Hon Dr MICHAEL CULLEN (Minister of Finance) : I move, That the Appropriation (2004/05 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2004/05) Bill be now read a second time. These two questions involve the final stage of the Budget debate—the third reading—and the second reading of the Imprest Supply Bill, which is normally moved in concurrence with it at this stage to provide for expenditure through to the end of the financial year, including expenditure in advance of appropriation, and to incur expenses and liabilities in advance of appropriation.

There is a spectre haunting the Leader of the Opposition, and that spectre is the fact that the New Zealand economy is going very well and is in good heart. When one has committed one’s professional life to being “Dr Misery Guts”, it is difficult indeed to respond to almost untrammelled, consistent economic success.

Madam DEPUTY SPEAKER: No. The member should refer to other members by their correct names.

Hon Dr MICHAEL CULLEN: Ah! Oh, right.

Madam DEPUTY SPEAKER: The member knows he must call members by their correct names, and not by a name that is derogatory.

Hon Dr MICHAEL CULLEN: Dr Brash—the appropriately named Dr Brash in this case—has spent his life being miserable about the economy and now is faced with an economy that is out-performing not merely his expectations but—I have to be fair—even the Government’s expectations.

The problems we face are those created by growth and success, not the problems of misery, failure, and social division, such as those of the 1990s. Firstly, we have had strong growth, making us one of the key successful economies in the OECD over the last 4 years. When could we have said that for 4 years in a row in some decades in New Zealand’s economic history? Not since the early 1970s. Secondly, we have low unemployment. Our unemployment rate is now the second lowest in the OECD, though, to be fair, the National Party caucus is not counted in the figures. Thirdly, there is moderate inflation, which is securely within the 2 to 3 percent band. Fourthly, we have growing household incomes, particularly because of the growing levels of employment. For the first time in our history, more than 2 million New Zealanders are employed, and they are looking forward to the implementation of the Working for Families package, which will deliver massive gains to 60 percent of all New Zealand families with children. But, of course, those at the top end will miss out, and that will cause terrible problems for those members opposite. Indeed, 60 percent of that money will go on families who are in employment—not that Dr Lockwood Smith would know anything about families; whether they are in employment or out of employment.

The social report released only a couple of days ago shows that New Zealand is in the top half of the OECD for the majority of the key social indicators that count. What is important to people is the life they are enjoying, not some abstract measure of per capita gross domestic product (GDP). We are catching up in terms of per capita GDP. We are catching up on the rest of the world, particularly on the rest of the countries in the OECD. For the first time in a very, very long time our economy, on a per capita basis, is growing faster than most other developed economies. We are on a roll.

But then we had Dr Brash appear and, for about the third time, he has unburdened himself of his strange views in an Australian financial magazine. He seems to scurry across to Australia to write his little bits and pieces, hoping they do not get noticed back home in New Zealand. Previously—and I will say this quite carefully—he appeared to be the Rip Van Winkle of New Zealand politics. Having spent four decades asleep, he woke up to find that the natives were getting restless, and he had some trouble understanding the changes that had occurred in New Zealand society in the interim. But now he has become the Cassandra-like figure, going around, as one of the cartoonists said, with billboards plastered with “The End is Nigh” on back and front. The end must be nigh, according to him, because life is getting better under a centre-left Government and that simply cannot be true, according to Dr Brash—it may be what is happening, but it cannot be allowed to happen. We have seen all the newspaper headlines and comments: “Bumbling Brash loses plot”, said the Otago Daily Times, as it tracked his movements around the country. Fran O’Sullivan—no great friend of the left, let it be said—saw “no road map for the future” in Dr Brash’s comments. According to John Armstrong, Don Brash’s comments “not only bordered on the ridiculous, it was silly politics to boot”. And, of course, we had the Dominion Post stating that what Dr Brash said was “simply wrong”.

So what do we see? First of all, according to Dr Brash, we are becoming a Pacific State country in terms of our economy, despite the fact that our GDP per capita is 10 to 30 times that of the Pacific States. But Dr Brash is just about ready to put on his lava lava and throw in the future, as far as the New Zealand economy is concerned. Secondly, he says that Australia is doing better than New Zealand. Well, let us have some facts. Fact: between 2000 and 2004, Australia’s economy grew 3.1 percent per annum on average; ours grew 3.5 percent on average. Fact: Australia’s inflation rate averaged 3.6 percent; ours averaged 2.5 percent. Fact: Australia’s unemployment rate averaged 6.3 percent; ours averaged 5.1 percent. We are going to hell in a handcart, according to Dr Brash, but it is certainly a Rolls-Royce handcart as far as most New Zealanders are concerned. With regard to GDP per capita, Dr Brash says we are going backwards. Well, here are some good figures. He used to like figures in the old days, when he took some notice of them. In 1990, when the National Government took office, Australia’s GDP per capita was 39 percent higher than ours. By 2000 Australia’s GDP per capita was 47 percent higher than ours. We went backwards from 1990 to 2000 in terms of per capita GDP. By 2003 Australia was 30 percent ahead of New Zealand.

Hon Member: Oh, come on!

Hon Dr MICHAEL CULLEN: “Oh, come on”—yes! Of course, he said “30 percent” and he was right, but what he did not say was that it was 47 percent when we became the Government. He left all of that out because it does not matter. Although Australia is seen as being the most successful developed economy in recent years, we beat it on every major economic figure in that period of time. Yet again, we are carrying on doing that, and yet again we are beating them in the individual pursuit event.

Of course, in 2000 Dr Brash was not worried about Australia and New Zealand growing differentially. Then, when he was the Governor of the Reserve Bank and supposed to do something about economic growth, he said that whether the growth rate was differential was neither good nor bad; it just meant New Zealand was different in some respects. Why does he see Australia as the model? Is it because of its higher tax rates? Is it because of its higher public liability insurance? Is it because of more regulated labour markets? Is it because Australians have longer holidays and shorter working years? Is it because Australians have higher welfare dependency? Is it because Australia has more active business-support funding? Is it because it has a higher level of economic regulation and economic nationalism than New Zealand has?

What is it that Don Brash wants to do? He wants to take a holiday—yours! He has suggested dropping all benefits to the able-bodied. He has promoted raising the age of eligibility for New Zealand superannuation. On many occasions, he has lamented the absence of a capital gains tax and has supported removing local control of resource planning issues. None of that will address New Zealand’s comparative performance. He says: “Woe is us! We’re behind Australia, so what we have to do is adopt policies that are even more different from Australia’s than they are now.” Now that is pretty illogical.

I invite Dr Brash, having returned from his unsuccessful provincial tour of the last year or so, to stand up to address Parliament, to stop attacking his country when he is overseas, and to tell us what a National Government would do, apart from the failed policies of the early 1990s that were designed to impoverish New Zealanders and drive social wedges between us.

Dr DON BRASH (Leader of the Opposition) : Members will not be surprised to learn that I disagree with almost everything the Minister said, and I rise to oppose the resolution. It is very clear that there are now two quite different visions for New Zealand, and one is of smugness and complacency, which sees everything in the garden as rosy. The reality is that when this Government came to office in late 1999, the economy was growing at almost 5 percent per annum. Why? Basically it was because the 1980s Labour Government—and let me give credit to that Government, which was very different from the present Labour Government—and the National Government of the 1990s carried out reforms that put this economy in a great place to grow. And in addition, we saw a steady decline in the New Zealand exchange rate, starting in 1997, which gave a huge boost to New Zealand export industries, and to agriculture in particular.

Growth has also been quite good since then; let us be frank about that, and I acknowledge that. But why? Let us look at it again. It is because of the reforms of the 1980s and 1990s, and the declining exchange rate through 4 years, and then an uncertain world environment, which produced a flow of immigrants from poorer countries into New Zealand over the last couple of years. There was a big flow in the years 2002 and 2003. It is very clear that over the last 10 years, growth has been caused by factors that have nothing to do with the present Government’s policies at all—nothing at all.

Let me quote from the last OECD report on New Zealand. It states: “Underpinning this improved performance over the last decade has been the programme of reforms that began almost 20 years ago. These reforms have boosted the economy’s sustainable growth rate and its resilience to recent adverse shocks. The slide in relative living standards vis-à-vis the OECD average seems to have been arrested, but”—and this is a very important qualification—“a further acceleration, necessary if New Zealand is to move back into the top half of the OECD, as the Government is intent on doing, is still not in sight.”

That is the reality. The good growth we have seen has nothing to do with the present Government’s policies. The Minister seemed to imply that more regulation, more holidays, and more taxation would somehow increase the growth rate. That is what he seemed to be saying. I do not know of any objective observer who would say that more regulation, more taxation, and more holidays would improve our growth rate—not any. [Interruption]

Madam DEPUTY SPEAKER: I want to warn members that this constant barrage is not allowed.

Dr DON BRASH: I make the point that the OECD report went on to say that many of the Government’s policies—its policy on company tax rates, its policy on infrastructure, its policy on the Resource Management Act, its policy of picking winners, its policy on the labour market, and its policy on welfare—were damaging our growth prospects. That was in the OECD report. The reality is that the current gap between our income and that of Australia—about $200 per week—shows no sign of reducing, and if the Government projections on both sides of the Tasman are correct, the gap will continue to get wider. Yesterday I was in mid-Canterbury and a pharmacist complained to me that she could not—[Interruption]

Madam DEPUTY SPEAKER: There has been a fair amount of interjection on both sides. That is just too much.

Hon Bill English: I raise a point of order, Madam Speaker. As is your right, you stood from the chair previously to intervene about the constant stream of interjections. Since then, both of the Government whips have interjected almost continuously—in fact, I think they got worse after your intervention. You have now risen again and intervened, after waiting for a good period to see if the interjections would drop off—and they did not. I think the House would like reassurance that if your intervention is ignored again, particularly by the Government whips, who are responsible for order amongst the Government benches, you will take decisive action.

Hon Dr Michael Cullen: I think the member makes a fair point, but I point out that during the 10 minutes that I spoke I was subject to constant interjections from Mr Ryall, Dr Nick Smith, Dr Lockwood Smith, Mr Simon Power, and a number of others who could not control themselves for the entire 10-minute period—to the point where I was tempted to find the pharmaceutical cabinet to try to help them during the process.

Madam DEPUTY SPEAKER: There has been a barrage of interjections from both sides, as I indicated, and I will certainly take action. I have warned members on both sides.

Dr DON BRASH: The reality is that if the projections of the two treasuries are even approximately accurate, the gap between our living standards and those of Australia will continue to get wider. Over the last 5 years we have seen approximately 25,000 Kiwis net leave this country each year, most of them going to Australia. If the gap keeps getting wider, we will have a situation whereby nurses, doctors, teachers, plumbers, builders, you name it, will continue to leave. In that sense, New Zealand is like other Pacific Islands, where the reality is that their most skilled people continue to leave. That is the situation we face.

The other vision for New Zealand is that of the National Party. Our vision is of a country that is growing, so that we can reduce the gap between our living standards and those of Australia. It is a vision whereby every child leaves school able to read, write, and do basic arithmetic. It is a vision whereby people get off welfare and do not stay on it year after year, decade after decade. It is a vision whereby everybody is treated equally under the law, whether they be Māori, Pacific Islander, Asian, or of European descent. [Interruption]

Madam DEPUTY SPEAKER: That has been ruled out previously. I say to the Government whip that it will not be tolerated.

Dr DON BRASH: The Government has basically given up on what it repeatedly claimed was its highest objective—namely, getting New Zealand back into the top half of the OECD. On present projections, that will not happen in the next two decades, and we certainly will not overtake Australia any time soon.

The Budget projected that growth over the next decade will be, on average, about 1 percent slower than over the last decade. The Budget simply fails to deal with the real issues facing this country. The Government claimed in the Budget that it wanted to encourage people off welfare and into work. What does the Budget do? It raises the effective marginal tax rates for people trying to get off welfare and into a job, to between 80 and 90 percent. Let us take the case of a one-income family earning $38,000 per year. It has two young children and is living in an average suburb in one of New Zealand’s major cities. The impact of the Budget is that by 2007 that family will take home about $43,000. In other words, it will take home more money than it earns. Contrast that with its neighbours earning $60,000. What will they take home? They will take home about $45,000, which is a difference of just over $2,000—about 50 bucks per week—for earning an extra $22,000 per year. That is supposed to create an incentive for people to get off a benefit and into employment. It is supposed to create an incentive for people to get more skilled. Who would get more skilled with a 90 percent effective marginal tax rate?

This Budget might be excused for failing to fix the growth problem if it actually did something useful to get people off welfare and into work. The sad reality is that an 80 to 90 percent effective marginal tax rate simply will not achieve that. The Government’s vision is limited and mediocre. The Government rests on the laurels of the 1980s and 1990s, and, frankly, if this is the best we can achieve, we simply will not deliver the kind of New Zealand we want for our children and grandchildren.

Hon MURRAY McCULLY (National—East Coast Bays) : I raise a point of order, Madam Speaker. In the course of the speech made by the Leader of the Opposition, my colleague Mr English asked for an indication from you that you would be firm in dealing with matters from the whips’ desk opposite, if there was continued interjection. Towards the end of Dr Brash’s speech there was continued interjection, and I invite you to make good your threat.

Madam DEPUTY SPEAKER: The member is quite wrong—I did not make a threat. What I said was that the level of interjection, which was a constant barrage from both sides, would be controlled. That is exactly what it was. The member will be quite clear that there was a continual barrage from his side, too.

Rt Hon WINSTON PETERS (Leader—NZ First) : In any viable democracy there should always be an alternative Government-in-waiting; in any viable democracy there should always be an alternative Prime Minister - in-waiting. The public today, which do not support this Government, will be extremely disappointed by what they have just heard, or rather about what they did not hear. It was a very confused speech, lauding Australia’s economic performance, whilst berating his own country, and never admitting why that is so—why Australia has done so much better.

If members look at Hansard for the May Budget debate they will see a prediction from New Zealand First that Don Brash would go out and make this comparison between Australia and this country, but that he would not admit why Australia had done so much better, since 1984, than the New Zealand. It is not an alternative Government, or Prime Minister, that goes around the country stirring up apathy. It is not an alternative to go around the country striving to put Mogadon out of business. It is not an alternative to go around the country totally underwhelming people. I can remember the great campaigns that National once ran with great leaders who had the ability to come into this House and stay here, and win in this House. They had the ability to take the Opposition’s argument and place it before the nation. All we have had here is a beat-up, month after month, and the polls tell us what will happen now.

It is true for Dr Brash to say that the economy grew by almost 5 percent in 1999. That is true—the economy did grow by almost 5 percent in 1999, despite the Asian crisis of 1997-1998, but whose Budget took it there? It was not National’s Budget. Whose Budget took it there? The Budget that acknowledged that US69c was far too high for an export nation and drove the dollar down. That, and no other reason, was why we had the success we have had.

