DAVID BENNETT (National—Hamilton East) : Yesterday we saw the last of the Labour Party. We saw Michael Cullen at his worst. He was confused and upset because Bill English had him in a corner. Bill English asked him what Government services he was going to cut to achieve $1 billion in tax savings. He could not answer. He did not know what to say. He knew that he destroyed Labour’s election campaign last time and that he had destroyed its arguments for the next campaign. Even in the newspaper today Michael Cullen is reported as saying that personal tax cuts are on the agenda and that they will happen under the Labour Government at the next election. Labour members can no longer argue that it defeats health, education, and law and order spending. They now have to deliver those services as well as tax cuts because they have gone out there and mandated it. They have given National the support—

The ASSISTANT SPEAKER (H V Ross Robertson): I am sorry to interrupt the member, but there is far too much noise. Would members leaving the Chamber please do so and show some courtesy to the member who is trying to address it.

DAVID BENNETT: This has given us the platform to go out there with tax cuts next year. Labour cannot say that services will be cut as a result, because that is not true. Labour is willing to provide those services and tax cuts, as well, and so can National. It is something we have been looking for Michael Cullen to deliver for a long time. Today Michael Cullen had to stand up when his leader was in trouble. He had to ask her supplementary questions when she was on the back foot. He was the knight in shining armour to save a leader who did not know what happened in her own Budget—a leader who, after the Budget, could only say: “Is that it? Is that all you can deliver, Michael Cullen, after 8 years in this place?”.

Hon STEVE MAHAREY (Minister of Education) : I begin my 10 minutes of comments on Budget 2007 by saying to Dr Michael Cullen that his eighth Budget is a fantastic Budget. He has a record second to none in the Western World, in the OECD. He is someone about whom we in this House—even, I am sure, Tau Henare—if we were offshore, would be saying “I feel good about Dr Michael Cullen.” In the 1990s the National Party left the country in a parlous state. At least we can now travel around the world with our heads held high because after eight Budgets we have seen Dr Cullen balance the books, make the country prosperous, make the country proud again of its social policies, make one feel good to be a New Zealander, and make those things sustainable. This Budget did those things and once again I congratulate Dr Michael Cullen.

National members have been saying to themselves over the last little while that there is a wee glimmer of hope for the National Party. They said goodbye to Dr Brash. They had a whack at getting into Government with him but that did not work. So immediately we saw the leadership rumbles begin again, and out of the dust emerged Mr John Key, the great hope of the National Party. He has been doing all sorts of things—delivering muesli bars, wearing pink shirts, getting T-shirts with little insignia on them, walking around with children, and doing all sorts of things that go with sizzle in politics.

Hon Maurice Williamson: And it’s going very well.

Hon STEVE MAHAREY: As Mr Williamson said, he has been a bit of a media star over the last little while. National members are saying: “This is good. This person knows his stuff extremely well.” I say to Mr Williamson, who is a real information technology - savvy person, that it is very interesting to look at YouTube, where the highly knowledgable leader of the National Party takes people around the parliamentary complex and tells them things such as that we meet in the Legislative Chamber, and that we met in the Legislative Chamber when this Chamber was closed. He says it with total authority, looking down the barrel of the camera and telling people, on no less than four occasions, completely wrong things about the most basic procedures of this House.

That is the problem with Mr Key. Mr Key is all flash but no substance, and that is his weakness. We saw this in the 2007 Budget when Mr Key was confronted by the fact that politics is not all about the pink shirts, the T-shirts, and trying to say that he is a person who is up with the play. It is about having something concrete to offer the people of New Zealand.

KiwiSaver is a fantastic policy that will offer an opportunity for us, finally—as Norman Kirk’s original proposal was cancelled by Mr Muldoon—to get back into saving as a country again. It will ensure that many people will have a top-up for their superannuation. We guarantee superannuation, unlike the National Party. Where did KiwiSaver leave the National Party? It left it floundering. Do we think that National members will agree with KiwiSaver? I think so. Will Mr Gerry Brownlee go to the next election disagreeing with KiwiSaver? I do not think so. Will Mr Henare go to the next election disagreeing with Kiwis having the chance to save, finally, for their future with a 2:1 subsidy and a $1,000 kickstart? Will the National Party campaign on removing that from Kiwis? All we can say is: “Make our day. Go and do exactly that.”

In other words, Mr Key and the National Party ran into a brick wall of reality with the Budget. They have to come up with some ideas, some policy, and they have to do better than they did in the 1990s. In the 1990s they cut accident compensation and privatised it. In fact, whole companies went broke trying to run accident compensation privately. Does anyone know that? They went broke. Bulk funding of schools produced a real divide between winner schools and loser schools. The National Government said it wanted all children to read by age 9, but then, immediately, Mr Henare halved the operational budget that was going to pay for that during the 1990s. National said: “Let’s say to ourselves that we care about health.”, but immunisation was so low in the 1990s that we became a net exporter of measles. We became a net exporter of illness, because of National’s market rents policy—that is one of my favourites; I will return to it at the end, because Maurice Williamson is here. It introduced the market rents policy, and rents went up 106 percent between 1992 and 1999. Despite making crime one of the top priorities of the National Government, under Maurice Williamson crime went up a staggering 80.6 percent between 1990 and 1998.

The National manifesto said it wanted a major offensive on unemployment, and it drove unemployment to 11.9 percent! Talk about a major offensive—National certainly created a huge amount of unemployment during its time. Fantastic job—thank goodness we are here! In subsequent Budgets since then we have done things like Working for Families, and therefore lifted 70,000 children out of poverty so far. Mr Benson-Pope continues on his mission of lifting young people in families that have not got the money out of poverty with that programme.

In education we have lifted funding by 47 percent. Mr Brownlee looks puzzled. I know why: he sits there reading the National research unit notes, which do not say the truth like this. The only way the National Party can get access to the truth is to come and listen to what the Government says—47 percent! More Māori are participating in education and in the workforce than ever before. Health spending has increased by—and I ask Mr Brownlee to listen to this—99 percent. There are more options for women to get into the workforce. There has been a 174 percent increase in funding in early childhood education. I am sure even Nathan Guy, who has a young family, goes home secretly to Levin—he is looking forward to getting back to farming later on after the next election—and says: “Thank goodness that when I’m back farming I’ll be able to get the kids into early childhood education because of the wonderful Labour Government’s 174 percent increase in funding.”

We have Child, Youth and Family lifting funding. There has a been a $260 million boost to older New Zealanders’ superannuation for the next 4 years. That lifts it back to 66 percent. The previous National Government cut that last time. I can see why Mr Brownlee is so focused on this. He can see that as the National Party has sat there we have been building social policy properly. We now have a Families, Young and Old strategy, which unites around major issues like obesity, non-governmental organisations, housing, family violence, and trying to lay foundations for lifelong learning. In this Budget we are now in a position where we have increased education spending, and social development and employment spending. There have been huge increases again in health spending, in justice spending, in accident compensation, in Māori affairs, and in housing.

I will finish on this note. There have been fantastic, solid, real increases in this Budget, and Mr Key says he will agree with all of them. He says: “I don’t care what you say. I’m going to agree with it. I’m going to take Gerry Brownlee with me. I don’t care if I have to make Maurice Williamson eat dead rats and sit there and accept market rents. I don’t care that Judith Collins is not going to be allowed to beat up on sole parents—I’m going to agree with them. I don’t care that Mr Ryall wants to privatise health—I’ll say I won’t. I don’t care that Mr English says that low-decile schools are awash with cash—I’ll say I’ll give them more. I don’t care that houses used to be something we thought we should sell off—I’m going to say we’re not. I don’t care that ACT wants us to roll KiwiSaver into superannuation—I’ll say I won’t. I don’t care that Pansy Wong wants to privatise ACC—I won’t do that.”

On this side of the House and around the country, I guess we are saying: “How do you trust that?”. How does one trust it, when Mr Key agrees so easily with every single question that is put to him? How come he can do that? This is the thing that really worries me: members should imagine that Mr Key is sitting there now and surrounded by Mr Coleman, the extreme right-winger; Mr Brownlee, the extreme right-winger; Mr Power, the extreme, extreme right-winger; Mr Williamson the extreme, extreme, extreme, extreme right-winger; and Mr Blumsky, the off-the-scale right-winger. They are all waiting for Mr Key—“Mr Cuddly”—to try to deliver them to Government so they can rush in and get the real National Party agenda going. No one trusts National members to keep Mr Key’s word, because every single one of them is a hollow man or woman.

GERRY BROWNLEE (National—Ilam) : Two things can be concluded from the speech just given by Steve Maharey. The first thing, in looking at the content of the speech and recognising that he is the third-ranked Labour Minister in the Government, is that it is no wonder that Labour is in a ditch. He cannot talk about the Budget, and he has to come in here with all sorts of other silly attacks. The second thing is that it is no wonder that Labour is panicking about its future, because he is it. He is the next leader of the Labour Party, and that is as good as it gets. I do not blame poor old Mr Maharey, though, for clearly having no idea of what was in the Budget, because nor does the Prime Minister Helen Clark.

This afternoon I want to read to the House a small snippet from an interview that Helen Clark gave on a radio station this morning. But let us put a bit of context around it. The Prime Minister has said for some days now that this was actually a tax-cutting Budget. Michael Cullen had told her so, and she believed him. He said that the business tax cuts out there were enormous, and that anybody in business would get a tax cut. But, unfortunately, over the weekend she must have been brought up to speed a little bit, because now she is advising people by saying in this particular interview—and I do not want to try to mimic her—

Hon Members: Go on!

GERRY BROWNLEE: No, it would devalue the effect. She said: “Self-employed can certainly come into the scheme,”—we assume that is the KiwiSaver scheme—“but, of course, you know, by definition they are paying their own wages.”Well, that is interesting. That is a reasonable admission. Self-employed people pay their own wages—that is good, the Prime Minister understands that much. She goes on: “But it is, uh, well, ah, will be that the changes to company tax encourage a lot more self-employed to actually incorporate, Jamie.”—Jamie being the interviewer, of course. So Helen Clark is saying that these people, who employ 80 percent of the workforce in sole trader activities, will get a tax cut by incorporating—having just said that these people actually pay themselves wages.

It gets better. She goes on and says: “See, a lot of our smaller businesses don’t actually bother setting up as a company. They are just sort of operators and individuals, and they pay their personal tax. Now, with the corporate tax rate cut there is quite a lot of advantage in incorporating.”

Well, I ask members to tell me what the advantage in incorporating is if one is a sole trader and every time one takes a drawing out of one’s business one pays one’s personal tax rate at a much higher level than the corporate rate. I say to the Prime Minister that there is no way around it. It is good for big business; it is not good for small business, and it is just another level of cost being put on it.

Showing us further how much she understands all of this stuff, the Prime Minister goes on to say: “And as well, of course, if you are a company and then you’re paying a wage, well, you are going to get the personal tax credit for your KiwiSaver. You’re going to get the tax credit for the employer putting the contribution in.” Well, I say to the Prime Minister: “Guess what? The wage payer, the employer, and the subsidy payer are all the same person!” I do not know why we should expect someone like poor old Mr Maharey to understand the Budget when clearly the Prime Minister does not.

One of the worrying things that came through in the Budget is that Labour members have now seriously convinced themselves that they know how to spend better than any individual inside this economy. They believe they are the people who should be making the choices, not individual New Zealanders. The only snippet we got from Mr Maharey’s speech was that there is now more money going into core services. He asked, for example, whether I was aware that there has been a 99 percent increase in money going into health spending. Well, actually I am—so are all of my colleagues. But those of us who sit in our electorate offices still see the long queues of people coming in and wondering why they will not get services. We still read the statistics every week that tell us that last year there was less elective surgery in this country than ever before; that tell us that if one wants specialist attention, then one will wait for months, and months, if not years; that tell us that if one wants some form of a relatively simple test, then fewer of them were performed in New Zealand last year than the year before.

So we are asking ourselves: “If all of this money is going in, and if that is the answer, why are the services not there?”. I am confident that New Zealanders are asking that same question as well. No doubt the answer to that question is found in some of the polling that is out there at the present time.

The Prime Minister has also hung her hat on the KiwiSaver scheme. I do not think anyone in our party would argue about the wisdom of one saving if one can—no one will argue against that. But what we are absolutely staggered about is the way in which this scheme will be structured. It will mean that workers who cannot afford to take $40 out of their pay packet will get nothing. But they will still pay tax, which means that the person standing next to them on the assembly line—or wherever else it may be—who can afford to take $40 per week out of his or her pay packet will be subsidised by the worker who cannot afford it. So the poorest New Zealanders are subsidising the wealthiest New Zealanders. That has got to be a brilliant scheme! It is certainly one that could only be put together by Labour.

I think that one of the interesting things we will see will be how many of the many New Zealanders who are prepared to say that they think the KiwiSaver scheme is a good idea will actually get around to saying they want to do it. What Mrs Pettis and so many of the members on the other side of the House do not understand is that we are a very low-wage economy—Labour has made it that way. Labour does not like the workers to get too far above themselves, because then it may not be needed. Labour has created a low-wage economy over the last 8 years, and there are far too many people in this country who simply cannot afford to take out the $2,000 from their pay packet on an annual basis in order to save. I think they will be very angry when they find out about that, because it has been sold to them as a tax credit. Workers have been told to join up to the KiwiSaver scheme and that there is a tax credit there for them. Not so; it is only for the workers who can afford to take it.

I call the House’s attention to this letter, this piece of Labour Party propaganda that was sent to a large number of households throughout the country. The Auditor-General has had a lot to say about this sort of thing, has come down with some rules, and no doubt will be looking at how Labour progresses with its State-funded propaganda from this point. I want to make a prediction. There is such a mess around this KiwiSaver scheme. So much of it is unclear. So many people do not understand how it will directly affect their pay packets. We will see millions and millions of dollars spent by the taxpayer trying to explain what Helen Clark should simply have asked Michael Cullen in the first place, and trying to explain to people like Mr Maharey why Kiwisaver is such a wonderful idea, when in fact it will see so many New Zealanders at the bottom end of our society continuing to subsidise those who have a few more quid, because Labour basically hates the workers.

The ASSISTANT SPEAKER (H V Ross Robertson): Members are advised that New Zealand First will be splitting its call. There will be two 5-minute calls, and the bell will be rung with 1 minute remaining.

BARBARA STEWART (NZ First) : On behalf of New Zealand First I am absolutely delighted to take a call in the Budget debate. This was a very focused Budget, which was delivered again this year by Dr Cullen. Of course, we were delighted that a significant investment was made in the health system. We in New Zealand First applaud this investment wholeheartedly. We have done so every year and we will continue to do so. The Government’s commitment to health spending is absolutely commendable, and its investment has paid off in so many different areas. We can see the results. There are far too many of them to list here in the House in this debate, but we hear about them every day at question time and we know that there are some very positive outcomes.

We want to have a First World health system; we hear about it every day. The bottom line is that if we want this, then we have to be prepared to pay for it, and we want to see the results. So we in New Zealand First believe that this investment is really setting a framework for the future of our health system, and I do not believe that one party in this House could disagree with it.

I must say that I found it very ironic when I listened to the speeches from the National Party members last night. Every year after the Budget we hear many members of the National Party lamenting about what the Australians received in their Budget compared with what we received in New Zealand’s Budget. Those members continually extol the virtues of Australia and say that people need to leave New Zealand and go to Australia to do well. It is very ironic that not one of those MPs has ever left to head off to Australia—the land that they proclaim is so good. We hear about this phenomenon every year. In fact, it is really getting quite boring. Jane Clifton from the Listener has recognised what is happening and has labelled it “the annual Australian Budget snivel-fest”.

Pita Paraone: Did she say that?

BARBARA STEWART: She said that; she wrote that in her column. It is just so ludicrous that the National Party has not recognised—as Jane Clifton says—that our economies are “cat and dog different”. That is the party that wants to be the Government and run our economy—yeah, right! That is quite amazing.

We in New Zealand First are absolutely delighted that this Budget has invested significantly in the aged-care sector. This Government has made the largest-ever investment of $150 million over 4 years into the aged residential care sector and $81.2 million into home-based support. We applaud this development and we know that the aged-care sector has also applauded it. We know that addressing the challenges in the aged-care sector has been a priority for many, many years, and at long last the issue will be addressed. We have had people petition Parliament over many years, looking for action. At last, significant amounts of money have been allocated to ensuring that the workers in this very important sector receive a much-needed wage increase. These dedicated people have been on some of the lowest wages in our economy, and this is one of the hardest, heaviest, and saddest occupations we have. I know that a lot of these workers get a lot of pleasure from their work and that wages are not the only motivating factor for them, but the important role they play has to be recognised, particularly in light of the fact that we have an ageing population and that the number of people whom we expect to be cared for in rest homes and in their homes will increase significantly.

In New Zealand First we believe that senior citizens should be treated with the services and the dignity that they need, and we believe too that staffing and training is an important aspect of rest home care. Now this important sector should be able to meet their needs to a far greater extent than happens at present. So New Zealand First is very pleased with this Budget.

PITA PARAONE (NZ First) :Tēnānō koe. Like my colleague who has just resumed her seat, I say that it is also my pleasure to participate in this debate. In contrast with some of the views that have already been expressed in this House, I believe that Budget 2007 has delivered something for Māori. If we start itemising those areas that are of concern to Māori—not least of all broadcasting, health, Treaty issues, education, and whānau—we can see how Budget 2007 has delivered.

I will make reference to one particular item that this Budget has delivered for Māori. It is no coincidence that this item has been delivered as a result of the confidence and supply agreement between New Zealand First and Labour. The particular item is the area of Māori wardens.

I regard Māori wardens as the unsung heroes of our country. The Māori Wardens Association was established in the early 1950s so that Māori wardens could take care of their respective communities. We can see that the role that Māori wardens play has changed from that time to today, particularly when we consider that in the 1960s and 1970s this country witnessed a great migration of Māori families from rural areas into the towns. The contribution that Māori wardens made to help assimilate members of their Māori community into those areas is beyond recognition.

I say thank you to Dr Cullen for producing in this Budget 2007 an amount of money that will certainly assist the Māori wardens to carry out their duties. I also remind this House that the reason the funding for Māori wardens was part of the confidence and supply agreement between New Zealand First and the Labour-led Government was that in previous years our leader had been responsible for ensuring that regular annual funding was made to both the Māori Women’s Welfare League and to kapahaka, and it just seemed strange that Māori wardens and the contribution that they were making to our society and our communities was not being recognised.

This year’s Budget is recognition of that contribution. Funding of $2.5 million over the next year, with further funding in excess of $4 million over 4 years out from 2008, will ensure that funding for Māori wardens is kept on the books, and that it is in line with the funding provided to the Māori Women’s Welfare League and to kapahaka.

Law and order issues have been the subject of recent debate in this House, particularly with regard to gangs—many of which, I am sad to say, are made up of young and not-so-young Māori. It seems to me that if the Māori wardens had been involved in not so much the control of, but the consultation with, such gangs, then the problems that gangs bring on our society would have been minimised.

It is with great pleasure that New Zealand First can claim some success in acquiring the necessary resources for Māori wardens so that they can continue to carry out their duties. I know that HēnareHape, a warden in the far north, and Peter Walden, the national president of the Māori Wardens Association and a resident of Rotorua, will be pleased to hear that this funding is being made available to them. It is incumbent on the organisation that has been responsible for them in the past—the New Zealand Māori Council—and Te PuniKōkiri to get their heads together to ensure that this funding is not wasted but is directed towards the area for which it was intended.

I can commend Budget 2007 for all the resources that it delivers for Māori. Kia ora.

LYNNE PILLAY (Labour—Waitakere) : I want to acknowledge the two previous speakers from New Zealand First. They made great speeches. I also want to say that for us in Waitakere, the contribution of the Māori wardens is second to none, and I think it is really significant that they have been acknowledged in this House today, as have many of the good works of the voluntary organisations that work so hard in our communities.

I want to start by asking Opposition members a question. I want you to tell me, because I am confused. I just do not know the answer. Are you going to keep the KiwiSaver—

The ASSISTANT SPEAKER (H V Ross Robertson): Order!

LYNNE PILLAY: Is the National Party going to keep the KiwiSaver scheme as announced in the Budget?

Hon Member: There’s the question!

LYNNE PILLAY: That is the question.

Hon Member: Ask it again! Ask it again!

LYNNE PILLAY: Is the National Party going to keep the KiwiSaver scheme as announced in the Budget?

Hon Member: What’s their answer?

LYNNE PILLAY: There is no answer. I think that those people have taken the lead from their leader, and from Gerry Brownlee. They have been poring over The Hollow Men and looking at their instructions as to how to handle those curly questions.

Simon Power: I raise a point of order, Mr Speaker. The member will be well aware that it is contrary to the Standing Orders and Speakers’ rulings to indicate that any member takes instructions from anybody, and particularly from those outside this House, whether it be in written or any other form.

The ASSISTANT SPEAKER (H V Ross Robertson): I just advise the member that under Speakers’ rulings 48/3 and 48/4 it is not in order to say that people are dictated to, or that they receive instructions or directions. I ask the member to continue her speech, and to be careful about what she says.

LYNNE PILLAY: Thank you, Mr Speaker, and I thank Mr Power. There is a little bit of sensitivity there.

I think, then, that they certainly research how to handle those curly issues. I think one of their clear approaches, which we certainly have seen through research written in certain publications, is to not give a straight answer—to avoid giving the answer.

Hon Paul Swain: That was in The Hollow Men.

LYNNE PILLAY: That is right. It is in The Hollow Men. The member is right. But that approach was certainly not from the author. It was from emails from the former leader of the National Party, and I think that sort of mantra has been very much followed through. I listened very carefully to Morning Report today, when I heard John Key on the programme. I was really keen—

Simon Power: You and 18 other people.

