. And I have to say, with the greatest of respect to my colleague to my left, that there were overtones, from a different perspective, of an ideological approach, in his remarks just a few moments ago.

The reality is that we actually live in a post-ideological age, and there needs to be a level of pragmatism and studied care in terms of the management of economies and the transitions out of the situations we have seen New Zealand in in recent years, and moving forward. There are some lessons to be learnt, which I think the Government is learning, and I acknowledge the work of the Minister for Canterbury Earthquake Recovery and the Minister of Finance in particular in terms of what is going on in Christchurch. When those events occurred, the rule book went out the window in terms of how you recover, and how you restore—in that case—a regional economy. There was no guiding set of principles. There was no ready reckoner or reference book to go to. The Government had to act pragmatically, as the circumstances dictated. A lot of things happened that were completely foreign to the way in which public services were delivered previously.

The challenge now, as we move forward, is to capture those good innovations and use them in terms of the way in which we manage the public sector of the New Zealand economy as a whole. It is not about that old competition for resources, as much; it is about the smarter use of the resources that are available. I think one of the themes in this Budget is very strongly about the smarter and better use of available resources, rather than that constant David Copperfield - like clamour for more and more and more.

The next thing I want to say in respect of that change is that the initiatives announced this afternoon with regard to housing are, I think, a superb example of that approach at work. We all know, and have known for too long, that the proud State housing system, which is really part of the New Zealand national tapestry, is creaking. We have people who are trapped in those houses, people who cannot get access to State accommodation when they need it, and this peculiar notion, which has been allowed to build up, that the houses that people were occupying were effectively theirs for life even when their circumstances had moved on.

The changes that this Budget foreshadows will make it easier for people to transition to different types of accommodation more suited to their needs at particular points in their lives, and also make it easier, then, for the people who might need the three and four-bedroom homes at an earlier stage to have access to them. I acknowledge the work the Minister of Housing has done in this sense. I think it is smart and I think it is innovative. I think it is working within the system to achieve positive gains, a better use of the assets, better rewards for the people whom we serve, and fundamentally a more pragmatic approach overall—equally so with the decisions that we will make a little later in this sitting with regard to the housing permits concept, where again, with a problem that we all know successive Governments have struggled with, this Government is achieving cut-through.

So when you look at the Budget you can play the traditional political game, if you like, and sort of do the unders and overs and say that it is not fair, or this sector has not gained as much as that one. But I think those days are past. I think what people look at now—whether it be the public sector, the non-government sector, or the private sector—is who is best placed to deliver services, to deliver the things that people want, and how we work with them to facilitate those opportunities.

For example, in the health sector—and I will give the House two examples with which I am directly involved—we launched a new mental health plan at the end of last year. For the first time we will be actively engaging with the 300-odd NGOs in the mental health sector to make sure that they can be part of the solution, not constantly left to one side as advocates for something better. Shortly we will announce a new suicide prevention action plan, and again that same principle will apply. It is not about a clamour for more resources. It is about saying: “How can we much more smartly and intelligently use what we have to advantage, to serve the people well?”.

Hon Member: Are you all right?

Hon PETER DUNNE: I almost seem I should be in need of the health system, but it is that time of year. Can I simply conclude by saying that this is a pragmatic, sensible, well-shaped Budget—one that is adequate for the times.

Hon GERRY BROWNLEE (Leader of the House) : I move, That the debate be now adjourned.