National has no economic policy—that is as clear as daylight today—though I am delighted that Dr Brash has finally found a vision. Members will remember that when he got the job he was asked what he understood being a New Zealander was. He said that he did not know. National has no policy, and it is not right that “New Zealand Second” rushes around the country stealing the New Zealand First Party’s policies. That is what they have done—they have tried to steal our policies. I have even heard him today talking about low-quality immigration. I beg his pardon. This is someone who believes that we should have 10 million people here. He cannot explain why. He cannot say why—

Hon Annette King: From Singapore.

Rt Hon WINSTON PETERS: Yes, well, I suppose “My wife was born in Singapore.” I mean, what on earth does the National Party think it is doing, as far as the right wing of politics in this country is concerned, in providing that as an answer, as an alternative Prime Minister, and an alternative Government? That is the worst performance I have ever heard or seen in this country, or in any other country. That embarrasses me because all around New Zealand I know of hundreds of thousands of people who do not like this Government, who do not like its social policy, who do not like how weird the Government is, who do not like how kinky it is, and who do not like all the sleaze and the sordidness of its policies. They do not like it and they are praying and hoping that somewhere else there is an alternative, but they are not getting an answer, and no amount of hype on behalf of the print media ownership in this country will change that.

New Zealand First is opposed to what is going on in this country in respect of our asset wealth and our asset sales. We are told that there is a boom in New Zealand at the moment, except that 80 percent of New Zealanders cannot feel, taste, or smell it. Sure we have a boom all right, it is a boom of consumption, but look at the export figures and at productivity—it is simply not there. All the fundamentals by which great economies are measured are not to be found in the New Zealand economy.

Craig McNair: What’s it like compared with Ireland?

Rt Hon WINSTON PETERS: Well, it reminds me of the great boom of the Kirk Labour Government from 1972 to 1975. Things were going through the roof; the sky was the limit, except that it was all about to bust because it was all based on consumption. What is the biggest investment today in New Zealand in terms of investment and capitalisation? It is housing. The last people I understood to live on housing were Hansel and Gretel. What we have here today is a Labour Party bringing in people in their tens of thousands on 110 points, which is down from 195 points, which means they do not need to have a job or any prospect of a job. Why would we bring in these tens of thousands of people who will not be placed in our economy if we were not hell-bent on providing consumption to back up our economic performance?

R Doug Woolerton: And we’re still short of workers.

Rt Hon WINSTON PETERS: Oh, yes, we are still short of workers because the trouble is that we have 300,000 people who cannot speak English at all. One in two of those people is not employed in the economy in a positive sense at all. Not so long ago—less than 5 years ago, in fact—I recall the same Don Brash, as Governor of the Reserve Bank, telling New Zealanders to “tighten their belts”. Do members remember that? He told them to tighten their belts and not to request pay increases because he said that we had “looming stagflation”. That was said by the good doctor, put up by the National Party as some sort of economic genius to run New Zealand’s economy. That is what he said 5 years ago. He also told people not to buy houses, that it was a waste of investment. He said people should rent instead. Well, let him try that today in Auckland, Tauranga, Nelson, or Christchurch. However, that is what he advocated, and every time the economy showed any signs of getting some life he would choke it because he was obsessed with inflation.

Today the same man says that Australian workers earn 30 percent more than New Zealand workers. Is that so? When will I see some economic analysis from some of these journalists over here as to the ridiculous nature of his comments about Australians? When will we see some honesty about what Australia did differently from us in 1984? In 1984 we had an economic revolution. Who supported it? Don Brash did. How do I know that? I know that because in 1987 when being mooted for the Kaimai by-election, Don Brash said: “Oh, no, I can’t stand for National. I support Rogernomics. I support Roger Douglas.” Here we are today with an alternative—a National Opposition that still believes that Douglas was right; that still believes that Ruth Richardson, of all people, was right; and that still believes that somehow if only they were given power they would discover the magic bullet.

However, this party behind me is riven with dissension. Mr Key says that he is not for selling State assets. Don Brash is. Mr Key is not certain whether we should keep our savings fund, but Don Brash is certain that we should get rid of it. What goes on here? How important is economics in any country? In any democracy that I know, economics is the fundamental main part of everyday politics, except that the National Party put its man in at No. 10. He is hardly lining up behind a bunch of political geniuses on the front bench. The current line-up would be the most bereft of talent I have ever seen in my time in politics, and, boy, knowing the Labour Party, that is saying something! But, even so, National’s finance spokesman cannot get past No. 10. Why on earth would that be?

Maybe it is because—

Ron Mark: He may be there soon.

Rt Hon WINSTON PETERS: I wish “Don Key” all the best. The reality is that this is no job to learn on the job. People in this country hire people because they have experience. They know what happened yesterday. They understand the pitfalls. However, today we have in this Parliament a so-called Opposition party led by someone who cannot find the parliamentary toilets and who does not understand, for example, what a primary health organisation might be. These are fundamental things.

We have a National Party that should be able to beat Labour hands down, except it has no economic policy, its social policy is a steal from New Zealand First policy, it steals New Zealand First speeches and regurgitates them out there without understanding them, and, worst of all, it just wants power for power’s sake. That is no reason to be in Government.

JEANETTE FITZSIMONS (Co-Leader—Green) : The 2004 Budget on which we are voting today is a house of cards. It has some very nice features that we would like to support, but a strong wind is blowing and the cards are flapping. Without an unprecedented effort to strengthen the foundations, we will be without shelter in the future.

I said those words in mid-June when we first debated the Budget, and since then the wind has only become stronger. In the last week the price of crude oil has passed US$46 a barrel. That is more than twice the Ministry of Economic Development prediction 10 months ago of US$20 a barrel in 2004. It is more than twice the assumptions about price on which the whole Budget forecast and planning was based, and it is a substantial increase even since the first reading of this bill. Some analysts give the price a fifty-fifty chance of reaching US$50 within weeks.

By and large the media do not understand what is going on, so most New Zealanders do not either. The Christchurch Press stated that the price of oil is driven by the situation in the Middle-East. Actually, it is not. The war in Iraq is driven by the shortage of oil, and not the other way round. Serious supply disruptions that knocked out a major supplier would be likely to take the price to US$100 or more, according to Deutsche Bank.

No, recent price rises are about demand. There has been an increase in demand in virtually every country—including a 40 percent year-on-year increase in China, the second largest oil importer—and that rising demand is against a background of gradual depletion. US oil fields have passed their peak and have declined since 1970. New Zealand oil fields passed their peak around 1986, and have declined steeply since then. World oil supply is expected to peak in the next decade, if it has not already done so, and only hindsight will tell us exactly when. Our concern was greatly heightened just this afternoon when Dr Cullen told us that he has never heard of the concept of peak oil, and that he does not accept we are dealing with the depletion of a finite resource.

But more important even than the date of peak oil is the date on which demand will rise above the rate at which remaining fields can supply. That date is very close. Oil prices will fluctuate a bit with markets and weather, but there can be no downward trend from there.

Rather than use this debate to admire the fine features of the house of cards and to criticise the ones that disappoint us, I want to examine the strength of that wind, and the steps we need to take right away to reinforce the cards so we have some shelter left after the storm. The best estimate of the strength of the wind is that current oil production is 81 million barrels a day but total productive capacity is only 82.5 million barrels a day. As fields pass their peak, the rate at which oil will flow will also reduce.

Let me make it really clear to Dr Cullen: we cannot pump oil out any faster than 82.5 million barrels a day, and 1.5 million barrels a day is a very small margin to cope with supply disruptions let alone more growth in demand—but both are likely. The single most important thing we must do to secure our economic future is to reduce our dependence on oil. If any members in this House do not believe that, then I invite them to show where the stuff will come from at anything like the prices we have had in the past, to meet the record rates of demand that show no signs of easing. Canadian shale will not do it. It takes so much energy to get the oil out that the more oil prices rise, the more the cost of shale oil will rise ahead of them.

The National Bank stated that the extra $300 million to $400 million that oil prices are costing us will knock 0.4 percent off our GDP this year. The Reserve Bank is worried about inflationary effects, as the price of oil affects the price of everything else. However, that is minor compared with what is coming.

The point is that when we pass a Budget we commit money to building for the future, and we need to think about what we are building. New motorways are planned based on predictions of traffic growth. How much of that growth will occur if fuel prices double? The Freightways Group has imposed a fuel surcharge and is looking at whether it will increase it. Petrol demand is very inelastic when prices first rise because people have few other options, but over time behaviour does adjust. Our transport future will depend much more on low-energy options like rail and public transport systems, and if we do not build them now while oil is still cheap it will be much harder to build them later.

Yesterday I was at the Britomart transport centre for the launching of the new Connex commuter rail services. The upgrade in Auckland commuter rail since I lived there and used it 12 years ago is stunning, but it still has a long way to go to meet Auckland’s needs. It needs a link to the airport, which means building new track, and it needs a tunnel extending the line west of Britomart and linking the southern and western lines. These will be energy intensive to build and low energy to run. We have a brief window to build now while oil is cheap, and we will reap the benefits when it is expensive.

Airlines have imposed fuel surcharges, too, and are considering raising them. Airlines are perhaps the most vulnerable of all forms of transport, as price cutting has raised demand for air travel and boosted growth. Is the Minister of Tourism planning to spend the $60 million we are voting him to promote New Zealand as a destination, in the knowledge that air travel will be less affordable in the future? Are we investing to encourage longer-stay tourism that is less energy intensive? Is the Minister of Tourism thinking at all about the long-term price of oil?

It is, of course, a fundamental of the Government to expand trade of all kinds. How much is the fuel price factored into that? As the rest of the world reels from yet higher oil prices, will countries continue to buy dairy products in the way they do now? Worse, if we allow basic industries to collapse by removing tariffs and allowing competition from sweatshops and child labour, will we ever get those industries back when the economics change and fuel-intensive imports of things we can quite well make ourselves do not seem like such a good idea.

Nothing is as important to social wellbeing as housing. Has the Minister of Housing thought about how to heat the houses the State is building? When will we have state-of-the-art solar design for at least all new State houses? When will the building code be upgraded to require more energy efficiency to keep energy bills down?

We have a fisheries bill before the House at present, which provides for highly migratory species caught outside New Zealand’s economic zone. Deep-sea distant fishing is the most energy intensive food production system in the world, even worse than grain-fed beef production. There is unlikely to be a market for fish caught hundreds and thousands of miles from shore at the prices that oil depletion will dictate in a few years time.

I go on to the forestry industry. Of all our productive sectors, this one has the best chance to prosper because it is capable of producing all its own processing fuel. Waste wood, and eventually purpose-grown wood, are particularly promising energy sources for New Zealand in a post-oil world, but they must be planned for. Where is the planning in the wood-processing strategy to use the wood waste coming on stream now, and to ensure we grow enough wood for the future? I do not see it; what I see is an assumption that the forestry industry can continue to demand more and more electricity, gas, and diesel, rather than become self-sufficient.

Farming must change, too. Fertilisers and pesticides are largely oil-based. Our competitive advantage will be in turning to organic production methods that do not require them. We have the science to do it but the Minister is lukewarm at best, and there has been little budget applied to developing the science further or to helping people change.

We do have options. New Zealand can survive high oil prices better than most countries, but successive Governments have chosen to ignore all the signs of oil depletion, and the opportunities to build a more secure future. I was encouraged a few weeks ago by Michael Cullen’s acknowledgment that oil will never be cheap again, and that Treasury projections should be reviewed. Today he tells us that the review of Treasury projections has not yet begun. This afternoon we learnt that the situation is much worse than we thought: this Government does not believe we have a problem, at all.

What we are looking for is a radical review of the fundamentals of economic management, now that the short-term underpinning of our rapid economic growth has been pulled away. We do not have to continue blindly until we crash and burn. The Greens are dedicated to developing the sustainable options that will see us through.

Hon STEVE MAHAREY (Minister for Social Development and Employment) : I wish Jeanette Fitzsimons all the best for her recovery from what seems to be a flu that has certainly gone around the House. For those at home who are listening to this debate on the radio, I remind them that they are listening to the end of the debate on the Government’s Budget. It was an excellent Budget, and that has been borne out by the fact that there has been so little criticism of it over the last little while. The Government members delivered that Budget, and we have waited on this side of the House to get engaged in the cut and thrust of ideas as they came up, particularly from the National Party—the pretenders to the throne. We waited to hear what National members would put on the table, how they would spend the money, and what they saw as the priorities.

We have waited in vain. We have not had one single policy idea from “Moga Don” or any other National Party members throughout this debate. The best they could do over the last little while was to say that they would reshuffle their members so that National looks like a Government-in-waiting. What did they do? They have promoted the organisation of the National Party to slot No. 3 in the National line-up. New Zealanders need to know that National believes that its own organisation—keeping its members in line—is the third most important issue for the National Party. So Simon Power, my colleague from the middle of the North Island, is now “senior whip No. 3”. When he goes home and people ask him what he is doing to advance the country, he will say: “I am organising the National Party; I am whipping them.” That is what he will say.

National members are saying that that reorganisation means they are ready for Government. Their first term MP, Mr Key on the second bench, is their finance spokesperson. The previous leader, Bill English, who is on the front bench now, cannot be in the same room with Mr Maurice Williamson. If Mr Williamson walks in, Mr English walks out. If Mr English walks back into the room, Mr Williamson does not walk out—he has too much cheek—so Mr English has to go back out again. Ms Rich is now agonising over whether to stay with this National Party. She is a woman of integrity. She is a woman who believes in fairness and decency, and she knows that work-for-the-dole, time-limited benefits, forced immunisation, fines for not taking one’s kids to work if one is a beneficiary—and that is all—is the National Party plan of the 1990s. It did not work then. It made people mean. It made them the worst kinds of New Zealanders. New Zealanders did not like that behaviour. Ms Rich knows that and she is thinking of leaving. Mr Sowry has already gone. Dr Lynda Scott is a first-term MP; one would think she would have her sap rising, would one not? She has been here for only one term—for only a little while. If National thought it was winning and would take over the running of the country, would not a first-term MP, keen on health issues, want to stay, want to be here, and want to be part of all that?