LYNNE PILLAY: Simon Power says it was me and 18 others. I do not think that is the case, given the number of people who have commented to me about Mr Key’s performance on Morning Report this morning. But, anyway, he was asked very clearly what the National Party’s position is on KiwiSaver, and he could not answer. He did not give an answer at any time. What he proceeded to do was to bang on again about public spending and how much money the Labour Government spent on public spending. We know that public spending is on health, primary health organisations, education and early childhood education, interest-free loans, plenty more police, Working for Families—all those sorts of things. It is not a matter of just spending on a lot of bureaucrats in the building. It is actually a matter of delivering things that are really important to Kiwis, such as paid parental leave, early childhood education, cheaper doctors’ visits, 4 weeks’ holiday, massive wage increases, the superannuation fund, interest-free loans, Working for Families, KiwiSaver, Modern Apprenticeships—and all of those things were opposed by the National Party; every single one.

Every single initiative that has put money into workers’ pockets and that has given better conditions to workers has been vehemently opposed by the National Party. I see those members frothing at the mouth sometimes when they talk about unions and what they have delivered for workers in this country. Then we hear Gerry Brownlee, the workers’ friend, saying that this is an anti-worker Budget. Well, that is just rubbish; we all know that. We know that this Budget is about helping workers. It is about helping families. It is about assisting saving, and incentivising saving. I am really proud of this Government, and I am really proud of this Budget, because it is about investing in our future and giving a hand up, not a handout, to assisting with saving. We want to see a society in which it is not just the rich who can afford to save towards superannuation. We want to see everyone being able to enhance Government superannuation, which is guaranteed under this Government. The guaranteed State superannuation is enhanced by savings. When we hear people from the Opposition whining and grizzling about how much greater it is in Australia, I say that 9 percent is what Australian employers pay to subsidise—

Russell Fairbrother: How much?

LYNNE PILLAY: Nine percent. Not 1 percent, 2 percent, 3 percent, or 4 percent. No, it is 9 percent. Somehow employers are so much better off in Australia because they pay a 30 percent tax rate, which we have matched. We are now saying to employers that we will assist them with a tax rebate, but we are asking them, over 4 years, to assist their workers to save by moving up to 4 percent contributions to support—

Hon Mark Burton: So what would it cost them in year one?

LYNNE PILLAY: In year 1 it would cost 1 percent; in year 2, 2 percent; in year 3, 3 percent—

Simon Power: There goes the pay rise.

LYNNE PILLAY: Simon Power, the workers’ friend, says that there goes the pay rise. I am telling you—

The ASSISTANT SPEAKER (H V Ross Robertson): When the member uses the word “you”, it brings the Speaker into the debate.

LYNNE PILLAY: I apologise, Mr Speaker.

In terms of business in New Zealand, if it was not supported and if the National members are right about what they say, why would we have had the tremendous support for this Budget from business? My electorate office at the moment is a very noisy place because double tracking is going in next door. Now I know that we will have not only double tracking but electric trains in Waitakere, and I think that is wonderful. That is this Government. Again, we do not see the National Party wanting to build on this. That party does not want to assist, in terms of infrastructure. For some reason it thinks a paltry $10 tax cut to all workers will deliver far more. We know it will not, and workers know it will not.

I am really proud of our policies. Working for Families is fantastic. I just think it is extraordinary, and so many families have come out in support of it. We think that is great, but now we have KiwiSaver. But what is really important is for the people of New Zealand to understand that if they were to be crazy enough to support a National Government, all those things would go. They were all opposed by the National Party. On not one of these initiatives have National Party members had the decency to say that they think it is great—fair cop, they will support it. They just will not do it. Their style is to say: “Avoid discussion on these issues, because we’re going to deal to them, but for goodness’ sake don’t let anyone know about it.” That, Mr Speaker, I think just does not jell with this party; it just does not. I ask the next National member who takes a call to please enlighten this House. Just tell us. Will the National Party support the Budget? Will the National Party support KiwiSaver?

SIMON POWER (National—Rangitikei) : That was Lynne Pillay, who chairs the Justice and Electoral Committee, which I have been sitting on from time to time recently when it has been considering the Criminal Justice Reform Bill. The position of chairperson of the Justice and Electoral Committee will be the last entry she has on her political CV, because it is going to be pretty much all downhill for that member, come November next year. She did a reasonable job in that role, but that is pretty much it. That is the end of it for that member.

As I sat here for the eighth Budget I have listened to—and I acknowledge that there are other members in the House who came in the same intake I did; and this was the eighth Budget we have sat through—I noticed something about the Budget this year particularly. I noticed a diminishing return of enthusiasm by Dr Cullen. He started off in his first Budget full of goodwill and vigour and, slowly but surely, as each Budget has come along, he has got more and more tired and less enthusiastic. If he keeps that up, by next year he will deliver the Budget with the same enthusiasm with which the Prime Minister delivers her Prime Minister’s statement at the start of each year—that is, with virtually no enthusiasm at all. It is like a chore for the Prime Minister to deliver that statement, and delivering the Budget is like a chore for the Minister of Finance. I have been hearing—

Rodney Hide: You should try listening to it.

SIMON POWER: That is right, I say to Mr Hide. It is a lot worse having to listen to it.

I have gone around the country since the Budget and spoken to taxi drivers and hairdressers—though not to hairdressers as often as I used to! They are telling me that this Budget will not save this Government. Those people have had a gutsful of the Labour Party, and they have had a gutsful of the Government. They were reserving a bit of judgment pending this Budget—and now it is all over.

People are saying that the Budget goes nowhere near to delivering what their expectations were. That is because the Labour Party continues to say one thing to the people of New Zealand and do something else. Members should remember that it was the Labour Party—[Interruption]—There is Sue Moroney chipping away from the back of the House, and the member for Hamilton West is up there chipping away at the back of the House. We know that Helen Clark told Parliament and New Zealand that she was going to put New Zealand back in the top half of the OECD. But we have seen that we have not gone up. We have not gone anywhere near the top half of the OECD. We have not even stayed the same and been ranked 20th in the OECD. We have gone down two places in the OECD rankings to 22nd.

Labour productivity has more than halved since this Government came to office, and my colleague Dr the Hon Lockwood Smith will, no doubt, talk about that—that is his area of expertise—when he takes a call shortly. What we know is that this Budget has delivered compulsion in an area where people wanted choice. What we know is that the Budget has delivered a blow to those hard-working New Zealanders who do not have much in the way of disposable, discretionary income. They are going to have to find the money in a way that is worrying. People like Lynne Pillay, who will be shortly out of Parliament, say that they are representing those very people who will do worse out of this Budget. I will tell the House what I found most interesting about this Budget. Not unexpectedly—

Sue Moroney: Yes, give us your ideas!

SIMON POWER: There is Sue Moroney chipping in again from the back of the House. She is here for the third time in 1½ weeks.

I was always going to look closely at this Budget to see what it would do in the areas of law and order, justice, corrections, police, and the courts. I am happy to tell the House what I found. What I found, despite a UMR Insight poll in February and March this year that said the No. 1 issue worrying New Zealanders is violence and crime, is that money has been set aside to build a new Supreme Court. Money has been set aside to build a new Supreme Court! There is absolutely no money set aside for new initiatives to stop crime from occurring. There is no new money for rehabilitation and reintegration in our prison system. There is no money to assist those with mental health difficulties in the prison system, and there is no money for drug and alcohol rehabilitation. People say the National Party is pledging more money. Actually, we are not, because that money can be easily found from wasted expenditure currently going on in those votes.

Russell Fairbrother: Which one?

SIMON POWER: I say to Mr Fairbrother that there is $11 million for landscaping four new prisons. That $11 million would have gone a long way towards drug and alcohol rehabilitation rather than planting ferns and pavers outside four new prisons. There is $2 million in bonus payments to senior management at the Department of Corrections. That money could have gone into helping inmates with mental health problems. That is where those sorts of initiatives come from.

This is a Government that in the Economic and Fiscal Update documents showed a fiscal risk of huge proportions. It is worth just dwelling on that. In 2006 the fiscal risk around capital expenditure for building prisons was forecast to be $209 million. In this Budget, delivered last Thursday, the same capital expenditure noted as a fiscal risk for the forecast period to 2014—and members should remember that the Budget forecast risk for capital expenditure in corrections was $209 million—was $1.2 billion. The reason for that is that the justice departmental forecasts are hopeless.

This Government has no idea how many people will be incarcerated in the forecast period. It has no idea how many people will be behind bars over the forecast period. But it is worse than that, because in 2006 the fiscal risk identified for the operational part of that vote was approximately $25 million. The operational fiscal impact risk noted in the forecast period in this Budget was $121 million for operational funding. This Government does not have a clue what it will do about the prison population crisis that it did not plan for. The Hon Mark Burton, to his credit, knows that the Hon Matt Robson did not want to build those prisons, and now it is all coming home to roost. Prisoners are being lodged in police cells at $139 a night, and that is unacceptable.

When National said the justice sector needed to be reviewed, the Prime Minister said it did not—and now it is being reviewed. When National suggested rolling the Department of Corrections back into the Ministry of Justice, Damien O’Connor and the Prime Minister said it was a ridiculous idea and that it would not happen—now it is being investigated by this Government. The Chief Executive of the Department of Corrections says that corruption in our prison system is limited to “a few bad apples”—no more than a handful of prison guards. Then, at 5.30 last night, we heard that as part of the restructuring of head office, an anti-corruption unit is to be set up.

Rick Barker has thrown his hands up at the courts; the overdue fines are out of control. He does not know what to do. He just keeps saying we are capturing more people at the border, while the quantum of fines owing in our court system is skyrocketing into the hundreds and hundreds of millions of dollars. We are seeing crime rates going up, violent crime skyrocketing, and youth violent crime skyrocketing even higher. And what does the Budget do in all of those areas? What provision does it make to deal with that catastrophe of problems? It puts aside money to build a new Supreme Court. Well, time is ticking, and the Government’s time is nearly up.

RUSSELL FAIRBROTHER (Labour) : For the benefit of those who might have missed it, I say that speech was from one of the young leaders of the National Party, misnamed as Simon Power. Simon Power, of course, is on the right wing of the National Party. We know that because he said that where George Bush goes, it—the National Party—goes. When George Bush goes to Iraq, it will go to Iraq. So where does that place him on the spectrum? It places him on the right wing. We know of the troubles in the National Party; the troubles in the National Party are with its own right wing. The right wing is becoming disillusioned with the centrist, populist policies—if I can use the word policies—of the leader, John Key. This is not just political cant, this is not rhetoric; this is based on analysis.

Just late last week political commentators Busby Ramshaw Grice commented in a political update on the work of Simon Power: “It is ironic, but nevertheless a real possibility, that the biggest obstacle Mr Key faces on his march to the Beehive may not be from Labour but from the right of his own party.” We have just heard a speech for 10 minutes from the extreme right of John Key’s own party. One of those up-and-coming leaders of the National Party in Opposition, one of the extreme right wing, has spent 10 minutes avoiding speaking about the Budget. He has spent 10 minutes avoiding speaking about the central issue of KiwiSaver.

That man followed my friend Lynne Pillay, who in her speech laid down a challenge to the National Party and its leadership. The National Party and its leadership includes the extreme right-winger Simon Power, who said: “Where George Bush goes, we go. We follow him to Iraq.” That is what taxi drivers are talking about. My friend Lynne Pillay finished her speech by asking National to tell us what it would do with KiwiSaver. That is not an idle question. The question on the table is: what would National do with KiwiSaver? When did that question go on the table?

It clearly went on the table this morning, on the Radio New Zealand National programme Morning Report, when the leader of the National Party would not commit to the continuation of KiwiSaver. The failure to commit speaks louder than words. This is the same man who was shown in the book The Hollow Men to have accepted the challenge that it was better to lie about policies than to talk about National’s extreme right-wing agenda. This is the man who said it would be worth his while to pursue a lie. So we hear the cant on Morning Report, when failure to commit to the continuation of KiwiSaver was part of this obfuscation, this avoidance of the real issue.

The real issue, of course, came out this morning in the Independent of 23 May. On page 6 the headline reads: “Everyone’s a Budget winner on the NZX”. This article by Nick Smith, headlined “Everyone’s a Budget winner on the NZX”, analyses the fortunes of the various companies on the New Zealand stock exchange and the fact that they will do very well under this Budget. I return to the article by Busby Ramshaw Grice, where they identified quite perceptively that this is a Budget that takes the Labour Party back on to the middle of the political floor, because this is a Budget on policy.

Those writers believe the National Party is “vulnerable”—to use the word in the article—because it has been tardy in developing new ideas and, in part, because of what seems to be a lengthy process to get agreement within the caucus on new policy. The article asks why the backbenchers of the National Party do not come out and state their position. Those backbenchers rode in on the coat-tails of Dr Don Brash, who is busy undermining John Key in the Auckland area by circulating an economic document critical of the direction of the National Party. Why do the young National backbenchers who rode in on the right-wing coat-tails of Don Brash not tell us what they will do with KiwiSaver? They will not tell us, not because they do not know but because they are too scared.

They are too scared to admit that KiwiSaver is an answer to this country’s problems and is the future of this country. National members debate KiwiSaver in isolation; KiwiSaver is not to be seen in isolation. They rant in this House that a large number of people are not able to afford KiwiSaver—they say there are hard-working Kiwis who cannot afford KiwiSaver. Those hardworking Kiwis are the same people who recently received the full implementation of Working for Families. An offer of a $10 or $20-a-week tax rebate offered by National is answered by hundreds of additional dollars going into people’s pay packets each week from Working for Families. So KiwiSaver must be seen as part of an integrated policy—a concept that is foreign to the National Party. We cannot debate KiwiSaver without also talking about Working for Families. Working for Families is the answer to the propaganda, advanced in this House by National members, that the working man cannot afford to enter KiwiSaver. The working man is just as thrifty as the capitalist. The working man knows when a good opportunity is presented, and a good opportunity is presented—

Hon Paul Swain: And the working woman, too, of course.

RUSSELL FAIRBROTHER: My friend who knows about working women says I should mention them, as well. Under the Prostitution Reform Act, of course, they will be able to enter KiwiSaver, too.

Under Working for Families, families have the cash to invest in KiwiSaver, and they will immediately get a return of $1,000, a $20-a-week tax credit, and the credit that goes into their account from the employer. So it is an investment that will lead to behavioural changes, as people learn not to blow excess money from the wage packet but to invest it. This is the answer to globalisation and the neo-liberal policies of borrow and spend—the policies that keep international companies foraging in and raiding the pockets of our working-class people in New Zealand. The answer is to change behaviour by encouraging saving patterns. The Working for Families package is the first step and KiwiSaver is the significant second step.

I want to talk about the third step, which has been totally ignored by National members in the debate. The third step is the bill that is currently on the floor of the House. I ask Dr Smith whether he can hear me and whether I should speak up; the answer we want from him is what he will do with KiwiSaver. The third step, of course, is the third reading of the Social Security Amendment Bill, a bill that will become law very shortly. That bill guarantees that we will continue to have low unemployment levels—world-record low unemployment levels. That is the third part of the interlocking picture that makes this Budget such a sound proposition. This is the answer to our lack of capital markets: KiwiSaver, Working for Families, and the Social Security Amendment Bill will put money into the pockets of New Zealanders and back into New Zealand. As we build up our own capital funds, no longer will we be the market to raid for overseas capitalists.

The way to get wage rises is to increase productivity. The way to increase productivity is to invest in research and development—as this Budget does—and to invest in the workforce. A workforce that sees a future for itself in New Zealand will push for and get higher wages, as it contributes to the businesses it is employed by. As a result of building our capital markets and building a happy workforce, productivity will rise as sure as the sun rises in the morning, and as sure as Dr Lockwood Smith will get up here and bleat about a picture based on distorted facts.

Dr Smith will not answer as to what the National Party will do to KiwiSaver. He will not say what it will to do to Working for Families. He will not say how National will fund cuts to essential services if it does not take that funding out of tax. If National gives tax cuts, how will it maintain our education policies? How will it maintain hospital services? How will it maintain research and development? The challenge National also faces—which Dr Smith must address—is how it will control inflation. Putting $20 a week straight into people’s pockets to spend is only inflationary.

This Budget addresses the need for capital markets. It addresses the need to prevent the growth of inflation on our tradables. As the tradables market increases, it is inflationary, and this Budget provides the answer to that. This Budget reflects the work of Working for Families, and builds on that work, and on the work of the Social Security Amendment Bill, which makes all people in this country potential participants in the workforce. The Social Security Amendment Bill recognises that most people can work and that everybody wants to work, and it enables people to get back into work by constructive schemes. This is a very good Budget based on policy—sound policy.

Dr the Hon LOCKWOOD SMITH (National—Rodney) : Let me remind listeners who that member was—that member who was just speaking in this Parliament. It was Russell Fairbrother. He came to this Parliament as the MP for Napier in 2002, and then achieved the impossible. I have to hand it to him; he achieved the impossible. Napier was one of Labour’s safest seats. I do not think National has held it since 1951, after the big waterfront strike carry-on in 1950. Russell Fairbrother, whom the Parliament has just been listening to, achieved the impossible: within 3 years he lost Napier to National, and not just by a little margin. My excellent colleague Chris Tremain now holds Napier by several thousand votes. Having just listened to that speech we can all understand why the people of Napier abandoned the Labour member Russell Fairbrother in their thousands as they went to an excellent member of Parliament in Chris Tremain.

In this Budget we are debating today, Dr Cullen has taken to a whole new level the issue of “Labour knows best”. In so many areas of our lives these days in recent years we have had this “Labour knows best” attitude dictating to New Zealanders how they should run their lives, how they should bring up their children, and where they should spend their money. But this time Dr Cullen has really excelled himself. What he said this time with this Budget was: “You naughty, naughty New Zealanders are not saving enough. Naughty, naughty New Zealanders are not saving enough so I, Dr Cullen, am going to force you to save more.” I think that is a huge insult to hard-working New Zealanders.

If we look at the 8 years that Dr Cullen has been treasurer in this country since we have had a Labour-led Government, we see the extra tax he has taken off good, hard-working New Zealanders. When Dr Cullen came to office, the outgoing National Government used to collect $32 billion in tax off hard-working New Zealanders. This last year Dr Cullen is collecting $52 billion. That is $20 billion—$20,000 million—more tax he has taken off New Zealanders. That is a 62.5 percent increase in taxation. How does that arrogant Dr Cullen expect New Zealanders to save, when he has taken $20,000 million more tax off them each year? That is not the cumulative amount of extra tax he has taken; that is the difference, per year now, between when Dr Cullen came to office and what Labour now takes off hard-working Kiwis. It is $20,000 million a year.

How the hell are New Zealanders meant to save, when the Government is taking all their cash and leaving hard-working New Zealanders having to borrow to make ends meet, borrow to own their homes, borrow to build new homes, and borrow to do darn near anything, while Dr Cullen taxes them to hell and beyond so he can look so good in paying back Government debt and putting money into his fancy Cullen fund? What this Labour Government is doing is obscene. It is wrong. It is just wrong to tax New Zealanders so hard and then to say they are naughty, naughty people for not saving enough. It is totally unfair.

What, I guess, makes me feel even sadder about it all is that Dr Cullen even admits that in his 8 years his operating surpluses have totalled $35,000 million. That is the surplus money after spending all the money required on health, education, superannuation—you name it. His cumulative surpluses have been $35,000 million. That is enough to give hard-working New Zealanders a tax break, but, of course, Labour knows best. Labour does not trust New Zealanders with their own money. Labour believes it is in New Zealand’s interest to take the money off hard-working Kiwis because Labour knows best how money should be spent.

In fact, now, with KiwiSaver Labour members are rabbiting on and saying not only do they know best how Kiwis should spent their money but, now, if Kiwis dare to want to use any of their KiwiSaver money to invest in a house, they have to buy that house in a certain area and they are not allowed to spend more than a certain amount on it. This is New Zealand we are talking about. This is not communist China, or communist Russia as it once was. This is New Zealand; a land my great grandparents came to for freedom—freedom from the controls in the United Kingdom. They came here to a land of the free, and now we have a Labour Government that not only taxes us to oblivion but now tells us: “You cannot spend that money on a house in that area—oh, no, no, no. You must spend that money in this area, because Labour knows best.” Dr Cullen knows best where New Zealanders should spend their money, how they should raise their children, and where they should buy a house, and New Zealanders have had a gutsful of it. They are sick to death of Dr Cullen and Helen Clark thinking they know better than ordinary New Zealanders.

I want to focus on a particular part of this Budget that has not had much coverage, and I refer to page 16 of the Executive Summary in the Budget 2007 document. What is interesting about that page is that it spells out the new spending. Already, prior to this Budget, the Reserve Bank has been hugely concerned about this Labour Government’s spending binge. If we look over the years that Labour has now been in office—8 years—we can see that it has doubled the size of the core Government bureaucracy. The Government has increased policy advisers and administrative staff by 95 percent. Accommodation for those extra bureaucrats under this Labour Government—just the extra space to accommodate them, compared with that in 1999—has taken 15 football fields worth of office space. If one tries to lease an office here in Wellington, one will find one cannot because the Labour Government has leased all the office space—15 football fields worth of it just to accommodate those extra staff.

The Reserve Bank has analysed that in the last 2 years nominal GDP has gone up by 9 percent in this country—nominal GDP—but spending on social welfare has gone up by 16 percent. Despite unemployment coming down spending on social welfare is up by 16 percent in the last 2 years. Spending on health has gone up by 21 percent. Spending on education has gone up 22 percent. We have had far bigger increases in spending than increases in GDP. The Reserve Bank was so worried about that that a couple of months ago it had a whole section in its monetary policy report on it. As the bank looked ahead it projected—and I want David Benson-Pope to reflect on this—Interruption] This is in the bank’s documents, and I invite David Benson-Pope to have a look, if he can read it, and see what the bank was projecting the Government’s expenditure increases were going to be over the next 2 years. The expected increase was $7 billion.

On page 16 of this Budget document, the increase in 1 year alone, this year, is $3,758 million. That means that in 2 years—even if the Government does not increase spending in election year; if the increase next year is just the same as, and I bet my bottom dollar it will be more than, this year’s—the increase will be closer to $11 billion, not $7 billion. That means the Reserve Bank will have to put up interest rates, and that means home mortgage rates will stay up higher, for longer. Ordinary New Zealanders are not only being taxed to oblivion and having to pay a petrol tax of 10c per litre in some regions but their home mortgage rates will go up, and exporters may yet face a still higher dollar because of the massive spending binge outlined in this Budget.

I say to Labour members that they show how callous they are about low-income New Zealanders. Low-income New Zealanders cannot put 4 percent of their wages into the KiwiSaver scheme. They pay the taxes, though. An ordinary person on an income of $25,000 a year with no dependent children pays 20 percent in tax, and at $25,000 a year that person cannot put 4 percent into this scheme, but he or she pays 20 percent of that income in tax, subsidising people who are on higher incomes and who can put money into this scheme. People’s home mortgage rates will go up because of the massive spending binge. They will get a lower wage increase because of the KiwiSaver scheme, and they have even lost the “chewing gum” tax cuts. This Budget is a disaster for ordinary Kiwis, and they will show that at the next election and boot that bunch out.

GORDON COPELAND (Independent) : Shortly after 2 o’clock on 19 May 2005, in making his Budget speech, Dr Cullen revealed to the people of New Zealand the deep, dark secret that lurked in the pages of that Budget. He told the House that it had been decided to adjust, each 3 years, by using the midpoint of the Reserve Bank’s policy target agreement inflation band, the taxation brackets. He said that equated to a 6.12 percent movement in each 3-year period. He said it would mean that at the time of the first triennial adjustment, which was to be 1 April 2008—now only a few months ahead of us—the $38,000 a year income threshold would move to $40,324 a year, and the $60,000 a year income threshold would move to $63,672 a year. In his Budget on 17 May 2007, Dr Cullen abandoned that promise.

The announcement made in 2005 was in itself historic. It signalled that at long last a Minister of Finance had the courage to bring to an end bracket creep in the New Zealand—

The ASSISTANT SPEAKER (H V Ross Robertson): No, no. I am sorry, but the member cannot challenge another member’s courage. That is a personal reflection.

GORDON COPELAND: I raise a point of order, Mr Speaker. I was praising Dr Cullen’s courage. I was praising his courage in bringing to an end bracket creep.

The ASSISTANT SPEAKER (H V Ross Robertson): Accepted.

GORDON COPELAND: It was, in fact, a courageous step to take. Bracket creep has long been beloved by successive Ministers of Finance, because it means they do not have to do anything to the taxation system and every year, as inflation chips away, more and more tax just rolls into the coffers. So that was a courageous thing to do. However, since coming into Parliament I have consistently advocated for the regular adjustment of the taxation brackets for inflation. Unless that happens, the plain truth is that the taxation burden increases in real terms year in and year out. Dr Cullen, however, has done nothing to adjust the brackets since they were established on 1 April 2000. That is now almost 8 years ago. He has not only gone back on the commitment he made in the 2005 Budget but also decided not to make any subsequent or consequential announcements in respect of the future in relation to this matter.

It is now clear, therefore, that the people of New Zealand—at least, through to 1 April 2008—will have experienced 8 consecutive years without any adjustment to the brackets. Inflation during that time has cumulatively been 22.6 percent. So the $38,000 a year income bracket, which is where the 33c in the dollar taxation rate now kicks in, should by now have been increased to $46,588 a year, and the $60,000 a year income bracket should have been increased to $73,560 a year. The average wage in the year 2000 was $36,000. So if people have done no more from then till now but to keep pace with inflation, they would now be on a salary of $44,000 a year, and in order to maintain an equivalent standard of living to that they had in 2000, they would have to be on exactly that figure. But, because we have made no adjustment whatsoever to the taxation brackets, it means that their take-home pay has been steadily eroded. Such people will have shifted long since from the 19.5c in the dollar bracket into the 33c in the dollar bracket, and it is now calculated that they are paying an extra $2,400 a year in tax, when trying to maintain exactly the same standard of living as they had. In other words, they have not increased their earnings in real terms—they have just stayed static—but they are now paying another $2,400 a year in tax.

That vastly increased taxation burden on New Zealanders now amounts to about $1.5 billion per annum—that is, $1.5 billion each and every year—and that amount will continue to increase until fiscal creep is brought to an end and the New Zealand income tax system is permanently put back on to a fair, an equitable and an adjusted-for-inflation basis. On the one hand we index benefits, and we index the excise duty paid on petrol, alcohol, and tobacco. On the other hand it is time to index the taxation brackets. It is time that we began to be honest with the taxpayer, and it is time that we recognised that the taxation burden on taxpayers in New Zealand has increased year in and year out, without a break, since the year 2000.

Let me go on to a happier note and to praise some of the other aspects of the 2007 Budget. It does include tax cuts, all advocated for by the United Future party—my party of very recent memory. It signals a cut in the company tax rate from 33c in the dollar to 30c in the dollar, which is a great step in the right direction and has my wholehearted support. It will lower the cost of capital. It will incentivise the reinvestment of profits into businesses. It will help start-up companies to survive the first couple of years of their existence, although I personally would go even further than the Budget has, and would provide a complete tax holiday for such companies over the first 2 years. This movement in the corporate tax rate is one that corporates have waited for and sought for years, and it is great that at long last, after 19 years without a change, we have addressed that reality. At last we are moving more towards competitiveness with Australia, and therefore giving our New Zealand companies a fair chance to stand up in the world and to shine.

However, nothing in the Budget gives me greater personal satisfaction than the complete removal of any limit on gifts to charities, for both individuals and companies. I have personally worked on that issue for 20 years, with almost every successive Minister of Finance over that time. I guess it just goes to show that sometimes someone has to be elected to Parliament in order to effect change, and it has been worth it to see that huge change for charities. Charities make an invaluable and irreplaceable contribution to the social fabric of this country. They do great things that Governments simply cannot do. They are the most effective and efficient organisations ever devised by mankind. I rejoice with them at this great step forward, and I encourage all New Zealanders to open their hearts and their wallets in support of charities. As they do that, they will now get a rebate of 33c in each dollar from the Government, with no cap—no limit. That, indeed, is a marvellous, marvellous change.

The KiwiSaver changes announced in the Budget also have my general support. I remember, early in 2003, discussing the need to provide tax incentives for savings with Professor Graeme Fogelberg, the then Vice-Chancellor at Otago University. We lamented the lack of such tax incentives, and I remember his trenchant criticism of those here in New Zealand who claim that such incentives do not work. Well, it is funny that every other developed country in the world has tax incentives for savings. We have been out of step and—guess what—we have had very low levels of savings. Perhaps we will at last get over our “purer than Caesar’s wife” attitude towards the taxation of savings, and remember the simple maxim that if the Government encourages something, we will get more of it. It really is as simple as that. Personally, I have no doubt that the KiwiSaver changes announced in the Budget will boost household savings significantly in the years ahead. That will lead to greater security in retirement, boost the pool of capital available for investment, rein in inflationary pressures, and put in place the foundations for an ownership society.

As is known, I have recently resigned from the United Future party and am now an independent MP. But I intend to launch a new political party, Future New Zealand. I can tell the House that moving towards an ownership society for all New Zealanders will be one of that new party’s central policies.

Hon HARRY DUYNHOVEN (Minister for Transport Safety) : It is a pleasure to stand to speak in this Budget debate. It is just a pity I was not able to be here on the night of the Budget, due to my being overseas at a meeting representing the Government. But it is a real pleasure now to speak in the debate, having read the Budget speech and having seen just what the Budget delivers.

It is 20 years, almost, since I first became a member of this House. Regrettably, unlike you, Mr Assistant Speaker, I have not been a member continuously, and you will well remember that our beginning here as new members of a Government in 1987 was a very tough time. David Lange, that great New Zealand Prime Minister, walked into our caucus on that first day when I was a brand new member, and said: “You—Duynhoven! You weren’t supposed to get here!”. I grinned and said: “Well, tough, I am here now.” He said: “Yep, and as a reward you can do, in 1 minute’s time, a 5-minute speech”—remember, I am a brand new caucus member; I had never set foot in the place before—“on the two things this Government should do that nobody has talked about.”

The two topics of my speech were proportional representation and the need for a fully funded, individually calculated superannuation scheme, where people made their contributions and knew what was in their account. My reason for being so keen on that—I have always been keen on a guaranteed superannuation savings scheme for our future—was that people had surety. I, like many New Zealanders, had seen and welcomed Labour’s 1972-75 Government and the marvellous superannuation scheme it put in place. It took a while to get in place, because a complete change in public sector culture was needed.

After just a few months of that scheme having been put in place, a change of Government occurred. Bill Rowling had been deposed as Prime Minister. Rob Muldoon became the Prime Minister and used as a bribe the fact that he would be able to pay back to New Zealanders all their superannuation contributions. Actually, people worked out what they would get back. He said he was an economic genius and that this country would be able to afford superannuation without people having to put into it other than through the tax system. We all know what a fallacy that was.

It is a famous saying that those who do not learn from history are destined to repeat it. The only danger with Michael Cullen’s marvellous KiwiSaver scheme is that National might be stupid enough to try the same stunt again. If it managed to do that, then I sincerely hope it is not successful, ever—the grandchildren of its members would curse them for it.

We as a country now have the opportunity to build on what is a quite remarkable change in approach, where superannuation is seen as a necessity for everybody—

Dr the Hon Lockwood Smith: If your productivity is stalled, you’re not going to build anything.

Hon HARRY DUYNHOVEN: —because not everybody has the wealth that one or two of the blathering National Party people have to be able to be independently secure for the rest of their lives. It is all very well for people who are getting a two-for-one subsidy from the taxpayer on a fairly substantial chunk of their income for their superannuation to be scathing about those who want to see that extended to the general public.

We often hear about how New Zealand—according to the National Party—is a highly taxed society. Its members keep comparing us with Australia, but they forget to count in little things like the fact that it costs people A$800 to register their car. It is less than $200 in New Zealand to do that. That is a tax, I say to Dr Smith, in case he had not figured it out. There are a whole lot of things like that, such as the Medicare Australia programme, which people in Australia pay into as well—on top of their taxes. The income tax rates are higher here, but those are all things that people forget to calculate in.

In this Budget we see a real emphasis on moving ahead to a stronger savings culture for New Zealand, to sustainable growth, to transforming our economy, and to ensuring higher living standards for all families in New Zealand. We have seen years, now, of what the business community least expected: a Labour Government responsibly running the economy, addressing the need for sound fiscal management, and managing to correct the imbalances in the economy. One has only to think back to what National Governments’ legacies were in the past to see why it was so necessary to have the sort of direction Labour has taken.

A sustainable future for New Zealand over the long term is vitally important to all of us, and especially to our children. Those who do not have children probably think about this in an academic way, but those of us who have children know that they look ahead to what might be achievable for them and to what will be there for them. If our legacy is to burn up their future—which is what National has done before with its borrow-and-hope policies—then that is a pretty poor commentary on our ability. I am delighted that this Budget sets in place really strong foundations for the future. It guarantees superannuation—as long as there is a Labour Government, because National, of course, has made it very clear that there is no guarantee as far as it is concerned—invests in families, gives us the opportunity as a country to move ahead, invests in education, invests in health care for all New Zealanders, and makes a real difference.

I say to members opposite that they have to make up their minds. They cannot keep harping on, as we heard Dr Smith do before, about the huge number of bureaucrats. Would a National Government cut the public service? Those members opposite talk about tax cuts, but when incomes are cut, there has to be a cut in spending. At the same time they blather on about the need for this and for that and for everything else, and about how they will spend this and how they will do that. Yet, a little time back—only 15 years or so ago—National ran an election campaign that was fundamentally dishonest. I do not want people to forget that that happened.

In 1990 National ran an election campaign that promised all sorts of things—

Chris Auchinvole: Back to the 1990s!

Hon HARRY DUYNHOVEN: Yes, back to the 1990s. I do not want people to forget that campaign, because they had to put up with 9 years of a lying Government. It lied its way to power. When I pointed out that I had heard John Banks in New Plymouth spell out the sorts of things that National was going to do, Labour ran ads telling people to watch out for their holidays, because those would go under a National Government and their sick leave would go under National. We pointed out all those things—

Chris Auchinvole: Oh, how miserable it was!

Hon HARRY DUYNHOVEN: Well, we understated it, because when National became the Government what it did was vastly worse than what we had said. What happened? We saw 9 years of cutting. We saw superannuation cuts.

I remember having a ride with Maurice Williamson in a car in 1998. We were going to a conference and we both happened to be on the same plane. He had a ministerial car, and said: “Harry, hop in.” I had a half-hour haranguing from Maurice about how bad New Zealand First was because it had refused to allow superannuation to be cut below 60 percent of the accepted 40-hour-a-week average wage. He was absolutely furious, because National had set its sights on a rate of 55 percent.

This Budget sets a sound foundation for the future. I am delighted with KiwiSaver. I think there are so many things in the Budget that will make a difference to New Zealanders. The Working for Families package is enhanced and low wages are enhanced.

We see a need to ensure that people do not forget what National will do when it is desperate to get power. People should not forget what we saw in 1990 and, previous to that, in 1975. I do not want people to forget that, because we must ensure that we keep this Labour Government in power in order to guarantee superannuation and all the other things that we see as being a normal part of New Zealand life for the future.

CHRISTOPHER FINLAYSON (National) : That was a great Opposition MP’s speech from the member for New Plymouth. I must say that he does angry very well indeed and I am impressed.

The reality is that last week’s Budget was dismal. It revealed not only the Government’s lack of competence but also its lack of imagination or understanding of New Zealand’s real economic situation. Indeed, the only time the Minister of Finance got anywhere near to announcing something exciting was when he reannounced National’s charities policy. As the Associate Minister for Arts, Culture and Heritage, who is also in charge of intellectual property issues, believe it or not, would tell us, there is no copyright in ideas, but at least the Minister of Finance could have had the class to acknowledge where Labour’s policy came from—it copied us.

The reality of the matter is that this is Michael Cullen’s last Budget and he will be on the scrap heap this time next year. This Budget was as consistent as his other seven Budgets, in that it lacked any real solutions to the problems facing New Zealand. For example, there will be no improvement in the current account deficit; we are sinking deeper and deeper into debt. There will be no improvement in wages and, indeed, our growing pay gap with Australia is fast approaching a crisis. There is nothing to suggest that the Government understands the need to boost productivity and grow the economy.

Labour has had 8 years to attend to these matters and it has done nothing. It has had 8 years in which to lift productivity, but the only things that have grown are interest rates. The Prime Minister promised us in 1999 that she would take New Zealand back into the top half of the OECD, yet we can look at the figures.

Chris Auchinvole: What happened?

CHRISTOPHER FINLAYSON: I can tell Mr Auchinvole that in The Economist guide to the world in 1988, our GDP per capita was slightly less than Australia’s, but we were ahead of countries like Spain and Ireland. Our situation today is very different, indeed. We are way behind Australia, and we are way behind Ireland and Spain. The Greeks, the Slovenians, and the Portuguese are catching up with us. At this rate, within a few years we will be behind Greece and Portugal and those great countries of Central Europe—the Czech Republic and Hungary—will be ahead of us, as well. [Interruption] Dr Lockwood Smith interjects very well and says that this will be changed only if there is a National Government. The situation is very serious.

What is the response of Labour members when they are confronted with these stark economic realities?

Chris Auchinvole: What is it?

CHRISTOPHER FINLAYSON: We saw it from Mr Duynhoven. They just stand up and blame National and what happened in the 1990s. Indeed, Mr Duynhoven even went back to 1975. For example, this afternoon Mr Cunliffe answered a question about broadband, and he blamed us for the light-handed regulation of telecommunications in the 1990s. He failed to note it was Labour that privatised Telecom in 1990 and that the Bolger administration inherited from the last Labour Government the very regulatory framework that Mr Cunliffe criticised today. That member does not even know his own party’s history while in Government.

Every time Labour members are criticised, they come back with “In the 1990s this, and in the 1990s that.”, and, in the case of Mr Duynhoven, “In 1975 this.” Real adults stand on their own two feet and accept responsibility for their own actions. But I can honestly say that in my 20 months in this place I have never once seen any Labour Minister accept responsibility for any failure or failings of the administration of his or her department. A little while ago the Prime Minister told us she was rewriting the Cabinet Manual to incorporate her new confidence and supply arrangements. What she did not tell us was that she was striking a red line through the doctrine of ministerial responsibility, as well.

I would now like to pay some attention to some of the areas for which I have responsibility. First, I want to say something about Vote Treaty Negotiations. The reality is that this Labour-led Government has had two failures as Minister in charge of Treaty of Waitangi Negotiations. On 20 July 2000 the first failure announced the adoption of six principles to guide the Government in negotiating settlements of historical claims under the Treaty of Waitangi. These included adequate provision to ensure there was reasonable and sufficient provision for settlement of Treaty claims in Budgets. In the 2007-08 Vote Treaty Negotiations there will be approximately $29 million, which represents a $900,000 increase on the corresponding figure for the previous year. But this does not even represent an increase in order to keep up with inflation. After taking inflation into account, the vote actually decreases. In the period from 2000-01 up until the latest year, Vote Treaty Negotiations has increased by about $1.21 million, but that represents a reduction in the vote, after inflation, of about $4.8 million.

What will the money be used for?

Chris Auchinvole: What will it be used for?

CHRISTOPHER FINLAYSON: I can tell Mr Auchinvole that there appear to be no initiatives to speed up and improve the negotiating process—just $900,000 being thrown at the existing failing process. But that sum will not overcome the fundamental failings with the process and the lack of leadership provided by the current Minister. The amount set aside for land banks is capped at $10 million, but that is not enough to buy a Landcorp farm, as events this year showed. The total amount the Government expects to spend on settlements this year is only $60 million, but at least two of the current settlements are very much under pressure and I believe that money could remain unspent.

Then we are told that the tribunal will receive about $7.7 million over the next 4 years to help the Government to push its objective of settling all historic claims by 2020. But the fine print of the Budget certainly does not point to a sudden surge of settlements. I believe that given the current level of performance, it is simply dreaming. Whatever happened to the proposal by the first failure as Minister, back in 2000, to persuade Cabinet to seek a comprehensive review of the Treaty of Waitangi Act? At the time she said she thought a review was needed, to ensure the future role and focus of the tribunal was consistent with the Government’s overall objectives in both the historical and contemporary issues. But, as so often happens with this Government, much was promised and very little was delivered. The sad reality of the Treaty negotiations process is that the Labour Government’s performance constitutes an irredeemable failure. The tragedy of the present situation is that there will be a continuation of drift, waffle, and lack of achievement until the next election.

So it is in the justice area.

Chris Auchinvole: Is it the same?

CHRISTOPHER FINLAYSON: It is exactly the same. The Minister of Finance mouthed the usual inanities about the Budget seeking to ensure that New Zealanders will have “a safe and just society” through increased funding to the justice sector. But the only practical proposal appears to be for a new Supreme Court building. Additional funding appears to have been provided to the Human Rights Commission to improve “service delivery”. Hopefully that will not mean senior officers of that commission going on any more jaunts to dubious International Bar Association conferences, as we learnt were going on when the Justice and Electoral Committee reviewed the performance of that suboptimal commission a few weeks ago.

What about the implementation of the new Coroners Act referred to by Dr Cullen? Will the additional money achieve anything? I doubt it. In fact, I heard of one particularly sad case a week or so back where a young lady had been killed in Pīhā in January, but her mother cannot close down the deceased’s accounts because she cannot obtain a death certificate as the Auckland coroners are too overworked to hold an inquest.

This is the new regime announced with such fervour and fanfare by the Labour Party last year. So while the Labour Party is concerned with featherbedding the Human Rights Commission and spending money on new procedures and processes, the everyday cares of New Zealanders are simply ignored.

Finally, I want to say a word or two about Dr Cullen, whose performance in the House last week was pitiful. That our Deputy Prime Minister and Minister of Finance, in an important tax debate, had nothing better to contribute to this House than petty and catty discourse about people’s ties brings deep shame on the New Zealand Parliament. Mark my words: this is his last Budget. His political career is going nowhere, just as his academic career was going nowhere upon his election to Parliament in 1981.

Perhaps the whole purpose of that horrible man’s tenure as Minister of Finance has been simply to serve as a warning to others: it does not matter how smart people are, and it does not matter how smart they think they are; if they do not listen to others and do not pay attention to the everyday hopes and aspirations of their fellow countrymen, then history will judge them to be a failure. Last night my good friend Mr Auchinvole referred to a letter written by Oliver Cromwell to the General Assembly of the Church of Scotland in 1650, and I endorse everything he said.

Hon DAVID BENSON-POPE (Minister for Social Development and Employment) : It is a pleasure to take a call in this debate, which is a very important one for Parliament and for New Zealanders to have. I will begin by responding very briefly to the unfortunately churlish comments of the previous speaker, Christopher Finlayson. Those comments were out of character, I suppose. Yesterday I conveyed to the member personally that I had heard him speak with erudition, accuracy, and eloquence at the State dinner for Mr Karamanlis earlier in the week. But the churlish comments he has just made about this country’s Minister of Finance and Deputy Prime Minister cannot really go without a response.