Mr Brash leads all this. He leads it by not being in the House. As Mike Moore used to say: “Isn’t it strange, we’ve struggled so hard to get into Parliament, and we never turn up here.” Mr Brash is on his provincial tour around the country, and when he has time he goes to Australia and bags this country. He says that we are just another Pacific Island State. We are not. We are a First World country. We have First World infrastructure. We have First World incomes. We have First World industry. We have First World attitudes, education, and a health system, one after the other. We are not a Pacific Island State—“just a Pacific Island State”, as he likes to say. But then Mr Brash likes to go on all the time with this kind of insinuation that things are wrong. He gets a few facts wrong all the time. He comes into the Chamber and says all the time that the world is about to end. He is always telling us the problem. At Ōrewa he did that, and he got it wrong. He told us about crime and how National would build $500 million worth of new prisons. When people asked, “What for?”, he said that maybe we would just double the number of beds in the cells. He got it wrong.

He tells us about welfare and says that we are so much worse off here than Australia. Australia has more people on welfare than we do. Its unemployment level is higher than the unemployment level here. He gets it wrong. On something like the economy, time and time again he gets it wrong. He tells us about these policies that were 20 years’ bad luck and led to no real gain. And then by some sort of magic, when the Labour Party arrives, suddenly things start to pick up. We do OK. We get more growth, we get better wages—we get all these kinds of things. Is that supposed to be luck? Even Dr Brash knows that, 5 years’ later, it is not luck.

This is a good Government leading a country that is doing very well. People are sick and tired of the hollow insinuation, no facts, doom-laden politics when there is no answer. I say to Dr Brash: If the country is in such a mess, where are the problems? If the country is in such a mess, where are the answers to these so-called problems? If the country is in such a mess why do 80 percent of New Zealanders report themselves as feeling pretty happy with the way things are? Why do they feel like that? Well, I tell Dr Brash that the fact is that New Zealanders think this country of theirs is on a roll. After years of being told that they were going to get no gain without pain, New Zealanders are finally seeing their lives steadily, year after year, month after month, week after week, getting better. That is what they have found over the last little while. Their economy is growing. Their regions are growing. Their wages are growing. They are better educated, more healthy, and better housed. They live in a country that the rest of the world—but not Dr Brash—thinks is a hot country to come to. Tourists are pouring into this country. They want to be part of a country that has a lifestyle like this, that has food like we have, that has wine like we have. They are saying: “Let me go and be part of that country.” Young people, 20 to 29-years-old do not go out of the country as they used to. They see a life for themselves here. They see jobs here. They see opportunities here. They want to stay. They love going to New Zealand films. They love Peter Jackson. They love people like Sarah Ulmer winning gold medals. They love New Zealand music. They love switching on the radio and saying that 20 percent of what they listen to has been produced by a New Zealand band or artist.

This is a fantastic country to live in. Those people have a real pride, a real sense of identity, and they love being part of a special, unique group of people capable of doing anything. They like living in a country where they get a fair go. They like living in a country where they have opportunities to reach their potential. They love the lifestyle here. They love sharing in the dividend from all the hard work that has gone on. Working for Families is a fantastic policy. Sixty percent of New Zealanders will do better if they have a family under this Working for Families package. They will get about $100 extra in their pocket from this Government. Even the National Party has had to say: “We won’t take it off them, we will let them keep it.” This is a fantastic policy. No wonder the polls have begun to change. They have begun to change because people are sick of the negativity of the National Party. They are sick of insinuation, sick of no facts, and sick of no policy. They are starting to turn on to a party that has had solid achievement over 5 years. We have a leader who has fought through for 5 years and who has led this nation in a way that makes us proud to be Kiwis and proud to be led by someone who has a brain in her head, ideas to say, and a vision for the future. This party, on this side, has the people and the policies, but most of all, it has the passion to lead this country.

We want New Zealand to succeed. We want New Zealanders to have a better life. We want their families to get better, their communities to get better, and their nation to be one of the leading nations in the world. Unlike Dr Brash, we do not call ourselves just anything. We call ourselves very special; we call ourselves unique. We call ourselves a mix of people who can stand up and be proud of ourselves, because we have a special bond with each other and we have a special bond with the land that we live on. We understand that we live in the luckiest country in the world. Labour is saying to Dr Brash that he can reshuffle his team, but it is time to stand for something, and not against everything. Labour is clear on where it stands. We are on the side of Kiwis who want the best for their families, their communities, and their nation. That is why over the next year, as we lead into the election period, we will put the vision forward for this country, against the negativity of the useless National Party.

RODNEY HIDE (Leader—ACT) : Let us strip away the rhetoric of this Government and say that yes, we do live in a great country, and that we, as New Zealanders, are a great people. That is why we have to get rid of this Labour Government and the Prime Minister, Helen Clark. That is why we need Don Brash to become the Prime Minister and the ACT party to be in Government. Parekura Horomia pipes up. My message to him from his electorate is that he has gone. I will talk about what New Zealanders are actually concerned about. We know that, because we had the Norm Withers referendum. I tell Mr Horomia that New Zealanders want to feel safe at home, safe in the streets, and safe at their place of work. We had a referendum that had overwhelming support from New Zealanders for the Government to get tough on crime and to protect New Zealanders. What do we hear from this Government? We learn that under this Government Andrew Ronald MacMillan, a terrible, brutal rapist and murderer, will get a $1,200 payout because of his hurt feelings. Parekura Horomia and Jill Pettis would not agree with that. No New Zealander would agree with that.

Keith Locke: I agree with it.

RODNEY HIDE: Keith Locke does, but then I question whether he is a New Zealander. No New Zealander would agree with that. We heard from this Government that it may get the Department of Corrections to see whether it can appeal that decision. What a weak response that was from the Government to the people of New Zealand, who are fed up to their back teeth with crime and lawlessness and disorder in this country. It is all right for Ministers to have diplomatic protections and for Parekura Horomia to sweep around in his flash car, but what about his constituents? What about the people in south Auckland who cannot say that their children are safe on their way to school? What has this Government done about that?

Hon Parekura Horomia: What about your constituents?

RODNEY HIDE: Parekura Horomia spikes up a bit now. He should do some door-knocking in his electorate, because he is gone.

While I am talking about Parekura Horomia, do members remember Helen Clark’s promise to close the gaps? Everyone was going to come together. Māori and Pākehā were going to sit around the table, and live happily ever after.

Moana Mackey: What happened to Māori unemployment?

RODNEY HIDE: That is a good question. What did happen to that policy of closing the gaps? I would like to hear that from the Labour Government. Labour will not let Parekura Horomia rise to his feet to speak. It has sat him down, because he is too tired to stand. It will not let him stand up to give a speech, so he lies back in his chair and yells out. Has Parekura Horomia got eyes and ears? Can he not hear and see what is happening in Māoridom? What did the Labour Party do? For once, it has united Māori. It has united Māori against Labour—against the Government of New Zealand—and for the first time in our history we have a race-based party in our Parliament, thanks to Helen Clark. She has not brought the races together, but has split them wide apart.

In relation to America and Australia, we are distant friends. Our Prime Minister runs around toadying up to the “axis of evil”, Iran, and helping it to organise itself to get its A-bomb up and running.

Hon Annette King: Don’t talk rubbish!

RODNEY HIDE: I saw it in the paper. All around the world we saw pictures of Phil Goff holding hands with Keith Locke’s friend Yasser Arafat.

Hon Annette King: Who does Mr Hide hold hands with?

RODNEY HIDE: I can tell the Minister of Health that if I got as close as that to Yasser Arafat I would not be holding his hand. That is what has been happening. If I got as close as that to Yasser Arafat, he would be in serious trouble.

Hon Annette King: But you would hold the hand of his wife?

RODNEY HIDE: I can tell the Minister that I would not hold his hand or that of his wife. Our Government is taking New Zealand on a path away from our traditional allies, is cuddling up to the likes of Iran and Yasser Arafat, and is to send a letter of apology, together with a cheque for $1,200, to a murderer and rapist.

I ask Annette King where we are on transport. We are committed to building roads in Auckland, but under the Land Transport Management Act we have to consult iwi on just about each and every road. Parekura Horomia and his tribal mates can turn up to any hearing, and hold it to ransom. Why is that? One reason is that there could be a taniwha in Kohimārama. [Interruption] I can see that there is a taniwha in Parekura Horomia’s seat. He should get up to make a speech like a man, and not just sit there and heckle away.

Then we come to the economy. I remember a time when the Labour Party used to want people to lift their sights and to achieve, to create, and to produce. This is what happens under Michael Cullen’s Budget. [Interruption] If Annette King pipes down for 2 seconds, she may learn what is in the Budget that she is about to vote for. In fact, if she listens to and understands this, she may shift her vote. Let us take the example of a family with two children in Auckland that earns $35,000 a year. That family is doing it hard in Auckland.

Hon Annette King: And what would ACT do for it?

RODNEY HIDE: I will tell her what Labour has done for it. That family has a housing cost of $300 a week, and gets $788 in its hand to live on. Annette King should imagine this situation. The family has to work harder, so the wife has to go to work. It then earns an extra $20,000 a year, but that is hard. Does Annette King know how much that family gets to keep, under this Budget? She does not know, so I will ask Parekura Horomia. If that family on $35,000 a year earns an extra $20,000, how much does it get to keep? Parekura Horomia cannot do the sums. Well, I can tell him it is $2,548 a year. The family earns an extra $400 a week by working harder, and gets to keep only $50 of that. That is what Annette King, Parekura Horomia, and Michael Cullen are voting for.

Hon Annette King: What’s ACT going to do?

RODNEY HIDE: Help is on the way—that is what I say to Parekura Horomia and Annette King. Help is on the way, because we are going to come along to the people who support those members—the Labour members—and we will give them a tax break so they can have more money in their pockets and will not have to go cap in hand to the miserable, mean, nasty Labour Government and ask whether they can have some of their own money back.

When Helen Clark came to office in 1999 she started out as a traditional Labour Prime Minister—robbing Peter to pay Paul. Labour robbed 200,000 people who were earning over $60,000. It took money off them and said: “To hell with you. To hell with success. To hell with achievement. We can spend this money where we can get some votes.” Do members know what Labour has done in this Budget? I know this will be news to Parekura Horomia. It is actually robbing Peter to pay Peter. Now people who earn $100,000 and have six kids can get a handout, because they are poor and needy. Under this Government a person on $100,000 with six kids is poor and needy.

What is the solution? The solution is not to have to go and get money from Michael Cullen because he says it is OK to do so. It is not to go off to Mr Copeland, who is propping up the godless Labour Party. Oh, no, that is not—

Hon Annette King: That’s a bit rich.

RODNEY HIDE: Maybe, but it is a good line. I can say this: if people vote for the ACT party they will be able to keep more of their money, and to spend it on their own God as they choose.

JILL PETTIS (Labour—Whanganui) : I raise a point of order, Madam Speaker. I did not interrupt during the member’s speech, but when he was making references to the Palestinian leader, Deborah Coddington called out: “I’d shoot him.” I do not think that is appropriate language to use in this House, and I ask that she be asked to withdraw and apologise.

Deborah Coddington: I withdraw and apologise.

Madam DEPUTY SPEAKER: The matter should have been raised at the time.

GORDON COPELAND (United Future) : I wait with interest to find out how the ACT party would help the family on $100,000 with six kids. When Rodney Hide decides what he will do to help that family, I ask him to let me and the rest of the House know. But I will not hold my breath, because I do not think there is actually anything coming the other way. In the 2002 Budget, which was delivered immediately ahead of the nation going into election mode, the word “family” was not mentioned once. In the 2003 Budget, on the other hand, it featured strongly, and in the 2004 Budget the words “family” and “family policy” have taken centre stage. Why has the change occurred? Simply stated, it is because at the 2002 election the people of New Zealand spoke clearly of the need to refocus policy on the family, by electing United Future, with its strong focus on family values and family building, to Parliament. United Future therefore welcomes the more than $1.1 billion worth of new initiatives that this appropriation bill will contribute to the support of New Zealand families, and especially to the support of working families in the low and middle income brackets. It is a great first step. It is the right thing to do, and it will benefit hundreds of thousands of families.

Let us not forget, however, that family concerns need to remain at the top of the Government’s agenda as it moves forward. Our social statistics are there for all to see, and have recently been described by the Minister of Finance, Dr Cullen, as intractable—an analysis, incidentally, that I disagree with, although I believe it will take us at least a generation to restore family and community life in New Zealand to the position they occupied 30 years ago. Many of our statistics remain bleak. Some 320,000 of our children continue to receive child support from the Inland Revenue Department, which collects liable-parent contributions from 212,000 people, mainly men. Behind those statistics lie the growing phenomena of fatherless and sole parent families—mainly women. New Zealand now has the second-highest level of sole parent families amongst the OECD nations. Some 50 percent of all Māori, and a lower but still high percentage of other children, are now growing up without a father in the home. The marriage rate has fallen, the number of divorces has increased, and we have the second-highest rate of both abortion and teenage pregnancy in the OECD. Behind those bare statistics there is a great deal of individual pain, disappointment, stress, and even psychological breakdown. The financial cost is massive. It is now estimated to be about $5 billion each year, or roughly equal to the total tax paid by companies large and small annually.

In those circumstances, we must do more than just bring ambulances to the bottom of the cliff. We need to make a yet stronger commitment to having a fence at the top of the cliff, and I believe there is a great deal more that the Government could do in that regard. The Families Commission opened for business in July, with a wonderful line-up of commissioners and a commitment to make a difference for New Zealand families. The commission has begun its work, and, guided by its research, I hope that Governments of whatever hue they may be will look to do a lot more in the area of parent education, marriage preparation, and relationship-building skills. The many charities and other community groups in this country have developed a variety of extremely good programmes that can assist literally anyone who is a parent—be that person married, in a de facto relationship, a solo parent, or whatever the person’s situation may be—to improve his or her parenting skills, in the interests of both the children and the common good of our society. Simply stated, we need every New Zealand parent to be the best parent he or she can be. United Future will therefore continue to advocate for the provision of vouchers to subsidise those courses, thus encouraging all New Zealanders to upskill in the area of adult relationships and parenting.

In connection with that, I was interested when I was in Australia a few weeks ago to see that the Australian Government has taken a positive lead in that area. It has established 65 mainly church-based centres throughout the country that are now offering Australian families real, practical, hands-on skill upgrading in the areas of relationship building and relationship enrichment. I was very interested to note the response to that of the Labor Party in Australia. Mark Latham said straight away that it was great, but it was not enough. I want to contrast that with the situation here, because at the moment we are debating comparisons between Australian and New Zealand a great deal. I would say that in this area Australia has taken a step forward, and that its step is one that we should emulate and follow. Similar things to those introduced in Australia have also been done in the United States of America with very, very good and tangible results. They demonstrate quite clearly that if people have, for example, marriage preparation courses before they get married, the rate of divorce drops significantly. That is a great thing, because ideally every child should have a mum and a dad at home for his or her upbringing, development, character formation, and so on.