Most New Zealanders are only too aware of the extraordinary contribution that Dr Cullen has made in the establishment of what has become known as the Cullen fund—somewhat to his embarrassment. We now recognise that this fund will guarantee the partial funding of superannuation into the future. That is despite the ACT party’s efforts, which clearly will be unable to come to fruition, because ACT will not be in Parliament and nor will any parties with which that party would have been in coalition. Not only has Dr Cullen cemented his place in the political history of this country with that contribution to policy development and policy implementation but he has gone a step further with some of the key elements of last week’s Budget. The element to which I most refer is of course the initiation of the enhanced KiwiSaver package.

Irrespective of what the National Party does, and irrespective of what its position might be—and we will wait for some weeks or months to know that, given the uncertainty we constantly see repeated about what its positional policy might be on anything—Dr Cullen’s contribution in terms of this policy is an extraordinary one. In the words of one of the journalists from the New Zealand Herald who has been reporting the Budget for the last little while, “Cullen will … go down in history as the Finance Minister who had the guts to tackle savings … when so many of his political predecessors wimped out.”

Well, the previous speaker has certainly wimped out, as has his leadership, in respect of the risks that this economy currently faces. For any politician in this country, given the inflationary pressures this country currently faces, even to suggest tax cuts is downright stupid and irresponsible—and it is not often that I agree with Bill English, but at least he has had the integrity to stand up to bad policy development in his party. For me and, I think, for most New Zealanders, Dr Cullen’s policy on savings is the great strength of what is happening in this country. People have realised how sensible, how appropriate, and how timely that key centrepiece of this Budget has been.

I will continue by setting a bit of the social and political context in New Zealand for this Budget. For those of us not in this House, those listening to the Hansard record internally, or those listening on the radio, it would be hard to understand or get a decent grasp on that context. The context is that we live in a society that for 11 consecutive quarters has had unemployment rates significantly below 4 percent. That is unparalleled in the OECD. The reality of the context in this country is that we live in a society that now has historically low unemployment levels cemented into place. It is not a society of the sort that the National Party developed, where unemployment went as high as 10 or 11 percent, but a society where we have moved from having 161,000-odd people on the scrap heap, on the unemployment benefit, without prospects or an immediate future—under National—to 25,000 people on the unemployment benefit. That is an extraordinary reduction of 83 percent, in the 8 years of this Government, in the number of people on the unemployment benefit. That can be put alongside the sorts of initiatives that we announced last week.

But before some tired National MP runs out the tired old myth of people being shifted around to gild the numbers, let me talk about the total—

Anne Tolley: It’s not a myth; come to Ōpōtiki.

Hon DAVID BENSON-POPE: I ask Mrs Tolley, please, to listen and let me talk. I ask her to open up her ears and, just for once, to listen. The total number of working-age benefits—I say to Mrs Tolley that that is “total”; it involves adding up all the numbers—received in this country since New Zealanders had the good sense to get rid of Mrs Tolley’s lot, has reduced by 35 percent.

The most powerful of those figures is in respect of 18 and 19-year-olds who receive the unemployment benefit. When National was last in Government the number of beneficiaries aged 18 and 19 receiving that benefit was 17,514. I can now tell the House that last month that figure for 18 and 19-year olds had dropped to fewer than 1,400—not 14,000 or 17,000, as it was under National, but 1,400.

I will dwell just for a moment on those young people. Young people get a bit of hard press sometimes because of the ridiculous, stupid, and highly undesirable behaviour of their minority. But we saw the best of young New Zealanders when we looked at the vox pop on television last night and saw young people being asked about KiwiSaver. All of the people I saw onscreen last night—young people down the street in Wellington, or wherever Television One or TV3 found them—when asked about KiwiSaver, said, without exception, what a great idea it was. These are the young people who are so unimportant and so peripheral to the National Party. All of those young people said what a great idea it was.

We listen in this House, or to the radio anywhere in this country, to stories that the National Party would have us hear about its advocacy, but, frankly, do we believe that advocacy and concern for low-income people and the young? Well, really! Let us go back to an article from Tracy Watkins just a couple of days ago; Tracy says it all in her Dominion Post article. The first line, which talks about the Budget, reads as follows: “You would have to be a mug not to sign up to Michael Cullen’s turbo-charged KiwiSaver scheme.” The good news is that New Zealanders, unlike the National Party and those sad people on the Opposition benches, are not mugs. I know that New Zealanders will make the right decision here.

I would like to tell the House a story I heard from one of my home town’s supermarket smoko rooms—I hope they do not smoke any more, but that is what the rooms are still called—and the story goes like this. The workforce there were discussing KiwiSaver, and the people, to a woman and to a man, said that people would have to be mugs—just as Tracy Watkins said in her article—not to sign up to KiwiSaver. Do members know what people in that lunchroom thought was the best part of it? They thought the best part of it was that their employer would have to make a contribution, too—and I have to say that I do not think the employer-employee relationship in that enterprise was as desirable as it might have been, or as it is in most places. Well, does that not stick in the craw of those National Party members who hate the idea that any employers should have to make a contribution?

But the good news is, of course, that that view is echoed by the poll that has been released today by the Business Council for Sustainable Development. Most employers are not the mean, nasty, short-sighted people that the National Party depends on for its funding; most employers know that the sorts of initiatives that will develop incredible loyalty, and support the economic future of their workforce, are also to their advantage.

The last message that I want to give today to New Zealanders, and to members on the other side of the House, is that it is becoming ever more clear that if this Government were to change in any way, all of these initiatives would be under threat. National members are the people who cut the benefits, gave us market rentals, cut superannuation, and gave New Zealand one tax break in all the time they were last in Government. The National Government did that every year, consistently, and its members over there are the ones who voted against business tax cuts. So New Zealanders understand that not only the Working for Families package but also the KiwiSaver proposals will be at serious risk if National is allowed to get its dirty paws anywhere near them.

TIM GROSER (National) : When one sits down and looks at the vast documentation of this Budget one sees that it contains a number of complexities. But, as in most things in life, the really important things come down to a few simple truths. The two simple truths that I wish to focus on in this call are these. The first truth is the very clear evidence that this Government has completely lost touch with New Zealanders, even its own constituencies—or those which it would naturally claim to own. The second truth—much talked about by my colleague Dr the Hon Lockwood Smith—is that the Government simply and clearly does not, as we see through its choices, trust New Zealanders to make decisions in their own best interests.

Let me start with the first simple truth, which is that it has lost touch with New Zealanders. I will use the same typology that would appeal to Government members: the boss class or the companies, and the workers—we all know that this is fantasy, but let us use this typology. We will put aside, by the way, the underlying reality that nearly 90 percent of New Zealand companies employ six people or fewer—the exact figure is 86 percent. Nearly 90 percent of New Zealand companies operate in a social setting where there will be almost no discernible difference between the person who owns the company and the fewer than six employees he or she employs and works alongside.

Maybe it is unreasonable to expect the Labour Party to be deeply in touch with those employers’ concerns and to understand what we in the National Party hear from small businesses every day of the week: that they are acting, in effect, as agents of the Government for this compliance issue or that compliance issue, and have responsibility for discharging issues that, frankly, many of them are hard pressed to get their heads around let alone to employ specialist advisers to deal with them. Maybe it is a bit tough to expect the Labour Party to be in touch with that thinking.

What struck me in all of the reactions was the statement made yesterday by the Employers and Manufacturers Association, which is essentially a major organisation representing very small businesses in New Zealand. After surveying and giving lectures on KiwiSaver to 3,000 different employers it reported as follows: “When told how the scheme is to work the employers instant response is laughter and disbelief.”

Chris Auchinvole: Really?

TIM GROSER: As I say, it may be a bit tough to expect the Labour Party to understand intuitively where 90 percent of New Zealand businesses are coming from, but, I say to Mr Auchinvole, I would argue that one would expect it to be in touch with its trade union roots.

Chris Auchinvole: You’d think.

TIM GROSER: You would think that. After all, a fair number of them come out of that corner. I ask members to park that aside for just a minute and to go back to the statement made by Michael Cullen in his Budget statement that the Government contribution—to KiwiSaver, obviously—will be offset in wage negotiations.

Chris Auchinvole: Oh, really!

TIM GROSER: Well, Mr Auchinvole, he had to say that, because if it was not offset in wage negotiations it would be yet another hammer blow on the heads of small businesses, which, as 90 percent of businesses, essentially make up the private sector in this country, bar a few and honourable large exceptions. So of course he had to say that it would be offset in wage negotiations.

Chris Auchinvole: So he has decided the negotiations?

TIM GROSER: He is trying to influence them.

I will sketch for the member a scenario, which I think will make him at least pause for some laughter. I will tell him about the “laugh test” in negotiations. This is a very brutal test in negotiations that I, of course, learnt from the international negotiation background that I have had. It is this: if one puts before a group of people whom one has to persuade about a proposition that is so lacking in credibility that they burst out into spontaneous laughter, that proposal is dead in the water; it does not pass the laugh test.

The specific circumstance that gave rise to this was the following. In about 1988, from memory, the Japanese Government imposed a restriction banning the importation into Japan of Austrian and Swiss skis, which are a major export item for these small European countries. When hauled before the court—in this case a technical court called the Committee on Technical Barriers to Trade—and asked to justify the reasons for this, the Japanese representative said that Japan could not import Swiss or Austrian skis because it would be unsafe. When pressed further the representative said that that was because Japanese snow has different characteristics.

Chris Auchinvole: Ha ha!

TIM GROSER: Well, exactly. Whereupon the entire audience broke out into similar spontaneous laughter as Mr Auchinvole’s. We never heard of that proposal again.

We already know that the Cullen extension does not pass the laugh test for small employers. As I said, when told how the scheme is to work, the instant response of employers is laughter and disbelief. But I ask members how they think the trade unions would respond to that. Let us say a person is a trade union negotiator and he or she follows the script of this Budget—the script that Michael Cullen expects negotiators to follow—and let us say that his or her expectation was, other things being equal, that he or she would go for a 3 percent wage rise. That person goes back into this mythical smoko of Mr David Benson-Pope and he or she says: “Three percent? I don’t think we should press for 3 percent. I think it should be 2 percent, because we’ve got to take account of the employer contribution.”

I ask members this. Do they think that would pass the laugh test? Tracy Watkins is entitled to her opinion, but I am actually following the opinion of Michael Cullen. The opinion of Michael Cullen is that the uptake is not likely to exceed 50 percent. So when that person goes as a trade union negotiator into the smoko, this mythical room, and he or she says that they should accept less, when half the people in that room are not participating in KiwiSaver, what do members think they will say? I will tell members: that person would be laughed out of his or her job.

I think it is incredible that the Labour Party is so far removed, and so deep in its third-term-itis that it could make such an elementary misjudgment—even in terms of the constituencies that one would expect it to understand and listen to. From National’s point of view there is a lot of water to pass under this bridge. We will have to listen again and again to the same nonsense that we have heard today: that if National wins we will steal workers’ savings. Let me quote literally word for word what John Key has said on this subject: “Depositors have nothing to fear from a future National Government raiding their accounts, and of their contributions or the contributions of the Government.” We will have to repeat this over and over again as fear tactics are used by the Labour Government. But we will do that. We will keep hammering the point.

The basic reality is that the details of KiwiSaver have yet to unfold. There is a lot of water to flow under this bridge. There is a case for improving the savings record of this country. There is no question about that, but there are many different ways to achieve this objective. Although we will guarantee the contributions of those people who in good faith will contribute to this scheme, we need to sit back and assess what the best way of meeting this objective is. That will take some time.

As for these false tears, Labour thinks it has a mortgage over concern for people at the bottom of the political and economic food chain. Labour members consistently deny the possibility that anyone other than the Labour Party could be genuinely concerned for the whole of New Zealand—just as they have denied the existence of an underclass, just as they have used strange terms like “Tory charity” to try to destroy a scheme that weeks later they adopt in wholesale fashion themselves.

Labour members think they have a mortgage on concern for people at the bottom of the heap. Let me tell those members that the Labour Government is using fatally flawed mechanisms for policy delivery. It is pouring $3 billion extra into a health system where it has poured $4 billion over the last 6 years and failed to produce positive results—the results it is producing are going backwards. We cannot accept the roll. New policy mechanisms will be used by a future National Government to deliver far more bang for the buck. The Labour Government’s false belief that only it has a mortgage over concern for people at the bottom has been revealed most clearly of all over the terms of the KiwiSaver scheme.

Hon MARIAN HOBBS (Labour—Wellington Central) : This Budget debate has been framed as KiwiSaver versus personal tax cuts. The previous speaker, who yet again referred to his experience as a well-paid public servant, based his Budget analysis just on that—on KiwiSaver and whether it works. This simplistic framing ignores the continuing strengthening of the Government’s support for our families, as provided for in this Budget, and it ignores the strengthening of underlying contributors to the needed increase in productivity that has also been delivered in this Budget.

If I look just quickly at strengthening families, it is not enough, and we have seen it happen on too many Wednesday nights not to realise this, for members to stand in this House, after the different personal tragedies that happen to various New Zealanders, and talk platitudes about how families are left unsupported and how children are vulnerable, and to say that they are left unsupported to deal with issues around education, youth justice, or health—then to vote down the very solutions promoted in this Budget that are about strengthening families. The only option that National puts up is tax cuts. But it is not tax cuts; it is cuts to the solutions to strengthen families.

Let us look at education. In the education budget we have put up funding for 14 new schools and 180 new classrooms. When I listened to question time today there was a debate about whether we would reach the 1:15 ratio. We cannot reach that 1:15 ratio until we actually build the buildings to put the new entrants classes in if we are to split them up into smaller and smaller classes. Ten school gyms are not only school gyms on their own, but also school gyms are to do with producing healthy young people, and to do with the work on preventing obesity and promoting healthy lifestyles. If we are talking about teachers—I cannot believe this in a sense, as a former teacher and now a prospective teacher again—5,000 extra teachers over roll growth have been put in since we came into Government in 1999. That is not about supporting the unions; that is about supporting families and our young people.

If we think about supporting families and looking after the youngest members of our families, the 20 hours’ free early childhood education programme has received an extra $50 million in this Budget. That means a total of $769.7 million in this year alone has gone into this area. This is matching words, matching platitudes, with action. This is what this Government and its support parties are about. But is this a programme that the National Party would support? We have not heard a thing about that. Probably that $769 million would be dissipated in personal tax cuts if we had a National Government today.

If we look at things like the Early Years initiative, which is about antenatal care, home visiting programmes, and parenting support for vulnerable families, that will all be forgotten when members stand in here and cry tears for the child who is beaten or killed. Those members will forget that there is a package there to support just such families. This is action, instead of parliamentary hand-wringing. We have the newborn hearing programme, which is identifying newborns with hearing impairment, and specialist support has been put in, in addition to the cochlear implant services—and I heard the previous speaker, Mr Groser, call that sort of work “fatally flawed” health support. That is not fatally flawed; that is what the community has been asking for. There is $17.4 million for extended support for out-of-school services.

Then we can talk about tertiary education. In the Budget we see a huge increase, this time focused on supporting universities, institutes of technology, and polytechnics to provide the quality of education needed in order to increase productivity. So we have money for tertiary staff salaries. Why? Because those institutions are in the international marketplace for those staff. There is money for operating costs and for expanded research. The students have not been forgotten. Students are being supported, because the parental income threshold will increase by 10 percent on 1 January—$16.2 million has gone into that area. The student allowance personal income abatement threshold will be adjusted for inflation. The step-up scholarship pilot has been increased, as has the Ngārimu scholarship. But will National guarantee to help these same students? Will it keep interest-free student loans? We have not heard an answer on that matter.

If we come to health in the Budget and aged residential care—again, how many crocodile tears have been shed in this House about the plight of workers who work in that sector and about aged care? Yet, these are the same members who will vote against this Budget. They will vote against $150 million going out there for aged residential care. They will vote against home-based support services and against people aged over 65 years getting $81.2 million. Those members will vote against home-based disability support services. They will vote against residential services for the disabled who are under 65. They will vote against the “Get Checked” Diabetes Aotearoa programme being expanded to cardiovascular diseases. That is what those members are going to vote against, yet they will cry crocodile tears in this House about supporting families.

Then we could look at things like the immunisation for—this word I find hard to say—pneumococcal meningitis, which is absolutely important.

Hon Member: Well done.

Hon MARIAN HOBBS: I think I got it—I thank the member. It is a very difficult word. Then we go to the area of having warmer, healthier homes. This is actually killing several birds with one stone. We want clean air, we want warmer homes, and we want to do something about climate change. We are putting in $23 million for interest-free loans to help homeowners pay for new energy efficiency; $15.3 million to have a home energy rating service; and grants to continue with energy efficiency retrofits for the houses of those on low incomes. That is the sort of work we are doing in that area.

Have we forgotten older New Zealanders? No, we have some colleagues and people to support us. As a result of our agreement with New Zealand First, we have ensured that superannuation and veterans pension rates are not less than 66 percent of the net average weekly wage. We have returned superannuation and veterans pensions to that level, so from 1 April single superannuitants living alone will receive an extra $13 a week, and a couple on superannuation will receive an extra $20 a week.

Then we think of strong families and of the priority there, and sometimes it is the small things that count. In the news are gangs in Counties-Manukau. Where is the Government? It is right alongside with the schools and with the social work services working with the schools, the parents, and the community. There is funding of $700,000 going into Turn Your Life Around and the Project K programmes. This Budget is about working with the communities out there.

We must consider those programmes in the Budget alongside the increases to the minimum wage. Let us think about that—this Government has given eight increases to the minimum wage in 8 years. We can compare that with the miserly, I think it was one—

Hon Brian Donnelly: New Zealand First forced them to.

Hon MARIAN HOBBS: —they drove it down—the one increase from the previous National Government. If people remember that, then they will begin to see the difference. There have been eight increases to the minimum wage from this Government, with its friends, and one from the previous National Government. People will begin to notice the difference.

This Government has brought in 4 weeks’ annual leave, Working for Families, and income-related rents. Will National members go back to market rents? What about paid parental leave? Who voted against paid parental leave? That will be gone. It will be gone by lunchtime—or was that another Prime Minister in waiting, so they thought? Those members opposite wait an awfully long time. He is gone.

If we talk about productivity, which those members keep on thinking we are not interested in, we see that this Government has been upskilling the workforce and has made investment in transport and in research and development. This Budget is a much more sophisticated plan of attack for New Zealand than a simplistic debate on KiwiSaver versus personal tax cuts.

Let us have a quick look at KiwiSaver versus tax cuts. This is the vox pop from the young of Wellington Central: “A $20 a week tax cut is four beers. It’s quickly adapted to, that extra $20, and then you want more.” I can remember that, from when I received wage rises. It is funny how we got the $500 wage rise, then forgot about it within 6 months. But $20 a week saving is $20, plus the Government contribution of $20, plus an employer contribution of say $10, which makes $50—and it is growing. It is not dissipating; it is growing. It is not adding to inflation. But the choice is even deeper. One choice that the Opposition wants to avoid is that tax cuts for the individual equals programme cuts for the community. Tax cuts for the individual is programme cuts for the community.

In 1998 National took superannuation from 65 percent to 60 percent of the average wage. We restored this, with help from our friends. What will National do? Ha, ha! Its record stands. I turn to the 20 hours’ free early childhood education. National has been remarkably silent on whether it will keep that. National voted against paid parental leave. Will National cut it?

ANNE TOLLEY (National—East Coast) : The biggest issues faced at this point in time in the area that I represent, which is the East Coast—typical rural, provincial New Zealand—are the high dollar, high interest rates, high taxation, and high compliance costs. So when the Budget was delivered, the majority of people in my area were interested in how the Budget would address those concerns, which are very typical across rural provincial New Zealand. The answer, of course, is that none of the above were actually addressed in the Budget at all. Let us look at them, one by one.

The most important thing farmers are concerned about at the moment is the high dollar. What do we see in this Budget to address that high dollar? Absolutely nothing. There is no economic strategy, and nothing in the Budget to give farmers any credence that this Government understands the difficulties they are facing and has a plan to get that dollar down. This year is supposed to be Export Year. Well, it is a cruel joke on the East Coast, because export earnings are going down, not up. They are going down as a direct result of the actions of this Government.

Forestry is a major industry on the East Coast. Forests are being cut down because of this Government’s actions. There is nothing in the Budget to address that issue, at all. Forests have not been planted, so investment has been halted, and that has caused a loss of jobs on the East Coast. People have no confidence, even as they come into this year’s planting season, that the Government will give them carbon credits for any of the forests they have planned. So they are disappointed that this Government has again overlooked the sector that provides the economic backbone of this country—that is, farming.

I turn to high interest rates. Last week I received a letter from my bank telling me that the interest rate on my mortgage has now gone over 10 percent. I am one of many throughout New Zealand who would have received a similar letter. We are paying 10 percent interest on our mortgage. The cities I deal with, such as Gisborne and Whakatāne, have lots of young families that are struggling to make ends meet. They are struggling because the cost of living has gone up, the cost of power has gone up, and the cost of food has gone up, as have the costs of rates and petrol—and now their mortgage has gone up. Many of those young families are struggling to make ends meet.

But Dr Cullen knows best, and this Labour Government knows best. They say to those families that they are not saving enough. What is more, the Government says that if it gave them a tax cut, gave them any extra money, it knows that they would fritter it away. The Government does not trust them not to spend any more of their money, so it wants them to save. These young families are flocking into my office, saying: “We do not have any spare money to save. We are struggling enough to make ends meet and raise our children.” A prudent investor would advise any of those families to pay off their home mortgage first, before they lock money away into a savings account where they cannot get the funds out until the age of 65.

What about high taxation? We know that that was not addressed in this Budget. Because of inflation, more and more people are paying the top tax rate. When this Government came to power in 1999—it seems like a century ago—it said: “Do not worry. We are putting up the top tax rate, but do not worry because only 5 percent of taxpayers will be paying that top tax rate.” Well, 15 percent of taxpayers are now paying that rate. The Government promised a miserly adjustment to those tax rates in the year before last. It was worth the equivalent of the cost of a packet of chewing gum. But this year taxpayers have been denied even that by this Government.