We also—unlike Rodney Hide, I suspect—actually have a solution to the problem of the gap that still remains in the area of the support for the family, notwithstanding the initiatives the Government has taken in its Working for Families package. When that package was announced, John Key very quickly went out and did some sums. He came back and reported to the press and to this House that he had calculated that a one-income, two-parent family living in the south or west of Auckland or in Wellington City and earning $38,000 a year would end up in somewhat the same situation as a family earning $60,000 a year, after the family support measures were taken into account. The family on $60,000 a year—that is, a family earning $22,000 a year more than a family on $38,000—would, at the end of the day, be better off only to the tune of $2,376. The response of Steve Maharey and Michael Cullen was that high marginal tax rates are always a product of such systems.

But there is an answer to that problem, and that answer is income splitting for two-parent families. All the examples given by John Key—and I have sent these figures to him and to Dr Cullen—focused on one-parent families. From my figures it is quite obvious that if we allowed families to split their income for tax purposes, we would solve that problem. If we consider the family on $60,000 a year, which John Key put out in his figures, and enable both partners to split their income on an equal basis, we would find they would be $5,346 a year better off than the family on $38,000. In other words, the gap between the two would double, simply by allowing income splitting.

Income splitting is an idea whose time has come. The Working for Families package assisted families on low incomes, through to those on middle incomes. The middle-income area is exactly where income splitting starts to make a difference, and that goes right on through to a family that earns $120,000 a year. Although Rodney Hide defined the problem with regard to the family on $100,000 a year that has six kids, he has not come up with an answer to that problem. But I am giving this House the answer today—that is, income splitting for families. That would make a difference, and a tremendous difference, to people right through from the middle-income families and on upwards. Therefore, it is an idea whose time has come. We would like to see that happen in the future.

It would be remiss of me not to mention some of the other ways that United Future differs from the Government in relation to the levels of taxation imposed on New Zealanders. We continue to believe that income tax brackets should be regularly adjusted for inflation. We did that in the Budget for the family support package; every time inflation goes up by 5 percent, we are to adjust the package. But the Government still refuses to do that for the income tax rate itself, and therefore continues to overtax New Zealanders—and to overtax them progressively more as each year goes by. The Government refuses to index the tax brackets for inflation. We also believe that the company tax rate should be lowered from 33 percent to 30 percent. That has nothing to do with anything other than the simple reality that it would lower the cost of capital and attract more capital into New Zealand companies, which are the engine room of the economy. That would enable us to grow, and to grow quickly. As is well known, United Future also believes that local body rates should be zero-rated for GST purposes.

Those are all affordable and just measures, and could be readily financed by, for example, a better mix of private and public provisions in the areas of health, education, and prisons. They could also be funded if the Government gave away its unduly profligate style of scattering taxpayers’ money in all directions—often, we are advised by the Auditor-General, without even a requirement for audited accounts to be provided. One cannot get a grant from the Lottery Grants Board without audited accounts, but one can get money handed out by this Government without audited accounts. That situation really needs to stop, and to stop soon.

I sum up by saying we cannot have a strong and prosperous nation without having strong and prosperous families. After all, a nation is no more than the sum total of its individual parts.

Hon PHIL GOFF (Minister of Foreign Affairs and Trade) : National was sliding in the polls even before Don Brash committed the most basic of all political errors: going to Australia last week to speak to a business audience and bagging his own country, by saying to that business audience that New Zealand was no better than any little Pacific Island State and was moving in the same direction as those States. If the Leader of the Opposition had an ounce of credibility he could have done real damage to his own country and to others’ willingness to invest in it. If there is one thing that New Zealanders as a nation cannot stand, it is a politician who bad-mouths his country overseas. This is not the first time that Don Brash has done that. In March of this year Don Brash was in Australia, telling the defence establishment that our country was not pulling its weight. This week I have come back from Afghanistan, where I saw more than 100 New Zealand soldiers working in the provincial reconstruction team in Bamian. I heard from other countries, and from the local people in that area, the record of what those soldiers were doing. I was proud to be a New Zealander—proud of what they were doing there; proud of what our combat forces were doing in Afghanistan—and I met those soldiers, as well. But what do we have? We have Don Brash bagging his country, and saying we are not pulling our weight. We have always pulled our weight as a country, and we are proud of it.

Don Brash has now been telling Australia and the world that we are an economic cot-case. An economic cot-case! In fact, this country has performed better than any other country in the OECD in recent years. The unemployment figure last week was 4 percent—the lowest it has been in 20 years. Australia has performed well, but its unemployment is at 5.6 percent. So the Australians knew that Don Brash was not giving an accurate picture of New Zealand, and they discounted him accordingly. They discounted him because he could not be relied upon. They discounted him because even the Australians do not like to see a politician bag his own country.

Does Don Brash not learn anything? Jenny Shipley and then Bill English did the same thing that he has done, and both of them were removed as party leader. I see John Key is smiling; he is already starting to count the numbers. All those Nats whom Nick Smith described as “treacherous”—his own colleagues—because they promised him, as the bagman for Bill English, that they would vote for Bill English and then they voted for Don Brash, are now wondering what they have done to themselves and their party. I make this prediction: Don Brash is plummeting in the polls—not just his party, but Don Brash—on the basis of the characteristics of the man and of his leadership. We will see a new leader of the National Party. It may be before the election or it may be after it, and I say to John Key that the new leader may be him, because it is hard to see anybody else sitting across in National’s ranks who could do the job.

Darren Hughes: What about Lindsay Tisch?

Hon PHIL GOFF: Well, Lindsay Tisch is a fine guy, but I am not sure whether he is after that position.

Patently what Don Brash said about New Zealand was not correct. When he described New Zealand as a small, failing Pacific State he cast doubt upon good governance in this country. But I refer the House to Transparency International, the international body that judges countries according to their governance and their lack of corruption. Every year, in recent years, this country has been in the top three countries in the world in terms of its open, transparent, honest system. Yet still Don Brash bags our country internationally, by saying we are a failing Pacific State. It is no wonder the Australians watched in wonder as that man set out to run down his own country. It reminds us of the “gone by lunchtime” comment, does it not? Don Brash said one thing to New Zealanders—no, National was making a very close study of the issue, and had made no decisions about nuclear power—whilst all along he was telling an American congressional team in private that the nuclear-free policy would be gone by lunchtime.

One cannot trust the man. One cannot trust the man in terms of his analysis of New Zealand and Australia in that speech. Don Brash said that this country had not done as well as Australia, and he blamed it on the Holidays Act. We will get 4 weeks’ holiday in about a year’s time if Labour is re-elected—but not if National is elected, because Don Brash has already promised working people that he will steal that from them. He said we were doing worse than Australia economically, because in a year’s time we are to get 4 weeks’ holidays. For God’s sake! Australia has had 4 weeks’ holiday for 30 years! Why are working conditions more attractive in Australia than in New Zealand? It is because New Zealand had dismal years of a former Reserve Bank Governor who was tight-fisted, and years of an ideologically driven National Government that would not give New Zealanders the conditions we were capable of earning for ourselves. Under this Government we have had economic growth, social progress, and a record number of people in apprenticeships and education. This country is going forward, and it knows it is going forward. That is why National is down in the polls. New Zealand First is sitting above the threshold, ACT has disappeared, and the other parties will do as they will do.

I say it is not good enough for Don Brash to blame ordinary working New Zealanders, just because New Zealand did not perform well in the 1990s. This Budget that we are celebrating in the third reading of the appropriation bill today provides for working families in a way that National never provided for them. Don Brash, when he was the Governor of the Reserve Bank, said he believed in tax cuts for the wealthy and nothing for low and middle income earners. That is what he said when he did not have a political axe to grind. Now he has tax cuts on the secret agenda that he will not reveal to the public, because he knows the public will not elect an ideological right-wing National Party into Government. But we know the agenda is there; we know the privatisation agenda is there. That is what Don Brash believes in and will deliver to this country if he ever has the chance to do so.

One thing the electorate has learned about the National Party is that it is quick to point out problems, but has no solutions. Six months ago Don Brash had novelty value: he looked new, he pointed out a problem, and he looked as though he might have some answers. Six months down the track, the electorate has seen National revealed as an empty vessel. It has no answers. National will not take the country anywhere; it has no vision. We saw the release of National’s law and order policy—what a wonderful policy that was! It had promises that were typical of the previous National Government, which did nothing for 9 years. That Government saw 90 percent of the country vote against National’s record in a referendum in 1999, and suddenly, now that National is safe in Opposition, it is brave and tough.

We have been tough. We have tougher bail laws than previously. We do not put people out on the street who, time and time again, have been shown to be unreliable and untrustworthy to be out on the street when they are facing charges. We have been tougher than we were previously in the sentencing and parole laws. The price we have paid for that is that prison numbers are tracking well above what was forecast. Four new prisons are being built, and that will not be enough. All that National can do is to say that Labour has been tough, but it will be even tougher. National says it will build seven more prisons on top of the four we are building, and will put another 4,000 people in them. It says it will have bail laws that will put thousands more people in prison, and then it wonders why it has got no lift from that policy. National has got no lift from that policy because the electorate in New Zealand recognised that National has no answers and no credibility.

This is a very good Budget. It will deliver strongly to working families, will take this country forward, and will create a better country economically and socially. For the first time New Zealanders are proud of where their country stands in the world and of the independent stance that we have taken. They will vote for continuity, calibre, and leadership. They will vote for the Labour Party to remain in Government next year.

JOHN KEY (National—Helensville) : That was another vein-popping performance from the Minister of Justice, the Hon. Phil Goff, who is persona non grata with everybody in New Zealand. That is why he has been in Afghanistan—because no one wants him. His own ministry does not want to talk to him. The ministry knows he let it down by sneaking out documents that he does not even believe in himself. When he was challenged to present them they were mysteriously destroyed. He is persona non grata with his own ministry. He is persona non grata with the good people of New Zealand, who are horrified because he supports sex with 12-year-old girls. Helen Clark said “It’s got so bad, Mr Goff, go off to Afghanistan for a couple of weeks, stay out of the limelight, stay out of the way, and hopefully our poll ratings will recover, because we cannot take it any more. We cannot take the pain. Come back and give a vein-popping performance. It will help you get up in the ranks.” Then one day he can have another barbecue and think about whom he will use to roll Helen Clark.

We saw a very, very interesting speech by the Hon. Michael Cullen, Minister of Finance. He came down to the House and gave a speech saying that things are just great in the rosy garden of the New Zealand economy. Things are just humming in the rosy garden of the New Zealand economy. He said that we are on a roll, we are smoking it, and we are doing even better than expected. That is very interesting. We are on such a roll that four out of five families get absolutely nothing out of this Budget. We are on such a roll that Treasury projects that the number of people on welfare will rise over the next 3 years. We are on such a roll that, despite the fact that the average family pays $3,000 more in tax since Labour came into office, families cannot have a tax cut. Those are the facts of life. We are on such a roll that we cannot even afford to help out those poor, hard-working families—most of which got absolutely zilch in the Budget. That is how much of a roll we are on.

I encourage the Minister of Finance, if he is feeling in such a generous mood about the state of the New Zealand economy and the likely income that it will produce, to come back down to the House and tell the good people of New Zealand that he has a magic bullet up his sleeve called a tax cut, for some people other than just the few thousand he singled out. He does not want to do that. I challenge him to come down and present a company tax rate that is the same as Australia’s, which is still above the OECD average of 29.3 percent. If we are on such a roll, we can afford to do those things for the business community and the people of New Zealand.

But the reality is that we are not actually on so much of a roll. Treasury has analysed this Budget and is telling us quite clearly that the projected economic growth rate for New Zealand will slow. It will slow more than Australia’s and the OECD average in the years ahead. That is because Treasury has taken some time to have a look at what the Labour Government has been doing. It has put to one side the spin doctors, of which there are so many on the ninth floor that it is a rather crowded environment, and looked at a sheet of paper to see what this Government has really produced for this economy.

What has the Government done to drive economic growth, for which it so loudly claims victory in the House this afternoon? It has raised the rate of personal taxation in New Zealand so that one in five New Zealanders now pays a top rate of taxation of 39c, not 33c; one in four secondary school teachers pays the top rate of taxation. That is what the Government has done in the area of tax. It has raised taxes so that an extra $1.5 billion will be paid this year just as a result of people moving into higher income tax brackets through fiscal drag.

Lindsay Tisch: And this is a caring Government.

JOHN KEY: This is a caring Government that is on such a roll, it has to deliver the good news to the people of New Zealand! Treasury has said: “It has failed on tax; What else has the Government done to promote growth?”. It is obviously very pro-growth, because it is rolling in the clover, so to speak. Treasury has turned to the labour market. What has happened in the labour market under this Labour Government? What we have seen is the ultimate cynical bribe—people can have 4 weeks’ holiday—we are on such a roll that we do not know what to do with ourselves—but, by the way, we cannot have it until 2006. Is there not an election coming up in 12 months’ time? That is right; and the Government will not tell people about the fact that when they have that extra week’s holiday, they will not get pay rises for the years ahead, because employers will not be able to afford it. So they will be paying for it themselves anyway, but the Government still says people should thank it for giving them something for nothing. Hello! That is a new form of “Winston Peters economics”, and even Winston Peters does not believe that one.

Then Treasury has moved away from labour markets, because it has seen a “D”. Even if this Government were doing the National Certificate of Educational Achievement for the Budget in Cambridge High School it would have to fail—and that would take a lot, from Cambridge High School!

So the Government has failed in tax and in the labour markets, and Treasury has moved to the area of compliance costs. We have seen more compliance costs heaped on small businesses and businesses around New Zealand that are failing, and struggling to keep up. Treasury has said that that is not good either, and has then looked to see what is happening in the energy sector for this Government that is on a roll with this Budget. Treasury has said, very interestingly, that the Government has to put up taxpayers’ funds to support the debt obligations of a State-owned enterprise because it cannot be sure that in 10 years’ time it will get enough gas. How will that help the Government and the taxpayer? It will not help them in the slightest because, when the gas runs out and the power goes out, there will not be anything there. But we need not worry, because the taxpayer will be paying for that. Why do we have to do that? Because we have a Government—

Hon Harry Duynhoven: When National was in Government it privatised railways.

JOHN KEY: Obviously, we have hit a nerve here. This is the Labour Government with energy policies that would not even stack up on Play School.

Why are we having to put taxpayers’ dollars up front? I will tell members why, in case they are wondering. The reasons are very simple. We have signed the Kyoto Protocol, so we cannot actually price carbon emission charges and, despite the fact we have a thousand years’ supply of coal in the ground, we cannot be sure that we will ever be able to use it. But we should not worry. We will export it to Indonesia, China, and other parts of Asia, and they can burn it because, somehow, it does not seem to affect the environment when it is being burnt in Asia or Eastern Europe, but it does affect things when it is burnt down here. That is a very interesting strategy, a very interesting strategy indeed. Then, we could have had the largest example of hydro generation for some time coming in—

Darren Hughes: How come this member gets 20 minutes?