Finally, we have high compliance costs. There is nothing in this Budget to help those businesses that are crying out under the weight of the paperwork this Government is forcing on them. Ratepayers are paying substantially higher rates, as a direct result of the paperwork and compliance costs that this Government has forced upon them. Nothing in this Budget will help to improve productivity, which has fallen to historically low levels.

But I want to talk about an area that I have some particular interest in, and I am pleased to see that the Minister Ruth Dyson has come to the Chamber, after I was talking to her this morning at the Social Services Committee. I went to the committee’s Budget hearing, as the Opposition spokesperson on Child, Youth and Family. This department is a very important part of our Government services. It is responsible for taking care of ensuring that our children grow up in a safe and valued environment. When I look at the statement of intent for the Ministry of Social Development, I see that one of Child, Youth and Family’s major planks is to ensure that children and young people have permanent and stable care. These are some very nice words in this statement of intent: “The cornerstone of every child’s development and wellbeing is a lasting primary relationship with an adult who is nurturing and protective, and who fosters security and trust through predictable responses …”.

In other words, in order for children to grow and develop, they have to have a secure environment and they have to be able to develop a bond with the adult who is looking after them. Any parent knows that. We understand that. We even have a bill before the House at the moment that is looking at allowing women who are in prison to keep their newborn babies with them for a period of time, in order to allow that bonding to take place. We understand the importance of that bonding for the development of those children.

So it was with some horror that I received answers to a question to the Minister yesterday that showed that Child, Youth and Family and this Government are failing the most vulnerable children in this country. They are failing them consistently, and they are failing them knowingly.

I have statistics from the year 2006 that show the worst cases, from sites up and down New Zealand, in relation to the number of times those vulnerable children have been moved from pillar to post. A 6-year-old boy from the Manawatū was moved 11 times in 1 year—11 moves. An 11-year-old girl in Papanui was moved 11 times in 1 year. A 2-year-old in Whenuapai was moved seven times. We have to ask ourselves what a 2-year-old can do that would necessitate moving that child seven times in 1 year—in 12 months. That is once every 1½ months that the child is put into a new environment, with new smells and new surroundings, and is left with a broken relationship. How on earth will that child ever prosper? We are supposed to be doing that in the best interests of that child.

I know that there are times when we do not get it right the first time, but I suggest to the Minister and her department that getting it wrong seven, eight, nine, 10, and 11 times in 1 year is not good enough. The children in this country who are the most vulnerable because they are the most at risk deserve far more from this Minister and from this Government—and there is nothing in this Budget to address that. There are no extra finances or extra resources to deal with that situation.

LESLEY SOPER (Labour) : Tired, tired, tired words—that is about all we have heard from the National Party speakers who have risen to speak in this Budget debate. I do not need to wonder what people in Invercargill must be thinking. They are the people who greeted this Budget with open arms. Like me, they are thinking “Same old Tories. Same old lies.” It is like being pelted with popcorn.

There was absolutely no substance whatsoever—and, in fact, precious little style— in what we have heard from members on the Opposition side of the House. We have had several hollow rants from assorted fine, upstanding Opposition members like Mr Power, Dr Smith, Mr Bennett, Mr Key, and the last speaker, Anne Tolley. There was lots of name-calling, hot air, and sound and fury signifying nothing from them. There was not one new idea. There was not one decent piece of policy. There was not one reference to the fact that real Kiwis exist in Invercargill or Stratford or Napier or anywhere else in New Zealand. Those are the real Kiwis who appreciate that Dr Cullen delivered a Budget for all New Zealanders, not just for the few that the National Party likes to talk to. Even 68 percent of business people are saying that they support KiwiSaver.

Just yesterday, I believe, in this House a National Party member asked why Lesley Soper had bothered to enter Parliament. To that member, who did not have the intestinal fortitude to say that to my face, I say it is because I can do a better job than all the caretaker MPs on the Opposition side of the House. It is because I believe in things like equity, fairness, opportunity, sustainability, and social justice. Those are words that that member and his colleagues would not recognise, but they are things that Dr Cullen has helped to further in his 2007 Budget.

This Budget looks to a sustainable future for New Zealand over the long term. It delivers the most substantial changes to the business environment in 20 years. It will help to develop a more innovative and dynamic economy. It invests significantly in infrastructure like road and rail. It delivers business tax reform with the first cut to the company tax rate in 20 years, from 33 percent to 30 percent. That is something that National, for all its talk, consistently failed to do, and then—does my memory serve me right—it voted against such cuts. Dr Cullen’s Budget supports research and development. It supports further expansion into overseas markets—all good things. It supports strong public services and gives all New Zealanders a stake in society—something those National members would not know a lot about. It shares the benefits of economic growth.

This Budget invests in health. There is a $400 million boost in funding for aged care; that is something to be proud of. One hundred and forty-two million dollars has been put into child health, and there is more support for Plunket, a final roll-out of cheaper doctors’ visits, a boost to Health Eating – Healthy Action, and $21 million going into primary mental health. Those are real delivery items.

The Budget invests in education. More than half a billion dollars—half a billion—has been put into things like early childhood education, into schools, into more teachers and lower class numbers, and into things like increasing the operations grant. That, to a party that introduced bulk funding as its only education policy, may be something to reflect on. There is real investment into real parts of New Zealand. The Budget invests $76.3 million into raising skill levels in the workforce. That is to answer the party that destroyed the apprenticeship system. Do the members on the Opposition side of the House remember that? Dr Cullen’s Budget invests $72.4 million for energy efficiency. Do those members, the classic climate change deniers, remember that—oh no, there was a recent flip-flop on that one, I believe.

The cornerstone of Budget 2007 is KiwiSaver. KiwiSaver is the policy that National does not support. KiwiSaver talks about our future. It will make it easier to take the hard step of saving for all of our futures, and to save for the sort of retirement we all want to have. KiwiSaver quite clearly is on top of the current Government superannuation. It is not a replacement for superannuation, as the Opposition has tried to imply, but is on top of it. KiwiSaver is about helping families. It is a helping hand to many people early in their working lives, because hard-working young families actually and absolutely deserve support. It is a help for homeownership—something the party on the Opposition side of the House never thought to deliver. All it could think of was setting market rentals for State houses. Never in its policies did National do anything for homeownership or for people who live in State houses in this country. Did I hear that there was also another flip-flop on market rentals for State houses from the leader of that party? Is he trying to convince people, with his softer look, that National may actually change that policy? I think we might have heard something about that.

Another advantage of KiwiSaver is family savings. Families actually want to build up more funds. KiwiSaver allows that; it encourages savings. That will reduce our overseas debt. It means we will build up domestic savings. It will help to retain a skilled workforce in this country because we have a competitive advantage over Australia. It provides the sort of support that we have been looking for for years, and that the National Party has consistently failed to deliver at any level—economy-wise, social-wise, or in any other way.

KiwiSaver is a brilliant scheme. And what do we hear from Mr Key? What is the only thing he can say about KiwiSaver at the moment? I will quote from a recent radio interview: “It’s our intention over the next few months to sort of … um … have a look through the full ramifications of it. It’s not immediately clear, I think, from documents … just all of the complicating factors around that.” That is indecisive. Mr Keys says: “and we want to … um … we want to … what … what … what we argued last Thursday …” and it trails off into “No guarantees about KiwiSaver.”

For Labour members, KiwiSaver is a cornerstone. It actually means that we have something positive to offer New Zealand. That is not the National Party approach of asset testing, and the superannuation surcharge U-turn—do members remember that one? Bulk funding, double-figure unemployment, bed night charges—those were all delivered by National. We are talking about a positive future, while National members talk about nothing substantial—“Same old Tories. Same old lies.” Thank you.

Hon RUTH DYSON (Minister of Labour) : This Budget is not just a huge step forward for savings and for investing in a sustainable future for our country. It is not just a huge gold star for Michael Cullen as Minister of Finance for delivering his eighth and, in my view, best Budget. It is not just a huge mark of credit to Helen Clark for her leadership, openness, and honesty in being able to work with several other parties to ensure that the Budget represented not just our aspirations as a Labour-Progressive Government but also the aspirations of our key support parties. This Budget represents a big judgment call and judgment time for the National Party. Budget 2007 asks which way National will jump.

It has been very obvious from the reactions—particularly from John Key and Bill English—that it is not so much a question of which way National members will jump as a question of which way they are squirming. I have never ever seen demonstrated in this House such extraordinary division between the leader of a party and its finance spokesperson over fundamental economic management. It is just extraordinary. The question remains of which way National will jump. The public of New Zealand has asked how it will judge which way National will jump. Bill English says one thing and John Key says another, then John Key changes his mind—as he is wont to do on most days—then Bill English still says something different.

Perhaps people might look at the record of the National Party. As Minister for Senior Citizens I spend a lot of time with Grey Power groups, Age Concern groups, and voluntary aged-care organisations up and down the country, and they remember the 1990s and what National did for older New Zealanders. National deceived and deserted older New Zealanders. It imposed absolutely unfair regimes. It discouraged working New Zealanders from saving for their retirement and it punished retired people who had done so.

The most significant of all those deceptions was the magnificent U-turn demonstrated by Jim Bolger. John Key is working his way up to that peak performance in U-turns. Every single New Zealander remembers the big speech in 1990 at the National Party conference where Jim Bolger said the surtax would go if National was elected as the Government. He said that National would attend to it in the first Budget, “no ifs, no buts, no maybes”. And what did National do when it was elected? It set about making the surcharge harsher. What happened to the promise, what happened to the pledge, which had not been made in a cupboard all alone but in public at a National Party conference? The threshold was increased under National. The rate was raised from 20 percent to 25 percent. So, on two critical parts of the surcharge issue, National deceived all New Zealanders. For older New Zealanders, who are dependent on superannuation for their day-to-day living, having secure superannuation is pretty important.

We have seen in the recent publication The Hollow Men that that policy was not just a policy of the 1990s. Don Brash literally said it. His very own personal email is quoted verbatim in The Hollow Men. He asked how National could package a lie so that older New Zealanders would not know what National would do after the election. Well, it is clear that nothing has changed. John Key has taken his leadership advice from exactly the same people that Don Brash took his advice from.

So National promised to remove the surcharge, then it increased it. It promised to inflation-proof superannuation, then it cut superannuation relative to the average ordinary-time wage from 65 percent to 60 percent—cut it by 5 percent in terms of that relativity. It promised to increase the single superannuation living alone rate, and it reneged on that promise, and, in fact, cut the next increase in the level of superannuation. So people had an actual decrease; they got less than they had expected. National promised that it would raise the age of superannuation entitlement from 60 to 65 over 20 years. It said it would phase in that change. What did National do? It delivered it in 10 years. So those people who had listened to National’s pre-election promises, and had planned their future on the basis of the change in the age of entitlement to superannuation being phased in over 20 years, suddenly had that time cut in half—it was 10 years. National offered a tax rebate, then it scrapped it. On pledge after pledge National not only did not implement the pledge but also went in exactly the opposite direction. It deceived and betrayed older New Zealanders, and it is very clear that it would do so again.

It is also clear from the contributions made in the House so far on the KiwiSaver fund, and on the Budget debate generally, that the alliance between National and ACT is getting closer. If people want to have a Government that does not support universal superannuation at 65 years of age, at 65 percent of the average ordinary-time weekly wage for a married couple, if they want an uncertain future for all of those people who are heading towards that age now, then they should listen very carefully to what ACT and National are saying.

In fact, David Carter, who has just re-entered the House, has proposed taking tax cuts out of the Superannuation Fund in order to cut the company tax rate to 25 percent. So every person in Brian Connell’s current electorate, which David Carter aspires to be the next member of Parliament for, should be wary. Kate Wilkinson aspires to be the member of Parliament for that electorate, as well. I am not backing either candidate; that is the National Party’s choice. I do not know why the National Party supported Brian Connell ahead of Kate Wilkinson last time—it may have rethought that. David Carter’s policy would cost about $1.5 billion a year. How can people of our generation have any confidence that superannuation will be there in future? Well, under David Carter’s policy there would not be enough money to pay superannuation to 65-year-olds at the rate we currently have.

We know that even though it is much better that superannuation is an entitlement that people get automatically when they reach that age, it is not a very high amount. It is not a great deal of money to live on. We increasingly hear people say they have paid off their houses—because that is what New Zealanders do—and they have good financial security, but they do not have enough cash to do the extra things they might like to do. I know that a lot of older people, particularly from Kaitāia and other parts of the North Island, like to travel south in the middle of winter to Canterbury so that they can get a taste of what a real winter is like. Others might want to go to the Gold Coast to get some warmth. But a lot of people do not have additional money to do that. We know that they are going into home equity release schemes.

KiwiSaver is one of the major contributors, alongside our guaranteeing in law the level, the entitlement age, and partial funding in advance through the Superannuation Fund. KiwiSaver works alongside that to say: “We are all going to help you save. Your employer, your contribution as a worker, and the Government through its substantial tax credits to both the employer and the employee, will all pitch in so that older New Zealanders in particular have more security.” But KiwiSaver does a number of other things, as well. It means that we can own more of our own country. We have fallen far behind in New Zealand ownership of our own country. KiwiSaver provides support for employers and for workers, and it supports the New Zealand economy. It ensures that we do not have the sort of pressure on interest rates that would totally undermine any tax cuts given by National as promised.

This Budget is about New Zealand today, but also about New Zealand in the future. That is why the commentators have been so in praise of it, commentators like Paul McPadden and John Cantin from the National Business Review. Paul McPadden wrote: “As part of the good news package for business, this budget has come complete with tax credits for R&D expenditure.” John Cantin wrote: “From a business perspective, the company tax rate reduction … delivers. Other positive news … includes the introduction of a tax credit …”. Commentator after commentator have said that this is a New Zealand Budget for our security now, for our investment in saving, and for our investment in the future. This Budget delivers like no other that I have seen in my lifetime. It is a visionary Budget. It is a Budget that puts New Zealand and New Zealanders first.

SHANE ARDERN (National—Taranaki-King Country) : That was one of the soon-to-be former members of the tired, out-going Labour Government. I say to that member, seeing that she raised the subject of pledges from National members that went right back into the dark days of the last century, that I have here with me three pledge cards, circulated during three elections, which were paid for by the taxpayer—illegally in the last case—with pledges that I would love to read back to those members.

Helen Clark, on becoming the Prime Minister of New Zealand, said that the incoming Labour Government had intentions to lift New Zealand into the top half of the OECD. That is what she said in her Speech from the Throne when she became Prime Minister. Tonight we are debating the Labour Government’s eighth Budget, and where are we in relation to those aspirations the Prime Minister laid out way back when she became the Prime Minister? A massive growth gap has developed between the living standards of New Zealanders and those of our Australian partners. I can tell members one thing that New Zealanders hate—they hate losing to Australia. They love our Aussie cousins, but they absolutely hate losing to them. And we are losing big time to our Australian cousins. That is one of the legacies of this Prime Minister.

We are exporting, in this Export Year, more people now to Australia than in the history of this country. Despite a huge surplus in the economy, the biggest ever surplus, more people are leaving New Zealand than ever before. The reason is that in this Budget, 50 percent of workers, the people that Labour purports to represent, get nothing—absolutely nothing, not a cent. Their wages are so much lower than their Australian cousins’ that they are saying: “Well, Dr Michael Cullen, some doctors make you well, and some doctors make you sick, but when it comes to the Budget, you are overwhelmingly in the last category.” Dr Cullen has made this country sick, and people are leaving in their droves.

I tell the members over there on the Government benches that we do not have concerns only with that. Let us look at the latest set of clichés this Government has used, which are all about the environment. This Government is now pro-environment, like no other Government ever. One of the myths being perpetuated by the Minister for Biosecurity—the outgoing “Sunset Minister”—the Hon Jim Anderton, is that we have one of the best biosecurity systems in the world. That is what he says. He says it regularly, although I note in recent times he has downgraded that to be “amongst some of our partners”, or words to that effect. Well, I ask: the best compared with what—countries that have didymo, countries that have varroa, or countries that are endemic with foot-and-mouth? What do we best compare with?

Bear in mind that this “Sunset Minister” was part of a Government that said agriculture was a sunset industry in this country, going back into the dark ages when he first became a member of this Parliament. He said that agriculture was a sunset industry. I will tell members what a sunset industry is. This Minister is a sunset industry, and this Government is a sunset industry, and if we let the Government keep going with its biosecurity policy, this country will become a sunset industry. The biggest threat to our environment is, at this moment, a major biosecurity breach, and given that we have had 233 organisms enter this country and become permanent residents in the last 5 years, it is very likely that such a breach could happen.

The Minister said that in the case of didymo there was not enough research, and there was not enough knowledge. He did not think it would be a big issue, so what could the Government do? Let me just tell members what our Australian cousins did when they had a similar threat. In 1999 the black-striped mussel invaded marinas in the Northern Territory. Within days, even though officials had no money and no legislation, they were treating that invader with a copper sulphate concoction. The incursion was a similar kind of incursion to ours, in the sense that it concerned a micro-organism that cannot be seen.

Now, after all this time, what is the research telling the Minister for Biosecurity in New Zealand? It should be telling him that copper sulphate might work on didymo. The Minister has said: “Well, we didn’t know that at the time.” Bumpkin—all he had to do was look at what our Australian cousins had done, and something could have been done here. Instead of that he said: “Oh, the Opposition spokesman said we should nuke all the rivers in the South Island; I never did. “I said that; he said those were some options the Minister should look at, and should look at seriously. But the Minister never looked at those options.

And what is the cost? This is the big point. It cost the Australians $2 million to eradicate that mussel incursion. What is the estimated cost of didymo in this country now? It is $300 million in the South Island alone—and that is if didymo does not clog up all the hydro stations, which it potentially is going to do, and make the power go off. What is the Minister’s response? Zero. He will not even do anything to keep didymo out of the North Island—in fact, our border control at Cook Strait has been reduced. Can members tell me that that is in the best interests of the environment?

Then there was the varroa outbreak in the South Island. Despite the Minister leading the bee industry to believe that he would eradicate the varroa mite if the industry put some dough in, which it did—it did put some money in—and leading it to believe that the Government would respond, he then turned around and said: “Well, given that there is likely to be a re-incursion, let’s let it go. I’m not going to worry about it.”, and walked right over the top of that industry. I say to members opposite that not only was there a loss of pollination because of that but also there is a potential that our whole bee industry will collapse—and it is not only to do with honey—because of the effects of using drugs and other such substances that weaken the hives. We are already seeing signs of it. So it is just amazing to see that nothing has been done, given that two damning reports from the Auditor-General have been released over the last 6 years; it is unbelievable. Most people would have thought that the Government would have responded to that situation. But what has it done? Absolutely nothing! Apparently Government members do not believe that anything can be done.

Finally, I move to the issue of securing our borders. The only way we can describe that is that it is a joke—it is like this Government. Nothing in the Budget that I can read will address the issues that have been raised over and over. We have, on average, 51 declared seizures of biosecurity risks at our airports every day of the week. I ask the Minister what he is going to do. We issue 7,627 instant fines, and 5,000 of those fines are for visitors. Why does the Government not look at deporting those visitors?. They are clearly flouting our laws. The National Party has talked about that for a long time. Why does the Government not adopt that policy? It would be like stealing some of the other National Party policies and then taking the credit for them. But that would be a good thing, and we would accept it as a good thing. Why does the Government not look at increasing the instant fines—the $200 fine has obviously been completely laughed at; it is a joke—why does the Government not do something like that? There is nothing from this “Sunset Minister”; it would be ridiculous to expect that that could ever happen. The reality is that biosecurity is just an absolute disgrace, and it poses the biggest threat to our economy and our environment.

So in summary I say that we have no policy from this Government, and there is nothing in this Budget to address these serious issues that concern the environment. I could have given a longer speech on forestry. The fact is that this Minister, who is also the Minister of Forestry—the “Sunset Minister” as he is—has done nothing to turn around deforestation. My colleague from the East Cape mentioned that, and the effects it is having on the economy up there, not to mention the effects that it is having on the environment. We are going—lurching, in fact—from one crisis to another in our forestry industry. The only saviour the Government has is a bit of a reprieve in the economy and the markets. But that has nothing to do with this Minister, and the Budget is a failure in that regard.

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

Hon DAVID PARKER (Minister of Energy) : One of the good things about MMP, of course, is that it means there is a proliferation of parties. That means there are many more people at this time of night to listen to speeches such as this, so I greet my fellow members of the House.

I am very pleased to be taking a call in the Budget debate 2007, because this Budget is a bold and important milestone in the history of New Zealand. It addresses the priority of improving savings, and it does this in a way that creates financial incentives and economic security for New Zealanders for decades to come. It encourages investment, and it improves business settings. We will see more business and we will see more growth in our economy, as a consequence. It supports moves to a sustainable economy. It advances us towards carbon neutrality, and it does all this while investing appropriate amounts of money in maintaining our core services—be they superannuation, health services, education services, or transport. It puts additional money into the infrastructure that we need to keep our country running.

How have we done this? Well, since 1999 this Government has overseen an economy that has been growing at above our historical norms. We have had growth since then of 3 percent per annum, on average, over and above the rate of inflation. That growth rate of 3 percent per annum is faster than that of Japan, faster than that of the United States, faster than that of all European countries, on average, and as fast as that of Australia. Australia, of course, is one of the well-performing economies of the world at the moment, with a wonderful richness of natural resources that can be dug up and sent overseas. This economy has grown at the same pace as the Australian economy since 1999.

Our unemployment rate is lower than that of Australia, and it is lower than it has been at any time over the last 25 years. We have gone from having mass youth unemployment in New Zealand in the early 1990s. The number of under-20s on the dole has fallen by a massive 92 percent—92 percent. There are now 28 Work and Income centres in New Zealand where there are no young people on the dole, at all. What a wonderful outcome!

Profit growth in the business sector has grown by an impressive 20 percent a year in 2003, in 2004, and in 2005—proof again that the Labour-led Government is a good economic manager. By comparison, the growth in corporate profits during the previous 8 years was between 5 and 7 percent per annum under that weak National Government. The Government’s fiscal position is also strong. Let us not forget that the last National Government to borrow in order to fund tax cuts, and to borrow funds, was the National Government under Muldoon. He left the economy in tatters—in tatters. New Zealand Government debt was equal to 60 percent of GDP. It was amongst the highest—if not the highest—in the OECD. One dollar in five of taxes was being spent on interest. That would have risen to one dollar in four had it not been for the wise stewardship, economically, of the subsequent Labour Government.

This Government has reduced Government debt to 20 percent of GDP—that is, gross Government debt at 20 percent of GDP. If there were a change of Government, it is absolutely clear that the only way substantial tax cuts could be funded would be through a combination of significant cuts in the core services of health, education, and superannuation, and—and, not or—an increase in Government debt. National would squander away the wealth of current generations in order to pay for unsustainable tax cuts.

This year’s Budget has an emphasis on savings. The Government is supporting that to the tune of $40 a week for employees. Every person who contributes a saving of $20 through a KiwiSaver account will get a tax credit from the Government of $20—

Hon Member: Opposed by the Tories.

Hon DAVID PARKER: —which is opposed by National. In addition, employers will get a tax credit of $20 towards their contribution to workplace savings. So for every $20 a week that people in this situation save out of their pay packets, they will be saving $60 a week. This is an incredible shift in New Zealand savings. It will be of benefit throughout the economy, not only for the security of people in their old age but also because the pool of investment capital available to business will increase. Interest rates over the decades will decrease, and the cost of capital will decrease. Labour productivity will improve.

One of the cries we hear from National is that labour productivity is not going up at a high enough rate. Well, we actually agree with that. But we have a solution; we do not just sit there and complain about it. We recognise that in order to improve labour productivity, we have to have more investment in labour productivity, more investment in plant, more investment in automated processes, and more investment in research and development—and this Budget hits that from three fronts. First of all, we have higher rates of saving. Therefore, the pool of capital that businesses will have to use will increase. Secondly, we have research and development tax credits. Thirdly, we have the decrease in the company tax rate—something, again, that National voted against. Who was it that last decreased taxes for companies in this country? It was the Labour Government. We did that in the 1980s. Who did not decrease the rate of tax for companies during the 1990s? National! Who is now decreasing the rate of taxation on companies in the year 2007? Labour! It is Labour that knows how to grow this economy, it is Labour that knows how to improve labour productivity, and it is Labour that knows how to improve the wages and living conditions of New Zealanders, so that New Zealanders stay in this country and add to its wealth.

I want to turn briefly to the issue of sustainability. John Key has said that sustainability is all talk and no action. What a load of rubbish! This Budget has $800 million of sustainability funding in it. Why do we have that focus on sustainability? It is because our leader, the Prime Minister, the Rt Hon Helen Clark, has rightly said that there will be no prosperity without sustainability, but that a commitment to sustainability will help us to lock in prosperity. And it will. We believe in sustainability. We have been pursuing climate change and sustainability issues during a very difficult period politically in the last 6 years. It was made difficult by the fact that Australia did not commit to the Kyoto Protocol, and that National criticised us for doing so. Now that sustainability and climate change are suddenly popular issues, National has changed its spots on them. But National talks; it does not deliver.

We have delivered $800 million worth of spending and the electrification of rail in Auckland and Wellington, and there has been a ninefold increase in support for public transport under this Government. In addition, we have $30 million of spending for sustainability, from household sustainability programmes to public recycling facilities, for business partnerships, and for sustainable Government procurement schemes. The Government can take a lead in this; we can change business practice not just for the Government sector but for the benefit of all sectors. There is $72 million for improved energy efficiency, $23 million for an interest-free loans scheme to further roll out retrofits and energy efficiency in homes, an additional $15 million for grant-based schemes for those on the lowest incomes, $15 million for a home energy ratings scheme, and more research into energy efficiency technologies—and that is in addition to all of the work we are doing through the New Zealand Energy Strategy.

I will come back to the big issue for the future here, which is how to fund the sorts of unreasonable tax cuts that National proposes. Well, the only way that National can do it is the way it proposed to do it at the last election: to cut services and borrow like Muldoon. National members are already saying that workplace savings schemes mean they might have to look at traditional superannuation. So they are already saying they would do again next time what they did when they were last in Government, which was to cut the rate of superannuation for the elderly. They would cut superannuation, they would cut spending in health and education, and those are the only three big votes. Unemployment payments and sickness benefits are already at low levels. There is not much that can be cut there. The only areas that can be cut are superannuation, health, and education, and, as well as that, National would have to borrow. It would have to undo the good work of this Labour Government. It would have to increase the rate of gross Government debt above the 20 percent of GDP where it is now, and where it is placed sustainably under this Government. A National Government would bankrupt this country; we grow it.

PANSY WONG (National) : That was the Minister responsible for Climate Change Issues, but did we hear anything on climate change? No! Did he answer the question posed by our very learned colleague the Hon Nick Smith? Will the Minister give foresters their carbon credits? They are waiting for his answer so that they can start planting trees. Will the Minister give them the credits? No.

I detected in that speech made by that Minister a really worried tone. He was very defensive about the Labour Government’s 2007 Budget, because he knew that it will be remembered as the “Michael Cullen Swansong Retirement Budget”. Apart from Friday’s news coverage—1 day’s news coverage—there has been no more news coverage of the Budget, apart from coverage of KiwiSaver, which I will come back to. Nobody is talking about the Budget. The Labour Government’s Budget this year—the year before election year—is meant to get people excited and talking about it for days and days. But we, the politicians, are the only group talking about it, and that is because we have to. The Budget debate happens to be a set-piece parliamentary debate; otherwise, many of us would like to talk about something more urgent or exciting. We are like the rest of New Zealand: no one wants to talk about the Budget.

The other thing I found really strange coming from the Minister responsible for Climate Change Issues was his saying how, under the Labour Government’s leadership, New Zealand is doing so wonderfully well. I hope the next Labour speaker will enlighten us and the public of New Zealand by sharing with us how come, if we are doing so well after 8 years of a Labour-led Government, New Zealand’s OECD ranking has gone down from 20 to 22. How come that is the case? If we are doing so well, why are we not returning to the top half of the OECD?

I want the next Labour speaker to comment also on why, under this Labour Government, New Zealand’s productivity is the lowest it has ever been. How come, in terms of the statistics, we are not doing very well? Actually, the only sector doing well is the Government’s public service sector. It is the only sector that is growing. Members should think about it. The Inland Revenue Department is to have 400 new staff, just to implement the first phase of KiwiSaver. With all the complications introduced by last Thursday’s Budget, I would hate to think by how much more the staffing of the Inland Revenue Department alone will increase.

I have been listening intently to the debate, and I find that Labour members’ speeches on the Budget have a common theme going through them.

Hon Maurice Williamson: Panic.

PANSY WONG: Apart from panic, they cannot stop talking about the incoming Prime Minister—National’s John Key. They keep on asking what John Key would do in relation to tax cuts. What tax cuts would John Key announce? How would John Key fund tax cuts? What would John Key do with KiwiSaver? One would think they would want to talk about their leader, Helen Clark, and about what she thinks. They do not care what she thinks; they know it is more important to hear what the incoming Prime Minister has to say and what is on his mind. All the speeches I have heard are about what John Key is going to do and how he will do it.

The good news is that they are not the only ones who want to hear from our leader, John Key, the incoming Prime Minister. Last Monday John Key visited Waiheke Island. I invite all members to visit Waiheke Island, with its growing tourism and wine sectors. Well, the Gulf News—

Hon Maurice Williamson: A good cross-section of people there.

PANSY WONG: Absolutely. Nobody can accuse Gulf News, the local newspaper on Waiheke Island, of being a right-wing newspaper—no way. This is what it says about the visit of our National leader, John Key, to Waiheke—an island with growing National support. He went to a women’s network luncheon at the Goldwater Estate winery. There were many people on the waiting list. Capacity was a problem. That evening he addressed a capacity crowd at the island’s Rotary club. But I am keener to share what the good, sensible women on Waiheke Island wanted to discuss—not many people talked about the Budget, by the way. The first thing they wanted to know was how John Key felt about the lack of opportunities for their children. They were worrying that their children were going to Australia, and they asked whether John Key could do something to stop it from happening. They want their families to be together—to be united in New Zealand. They said that because of low incomes and student debt, their children cannot afford to stay in New Zealand.

John Key shared with them that, indeed, that was true, because in the last 5 years Australia’s after-tax income has increased by 33 percent. Guess what New Zealand’s after-tax income has increased by? Half of that! That is why youngsters are leaving for Australia. Our country has a population of 4 million people. One million New Zealanders live overseas. Australia has a population of 22 million people and only 800,000 Australians live overseas. Those women were not asking questions about the Budget; they were interested in opportunities for their children.

In one of the answers John Key gave—and I want to share this with our listeners, because I got the same message from the university students I talked with—he talked about education, about having a skilled workforce, and about creating opportunities for our skilled youngsters to grow into. He talked about the importance of education and the importance of striving for excellence. In talking with university students, I was told that their big concern was the National Certificate of Educational Achievement (NCEA). First of all, they said they regretted that when they were going through high school they did not work as hard as they should have because, under NCEA, they could receive only “Achieved”. They were not rewarded for putting in additional effort. They regretted that, because the jump from high school standards to university standards proved to be really hard. Secondly, they found it really hard undergoing the examination system in the universities after not being used to such a system at high school. These are the types of issues that people out there are concerned about.

Another issue is safety. Can anyone blame young women in the universities for talking about safety? They do not feel safe. We need only to look at all the scandals and scams in our prison system. On the television news just today we heard that a mother and her child have had to move from their home because a young sex offender, under the watch of Child, Youth and Family, had returned to the community and was able to move around freely and terrorise people. Where is the victim’s right? A mother and her child have had to pack up and leave their community, while a sex offender is free to live there. What happened to victims’ rights? I think New Zealand First members talk tough, but they have never got Labour to deliver on those policies that they think are important.

I understand why Labour members keep wanting to know our leader’s opinion on tax cuts, because after the next election, if Labour cannot hold on to its minority Government status, they will be out there joining the workforce, and they will want a tax cut to make sure they have more take-home pay. I also predict that next year Labour will finally introduce tax cuts in its Budget. We know that it has already adopted the policy of our leader—the incoming Prime Minister—of removing the tax cap on donations to charity, so we can look forward to tax cuts in the next Budget.

MARYAN STREET (Labour) : I am pleased to take a call in the Budget debate. This is the biggest Budget ever in terms of a structural impact on our economy. It is the biggest Budget in terms of business tax cuts. The business tax cuts package is the biggest we have seen in 19 years. The investment in research and development funding is a huge breakthrough that makes a real difference for the business community, and one can hear them saying so.

I also mention rail infrastructure and public transport. That announcement will have big flow-on impacts for Auckland in particular, and also across the economy. It will have social impacts and it will impact on environmental sustainability. In the economy it will mean that businesses can move their goods more freely across a roading network that is not clogged with private cars. We are told constantly—and it does not take a rocket scientist to work it out—that congestion costs the economy. In social terms, the reduction of emissions from private cars will make New Zealand a healthier place. People will not be dislocated out in the suburbs if they have an efficient North Shore busway, which is effectively the equivalent of a rail corridor, or if they have electric trains getting them to work around Auckland. The environmental impact of reduced emissions and carbon neutrality will be felt for years to come.

This is a long-term, visionary Budget. It delivers on the vision of Norman Kirk’s superannuation scheme, and it also delivers on Sir Dove-Myer Robinson’s rapid rail scheme. On the last day I spoke about the Budget I wanted to draw attention to the fact that the first Labour Government was known for the institution of the welfare State—in other words, for developing a system of care for the poor and the needy. The Norman Kirk Labour Government was known for independent foreign policy, amongst other things, but it was also known for its superannuation policy. The fourth Labour Government was known for bold economic restructuring, with all its ups and downs, but it was also known for the bold move of making us nuclear-free, which has become one of this country’s iconic identifying marks. This Budget is of similar import. It is the same thing. Every time bold, far-sighted moves are made in a Budget—such as those made in this Budget—people’s economic literacy ratchets up a notch.

The last time I spoke in the debate Judith Collins found my expression “social debate” difficult to understand. I apologise if she was confused by the complexity of my language. I will translate the expression for her. Social debate means what people are saying. If we listen to what people are saying, it is clear that when it comes to KiwiSaver, people get it. They understand that our savings record in this country is abysmal. They understand that if there is some encouragement, a nudge, or a kickstart into a savings habit, they will be better off in their retirement. They can work out that even those on very low incomes can get into KiwiSaver, because the 4 percent is taken out at the start, up front, at source. With 4 percent taken out, it is possible for people to save that money instead of spending it on something. There will always be essential items for money to be spent on, but if the 4 percent is taken out at source, at the beginning, that is the best option for low-paid people because it is a percentage figure, and as people’s pay increases, as it will do under a Labour Government, so will their savings increase.

This is the most significant contribution to a savings regime that we have seen in this country. People can work it out. They understand that if greater savings are kept onshore within New Zealand there will be greater investment for businesses in New Zealand.

I tell members opposite that they should not ever pretend that poor people do not save. Poor people are the ones who are not given credit to purchase things. They are not given credit, and therefore they save up before they can buy things. Members opposite have only one mantra, and that is why they are in such despair about this. Their one mantra is tax cuts. They are bereft of ideas, and that is the thing that drives them crazy about this Budget. They have no answer, no alternative, and no bold suggestions that will take this country forward and allow New Zealanders to prepare adequately.

I do not hear any interjections of any substance from Opposition members, because they are completely lacking in alternative ideas for an alternative Budget. What happened to the old days when alternative Budgets used to be put up? They have not been put up by this Opposition, because it does not have more than one idea—that is, personal tax cuts. By the time National members have borrowed money to fund tax cuts, if they are not going to take it out of public spending, they will have brought this country back to the brink of bankruptcy from which this Labour-led Government has delivered us.

This Government is looking after the long-term interests of the people of New Zealand, and people recognise that. People are not short-sighted. If we listen to some of the other conversations that people have—and Mrs Collins asked about social debate, or, in other words, what people are saying—and if we listen to what business people are saying, we see that it is clear from the first poll of business decision makers about last week’s Budget that the majority support moves to require employers to match staff contributions to KiwiSaver. They also support the new 10c a litre regional fuel tax. They do not favour immediate personal tax cuts, because they recognise that that is inflationary.

Members opposite are so poverty-stricken in their ideas that they cannot deliver an alternative. They cannot even deliver an adequate, coherent reply to the logic and the imperatives behind this Budget. The poverty-stricken nature of Opposition members is an appalling indictment on the state of democracy in New Zealand. We should have a robust debate but we get no such thing. We get carping about one cliché, one idea—that is, personal tax cuts. People in the street say they would rather have $20 going into their savings account than $10 in the hand now in a measly across-the-board tax cut.

Members opposite need to sharpen up their performance, because they have offered no alternative in the face of what they, deep down, recognise as being solid constructive moves for the economy of New Zealand, for business productivity, and for New Zealanders to have comfort and dignity in retirement. That is what we are on about and this is another significant and bold move by the Labour-led Government. The population in this country recognises that we get bold, constructive, far-sighted moves only from a Labour-led Government. That is the long and the short of it.

No significant contributions have come from the other side of the House. They have offered nothing by way of an alternative. The poverty-stricken nature of Opposition members becomes apparent as every day passes. The National Opposition is clearly absent from the debate. With only one song to sing, National is not even getting the support of the majority of business decision-makers, whom one would think would be its natural constituency. But that is no longer the case.

Dr RICHARD WORTH (National) : The previous speaker, Maryan Street, has spent valuable time—some 10 minutes, perhaps—criticising the Opposition. What I would like to do, in the 10 minutes I have allotted, is to focus on some of the critical issues.

This debate is grandly called the Appropriation (2007/08 Estimates) Bill, but it is more colloquially known as the Budget debate. The issue for us here tonight is encapsulated in the amendment on the Order Paper, which is that “this House has no confidence in the Government led by Helen Clark because it has presided over a decline in New Zealand’s competitiveness and has failed after eight budgets to deliver a meaningful reduction in taxes for New Zealand workers.” There are two aspects to that amendment: “presided over a decline in New Zealand’s competitiveness”—and it has; our competitiveness has plunged—and “has failed after eight budgets to deliver a meaningful reduction in taxes for New Zealand workers.” That was the subject of the previous speaker’s comments.

So the issue for debate tonight is that the Government has taken a deliberate ideological position that is hugely damaging to New Zealand’s interests. I just start by saying that Labour has had 8 years in which to lift productivity and expand the capacity of the economy to grow, but sadly it has squandered that opportunity. Why has it done that? Well, for reasons that other speakers have given, New Zealand has fallen down the OECD rankings, from 20th place to 22nd. I thought for a moment that the Hon Damien O’Connor, in the interjection he was trying to make, would assert that our position had improved, but it has not. It is a matter of record that it has not improved. We have gone from 20th to 22nd place. Portugal, Hungary, and the Czech Republic are our competitors. I simply note that in the document that I now hold up, the statement of intent of the Ministry of Economic Development, the ministry admits and asserts that that is exactly so. The report states: “New Zealand still ranks 22nd in income per capita at US$25,950, 13 places behind Australia at US$34,200.” The commentators who have written this material say: “If New Zealand is to catch up with other countries, the economy must perform better still, sustaining growth rates at high levels over the next one to two decades …”.

As others have also said tonight, labour productivity has fallen to historically low levels. Labour productivity has more than halved since this Government came into office. But there are other points. Pansy Wong made the comment that because of inflation more people are paying the top tax rate than ever before. The Budget shows that 15 percent of income earners—and that is 456,000 people—now pay the top income tax rate of 39 percent. Those members opposite will remember Dr Cullen assuring the nation that only 5 percent of income earners would pay that rate.

Christopher Finlayson: Darren was not even born.

Dr RICHARD WORTH: No, the young junior whip was not even born then. Labour has spent eight Budgets doing nothing to address this insidious rise in taxation.

But I will go on from there and make a further point that I think is significant in the context of what we all want, or should want, which is a better New Zealand—a New Zealand that is measured not only in terms of GDP growth but also in terms of that indicator that is much more difficult to identify, which is quality of life. The reality that this Government seems not prepared to accept is that choices made in the Government’s approach to business assistance, to export market development, to research and development, to education, to capital markets, to infrastructure, to trade policy, and to migration, can very significantly influence the pace and direction of economic development. Why is the Government not prepared to accept the reality of that observation?

One of the Government’s objectives is to increase the internationalisation of New Zealand business. I want to talk about that from a very practical perspective for a few moments, and to establish two broad propositions. The first is that there is a lack of depth in important parts of New Zealand’s financial markets. In part, this is an issue relating to the Government’s responsibilities as an immigration policy maker. There is a flight, which we have heard about for the last many months, of New Zealanders to Australia. I accept that a proportion of those players going to Australia are, perhaps, people who are not in what might be called the “top drawer”. But, that said, a huge number of those people who are going to Australia are people whom we desperately need. They are people who are skilled in business, they are people who are skilled in the provision of welfare services, they are people who are skilled in the provision of public services, and they are people who are skilled in the trades—they are people whom we need.

I will comment for a moment on this immigration aspect. In terms of policy we have established a number of immigration categories—and I see Dr Choudhary nodding wisely as I make these comments. This might be an issue on which even he would agree. One of those categories is the business investor category. We have set a whole lot of hurdles around this category, which makes it almost impossible for people whom we want, with skills that we want, to come to New Zealand. One of those issues touches on the English language test. A second issue touches on the capital requirements and the deployment of capital when those migrants seek to access New Zealand.

I am certain—and I am watching Dr Choudhary, and I see the nods that now come frequently as I make these comments—that we need to get on and deal with that issue, because with this outflow of talent we cannot replicate that talent from our existing base. We have to take a really hard look at our immigration strategies. The second broad proposition that I would like to advance relates to the context of economic development—I cannot really hear, fortunately, the comments that are coming by way of interjection from the young whip; I am sure he thinks they are meaningful, but the members on his side of the House seem to gain no confidence from them—and that is the seemingly risk-averse stance of New Zealand Trade and Enterprise. It is a stance that is reflected in a number of ways.

I ask members to look at the Budget and make a judgment. We all know, in the context of increasing exports, how critical networks are. This Government could have done so much more to strengthen networks around the world, which would be significant in what is a critical year for us—Export Year. Let me give members an example. I happen to know a guy who makes the world’s seatbelts. He is Italian. He makes those seatbelts in two locations: a factory in Flanders and a factory in China. Miles of seatbelts are made in a day. He has a New Zealand passport. These are interesting circumstances; he is an Italian with a New Zealand passport. He stands ready to enable New Zealand business to access those networks. Is the Government interested in him delivering what he can deliver? Absolutely not. He said that he would like to be an ambassador for New Zealand, in the context of being an honorary trade consul; he is not asking to be paid. He is there to help us. Are we interested? No. Why are we not interested? There is an ideological problem sitting there; a view that somehow free service is maybe not good service. That is just one illustration. The second thing I would say is that, hugely different from Austrade, New Zealand Trade and Enterprise is simply not prepared to have its input, skill, and contribution measured.

Dr ASHRAF CHOUDHARY (Labour) : It is a great pleasure to stand and say something positive about the Budget. It is certainly a delight to speak after Dr Worth, who has mentioned exports and our export policies, and I thought I would just mention that issue before I go to the main thing.