JOHN KEY: There is the translucent member from Otaki. I whipped through Otaki the other day and, frankly, I would think of standing for that electorate if I did not have the seat of Helensville. It looked entirely winnable to me—very winnable indeed. I asked whether anyone had ever heard of Darren Hughes, and they answered: “Who? Who? I think he is still at school, Darren Hughes. He is that quite nice young bloke, but I don’t know what he knows about politics. I know he has done bits and bobs, and—oh, that’s right; he took Helen Clark to The Lord of the Rings—best night out she’s had in ages.” Anyway, I transgressed from the Budget just for a moment, and now to move back to the issue of—

The ASSISTANT SPEAKER (H V Ross Robertson): That would be good.

JOHN KEY:—hydroelectric dams and why we are having to put taxpayers’ dollars at risk—it is because we do not have an energy policy consistent with the Resource Management Act. That is why we are in 60th place out of 60 in the world competitiveness index.

Treasury looks at the list and says to itself: “Tax is a failure, labour market’s a failure, compliance costs are a failure, energy sector’s a failure, RMA’s a failure, so our future projections for economic growth in this country are grim. But don’t worry, because Michael Cullen is telling us that we are on a roll, and it’s all really good.” Then they ask Hon Dr Michael Cullen in the serene quietness of his seventh-floor office: “Sir, what have you done to help the economy of New Zealand?” He says: “Er—oh, that’s right, I inherited all those things from the 1980s and 1990s. I had a huge tail wind of a very low exchange rate and high commodity prices, and I just came along and did a few things to make a mess of it all.” I do not have much time to talk about the Budget, which is a great shame. But I can just say that every Labour member has got up and said what a great Budget it is. Well, if it is such a great Budget, why are we having to spend $21 million worth of taxpayer dollars to promote it?

Lindsay Tisch: Good question.

JOHN KEY: Yes, it is a very good question. What do I see? I see deer in the headlights and stunned mullets. There is not a whisper, not a murmur, out of members on the Labour benches. [Interruption] Oh, hello—we have woken them up. But, no, there is $21 million to promote a propaganda machine. Why would anyone want to promote it? That is a bit of a vexed question. Why would anyone want to promote something when four out of five people will get nothing out of it? There will be high effective marginal tax rates. The doozy came last week, because the Government got very upset when the Dominion Post on its front page pointed out that of those working families who were getting the accommodation supplement—lo and behold, 50 percent of them were not families. I wish I could have an extension of time, because it has been so much fun to point out the failures of this Budget and of this Government.

JIM PETERS (NZ First) : I rise on behalf of New Zealand First to speak to matters in the current Budget, notably in regard to education. The first issues I want to raise concerning the current year are those of student allowances, student loans, and the married student scheme. We are aware that there was a recent change in Government policy that allowed married students over the age of 25 to receive the student allowance. But the Budget, as from next year, links those students back to their parents’ incomes, and only those who are really eligible in that regard will be able to claim the student allowance. One of the issues we face in our community at the present time is that the assistance coming through is dramatically unfair. Those parents who are already subsidising education through their taxes—the education of the lucky students who can claim student allowances—will now, even if their own children are only barely over the threshold, have to provide for others as well.

In 1999 the present Government came to power with a promise that the student loan scheme would be changed—but the changes have been minimal. We have a situation today in 2004, when there is little but minor change in the Budget with regard to the student loan scheme. We all know that student tuition fees and student indebtedness have an impact on the courses that people are able to undertake, and affect the quality of students’ learning environment, their academic performance, and the choices for life they are able to make. Most of all, the increased burden of the student loan scheme means an inability for students in time to secure a home-loan mortgage. Bank managers admit that students are disadvantaged. Those who marry find that marriage is not an option out of the scheme, and those who bear children have to take time off in order to proceed. Academic standards and performance are under threat while there is this consistent issue of the student allowance.

In recent days we have had editorials, in the Dominion Post and in other newspapers, that bring back to the Government the fact that there is not adequate provision at present for student allowances and for student participation in education.

But the real issue I want to raise today is that of the National Certificate of Educational Achievement (NCEA), and the forecasted spending for that qualification for this year. Before us in recent days we have had the example of Cambridge High School, but I will forbear to speak strongly on matters that are not yet in the public domain with regard to NCEA. This national certificate has long been an issue. It was nurtured by Dr the Hon. Lockwood Smith, carried through by the Hon. Dr Nick Smith, and embraced wholeheartedly—and, I believe, without adequate care and time—by the present Minister of Education.

We have before us not just a Cambridge High School issue but an issue throughout the whole secondary school system. In respect of the education ministry’s forecast for spending this year, particularly with regard to the New Zealand Qualifications Authority, there are serious issues. One of the issues that has developed from Cambridge High School is misunderstanding as to how the National Certificate of Educational Achievement could be formulated. The school tried to amalgamate into one system—and for very desirable reasons, although I believe that those reasons will not be seen as worthy in the long term—unit standards, which were industry-developed under, and accredited by, the New Zealand Qualifications Authority, and achievement standards, which were a reformulation of what we formerly knew as School Certificate, Sixth Form Certificate, and bursary.

That amalgamation, developed by the present ministry in recent years with increasing quantities of statements, has not been sound, but at Cambridge High School the issue was: just what did happen there? Can I say in passing that Cambridge High School was a school that developed from having indifferent standards in 1992 into being an outstanding school, under an outstanding principal and an outstanding board. But without an understanding of NCEA as that qualification has developed, and without an understanding of the role of the New Zealand Qualifications Authority, something has been lacking according to recent comment and the more recent reports issued by various bodies.

I turn to the fact that at Avondale College, Brent Lewis—who used to teach in this district—talked about what this system is about. He said that schools have set up withdrawal systems for students to go away and do units, and have organised little subgroups in classes to do special credits. These activities are not unique to Cambridge High School; they are a logical consequence of the system. It is a system whereby one can earn six credits for bone carving in 2 days’ work, as against six credits for one quarter of a year 11 student’s total work in English for 2004. That result is an indication that this system, which has been thought to be at fault in Cambridge High School, is not just at fault there. It is a system that I, on behalf of New Zealand First, believe needs to be re-examined.

We believe in the NCEA as a system that would seem in time, with pastoral help from the Ministry of Education and the New Zealand Qualifications Authority with regard to the workload and to teachers, to be a worthy successor to what we knew as School Certificate, Sixth Form Certificate, and the bursary exam. In fact, at this time in 2004, the Cambridge High School issue seems to indicate very seriously to the Minister and his officials that issues need to be re-examined. Namely, the issue is whether NCEA, an amalgamation of achievement standards and unit standards, is a system that has real validity for the future. At present, I believe that the jury is long out on whether it has.

I understand the reasons this was done, and I want to quickly traverse the fact that the industry training organisations set up under the New Zealand Qualifications Authority did a very worthy job all through the 1990s of developing work-worthy credits for their industries. One of the issues that has developed under NCEA is that the huge body of work done by the industry training organisations all through the 1990s is now at risk.

The last thing I want to say about this is, in regard to Cambridge High School or any other college—and I believe that others will be found somehow wanting under the recent developments, and I will come back to that in a second with regard to the New Zealand Qualifications Authority—is that unit standards were a worthy achievement in regard to the various trades industries that had developed them. I know of schools where, in regard to agriculture, carpentry, industrial design, and hospitality, they were, and are still today, the best method for students to be able to achieve something worthwhile and creditable.

By the way, although questions were asked about this matter all through the 1990s, the answers were not forthcoming. The forced amalgamation into an achievement standard design has not been one that is worthy. New Zealand First believes that the Minister must address this issue now. The Minister must not take into account the recent comments being made by the New Zealand Qualifications Authority, which is attempting to go from not doing its job in regard to monitoring and analysing what is happening in regard to accreditation, but somehow in recent statements, including one made last Monday, it is stepping over the boundary into trying to tell schools how to teach the curriculum in the classroom.

The authority’s task was to analyse and be quite certain on behalf of the taxpayer and, not least, on behalf of parents and children, that the system they supported was creditable. The Cambridge High School issue has shown, not that Cambridge High School was at fault, but that the system was at fault, and the Minister needs to address the matter in the education budget urgently.

Hon ANNETTE KING (Minister of Health) : Is this not a debate of contrasts? On the one hand we have the gloom and doom merchants, who all day have been predicting that the end is nigh. I saw an extremely good cartoon in the Saturday New Zealand Herald; it had Don Brash walking around with a sign saying “The end is nigh.” There has been a repeat of that in the House today: one would think there is nothing good going on in New Zealand, there are no good people, there are no good policies, there is no hope, and there is nothing happening, if one were to listen to the National Party and the ACT party. On the other hand there is a Government that has policies and purpose. We are here today defending our policies and telling people what we are doing for New Zealand and where we are heading.

I want to contrast that with the approach of Don Brash of the Opposition. He said New Zealand is racing towards oblivion. He went to Australia, to an Australian audience, to say that. I think there is a word for that; it means something like a lack of internal fortitude. But the only person who is racing to oblivion is Don Brash himself. Let us look at the latest polls, which say it all. I will take just one—the National Business Review poll. It had Labour on 42.3 percent, up five points, and National on 37.1 percent, down three points. That is an eight-point change. I think Mark Sainsbury from TVNZ got it right when he said: “National is heading in the wrong direction this month. In some ways, he has run out of steam. Don’t forget, Ōrewa gave him a fantastic platform, and we have seen the numbers gradually creeping down since then.” Don Brash does not have the same platform. Unless a politician has an issue to keep him or her in the news, that politician will just drift away from the public’s mind. I agree with Mark Sainsbury, because Don Brash is drifting away, all right. Some of his caucus are saying he not only has drifted away but has lost the plot—completely lost the plot.

One has to ask oneself why he went to Australia to bag New Zealand and New Zealanders. Why did he go to Australia to slag off New Zealand’s efforts and New Zealand families? Why did he go to Australia to suck up to Australian business people? Why did he make a speech talking New Zealand down and, by comparison, talking Australia up? Was it disloyalty, was it desperation, or was it just plain dopey? No, I think it was probably a combination of the whole three. Don Brash asked in his speech in this House today how more holidays, more regulation, and more taxation can lead to economic growth. Well, the irony of that question is that he went to Australia and praised what was being done in Australia. He said: “We want to be more like Australia. They have more holidays, more regulation, and more taxation.” I do not know where he gets his facts and figures from. There seems to be a little gap somewhere in his memory, or in the way that it works. I believe that he has lost the plot.

I tell New Zealanders that he also has double standards, because he wants their holiday. He wants the extra holiday that this Government has promised to New Zealanders—1 week’s extra holiday. Four weeks’ holiday is something that Australia has had for 30 years, and that we will have after the next election, with the return of a Labour-led Government. Don Brash wants to take away that extra week. He does not want New Zealanders to have 4 weeks’ holiday. He wants to take it from New Zealanders, and New Zealanders would not get 4 weeks’ holiday under a Brash Government. But the irony and double standard of that is Don Brash himself had 4 weeks’ holiday when he was Governor of the Reserve Bank. Is there not a word for that? Is it not a word that starts with a big “h”? I mean, he can earn half a million dollars as Governor of the Reserve Bank and get 4 weeks’ holiday, but he does not want to let good, hard-working New Zealanders have 4 weeks’ holiday. No, he says: “When we become the Government, they will not get that holiday. Mind you, I will have it if I can.” Certainly, I am sure he will make sure that he can have 4 weeks’ holiday, but not our good, hard-working New Zealanders.

Darren Hughes: He only works 2 days a week in this job.

Hon ANNETTE KING: If we add those 2 days a week, his holidays, and his pay, we find what he would deny New Zealanders. Well, I think John Armstrong got it right when he said: “Don Brash’s assertion that New Zealand risks becoming ‘just another Pacific Island state’ not only borders on the ridiculous, but was silly politics to boot.” He put out a statement that I thought was really, really good. I love the headline: “Bumbling Brash loses the plot”—and he is absolutely right. What we really wanted today from “Bumbling Brash”, who has lost the plot, was one policy—just a little policy, just a wee policy, just a wee glimpse of a policy—

Hon Harry Duynhoven: Just a sentence or two.

Hon ANNETTE KING: —or just a sentence or two of a policy. What did we get? We did not get a policy; we got the “Brash bumbling” versus the “Key confusion”. We have no idea what the National Party stands for or what it would do if it got into Government, other than take away New Zealanders’ holiday, or sell off the family silver, or sharpen the pencil to make cuts to the assistance that people receive. Those are the policies that the National Party has. Apart from them, it has no policy, and those members could not give us a policy.

I wondered what Dr Brash knew about health. This is a very important part of social policy. Well, I now realise that he knows very little about health, at all. He pretended he knew a lot. He pretended that he was very knowledgable about health. He talked about primary health organisations in his now infamous Ōrewa speech. He said that primary health organisations were an example of race-based policy. He said that very knowledgably, as if he knew all about health and primary health organisations. But when he was approached by a reporter from New Zealand Doctor, he said he did not know what a primary health organisation was. He did not have a clue what a primary health organisation was. The editor of the New Zealand Doctor wrote that she was astounded and astonished at his ignorance. Frankly, I am not at all astonished at the ignorance of Don Brash. As per the quote from The Castle, Don Brash is not an ideas man. He is not one of our ideas men. He can certainly sharpen pencils, and he can certainly cut, slash, and burn, but he is not an ideas man.

I want to tell the House what New Zealanders think about this Budget in terms of health, and I could not do better than to quote a doctor from Auckland who sent me this letter. He wrote: “Dear Mrs King, congratulations on your efforts to fund primary health care. Since you introduced the increased funding for 65-year-olds and over”—as members know, that came out in this Budget—“it has been a great relief to me to be able to provide more affordable health care to my elderly patients. Clearly, you are making general practice more financially viable. You have done something very positive to reverse the dissatisfaction and low morale in primary health care.”

Darren Hughes: Signed by Dr Don Brash?

Hon ANNETTE KING: No, it was signed by a doctor who makes people well, not one who makes people sick. I could not do better than to quote from a person who is at the front line of the health system, and who can see what the Government has done in this Budget to improve New Zealanders’ health. We have now committed almost $10 billion per year to the New Zealand health system, to make it the best we can within the constraints of our economy and our resources. We have a very fine health system. Members should just ask Mr Donnelly, who is sitting there with his leg in plaster after playing a courageous game of rugby on behalf of the parliamentary team. He received from the New Zealand health system the best treatment that he could possibly get—starting with the Minister of Health telling him he had a broken bone. He got the diagnosis right from the top, and he got the treatment, and it was provided for in this extremely good Budget.