Yesterday the Hon Phil Goff put out a statement saying that this Budget allocated a $23.8 million increase in funding for the strengthening and growth of a New Zealand Trade and Enterprise presence in the key markets of Asia. The expansion will see Trade and Enterprise open up to five more offices in China—

Dianne Yates: How many?

Dr ASHRAF CHOUDHARY: —five more offices in China—one more office in India—

Dianne Yates: Where?

Dr ASHRAF CHOUDHARY: —in India—and New Zealand concept centres in China and Japan. The concept centres will be modelled on the successful New Zealand Focus centre in Hong Kong—a permanent exhibition for the promotion of New Zealand products. So, I say to Dr Worth, that is the sort of thing this Government is doing. It is making sure that our products, particularly our agricultural products, are out there in the world bringing very valuable foreign exchange into this country.

Dr Richard Worth: Where in India?

Dr ASHRAF CHOUDHARY: The member has recently been to India—I know he has travelled there. The member has seen for himself the opportunities that are going begging in places like India, China, and the whole of Asia. This Government is doing something about it.

As was said before by my colleague Maryan Street, this Budget is very bold and very visionary. It is very important to realise how the people are thinking out in the street. Over the weekend I had a number of calls, particularly from members of my Asian community and other ethnic communities, saying that this Budget is a fantastic one. They see a whole lot of things in this Budget that are very valuable to, particularly, the Asian and other ethnic communities, which value the culture of saving. Many of these people have come to this country from backgrounds where there has been a culture of saving, where it is often said that if one earns a dollar one puts 50c away. In the cultures where these people have come from, people never have any pension or superannuation schemes. They love the enhanced KiwiSaver scheme because we have made sure that it reaches out to all people, irrespective of what wage or salary level they are at. The message I have got is: “Good on you, Labour Government. You have done this at last.” Some of the things that in the past were decimated by the National Government are now being reintroduced.

I am delighted that the Government is putting $40 per week towards a tax credit, both for savers and for employers, and, also, providing $1,000 as a kickstart for all KiwiSavers. Of course, for any scheme to become really productive and useful in the long term it is important that there is a compulsory contribution from employers, because without that contribution there is no commitment from employers to make the scheme a success. We on this side of the House are delighted that this scheme has at last become feasible for all of our people, irrespective of whether they are working for themselves or are employed. I am delighted to support this scheme to that extent.

I will talk about other issues, like education. One of the things that really made me proud of being a part of this Government a couple of years ago was the introduction of no-interest student loans. Again, this is an ongoing issue for us.

Dianne Yates: How many kids have you got at university?

Dr ASHRAF CHOUDHARY: Exactly; that is the question I would ask. We on this side of the House value education. I value education for my children and for everyone in this country, because without education we are nothing. Clearly, the no-interest student loan scheme that we started has made sure that every child and every student has an opportunity—

Darren Hughes: Opposed by National.

Dr ASHRAF CHOUDHARY: Opposed by National, regrettably. Now National members realise that they cannot do without it. They will do that with some of the other things we are doing now. I am sure they will come round to supporting KiwiSaver. They will realise by next year what will happen to their polling, and they will support KiwiSaver.

But I will talk about education. We are putting a huge amount of money towards education. That is fantastic because every child must have access to good education, particularly at the tertiary level. We have to add value by having higher education—whether at polytechnics or at universities. People must have the opportunity to study, because without it we cannot really understand where we are going as a country. We need to realise the contribution education can make to this country. Madam Chair—

Dr Richard Worth: Speaker.

Dr ASHRAF CHOUDHARY: Sorry, Madam Assistant Speaker. With Labour in Government universal superannuation will never be questioned again.

Darren Hughes: Cut under National.

Dr ASHRAF CHOUDHARY: It would be cut under National. But under Labour this KiwiSaver scheme will never be questioned. We believe that every New Zealander has a right to a decent, publicly provided pension when he or she hits 65—not 68, not 70. Previous experience tells us that the party opposite will again think about raising the age. That is simply not acceptable to New Zealanders. KiwiSaver is designed as a top-up to national superannuation. The current superannuation will not be replaced by this system—no way. At the same time as we are investing in KiwiSaver, we are investing heavily in raising the rate of superannuation, and in raising the New Zealand Superannuation Fund, to make sure that superannuation can be paid in the future.

That is something National fiercely opposes. New Zealanders should be worried. National members are dropping hints already about dropping universal superannuation. The only way to guarantee that we keep our superannuation scheme is to make sure that Labour is in Government. That is the message I would send out to my ethnic communities in this country. The only way that they will keep superannuation going, keep KiwiSaver going, and keep education going is to make sure they support Labour. The last time that Bill English was in Government, the previous National Government cut the superannuation rates. Do people remember that?

It is true that for people on very low incomes, saving is a challenge, and it is true that KiwiSaver will not be the answer for everyone. Certainly, it will not be the answer for everyone, but it will be fantastic for all of us because KiwiSaver makes it easier for even more New Zealanders to start saving for their future. It is certainly making it easier for people to do that. I am delighted that I am part of this Government, which has brought in a Budget like this one, which is fantastic for our future.

TE URUROA FLAVELL (Māori Party—Waiariki) : Kia ora tātou. Tēnā koe, Madam Assistant Speaker. Kia ora tātou e te Whare. The Māori Party comes to the Government’s annual financial statement with two basic principles in mind. The first is that the Budget would promote fairly the development of each of the cultures of the two parties to the Treaty of Waitangi. The second was that the preparation, the approval, and the management of the Budget would be the responsibility of both parties.

During the course of the Budget debate my colleagues Dr Sharples and Hone Harawira have shown that the management of State resources has been far from equitable. They have described the various ways in which the Crown has failed—miserably—in fulfilling the guarantees anticipated in article 3 of the Treaty, and I will conclude our contribution by focusing on the Treaty as the very basis of our constitution and on how far this Budget goes in delivering on that expectation.

The Budget summary looked really promising, actually—promoting again the concept of reconciliation. The promise that “Reconciliation at home between Māori and Crown matters” was introduced earlier this year in the Prime Minister’s statement. What we do know is that Government terminology is word-crafted and spun to perfection before release, so the placement of this concept in the Budget must also be understood to be fairly deliberate. We in the Māori Party consider the concept of reconciliation as being code for the Truth and Reconciliation Commission in South Africa, which addressed the worst ravages of the war of apartheid.

In Australia the truth-telling nature of reconciliation is known as the “sorry” business. They have passed a Council for Aboriginal Reconciliation Act to promote a deeper understanding of the past dispossession and continuing disadvantage of the Aboriginal and Torres Strait Islander peoples. An independent entity, Reconciliation Australia, has also been established. And just over a year ago the Liberian Government established and staffed the Truth and Reconciliation Commission to establish forums throughout that country for victims and perpetrators of war.

We were wondering what the Prime Minister was really thinking, and what her Minister of Finance was forecasting, when reconciliation was introduced in the 2007 Budget. I came across a report from Freetown, Sierra Leone, that gave a clear expectation of the notion of reconciliation, which could involve something like this: “Reconciliation is a long-term process that must occur at national, community, and individual levels. Being a process, it will take time and will need to continue even beyond the present generation. Reconciliation aims at restoring the social fabric within families, communities and the nation.”

So, finally, we thought that this Government might be looking again at the sorry state of affairs managed in the Treaty settlement negotiation processes. We thought that it might reconsider the rationale for the Crown itself chairing negotiations, rather than establishing an independent body to ensure that both parties participate in good faith. Professor Mason Durie described the current process as assuming a dominance that far from endorses the principles of the Treaty. He stated: “Leaving aside the justice of the claims and the fact that settlement is well overdue, the settlement process depends on the retention of adversarial bargaining rather than moving towards managed cooperation and co-existence. In other words, the elements of the colonial relationship are maintained, the Crown decides on the merits of the claim and makes an offer of restitution, though within a framework which the Crown itself has imposed”.

So with the key fiscal aggregates for 2007-08 showing some $76.9 billion in revenue and an operating budget of $6.4 billion, one would have thought that reconciliation might have equated to meaningful revenue and resourcing. We thought that the Crown might consider leaving aside the colonial relationship, instead moving towards managed cooperation, coexistence, reconciliation, and healing. But oh no—and here is the thing—what this minority Government really meant by “reconciliation” is just treading water: more of the same and maintaining the status quo. So it gave the Office of Treaty Settlements a $900,000 boost to buy some more policy analysts and it gave less than $2 million a year to the Waitangi Tribunal. But if we drill further into the fine print, we find that the amount set aside for land banks is capped at an all-out total of $10 million, and the total the Government expects to spend on settlements is capped at $60 million. Ten million dollars would not have been enough to buy the controversial Landcorp block of Whenuakite Station in order to return it to Hauraki iwi, let alone any others.

Ever since 1986 the Waitangi Tribunal has been able to order that land kept in the context of a State-owned enterprise must be transferred to Māori in order to settle Treaty claims. However, $10 million would not have afforded the Crown any opportunity to purchase the Rangiputa block to be returned to Ngāti Kahu, or, indeed, to reverse the sale by Landcorp of 1.8 million Fonterra shares, worth $11.7 million, from the Ngātea farm prior to any consideration of its being set aside for the Hauraki Treaty settlements. As for the $60 million, well, if we take the Minister at his word, we know that the Crown is currently working with over 20 groups, all dealing with multiple claims. So if we consider further the approach taken in the Tāmaki-makau-rau settlement inquiry, the Kaingaroa inquiry, and the Te Arawa settlement, the Crown’s failure to disclose information or to engage might end up incurring costs outside what might be covered in the $60 million. Judge Carrie Wainwright’s findings on 8 May provided a stern accusation levelled at the Crown that its provision of documents and evidence central to the Tāmaki-makau-rau inquiry was unsatisfactory and that the stance of the Crown Law Office was unfortunate.

This is not reconciliation. These events put a stop to any hope of a Treaty partnership. They give us no hope of ever coming to forge a nation unified by the promise of Te Tiriti o Waitangi. True reconciliation would not have satisfied itself just with some funding for policy analysts. Reconciliation approaches might have considered the proposal of the Māori Party that a minimum quantum would be expected for each settlement. We believe that for the restoration and rebuilding of nationhood, all claimants must be guaranteed a basic level of resource to ensure that opportunity for development is not compromised. Claimant funding needs to be reviewed and increased, so that all parties to the settlement process are on a level playing field.

Another aspect of the reconciliation project would have been to do as Professor Mason Durie suggested and establish an independent settlements authority. Such an authority would turn over every stone to ensure that the claims would be settled earlier and be settled fairly, and that there was a broad consensus for the process and, therefore, greater commitment to the settlement resolution. Reconciliation would also have been likely if the Crown was to drop the fiscal cap on the Treaty settlement pūtea in the first place.

Ten days ago the Māori Party released its 6-prong Treaty Budget package. We are really pleased that one of the six ideals, the commitment to more resourcing to the Waitangi Tribunal, was followed through, so that it can deal with claims more speedily. But there were other elements of our package that could also have provided some useful context for relationship repair and maintenance. One is the commitment to buy out the relativity clause—a type of top-up mechanism that will be used to supplement settlement funding in the Tainui and NgāiTahu settlements. The other is to give consideration to joint ventures with State-owned enterprises, along with other possible innovative approaches to respond to settlement priorities.

We are interested in the comment made by law commissioner Denise Hēnare, who concluded: “The Treaty is far from being a fossilised document. It is a beacon for the future … An embryo of principles, values, and ideas to be worked out, developed and adjusted over time.” Well, Budget 2007 does little to promote the concept of the Treaty as a beacon for the future. The fiscal constraints are so rigid and lacking in imagination that they will produce results that are stuck in time. The Government is limiting itself to a fraction of the revenue required, and has shown itself to be paralysed by a minimalist view and power, rather than committing to principles of justice, nationhood, and reconciliation.

Hon TAU HENARE (National) : I thank my colleague from the Māori Party. I have one little point. We ain’t got time for truth and reconciliation. The working class people of this country need a tax break, and they need it now. Give them the $20 a week in their hand. Who says that they are not bright enough to save the $20, or to spend it? It is their money. It is not the Government’s money. This is academic snobbery at its best, from a third-rate history lecturer. I will tell members something about the Prime Minister and the Minister of Finance. Neither of them have had a job outside of university or politics. [Interruption] I tell that member, Darien Fenton, that I have had plenty of jobs and I enjoyed every one of them, until I got the boot.

It is absolutely academic snobbery. The Labour Party, for years and years—7 or 8 years—has had a surplus in its hands and has waved it around every Budget day. Last year the Government gave a tax cut. But, lo and behold, this year, even before that tax break came into force, the Government took it back. The Government took it off the workers again. Shame on the so-called unionists who are members of that Labour Government—from the Service and Food Workers Union right through to the hotel workers’ union. We have two old members from the hotel workers’ union, Mark Gosche and Rick Barker. Both of them were regional secretaries. In the new intake, there are three or four throw-outs from the union movement. The lady who spoke just not so long ago, Maryan Street, wanted us to hear about the Labour Party.

David Bennett: What party?

Hon TAU HENARE: She wanted us to hear about the Labour Party’s history. She talked about people in the Labour Party. Was Arnold Nordmeyer a Labour MP?

Christopher Finlayson: He would be an ACT MP.

Hon TAU HENARE: Oh, he used to be an ACT MP, but he was a Labour MP. Roger Douglas was a Labour MP. The only people worth their salt, basically—

Christopher Finlayson: Prebble was a Labour MP.

Hon TAU HENARE: Richard Prebble was a Labour MP, too. But here is the rub. In this Government all we have is the dictatorship of the proletariat. That is what they believed for a long time, and that is what they will continue to believe—the whole thought that they know best how to spend other people’s money. I say that it is time for those people to get out and leave people to spend their money the way they want to. If they want to spend it on a superannuation scheme, so be it.

But here is the other thing. Not only do they give with one hand the so-called corporate tax rate drop from 33c to 30c, but on the other hand they make them pay out $20 for each worker, per week, for the rest of that worker’s life, basically—thousands upon thousands. What the unionists do not understand is that workers in this country this year, next year, and the year after will not be getting a wage increase. Do members know why? It is because those grubby people over there will not allow the employer to make a bob and give it to the workers in a wage increase. They have taken it away before they even get their hands on it. They want to strip the poor of the meagre wealth that the working class gets. We always hear from the Labour Party about the working class, and the meagre resources they have. What will the Labour Government do? It will take $20 out of a working-class person’s family. It will take $20 off the table.

Darien Fenton: It’s not compulsory.

Hon TAU HENARE: Oh, it is not compulsory! Darien Fenton says that it is not compulsory. Well, let me tell that member that it might as well be compulsory, because blimey, what we have here is that not only is the Government going to take it off the workers, but it is taking it off the employers too. It is compulsory. This is nothing more than smoke and mirrors.

I want to digress just a little bit and quote something that I think this House needs to know: “This is a Budget to buy votes, not a Budget to build a better future for this country. It is a pork barrel Budget aimed at one thing—just keeping, oh so definitely, political power. It is a cynical statement signed by a cynical group of people. If a public company in this country had published such a document, it would be tagged by the auditors.” That was from none other than the Minister of Foreign Affairs, Winston Peters. He said that about the Budget in 2004. He said about this party, the same party that he got the baubles of power off: “Labour, today, lost the plot.” That was Winston Peters in 2004.

Barbara Stewart: Time has moved on since then.

Hon TAU HENARE: I really like that. Time has moved on since then. Absolutely it has. Winston is now driving around in a limo, instead of in a Status taxi. But that does not matter. That is OK. Darien Fenton will not see the inside of a limo very soon. In fact, she will never see the inside of a limo.

This year’s budget for Māori Affairs increased supposedly from $12 million to $169 million. The spin that the Labour Party gives is that if we have a look at Te PuniKōkiri’s budget, it actually drops by $18 million. Have a read of the books. Books do not lie, apparently. Well, it is in the Budget books and it is in the estimates—$18 million.

But I want to congratulate the Government on one thing about this Budget, and that is the $2.5 million that was given to the Māori wardens. They are being trained by the police, and I am just a bit wary that this $2.5 million for the Māori wardens will go to prop up New Zealand First’s police numbers. Is that the reason why they are being trained by the police? We never know.

Parekura Horomia says that most of the benefit for Māori from this week’s Budget will come from mainstream areas, and that tax cuts would take money from areas where Māori need support. Again, the Government has taken a tax cut—what it was supposed to give—off Māori workers, taken it off workers in general, and said: “Well, actually, we think you would be better off if we took that $20 a week and spent it on something that we think you might like.”

It is like someone going into the hardware store and getting the proprietor to sell something that the proprietor thinks that that person needs, not what that person thinks he or she needs. That is exactly how this Government has worked, will work, and always will be; it believes in the doctrine of the dictatorship of the proletariat—the proletariat. The working class can kiss the proverbial because some of them got the boss’s job at last. That is what this is all about.

David Bennett: Academics!

Hon TAU HENARE: It is. It is academic snobbery. They cannot allow themselves to leave working-class people to make a few decisions. All I can say in closing is a little line from Malcolm X when he was arrested for thieving—and it was not him. He said: “Take your hands out of my pocket.” “Take your hands out of my pocket.”; that is the catchcry that working-class people in this country should have when they go to the polling booth in less than 18 months’ time to get rid of this Government once and for all. People should say: “Take your hand out of my pocket because it is not your money. You did not work for it; I worked for it. I, as the worker, worked for it and I want to spend it the way I want to.”

DARIEN FENTON (Labour) : I tell listeners that the last speaker was Tau Henare the working-class hero, who is now a National list member. Did he not once work for a union and did the workers not pay his wages? Yes, they did, and did he not sell them out? First of all, he went with National as part of New Zealand First, then with Mauri Pacific—do members remember that—then he was back, like Lazarus rising from the dead, as part of the National Party. I say to that member: “Good on you, Tau.”

It is a great pleasure to contribute to this debate, because Budget 2007 is forward-looking and innovative. It addresses our future and deals with the current issues of our nation. It is a Budget to be proud of.

I have taken an interest in this debate. What has interested me has been the naivety of those newer National members across the House. I do not expect anything more of the National Party’s old guard, and a lot of them are still here. Those members were responsible for the trashing of ordinary people and the low paid last time they had their hands on the levers of power. I am talking about National’s co-leader Bill English, Nick Smith, Murray McCully, Lockwood Smith, Maurice Williamson, Gerry Brownlee, Tony Ryall, David Carter, John Carter, Wayne Mapp, and Pansy Wong—among others. They are still there and New Zealand still bears the scars of the damage they did during the time they spent in Government.

The newer National members, like David Bennett, are woefully ignorant of their party’s political history. [Interruption] I say to David Bennett that he needs to study that history. When that member was in the boardrooms—and some of his mates were flying around as flying doctors or chasing sheep—he was absolutely ignorant of what was happening around him. Some of us were picking up the pieces of the chaos that the previous National Government had caused. Whether National members like it or not, or whether David Bennett likes it or not, I am here to remind everyone about the 10 years of hell under the previous National Government. Members of the Opposition have delivered sanctimonious speech after sanctimonious speech mentioning the low paid and the vulnerable. What a laugh! I will never buy that concern from that party. I do not believe that National members have learnt the lessons of history, and until they learn those lessons they are doomed to repeat the mistakes. Let us make sure that never happens.

Let us remind the House and those listening of National’s real record in respect of workers and those on low pay. I ask David Bennett to listen; he might learn something. Under the previous National Government countless jobs were casualised, reduced to part-time hours, and contracted out. From 1991 to 1999 growth in part-time jobs was 36 percent, including jobs with hours as low as 1 hour a week. Meanwhile, full-time, secure jobs were axed in their tens of thousands. The numbers on benefits soared. They increased by over 100,000 from 1991 to 1999. Real wages increased by only 0.1 percent a year. In the case of low-paid workers, such as supermarket workers, real wage rates fell by 11 percent between 1987 and 1997 for those working from Monday to Friday. Those whose work included weekends had a 33 percent real pay cut.

Under the previous National Government, unemployment averaged 7 percent and peaked at 11 percent, Māori unemployment peaked at 25 percent, and Pacific Island unemployment peaked at 28 percent. The minimum wage was frozen at poverty levels. The only protections that workers had were $7 an hour by the end of 1999, 5 days’ sick and bereavement leave, and 3 weeks’ holiday leave. That does not apply just to the 1990s.

Barbara Stewart: What about the superannuitants?

DARIEN FENTON: That is right. The member is right about the superannuitants.

The cynical politicking of National members in claiming outrage on behalf of the low paid and vulnerable has been appalling in this debate. If their concerns are genuine, then why has their party opposed the raft of measures that this Government has brought in since 1999 to improve the lot of the low paid? Members can take the example of the Employment Relations Act, which gave low-paid workers better bargaining power by righting the power imbalance between employers and workers. Did National members vote for that? No, of course they did not. The Employment Relations Act Mark II strengthened good faith and the rights of those on individual agreements. Guess what? National voted against it. An amendment to the Employment Relations Act was passed in this Parliament for the sake of vulnerable workers. That amendment stops low-paid workers from having their pay cut when their employer changes. Guess what? National voted against it.

We have had multiple increases in the minimum wage, and all of them have been opposed by the National Party. We had the renationalisation of the Accident Compensation Corporation; National opposed that. National voted against the Holidays Act and its provision for 4 weeks’ annual leave—surprise, surprise! Legislation for paid parental leave and the extensions—apart from the one for the self-employed—were opposed and voted against by National. Working for Families was opposed and voted against by National. Cheaper doctors’ visits were opposed and voted against. I could go on and on all night.