The ASSISTANT SPEAKER (H V Ross Robertson): Just before I call the next speaker, I tell the House that the Green Party and the Progressive Party will share this 10-minute slot. For the benefit of members, I will ring the bell at 4 minutes, with 1 minute remaining.

ROD DONALD (Co-Leader—Green) : I thank my colleague from the Progressives; it is good to work together.

It has often been said that a week is a long time in politics. If that is the case, then the 13 weeks since Dr Cullen delivered his Budget are a political lifetime. They also mark the end of an era—the end of cheap oil. In my lifetime there have been three oil shocks: 1974, 1979, and right now. The first two were supply-side driven. As my co-leader, Jeanette Fitzsimons, has said, today’s shock is a combination of supply-side problems in the Middle East, Venezuela, and Russia, and demand-side problems—with China’s demand, in particular, having grown 40 percent in the first 7 months of this year compared with the same period last year.

However, the big difference between now and then is that the current shock is unlikely to be short-lived, and the need for major structural change, rather than short-term management adjustments, will be inevitable. Highly respected economists such as Lester Brown, the author of Plan B: Rescuing a Planet Under Stress and a Civilisation in Trouble, have been predicting for years that world oil production will soon peak then steadily decline as accessible reserves of that finite fuel are depleted, and that that depletion will inevitably lead to rising prices as competition increases for a shrinking resource.

It therefore came as a shock to me that the two Treasury economists who briefed Jeanette Fitzsimons and me about how Treasury calculates its oil price forecasts had never heard of peak oil, and did not seem to understand that, unlike canola or cotton, oil is a finite, non-renewable resource. Instead, the economists said that they based their price assumptions on historical events and on what the futures market predicts the price will be. They admitted that to futures traders “long term” is a mere 2 to 5 years. That will explain why, in the one page Dr Cullen devoted to oil prices in his Budget on 27 May, he predicted that spot prices would remain at US$32 per barrel over the middle of this year before easing back to “our assumed ‘equilibrium’ level” of US$19 per barrel. The briefing note did admit that since the central forecast was finalised, the spot price had increased to US$37 per barrel—some 16 percent above Treasury’s assumption—and that that was due to supply concerns in the Middle East and low inventory levels in the USA. There was no mention of demand growth in China, let alone an acknowledgment that world demand is close to exceeding world supply, as Jeanette Fitzsimons outlined in her speech.

Today the world price stands at $US46 per barrel. What will Treasury’s new equilibrium be? Will it be $30 per barrel? Dr Cullen’s answers to questions in question time today displayed a woeful lack of understanding of the oil predicament we face. Clearly, he had not read Vernon Small’s article in the Dominion Post last week. I acknowledge that he did admit, in response to my questions in the Finance and Expenditure Committee on 17 June, that petrol will never be cheap again, but today he did not seem to understand the ramifications of the end of cheap oil for our economy, our society, and our environment. There seems to be an ostrich-like mentality that somehow, some way, we will discover new reserves or new technology that will enable us to continue along the present unsustainable path. One would think that the impending demise of Māui Gas would be enough of a wake-up call, but, no, the Government’s response is a “drill and hope” strategy. Yes, the Government is doing good things by issuing carbon credits to foster new wind energy projects, and, yes, it has bought back the rail network in recognition that it is vital strategic infrastructure, but it is also underwriting its own State-owned enterprise Genesis Power to squander our precious gas reserves—if we find any—on electricity generation.

New Zealand has a once-in-a-lifetime opportunity to face up to the reality of peak oil, to radically rethink how we run our economy, and to use the window of opportunity we have to achieve sustainability and self-reliance. The Green Party urges the Government to take this issue seriously and to work with us to ensure that our kids have a future that is worth living. It is ironic that Dr Cullen has put in place a superannuation fund based on 50-year projections of an ageing population, when at the same time his officials have yet to wake up to the even larger threat that oil depletion poses to our immediate future. Now is the time to do a whole range of things: to install solar water heaters in every State house and Government building; to offer solar and insulation mortgages to private homeowners and landlords; to ensure that every motorway investment is reassessed in the light of permanently rising oil prices, and to allocate the money to public transport; to adopt an import substitution approach to trade, rather than increase dependence on fossil-fuelled export growth; and, in relation to tourism, to encourage more Kiwis to see New Zealand first, and to invite the increasing number of visitors to stay longer and fully appreciate not just our clean, green image but the self-reliant and sustainable country we have the capacity to become.

Hon MATT ROBSON (Deputy Leader—Progressive) : The progressive Government stands for growth, jobs, and families, and that is what this Budget and the estimates we are discussing symbolise. This bill gives form to our progressive Government’s Budget for the financial year just started. Progressive Governments invest in projects to promote economic growth and the further development of our industry sectors and our regions. Progressive Governments are the ones that deliver practical policies that provide financial incentives to working families, to working parents, to stay inside the workforce and outside the welfare system. We have introduced a four-letter word back into our society, and that is the word “plan”. With economic development, educational progress, and changes in the health system, we are moving towards a more rational society. A progressive Government is a Government that acts to protect the most vulnerable and alienated members of our community, because it is those sectors that always suffer the highest toll from cannabis abuse, alcohol abuse, tobacco abuse, and other substance abuse. Our progressive Government has overseen the most impressive 5-year spurt in growth and in jobs ever recorded in this nation’s history.

Our ambition is to keep on getting on with the job in the election in 13 months’ time. Only one left-wing Government in the history of New Zealand has ever won three general elections, and that was the 1935-49 Savage, and then Fraser, Government. New Zealand’s recent adoption of the more representative and democratic MMP system has changed the way Governments are elected. In the countdown to September 2005, non - Labour Party voters will have an awesome responsibility. That responsibility is either to see that this progress continues, or to turn it over to the reactionary, atavistic parties that exist on the opposite side of this House. Non - Labour voters will need to look carefully at all other parties, and choose the best bet to ensure the next Government remains forward-looking, remains pro-jobs and pro-growth, and will not let down the most vulnerable in our society by moving away from our strong, multi-pronged approach in the battle against substance abuse.

We all know that over a period of 30 years, starting in the mid-1970s, New Zealanders’ average standard of living fell dramatically compared with living standards in Australia. Under the slash-and-burn policies of the past, our living standards dropped to be around 30 percent below Australians’ living standards. According to the OECD, this progressive Government, with legislation like that before this House, has turned all of that round. The economy has experienced stronger growth in the 5 years of this Government than Australia has. That is the exact opposite of what happened when National ruled New Zealand, and Don Brash was the central bank governor, when Australia motored ahead of us. According to the OECD, progressive regional industry and skills-investing programmes, and more intelligent management of monetary and fiscal policy, ensured that New Zealand’s per capita growth domestic product increased between 1999 and 2003 by more than in the previous 5 calendar years of 1994 to 1998.

New Zealand needs a third-term Labour-Progressive Government next year. The Labour-Progressive Government is investing 27.7 percent of our total Budget in social welfare. That is a 30-year low because so many people are now in jobs, training, or education. Welfare spending under the last National Government was significantly higher each and every year of its rule, reaching as high as 38.6 percent of Government spending. This Sunday the Progressive Party continues with its candidate selections for the September 2004 elections, with the selection of the first four electorate candidates in Auckland. We will be campaigning for the party vote as the only party that has a 6-year proven track record inside Government of promoting growth, jobs, and skills, and of delivering policies that help communities fight off the ill-effects of substance abuse. We will be campaigning for another 3 years of the type of forward-looking policies and programmes that are liberally represented in the 2004-05 Budget before this House.

Those are the economic and social achievements. I have one word, though, for other colleagues in this House, including my Labour colleagues: we have to look at our moral responsibilities as well. I would ask in this period that we look again at the case of Ahmed Zaoui, overturn his unjust imprisonment, and remove that stain from the Labour-Progressive Government. Similarly, I ask that we look at withdrawing the Identity (Citizenship and Travel Documents) Bill, which is an insult to our migrant communities, and places a dangerous power in the hands of the Security Intelligence Service to recommend that the passports and travel documents of New Zealanders be withdrawn because of its opinion that we are security risks. I ask that we look carefully at our moral responsibility, as well as our economic and social progress under a very good Government.

Hon JIM SUTTON (Minister of Agriculture) : I want to start by observing that we no longer have a National Party agriculture spokesperson on the front bench. This must be the biggest betrayal of its rural and provincial heritage that this party has ever been responsible for. In fact, when I came into the House this afternoon, the only Opposition spokespeople on the front bench were Craig McNair of New Zealand First and Rod Donald of the Greens. They were the only people who were looking after the interests of the Opposition supporters out there in the countryside—the traditional agricultural right-wing voting people out there in the heartland. Who did they have looking after them this afternoon? They had Craig McNair from New Zealand First and Rod Donald from the Greens. But then Brian Donnelly came into the House, and things looked a bit better. He is hobbling along on his crutches. He has been playing football—golden oldies—although I would have said not-so-golden, but brave. My colleague generously described his game as brave, and I suppose it was.

He ought to examine himself in the mirror in the morning because when he went off to have his football injuries medically treated he was probably depriving a New Zealand pensioner of his or her opportunity to get a new hip. That pensioner has probably been waiting since 1992 for that hip, and now we find that Mr Donnelly is getting new studs put in his feet so he can resume his football. However, as my colleague did, I do give him credit for his bravery. A man of his age should not be playing football. He should not be asking so much—

Darren Hughes: That’s what Mrs Donnelly said.

Hon JIM SUTTON: Well, we should not be asking so much of him. Seriously, it is a disappointment that the National Party no longer rates agriculture as a front-bench portfolio. It just shows the contempt that National has for heartland New Zealand. What do National members believe in? We can see what the National Party’s election strategy is, by whom it puts on its front bench. It has a spokesperson for law and order. It figured that New Zealanders do not like criminals, so the front-bench members will make their speeches against criminals. National’s spokesperson on race relations has been promoted to being deputy leader. Usually that is a good indication of what it will fight the election on. National has given its big speech on race relations. It has tapped the full extent of racial resentment in New Zealand. It went up in the polls, it is already over the hump, and it is coming back down again. It is now behind in all the main polls. All four of the main polls show National is down and falling.

Its spokesperson on beneficiaries is on the front bench. It is campaigning against beneficiaries and tapping the deep spring of resentment about beneficiaries amongst taxpayers. National is doing its best to whip up a deep spring of resentment against beneficiaries—

Darren Hughes: It’s not working.

Hon JIM SUTTON: It is not working very well. But one thing we can say for beneficiaries is that they do vote and they will not forget the National Party’s betrayal.

The other group that does not yet vote is immigrants. The National Party is exploiting the deep resentment of some New Zealanders against immigrants. But National members have not done their sums. They have not calculated that with unemployment down to record-low levels of 4 percent and probably still falling, the number of people who blame immigrants for taking their jobs is down to almost none. In fact, there is some doubt about whether unemployed people these days would vote against immigration. They might recognise that there is a skills shortage that we can fill in the short term by bringing in more immigrants, and there are plenty of immigrants who want to come to New Zealand because, despite the gloom, doom, and the badmouthing of New Zealand by the leader of the National Party, New Zealand is still recognised as perhaps the best place in the world to live and to bring up kids.

Lots of people will come back from their travels to the Olympic Games and elsewhere, after enjoying their new-found prosperity by seeing the sights of the world, and say: “Well, it is pretty good over there, going to the Olympic Games and staying in flash hotels, but it is good to be home because New Zealand is the best place in the world to be living.” This has been reinforced by the recent situation and outlook published by the Ministry of Agriculture and Forestry for New Zealand agriculture and forestry. It points out that for those of us who still retain a deep interest and abiding love for the primary industries of New Zealand, things are looking even better and brighter after the exciting results of the World Trade Organization meeting in Geneva earlier this month.

For the first time ever, 147 countries agreed that they will negotiate an end-date for all export subsidies—those pernicious interventions that drive down prices and keep unsubsidised farmers’ incomes down all around the world, developing-country farmers, and developing-country economies; all are kept down by those pernicious export subsidies that destroy those developing-country markets and third-country markets.

This is a great day. We can now look forward to when those export subsidies are eliminated. New Zealand can expect to see a substantial increase in the value of our agricultural exports over the next 3 years, along with a slowly depreciating dollar. That is not me saying that; it is the Ministry of Agriculture and Forestry in its situation and outlook for New Zealand agriculture and forestry, and it is not biased. It points out that the value of pastoral agriculture, horticulture, and forestry exports is expected to increase by 20 percent to over $20 billion a year over the next 3 years.

The largest contributor to this will be dairy—the star performer—up 25 percent to $7.6 billion due to higher volumes and prices. Forestry is also up 41 percent to $3.89 billion—largely due to increased lumber volumes and prices. Wool export value is projected to increase by 4 percent due to higher prices, while horticultural export value is projected to rise by around 30 percent in 3 years, mainly driven by a 300 percent increase in wine volume being exported.

This Government understands very well the importance of primary industry to the New Zealand economy. We understand extremely well the value and importance of rural communities to our society. What was delivered in the Budget for education, health, and families could not have happened without economic success, and much of that economic success started on our farms and in our forests out there in rural New Zealand. They still provide 60 percent of this country’s export income, and it is absolutely essential that we keep them growing and thriving. This Government is doing what it takes to do that.

Biosecurity funding is up another $46 million over the next 4 years, making a funding increase in biosecurity baseline of 57 percent since the Labour-led Government was elected in November 1999. It is still not enough, but it is also a measure of the complete inadequacy of the previous National Government when it came to protecting New Zealand from exotic bugs and diseases.

This is a good-news Budget. This is a Government on a roll. We look forward to the next general election—we say: “Bring them on!”

Hon BILL ENGLISH (National—Clutha-Southland) : That Minister should talk to a few farmers if he wants to find out whether they respect his Government’s view of farmers. He will get a strong, clear message. His involvement with the agriculture portfolio consists of waving out of the aeroplane window as he flies over on the way to somewhere else. He showed his regard for rural communities by overseeing the closure of just about every rural school in South Canterbury except for one that happened to have as a chairman someone who used to be the Green Party candidate. Jim Sutton broke his back for the Green Party to keep its rural school open, and closes the rest. [Interruption] The Minister ought to take it seriously. He closed Watlington Intermediate down. It had 500 pupils, and was a very successful school. The classrooms were full. That is why 1,500 people turned up to a public meeting in his electorate, and that is why he will not win that seat in the next election. But he has got some padded-out position high on the Labour list—a man who is now almost completely divorced from New Zealand politics, and who will never reconnect.

If members want a little indication of how this Government works, often these things appear in the small stories as much as the large ones. Mr Mallard boasted in the Budget about everything he had done for at-risk children. He appended to his press release a list of 42 programmes. I asked him: “Give me the names of those 42 programmes, and what money is being spent on them, and what money the Budget plans to spend on them, since it was on a Budget document.” I got the answer to that question today. The list of 42 programmes comes from policy work done in 2001. It is nothing to do with the current Budget, at all. Not only that, but the Government gave an honest answer to a parliamentary question, and that is very unusual. The Government said: “Here are numbers, the amount of money spent on it, but they don’t mean anything.”

It is just a small incident—a list of 42 programmes put out for at-risk children in education. If members read the Minister’s press release they would have thought that that was what was being funded by this Budget and that the Minister was doing a whole lot of stuff for at-risk children, but he was not. It was a policy stocktake that was 3 years old with numbers that meant nothing. So many people who have had goodwill towards this Government in education are gradually finding out that they have been sucked in by that goodwill.

We used to talk about standards in schools, and National certainly still does. However, I want to raise the issue of standards in a bureaucracy—standards of integrity, standards of professionalism, and standards of good public policy. Yesterday the report of the New Zealand Qualifications Authority into Cambridge High School was released. The chief executive of the New Zealand Qualifications Authority went to great trouble to say that it was only one room at one school where the credit cramming was going on—that is, kids getting credits when they really did not do any work for them.

The New Zealand Qualifications Authority has been in that school for the last couple of years and apparently it never saw any of this. The credit-recovery room at Cambridge High School has been going for over 2 years. I asked Trevor Mallard at the select committee whether the New Zealand Qualifications Authority was monitoring the New Zealand National Certificate of Educational Achievement, and he said that it was. I asked him whether the subjects were moderated, and he said: “Every subject, every year, in every school.”—apparently, except every subject last year and this year in one school! Who believes that? Nobody believes that. The official educational agencies are on a mission of untruth about the National Certificate of Educational Achievement, and the Minister is leading it. He does not have a clue whether practices like that are happening in other schools. Does it matter? To him, it does not, and to this Parliament it probably does not, but for thousands of students earning life-changing qualifications at the young age of 15 and 16 when they depend on us to ensure that qualification means something, then this scandal does mean a lot.

I can assure the Minister that similar practices are going on in other schools. Cambridge High School made the mistake of putting it in one room because it is a school that had a small enough number of kids that they fitted in one room and it called it the credit-recovery room, which sounds like an arm of a debt-collection agency, and it got the book thrown at it, and so it should. But the public agencies have let those students down, as they are letting down thousands of other students. The New Zealand Qualifications Authority was in that school, time after time, for 2 years. The Cambridge High School issue came to the notice of the public only because of the dreaded media—television and magazine reporters who investigated and put those matters into the public arena.

That in itself is a scandal. The public agencies are so ideologically committed to this qualification that they will not admit any fault. As the chief executive said: “One room in one school.” I tell the Minister that if it turns out it is not just one room in one school, but many rooms in many schools, then that chief executive should lose her job.

It is no better in the tertiary sector. In fact, I would say it is worse. We have seen, through questions in the House here, and extensive publicity, a tale of low-level corruption and unprofessionalism, a lack of ethical behaviour, and weak leadership, in our tertiary sector. Has this cost us anything? Well, again, as members will know, it does not matter too much today, and it might not matter too much in this House. But at a time when our economy is crying out for skilled people, when thousands of at-risk young people have been dumped in the Correspondence School out of our mainstream school system, and when we have desperate levels of low achievement among our young children, this Government has been hosing away money through its mates in the polytechs and other agencies, and is unwilling to do anything about it.

We have much higher priorities. I do not have anything against people getting some adult education, going to night schools, learning how to paint, learning another language, or learning one’s own language—as many of them have been. Those are all good things on their own. But they become very bad things when paid professionals of the State ruthlessly exploit the weak leadership of this Government in tertiary education.

Steve Maharey, 4 or 5 years ago, laid out his vision for tertiary education, and many people agreed with it, including some of my own party—quite unwisely, I might say, and I told them that at the time. He said he wanted to steer the system to make high-value, strategic choices in the national interest. Well, when a Labour politician says “the national interest” one knows he or she is getting mixed up. What has happened is exactly the opposite of what he said. Instead of the money being channelled into what he said mattered—research and high skills for the knowledge economy—it has all ended up, to the tune of hundreds of millions of dollars, on low-value, non-strategic courses that no Government chose. That is really the core of it. By his own definition, Steve Maharey has utterly failed. He laid out what the policy would do. He made the choices, apparently, and the money—$1 billion extra, actually, on tertiary education, during the term of this Government—has gone on the lowest-value courses that one could imagine. That has also been a product of the Minister’s failure, and failure in the educational bureaucracy, the Tertiary Education Commission. This Budget commits $45 million to that organisation, and it is totally wasted; in fact; it is destructive.

The ASSISTANT SPEAKER (H V Ross Robertson): For the benefit of members, I inform them that the Independent member and the member for the Māori Party have decided to share their 10-minute slot. I will ring the bell with 1 minute remaining.

DONNA AWATERE HUATA (Independent) : If any evidence was needed that this Minister of Education has no idea what he is doing, then it has to be the gobsmacking events that have unfolded at Cambridge High School. The report has come out, and for a whitewash it is brilliant. The report stated that there was no formal policy, rationale, or goals, that there was no programme of learning, and that no trained teacher was available. It stated that there was no formal process for identifying students for achievement recovery, and that quality assurance of the assessment was negligible.

How many times have we been in this House and heard that Minister of Education defend the New Zealand Qualifications Authority, defend himself, defend all the abominations that have happened with the National Certificate of Educational Achievement (NCEA), and deny that any of these things were coming to pass? Anyone could have predicted that the events that have unfolded at Cambridge High School would have unfolded given that we have had no assurances, in reality, that it had that moderation system set up. Anyone would think that if any school had a 100 percent pass rate, given the normal bell curve of intelligence and of achievement that one will find in any school, someone would be alerted that something was going wrong in a particular school. But no.

Who was the very first person to roll up to Cambridge High School on hearing that it had a 100 percent pass rate? It was none other than the Minister of Education himself. What was he thinking, and what was the New Zealand Qualifications Authority doing for the 2 years that it was crawling all over Cambridge High School, not noticing that there were, as it says, no formal policy, rationale, or goals, and that there was no programme of learning? What was the authority thinking? What was it looking for if it could not identify the kinds of unusual and extreme credit-cramming processes that were in place at Cambridge High School? Who has defended the whole NCEA system ever since the Minister forced New Zealand students to be guinea pigs in an unprecedented untested exam system that has been rejected by everyone overseas—a system that we have had to put up with, year in and year out, for the past 3 to 4 years?

When it was pointed out in 2000 that moderation, as the Minister had designed it, would not work, who was it who denied it categorically? It was the Minister of Education himself. Who, when it was pointed out to him that the NCEA would dumb down education, denied it categorically? When it was pointed out to him, on not one but several occasions by several speakers in this House, that both teachers and students would be tempted to cheat under the moderation system as it had been designed, who was it who denied it categorically? It was the Minister of Education himself. So I find it quite amazing when I hear the Hon Bill English comment about NCEA—because I was listening for the magic words from that former leader of the National Party. The magic words to me were this: NCEA will be scrapped by the National Party. Those are the magic words that I and thousands of other parents want to hear. We want to hear that the NCEA will be thrown into the dustbin where all stupid policies that cut down our tall poppies should be thrown. They should be dumped in that dustbin as soon as possible. Where are those magic words? What is the National Party going to do about it? The people of New Zealand must be thinking that Labour will do nothing about it, obviously, but what is National going to do about it? Those magic words were somehow missing from the Hon Bill English’s speech. Given the words that Bill English has spoken today, I ask where the National Party was when my National Certificate of Educational Achievement Moratorium Bill came out in 2002. Where was it?

Katherine Rich: It was those people.

DONNA AWATERE HUATA: No, no. Never mind those people, I say to Katherine Rich. It was the National Party and New Zealand First that voted against the only opportunity that this Parliament had to stop level 3 from being implemented. It was the only opportunity of stopping our gold-plated bursary exam from being scrapped. Where were National and New Zealand First? They were nowhere to be found. Those members have a blinking cheek to stand up in this House, as members of both parties have today, and accuse Labour of not doing a good job. All I want to say to Ms Rich is that National members had an opportunity to do something about it in 2002, and they did nothing. The NCEA should be scrapped as soon as possible.

TARIANA TURIA (Leader—Māori Party) : I want to address the estimates of appropriations for Vote Treaty Negotiations, and my comments will relate to two specific areas of concern: the way in which the concept of settlements is grouped under two major outcomes based on deficit analysis, and the vexed question of quantity—are we being short-changed again?

As all in this House are aware, the Treaty of Waitangi is the foundation document for our nation. At its very heart the treaty represents the basis of a relationship between peoples—a relationship of goodwill—that anticipated promise for our future. I ask how much goodwill can be retained in a relationship in which the key purposes of it are to reduce crime and to ensure that peoples’ interactions are underpinned by the rule of law. The major outcomes that the Minister in charge of Treaty of Waitangi Negotiations has agreed to for Vote Treaty Negotiations, the vote that represents the constitutional basis of this nation, are safer communities in which there is reduced crime, youth offending, offending by Māori, violence, organised crime, theft of and from cars, burglary, family violence, and serious traffic offending. In other words, if we enact the Treaty of Waitangi claims settlement process, we will reduce all those negative outcomes of crime, offending, and violence. What does that say about the Crown’s view of the parties involved in that relationship? The other major outcome agreed by the Minister is a fairer, more credible, and more effective justice system where there is improved delivery of court services; improved public confidence in the police, judiciary, and other institutions; improved laws; and, finally, improved relationships between the Crown and Māori.

What a maze of bureaucratic waffle! How can treaty negotiations reduce theft of and from cars, prevent burglaries, and improve confidence in the police? I am sure that the concept of theft as applied to land would be one that groups would understand far better than any of those other outcomes. The recent claimant group that signed, Taranaki ki Whanganui a Tara, no doubt also considered that the land dealings meted out by the New Zealand Company were akin to home invasion. So treaty settlements will reduce every possible form of crime other than the real crime, wherein our lands, language, and culture were taken away and another was imposed upon us—the crime of being dispossessed of our sovereignty, of being stripped of our identity and our resource base. Our tupuna never ceded their sovereignty. It was taken from them at the point of a gun and by the doctrines of law. It is inconceivable that our tupuna would have given an unknown foreign power the right to rule over them and make laws against them, and to steal their land. It is an impossibility and beyond the powers of any rangatira to do that, both then and now. So when our people learn that the desired outcomes of treaty negotiations will serve to uphold the rule of law, no wonder there is so much cynicism about this Government.

The other key area in the 2004-05 financial year that I want to pick up on is the massive increase of $1.29 million for increased negotiation activity! That is a crime. We want more settlements but also more money—not to be short-changed again. If tangata whenua enjoyed proper protection of their property rights, settlements would be worth considerably more than the meagre pickings calculated in these appropriations. Our people should actually be entitled to legal aid, as are others, particularly those involved in criminal offending. Perhaps the outcome that we could have accepted in Vote Treaty Negotiations was an outcome in which tangata whenua are recognised for the contribution they have made, and continue to make, to this nation; an outcome in which the quality of the relationship between the Crown and our people is actually a meaningful one based on mutual priorities, not just propping up Crown infrastructure; an outcome that would actually demonstrate that treaty settlements are about acknowledging the vital contribution our people have made to all aspects of the social, cultural, economic, and political life of this great country of ours. That is the sort of outcome we can all sign up to.

Hon PETE HODGSON (Minister of Energy) : Boy, am I proud to be a member of this Government! Boy, am I pleased to be part of a Government that decided in the last Budget to increase funding for research, science, and technology by the greatest amount ever! More money than ever was appropriated in the last Budget for science—an increase of more than 40 percent over the past 5 years.

Rodney Hide: All wasted.

Hon PETE HODGSON: Rodney Hide is about as innovative as a brick. There has been a 40 percent increase in funding for research, science, and technology over the last 5 years. Funding has gone into economic development, environmental research, social research, and scholarships. Money has gone through the Foundation for Research, Science and Technology, the Marsden Fund, the Health Research Council, and Technology New Zealand, increasing the commercialisation of good New Zealand ideas in a global marketplace, increasing patents, increasing all the bibliometric analysis that one wants done, and increasing collaboration between Crown research institutes, universities, and research associations. There is increasing collaboration off shore with Australia, America, Japan, and China. There are increases everywhere, increases resulting from funding going into the centres for research excellence, funding for the Pre-seed Accelerator Fund, and funding for the Equity Investment Fund.

The private sector has done even better. Between 2000 and 2002, in those 2 years, the private sector increased its investment in research and development by 32 percent. The private sector increased its investment in universities and Crown research institutes, but it did its own research and development and filed its own patents. We have growing innovation in this economy. We have an innovative Government. We have a partnership between the two, and it will not be broken any time soon. The economy and the Government, as far as innovation is concerned, go hand in hand. Not that the money is enough; it is never enough. There is never enough money for, say, health research, or institutional funding for Crown research institutes. There is never enough venture capital funding or intellectual property capacity in this country. There is no such thing as enough, but, boy, is this Government making a difference.

It is the same with transport. We have got the New Zealand Transport Strategy, we have got ourselves the Land Transport Management Act, and then “Dr No” became “Dr Yes”. Last June or July, when Transfund announced the national transport plan for the next 10 years, we saw that it showed for next year, in every region of the country, a significant increase in transport infrastructure funding. We now have integrated transport. We now have transport in which multimodal planning is the norm. We have increases in every region in the country, including the Chatham Islands.

In energy, we have got funding this year for the Electricity Commission. It is about time we had ourselves a managed market. We know that a fully regulated market does not work. We know that a free market does not work. Therefore, we have got ourselves somewhat more of a managed market. We have got funding going into gas exploration. We have changed the fiscal incentives. We will address the gas shortage that this nation is facing.

In the last Budget, not only did we have New Zealand dollars, which is what one would expect in a New Zealand Budget, but we had a new currency and it is tonnes of carbon dioxide credits. Those tonnes are being tendered in the next month or two. If a country can produce a reduction in carbon dioxide emissions, then we will give it up to that amount in credits. That country then has to go on the global market to sell them. I signed an agreement with the Netherlands Government yesterday afternoon, as it wants to buy 34 million tonnes of credits. We have 6 million tonnes available, if the price is right. We are seeing climate change making money for New Zealand industry. What is more, we will see this Government run that process at a profit—that is to say, we will reduce carbon dioxide emissions by more than the carbon dioxide credits that are put into the marketplace. [Interruption] They are owned by the New Zealand Government, which is a signatory and ratifier of the Kyoto Protocol. That is a matter of international law, and the member should get her facts right.

Unemployment in this country is now 4 percent. That is not quite the lowest rate in the Western World; it is the second-lowest rate. We have got regional growth everywhere, in every region. We have got per capita income increases. We have got a reduction in national debt. We have got increased provision for superannuation. We are one of the few countries that has decided to partially pre-fund national superannuation. Because of the “Cullen fund”, we will not have the problems that France, Japan, or other nations have. We have the Working for Families package, which is the hallmark, the flagship, of the last Budget. It addresses a major problem in this country, which is the rich-poor gap. We are hearing from the rich; they cannot stop interjecting on me. The rich-poor gap is being closed by this Government.

Last week I came back from a remarkable trip through China, Korea, Japan, wherein one finds one-third of the world’s research and development effort. I went there with a delegation of New Zealand science leaders, and we are thickening our linkages to those three nations. After 5 days in those three countries I returned to my home in Dunedin. The headline in the Otago Daily Times was “Mr Bumbling Brash loses plot”. The article states: “Dr Brash’s assertion that New Zealand risks becoming just another Pacific island State not only bordered on the ridiculous but was silly politics to boot.” That was my welcome home, and it came from John Armstrong, a respected political commentator. He said: “At the end of the day National’s leader is perfectly within his rights to make a fool of himself.”, and he goes on, for another thousand words, to show why the leader of the National Party made a fool of himself. It was remarkable.

I picked up the latest Listener—I had been missing it, having been out of the country—and I found there that Jane Clifton, another political commentator, says it is hilarious that National has come up with the idea of reducing Cabinet from 20 to 15 because the new leader has had time to realise that he would be pushing the proverbial uphill “to find 10 trustworthy warm bodies to call Ministers”. I think this is called snatching virtue from the jaws of necessity.

So we are back to the stupidity of New Zealand politics where we have a Government that is working with the country to produce economic growth, and jobs, and prosperity like we have not seen in 20 years, and we have another party that is saying we are becoming another Pacific Island State. It is almost unbelievable just how detached the National Party is from reality. It is extraordinary. In fact, if we have a capacity constraint in this country—and, sure as hell, if one is trying to build roads in Auckland, that question may arise—I think the biggest one is on the front bench of the National Party. It is a remarkable capacity constraint. National members have another election coming. They will get themselves a new intake. They might get some bright new things, they might get some fresh faces, but right now we have a poor National Party under, apparently, poor leadership.

Well, that ain’t good for democracy. How is this Government being tested? How is this Government being shown up? Where is the quality opposition in this Parliament at the moment? It is to be found in other parties. It is to be found in the Green Party, in the New Zealand First Party, and in the United Future party. It is not to be found in National, and it certainly ain’t to be found in ACT. All that ACT can do is change its leader and go to Auckland and say it is taking the pulse of Auckland for the next 2 months. Do members know what the pulse of Auckland is? It is 60—that is how many people turned up at ACT’s meeting in Auckland last week. That is the pulse; it is a very thin and thready pulse that ACT has in Auckland. But the point of the story is that the ACT party is not a decent Opposition, either. ACT members are very good at shouting out and cracking jokes amongst themselves, but they have no depth. There is no particular analysis.

Darren Hughes: 2 percent.

Hon PETE HODGSON: That is why they are at 2 percent. The National Party is a problem. It is a problem for New Zealand democracy because it does not have depth. It is a problem for New Zealand democracy because when its members reshuffle, they cannot even fill the front bench. They have to fill it with the senior whip. It is not as though they have a nine-person front bench. New Zealand First has flogged half the front bench off them, and they still cannot fill the rest. So we are in a situation were the other so-called major party does not have much talent, and its leader provides absolute proof of what lack of talent means. He went to Australia and made a fool of himself, then came home again. He asked a question in this House today for the first time in a month. Where has the Leader of the Opposition been?

KATHERINE RICH (National) : The concern that member has for the National Party is touching, to say the least, but we do not need the concern of that member. For those who have just tuned in, that was not the latest pastor of the Destiny Church. That was not the Labour Party’s answer to Tigger. That was Pete Hodgson, member for Dunedin North. What an opportunity he had to talk about this Government’s Budget, but if anybody doubted the relevance of the National Party, they need only see how much of that member’s time was spent talking about the National Party and how much of a concern it was to him.

I heard Steve Maharey, the Minister for Social Development and Employment, speak earlier today. It was very interesting to hear him take credit for everything from a greater life expectancy in this country to reduced unemployment—even Sarah Ulmer’s gold medal. This Government cannot continue to take credit for the good things that have happened in this country, yet totally absolve itself of the responsibility for some of the bad things that have happened in this country, as well.

The social report that was released a couple of days ago was an absolute joke. It picked up on a few key statistics but failed to tell the real story about what is going on in this country. It did not make any mention of the fact that close to 35 percent of young women in Auckland who go on the domestic purposes benefit do not name the father of their child. It did not make any mention of the fact that many of the people who have come off the unemployment benefit have casually moved over to the invalids benefit or the sickness benefit. It certainly made no mention of the fact that the numbers on both those benefits have increased dramatically under Labour’s tenure.

So rather than the Government having a lot of things to crow about, there are a lot of things that it should have addressed in this Budget, but were not touched on at all. Let us talk about a few things that have gone wrong for this Government. Let us talk about the disaster that is the Department of Child, Youth and Family Services. Why, in the last 6 months, has it failed to answer 11,000 calls from concerned New Zealanders who have phoned because they have been worried about a New Zealand child? People do not ring that department for fun. They ring because they have genuine concerns about children, and to get nothing more than a dial tone and to have to hang up because they cannot get an answer is not fair to those people who ring, nor is it fair to New Zealand children.

Hon Judith Tizard: Absolute rubbish!

KATHERINE RICH: There she goes! The “Minister of Champagne Flutes and Smoked Salmon Canapés” wakes up to make a comment. I ask that Minister what she says to New Zealanders who ring Child, Youth and Family Services to raise a concern about a child and do not even get an answer. They do not even get someone on the other end of the phone to answer their call. It is a shambles and a disaster, and it is no wonder that we see child after child on the 6 o’clock news as the latest headline. Ron Burrows rang. His call lasted more than 24 minutes, and how was that call summarised under this Government? Two words. It did not even become a notification. It is an absolute shambles.

Darren Hughes: What’s your policy?

KATHERINE RICH: National does have some policies in the area of Child, Youth and Family Services, I say in answer to the translucent member for Otaki. We believe that a call centre is not the way to manage the thousands of calls to Child, Youth and Family Services, and that we need to go back to having local child protection teams so that local knowledge can play a part in making a judgment.

Four years ago Judge Mick Brown put out a report that was a great piece of work. He told this Government that it needed to reduce the unallocated case list to zero within 6 months, and the Government signed up to that. And what is the unallocated case list at the moment? It is over 4,000. Somebody has phoned up to share a concern about those children. They have become a notification, and their notes sit there in a file in an in tray, unallocated to a social worker. It is an absolute disgrace. While this Government continues to put out blueprints and baseline reviews, and workshop after study, children wait for a social worker to pick up their file. We have also seen the absolute disgrace—

Lindsay Tisch: I raise a point of order, Mr Speaker. The member has been interjecting right though this debate, and then she made the comment “That was disgusting.” That was unparliamentary and I ask—[Interruption] She has been interjecting, and I draw your attention to the Standing Orders and ask that she apologise for those comments.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the honourable member for his contribution. I was going to refer the member to Speaker’s ruling 56/1, which states that interjections must be rare, reasonable, and relevant. I ask the member to desist.

KATHERINE RICH: It is interesting that that member is making a few comments, because it is clear to me that she is more at ease sipping champagne at the latest arts function than talking about the hard issues about maltreatment of children in this country. It just goes to show what the priorities of this Government are. This Government’s priority is sipping champagne and eating smoked salmon rather than dealing with the maltreatment of children.

• Sitting suspended from 6 p.m. to 7.30 p.m.

KATHERINE RICH: Prior to the dinner break we were discussing the Government’s latest Budget, this legislation, and the Working for Families package. Well, this Budget did not work for families. If anything it will drive more families into welfare dependency and increase the queues. Since when has making families who earn up to $100,000 a year dependent on the State been something to crow about? Since when has raising the effective marginal tax rate for families so that when they earn another $20,000 they get to keep only $3,000 of it been something to crow about? We will see a lot of people being put into the situation whereby they are motivated not to go out and do a bit of overtime, and not to go out and get that second job, because it is simply not worth it. The Government is going to keep the majority of the tax as it claws back some of the benefits that those families presently enjoy.

What we have also seen recently is the Government crowing about its Jobs Jolts programme. We heard the Minister say he was going to get tough on people who moved to remote areas. Well, that is all very interesting, but in response to a parliamentary question the Minister told me that Work and Income is not currently collecting any data on how many people move to remote areas. So it cannot tell me whether anybody has been sanctioned as a result of moving into a remote area. Mr Maharey said the Government was going to get tough on people who failed drug tests and job opportunities, and sabotaged job interviews. Well, he tells me he is unsure whether anybody has faced a sanction as a result of failing a job drug test, because Work and Income is not collecting any of that data.

The Opposition has long believed that the Jobs Jolt programme is nothing more than a “Jobs Joke”. It is all smoke and mirrors and it is all designed to look as if the Government is doing something, but very little information is being collected. So much for evidence-based research. Really, the Government is looking at putting a political spin on things as opposed to doing something.

One of the things the Government has glossed over, of course, is the number of women—they are mainly women—on the domestic purposes benefit. I think it is an absolute disgrace that in Auckland one-third of all young women going on to the domestic purposes benefit will not name the father of their child so that the taxpayer can collect child support. I understand there are sometimes some good reasons not to name the father, but I do not believe that one in three young women who go on to that benefit does not know who fathered her child. Work and Income actually admits that 21 percent of those people who face a deduction on the domestic purposes benefit not only know the name of the father but that it is also on file at Work and Income. So Work and Income has the name of the father, either on a birth certificate or on file somewhere, but because the mother will not sign the appropriate form, Work and Income cannot then pass it on to the Inland Revenue Department so that child support cannot be collected.

Jill Pettis: National hates success.

KATHERINE RICH: That member talks about success. I do not think that raising child support debt to nearly $1 billion is something to crow about. There is nearly $1 billion of unpaid child support debt and in the meantime, while the member sits there and shouts, children are not having their soccer boots paid for, they are not getting their music lessons, and they are not having their school camp fees paid for.

LINDSAY TISCH (Junior Whip—National) : I raise a point of order, Mr Speaker. The challenging of the Chair earlier on, by displaying signage that had been ruled out during question time, is a deliberate challenge to this House and to your authority.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the member but I have already dealt with that matter.

LINDSAY TISCH: I would like to finish the point I am making. I know you have dealt with it. However, the same members who were involved this time were the members who were involved during question time, and that is a challenge to you and to the authority of this House. We take strong exception that this has occurred a second time.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the honourable member for his contribution. The Chair does not need inquests on actions he has already taken. I have already dealt with the issue.

Hon PAREKURA HOROMIA (Minister of Maori Affairs) : I rise to commend this Government and the Minister of Finance for this excellent Budget for Māori. It is a Budget that signals the clear commitment of this Government to accelerating the advancement of Māori, and not being shy about that. This Government is building a strong and confident nation. This Government recognises that for New Zealand to prosper and progress, all individuals and groups have to reach their fullest potential. Providing opportunities for Māori to reach their potential will ensure benefits for all New Zealanders. This Budget will take New Zealand ahead, and, most important, Māori will be leading part of that charge.

I repeat what I have said earlier this year in the House, that I am very proud to be Minister of Māori Affairs in a Government that is leading the transformation of our people. This transformation is integral to the strengthening of our nation and our economy. We have heard two nonsensical and shockingly divisive speeches in the last half a dozen months. The first was at Ōrewa, when someone starting scratching the paternal, pathetic race nuances of people. The second was just the other day, and it was as bad as the performance of the All Blacks, when the Leader of the Opposition went over to Australia, trying to play Judas, and stabbed his country in the back. That is shocking. This Government is not about divisiveness. It is about moving forward.

Some members in this House believe that Māori are not a key part of this nation. Some seek to divide the country to exploit their own agenda. But I tell this House that Māori are the tangata whenua. There is no better recent example of Māori culture being at the forefront of New Zealandness than at the Olympic Games, where the success of our athletes has been celebrated with the haka. Sometimes I think the haka is wasted on things that do not return good results for our people, both for Māori and for New Zealand as a nation.

This Budget is certainly designed to elevate the profile of Māori from dependency, division, and grievance, to economic and social opportunity. It is about changing attitudes. This Government is shifting the profile of Māori, and we need to celebrate the number that are around in relation to what we have done. I have hīkoi-ed up and down this country, talking about shifting the profile of Māori. Demographic forecasts for the next 50 years show that although New Zealand’s population generally is ageing, the Māori and Pacific populations will remain relatively youthful. In fact by 2021, one in five people aged 15 to 39 will be Māori. So we will have a whole lot of Scottish - New Zealand Māori people. The demographic trends of Māori compared with New Zealand’s population highlight the importance of improving the circumstances of Māori families. I know that right now in this country a lot more Māori are going home tonight to put decent food on the table and to talk about the day they spent at work. That has been achieved from the creation of this Government’s policies, and this Budget will add to that.

Let us go over some of the things we have done. Māori unemployment is now at 8.8 percent and tracking down. That is a phenomenal slide from 21.5 percent when we came into Government. That is about closing the gaps, that is about making sure that our people get into the labour market. Over 43,000 more Māori are now in work than were in 1999. They are working from 8 a.m. to 5 p.m. or even longer hours. The number of Māori registered as job seekers with Work and Income dropped from 74,000 to 40,000, and it is continuing to fall. As a significant part of the New Zealand economy, the Māori economy contributes $700 million, and there are a whole lot of clusters of enterprise, whether in Rotoiti, Rotorua, Tokoroa, or Tolaga Bay, that are getting together. They are asset-rich and they are not in debt, and we intend to ensure that those clusters move forward.

Since September 2000 the Māori Business Facilitation Service has assisted over 4000 clients. The Māori authority tax review is certainly benefiting those Māori who are trying to accelerate their enterprise and inter-enterprise. Māori enrolments in tertiary education, as at May 2004, revealed that the number of Māori enrolled in tertiary training had almost doubled between 1999 and 2003. In 2002 Māori gained almost 20 percent of all qualifications, and I certainly enjoyed sitting at Otago University watching a lot of those Māori get certification and degrees of a whole lot of different sizes—not namby-pamby nonsense, such as some of those legal experts have over there. They got different sizes that are relevant today.