What else has National offered to this debate? We have heard a lot about Australia. I want to ask Opposition members why John Howard is trailing so badly in the polls. If his tax cuts are so magnificent, why is he going to lose the next election? I will tell members why. It is because Howard’s industrial relations legislation has finished him. New Zealand workers who go over to Australia are doomed to learn a tough lesson about the realities of Tory policies in Australia. They are about to learn the hard lessons that New Zealand workers learnt under National, and workers have long, long memories. The National Party will find out—come election time next year—that New Zealand workers’ families have neither forgotten nor forgiven.

The Howard Government was re-elected in 2004 on a promise of keeping interest rates at record lows. But there have been four interest rate rises, and the cost of average mortgage repayments has risen by nearly $200 a month. At the same time, the Federal Government’s new industrial relations laws have put downward pressure on the take-home pay of working families, with wages for full-time workers actually declining since the introduction of the Work Choices industrial relations laws. Although those on the Opposition side of the House like to laud the Australian tax cuts, Australian commentators are saying that the $14—on average—of tax cuts, which working families will receive in the latest round, is not enough for those who have been squeezed as a result of their take-home pay being reduced under the new industrial relations legislation.

In contrast to the Labour-led Government’s contribution to skills development, workforce development, apprenticeship, education, and training has suffered 11 years of neglect under the Howard Government, with Australia being the only OECD country to have cut public investment in tertiary education—by 7 percent since 1995. Other countries, including New Zealand, have had an average increase of 48 percent.

So the lesson for the National Party is that all the bribes in the world will not convince voters. Just as Australian workers are not convinced to vote in support of John Howard, low-paid workers will not be convinced that the National Party is suddenly on their side. The problem that National has, of course, is that New Zealanders get KiwiSaver, which is a wonderful plank in this Budget. Workers get it. Families get it.

Hon Member: Employers get it.

DARIEN FENTON: Employers get it—they are supporting it. They support the idea of saving for the future and having a stake in New Zealand society. They think the enhancements to KiwiSaver are brilliant. The only people who do not get it are the members of the National Party.

I have to say that some of the contributions to the debate have been bizarre, such as those in respect of pay increases. KiwiSaver requires employer contributions of 4 percent by 2011. The Government will return 2 percent of that by way of tax credits. Fifty percent of workers are expected to be enrolled in KiwiSaver by 2011, so that halves again the contributions that employers have to make. That comes to 1 percent over 4 years, or 0.25 percent a year. Workers might expect that sort of pay increase under National, but workers under this Government are getting decent pay increases and will continue to get decent pay increases.

I make a final point on low pay. On page 30 of the Budget speech the Minister of Finance outlines the further $3 billion investment in health. Part of that is a substantial investment to improve the services to old people and people with disabilities, “including through addressing workforce issues arising from low-paid workers in DHBs and within aged residential and home based support settings”. Thank goodness this Government continues to invest in our future, in the low-paid workers, in sustainable growth, in transforming our economy, and in higher standards for all families.

KATE WILKINSON (National) : I have heard so many of the Labour Government speakers referring to the past, looking forever backward—[Interruption]—some more backward than others, I say to Mr Benson-Pope. They have no vision, no ideas, and no chance. We have heard of deception and desertion in this debate, and I want to remind the House what actually happened in 1990, because I think it is important that we set the scene.

In 1990 the newly elected National Government and the New Zealand public learnt that Labour had been far from open and honest in the lead-up to the election. Labour hid the need for a $600 million bail-out of the Bank of New Zealand, and by October 1990 the fiscal situation had deteriorated by a further $1.5 billion to reach a deficit of $3.7 billion since the Budget presented by Labour Minister of Finance David Caygill. With the subsequent passing of the Fiscal Responsibility Act it was said that this cynical dishonesty could “never be repeated”. Well, unfortunately, that quote was wrong, because the lesson has not been learnt, and the cynical dishonesty still abounds from this Labour Government.

Mr Deputy Speaker, you do have to wonder about this latest attempt at a Labour Budget. [Interruption]

Mr DEPUTY SPEAKER: These interjections are not intelligent.

KATE WILKINSON: Thank you, Mr Deputy Speaker; I concur with your ruling. We do have to wonder about this latest attempt at a Labour Budget, when Laila Harré, the champion of workers’ rights, herself admits to being disappointed and asks what is in it for her workers.

She was quite right to ask that question, because 50 percent of workers will get nothing from this Budget. The working poor get to subsidise their better-off workmates. They do not get to spend more of their own money; they are not even trusted with their own money. This is what Laila Harré had to say about the Budget: “… this Budget makes me sad. When before has the workers’ party been so endowed with riches and surrounded by such potential? Even the projected cash deficit has bloomed into a $2 billion cash surplus and there are people and causes crying out for that money. … Compulsory employer contributions are a double-edged sword. They will help those who make it into the scheme, but workers are expected to lower their wage demands to off-set the cost to employers.” That statement was from Laila Harré, the champion of workers’ rights. KiwiSaver is the supposed linchpin of this Budget, and that was what Laila Harré had to say about the eighth Labour Budget. Labour is no longer the workers’ party; it is the self-preservation, power-at-all-costs party.

We have heard about the cleaners—the hundreds of cleaners. They will not get a wage rise. They will not get a tax cut. They will not opt—they cannot opt—for KiwiSaver. They will not get anything from this Budget. If workers do not have enough money now, how on earth can they be expected to save for tomorrow from today’s wages? Fifty percent of workers will get nothing from this Budget, and if they live in Auckland they will actually get to pay more tax in the form of the regional petrol tax.

On the morning after the Budget speech I read the editorials in the morning papers. It was interesting reading, because they put in perspective just what other people thought of this eighth Budget. The Budget was so impressive that the car-parking issues of Taranaki were more important. The people in Taranaki were more concerned about their parking than this Budget—a Budget described by one of the Ministers as “a huge gold star”. The southern papers were more interested in the Southern Man—that was more important to them than this Budget. In fact, the editorials that did cover the Budget had headlines such as: “Opportunity lost”. I find it puzzling that when we announced our charities policy some months ago, it was derided as Tory charity and as tax cuts for the rich. But now that this Labour Government has it in its Budget it is neither. Under National it is tax cuts for the rich; under Labour it is not. Labour members say that tax cuts under National are inflationary. But for some reason tax cuts under Labour are not inflationary.

You know, I also find it puzzling that when National suggests tax cuts, Labour says they will have to be at the expense of cutting health and education services. When Labour suggests tax cuts—and the Prime Minister actually said this is a tax-cutting Budget—they are no longer at the expense of cutting health and education services. It is puzzling that for some reason it is OK for this Labour Government to avoid answering questions during question time about current and important matters, but it is not OK for us not to answer questions about what may happen in the future. Labour does not have to answer a question about what is happening in the present, but it expects us to answer a question about what may happen in the future. There is a word for this.

It is often said that the tax dollar should travel the least distance between taxpayer and its end destination. Our tax dollar is a long-distance runner—a marathon runner. It is paid by the taxpayer, it is churned around in the Government coffers for some time, then it is re-churned out again at some stage in the far-off future. It is like the Working for Families benefit. Each churn of the tax dollar reduces its value. Surely the object is to reduce the churn and maximise the use of the tax dollar. But this Government must have control. It must control what we have and what we spend. It cannot possibly trust us with our own money. It takes the money, churns it through some bureaucratic nightmare, then, if we are lucky, we can ask for some of it back. If we are even more lucky, we may be able to get some of it back. I am no economist, but that certainly does not seem to be an efficient use of our tax dollar.

Labour has had 8 very long years in which to lift productivity—very long years. It has had years and years in which to meet the Prime Minister’s own commitment to lifting us to the top half of the OECD rankings. What has happened? Are we now in the top half of the OECD rankings, after 8 years? No. Are we even in the same place in the OECD rankings as we were 8 years ago? No. We are worse off than before. We have fallen down in the OECD rankings, and we are now ranked with Portugal, Hungary, and the Czech Republic.

Lifting fundings has been lauded by the Government, and for some reason this Labour Government thinks that lifting funding is the same as lifting productivity. But it is not. As we hear time and time again, throwing more money at an issue does not address it. Throwing more and more money at health actually resulted in longer waiting lists, fewer operations, and more time spent waiting for a specialist’s appointment.

It is interesting what the Christchurch Press had to say about this Budget: “ ‘We need’ ”—Dr Cullen said—“ ‘incentives for investing and innovating in our economy to raise productivity and sustainably increase our living standards.’ Cullen has diagnosed the problem exactly. Regrettably, in his eight years in office, he has presided over an economy in which the opposite has happened and despite all the talk about economic transformation, he has failed to offer anything in the latest Budget that will significantly alter that. In one of the most propitious periods for real economic change in recent history, Cullen has lost a huge opportunity.” This is an opportunity that good, hard-working New Zealanders deserve.”

Hon RICK BARKER (Minister of Internal Affairs) : Listen to the raucous noise from the National Party. The speech from the Exclusive Brethren’s lawyer was one of the most empty speeches I have heard. But that is what one expects from the National Party—all rhetoric, and rhetoric that one cannot believe.

One of the key issues for the next election coming up is going to be whether New Zealand saves for its future, or whether it spends its future away. The National Party has got the greatest collection of spenders this country has ever seen. Take one of the greatest economic brains the National Party ever produced the Hon Bill Birch. He left this country with a theme park of industrial white elephants. National debt went through the roof, wages fell, and what did the National Party do then about balancing the interests of the disadvantaged and the poor with the interests of the wealthy? The answer is very, very clear. One of the last Budgets given by the Hon Bill Birch saw tax cuts for the rich and a cut in superannuation for superannuitants. National cut the floor of superannuation from 65 percent down to 60 percent of the net average wage. But that is honouring an old, long-time Tory tradition.

The Tories have always attacked superannuation; it is really clear when one goes back and looks at the history of New Zealand. One of the antecedents of the National Party was in control of this country in the 1930s—a long time before Labour came into power. It is true, absolutely true, that Pākehā New Zealand got paid more in benefits than Māori. That is the legacy of the antecedents of the National Party. Māori got paid less than Pākehā. It is true that this was changed when Labour came into office in 1935 and said every New Zealander was equal. We made all access to State benefits equal. The Labour Party built the welfare State, and the National Party was locked out of office until it accepted, without qualification and without equivocation, the welfare State.

It was only when the National Party said to the public that it would make no changes to the welfare State that it was electable, and it was electable for quite some time. In 1972-75 along came another visionary Labour Government and one of its key planks was to introduce compulsory superannuation. It was a compulsory superannuation scheme that would have addressed several structural problems in the New Zealand economy: firstly, we were not saving enough for retirement; secondly, there was a shortage of savings in New Zealand; and thirdly, spending was running ahead of what the economy could withstand.

The Labour Government introduced superannuation. This superannuation scheme was attacked by National and it made a promise to the country—a promise that the public wanted to hear, and wanted to believe, but we all knew was a lie. The promise was that New Zealanders would be guaranteed 80 percent of the average ordinary 40-hour take-home pay at age 60 on top of any job they wanted to have. Muldoon promised that, and he also said as a bribe to the public: “We will scrap Labour’s superannuation scheme. We will give you back the money you put in as well as the employers their scheme.” I say, to my deep regret, I was working in a factory in Dunedin at the time, and everybody voted National that year. They said: “To hell with the superannuation scheme, to hell with the future, Rob Muldoon will look after us.”, and they went and spent the money.

For the next 10 to 20 years this country thrashed with the problem of what to do to look after our elderly. The best example the National Party came up with was to give tax cuts for the rich and a cut in superannuation for our superannuitants. It cut the floor from 65 percent to 60 percent of the net average wage. That is what the National Party did. It was really interesting when I talked to people at the yacht club while my son was sailing off the North Shore. People came up to me and said: “You’re a Labour politician aren’t you?”. I said: “I am.” They said Jenny Shipley had shown very poor leadership—very poor leadership—because she had cut superannuation for their grandparents. They said: “Cutting the superannuation for our grandparents is a bad thing. These people can’t go and get another job, they can’t move to Australia, and they can’t do anything else.”

The National Party, in order to fund tax cuts for the rich, was prepared to rip the money off the most vulnerable in our society. These were people who had built the railways, built the schools, built the hospitals—all that we were brought up with—and National was prepared to cut their superannuation. But it gets worse. The National Party said it was going to get rid of the superannuation surcharge. Its members said: “no ifs, no buts, no maybes, watch my lips.”, and what did they do? They increased the superannuation surcharge. The National Party has the most shameful, disgraceful, despicable legacy on superannuation of any party in this Parliament. If any superannuitant has any faith in the National Party, then I would say it is a very rare thing. There is no justification for it whatsoever.

This Budget has been visionary and has tackled the key issues in our economy. All commentators have said there are many problems. Firstly, our kids cannot get a deposit to buy a house. What are we going to do about that? Secondly, there are inflationary pressures in the economy and they need to be dealt with. Thirdly, there are huge savings deficits in this country. The Labour Government, with KiwiSaver Mark II, has solved all three problems with one hit. We are going to encourage people to save for their retirement, we are giving young people the means to get a deposit for a house, and we will put money into the system that business and others can draw down.

In addition to this, the Labour-led Government has cut the corporate tax rate from 33c to 30c. In 9 years of misery the National Party did nothing for business at all. With all its opportunity to cut the corporate tax rate it did nothing. The only thing the National Party cut was superannuation for superannuitants. It is on the record, and is unmistakable; that is what it did. Superannuation went from 65 percent down to 60 percent. Bill English was there; that was one of his proudest moments. The proudest moment of Bill English was when he cut superannuation from 65 to 60 percent of the net average wage and that man has the cheek to attack the Labour Government’s policy on KiwiSaver to help New Zealanders save for their retirement.

If Bill English wants to go out and talk about superannuation he will make the Labour Party’s day. We will go back and remind the public of the words of his leader at the time: “no ifs, no buts, no maybes”. National members lied. They also said to the public “watch our lips”, and they lied. They also told the public that they would do nothing to affect workers’ wages, and they lied. They brought in the Employment Contracts Act and cut workers’ wages.

Bill English makes fun about Tory charity. Well, I want to tell the National Party what Tory charity is all about; Tory charity is about cutting benefits. Tory charity is about introducing market rentals. National was so concerned about the public of New Zealand that prior to one Christmas, when State house rentals were going up, it advised all the people in State houses in the Hawke’s Bay area, like everyone else in the country, that their rents were going up—and they kindly put holly and “Merry Christmas!” on the letterhead. The letters said “Merry Christmas!” to beneficiaries whose rents were going up; that was a Tory policy from the National Party.

This is a great Budget. It builds on all the other Budgets that have gone before, and is part of a long-term sequence of Labour Budgets. It is a sequence of Budgets that has restored the superannuation cuts of the National Government, that has put forward extra funding for students to reduce student fees and cut student loans, and that has put money into the hand of superannuitants by way of rates rebates. We have done a pile of work in this area, and New Zealand is much better off for it. That shows in my own area of Hawke’s Bay, where average incomes have risen steadily under this Government. Unemployment has gone down dramatically under this Government. We inherited 160,000 people on the unemployment benefit. What do we have today? We have approximately 25,000.

This Government has been fantastic for this country, and will continue to be fantastic, because the people of New Zealand will support us. They will support us because we have good Budgets that do the best for our country and for all of our people. We are not here in the short term, which is essentially what National is. The public will remember that when it comes to superannuation, National has nothing in its history to be proud of, whatsoever. National is the party that cut superannuation in the past, and got rid of superannuation in this country illegally. National, when it made promises about superannuation in the past, lied—it lied when it said: “no ifs, no buts, no maybes”—and it will lie again.

CHESTER BORROWS (National—Whanganui) : What a surprise to hear that member Rick Barker—a Minister in Cabinet, who came along here and ranted for 7 minutes, managed to mention the Budget twice but never once spoke about any of the three votes he is responsible for! He is the Minister for Courts but never once mentioned how he will go about recovering fines or paying back reparation to victims. What an absolute disgrace! He could not even tell us what page Vote Courts is on, in his own Government’s Budget.

I rise to talk about how this Budget offers very, very little in the area of the causes, the investigation, the prevention, and the resolution of crime. This Budget does mention two things, though. It talks about an enhancement in funding in two areas—one is around recruits, and that is a really interesting subject to have a look at. Prior to the last election, the Government decided there was no need for further staff numbers within the police, at all. As the Prime Minister said, anyone who was talking about increasing the number of police recruits in the thousands was not on the same planet. Of course, once the Government found out that National was interested in doing that and New Zealand First was interested in doing that—what do you know—it promised us 250 more community cops. Well, we are yet to see those community cops, and by the look of it—from the people who are making contact through the website or the 0800 NEW COPS phone number—the Government will not get to see them, either.

The other enhancement with anything to do with the police in the Budget is an enhancement of funding for the Police Complaints Authority. That authority has been telling us for at least the last 2 years that it has been seeking more and more funding, because it is finding it difficult to do its job without it. Finally, the Government has been forced to listen to the authority.

When we look at the causes of crime, we have to acknowledge that young people get involved in crime for the same reasons they get involved with gangs: there is a lack of engagement with their families, there is a lack of engagement with their education, and there is a dependency on drugs and alcohol. This is a Government that came into this House in 1999, and again in 2002, pledging to deal with the problem of youth crime. We found, of course, that it did not work. The Government had a strategy that was called the Youth Offending Strategy. The Government sank $12 million into it, but it found that it did not work. In fact, youth crime plateaued or went up slightly, and violent youth crime went up by nearly half—by 44 percent. What do you know—after that, the Government did not promise to deal with youth crime at the last election, because it knew it could not tackle it.

This Government came to office in 1999 promising to deal with burglaries, and what happened? The rate of burglaries went up. The Government did not deal with these burglaries and—what do you know—last election it did not even talk about burglaries, because it knew it could not hang on to that promise.

The Government took the police’s focus off gangs. If we look, for instance, at the city of Wanganui, which I have the privilege to represent, we see that in 1996 the police concentrated on gangs. That was the focus of their strategy. Crime went down, and trended down for almost all of the following 6 years—because the police kept their feet on the throats of the gangs. The focus was taken off gangs from about 2002 and we started looking at things like traffic quotas and—what do you know—gangs reared their ugly heads again. The Black Power gang, which had disappeared out of Wanganui, came back into Wanganui because it had found a fertile hunting ground for new recruits.

We look, for instance, at the situation with education and the disengagement in education. Labour came in promising it would set up and run a truancy register. It has promised that every year it has been in, since 1999. But what we have now is the appalling situation where we have 45,000 students in our little country away from school every week, and no one can tell us who they are, where they are, or where they should be—and nobody cares. Is it not interesting how quiet it has got in the last couple of minutes? Another promise we noticed, which has been the hallmark of Labour’s education policy, is that in year 1 there was to be a ratio of one teacher to 15 children—1:15. The Government has worked hard on that, it has advertised it heavily, and now we find within the Budget that it hopes to make it a ratio of 1:18.

Another hallmark of youth offending and involvement in gangs is disengagement with the family. I was really interested to notice in the newspaper yesterday a quote from the National Collective of Independent Women’s Refuges. These people are supposedly friends of the Labour Party: the women’s refuges include the very same people the Minister for Social Development and Employment gave provider status to, after taking it away from other organisations. So what did they have to say about this Budget? They said: “We are devastated there was nothing in the budget bid for Refuge, especially after all the work that we have done in conjunction with Child Youth and Family and other agencies of the Ministry of Social Development … We feel that we have been used and abused and I guess that is reflective of the work we do. We shouldn’t be surprised, but we are.”

The women’s refuge in Wanganui recently picked up the Te Rito contract, which is between Child, Youth and Family, the police, and Women’s Refuge. Strangely enough, the contract was taken off an organisation in Wanganui called the Whanganui Living Without Violence Trust. I notice that the Minister for Social Development and Employment pricked his ears up then—and he should. The Whanganui Living Without Violence Trust was the organisation that took all the Pol 400s—those are the family violence forms the police fill in whenever there is a family violence incident—collated them, and then approached the victims of family violence. They supported them and put them in touch with various other helping agencies and organisations. They looked after the counselling of families, and that was the role they had.

Darren Hughes: It was Government money, and Bill English says there’s too much Government spending.

CHESTER BORROWS: Yes, hang on Darren, it is coming. Between Child, Youth and Family and the police it was decided to take that contract away from that trust, without any discussion or negotiation. Its representatives were not even in the room when the decision was made. However, representatives from the women’s refuge were. That contract was given to the women’s refuge, because the Government wanted to pay the Women’s Refuge about an extra million bucks or so a year. That is the reason Labour has given for giving nothing further to the Women’s Refuge in this Budget.

But the Whanganui Living Without Violence Trust is an interesting case in point, because that Minister for Social Development and Employment sitting over there gave the contract to the trust to provide training to Work and Income staff in dealing with people who have been exposed to family violence. The trust had a contract for doing that and—what do you know—they were paid for it. The trouble was they had not delivered any of the training. They asked when the training was to be held and they were told that it was not needed any more. So what happened? They got in touch with their local member of Parliament. I wrote to the Minister and asked what the story was, and where it was going to. The next thing they knew, a letter arrived saying to disregard anything that had been said in the past and that the trust was wanted to provide the training to Work and Income. They did and—what do you know—they were paid for that again, as well.

And this is just an indication of how effective this Government is in looking after money for those people at the bottom of the tree—those people who are relying on this Government to be able to turn it on for them. It is all very well to give us all that pie-in-the-sky stuff. For instance, the previous speaker got up and stood for 8 to 10 minutes without even mentioning the Budget that he, as part of Cabinet, is so proud of.

Another interesting thing is that the shafting of Women’s Refuge came in a year when family violence is higher than it has ever been before. Family violence went up by about 1,500 between 1999—when this Government came to power—and 2000. The following year it went up by 2,000. In 2002 it was up an extra thousand on top of that. In 2004 it was up another hundred or so. In 2005 it was up by 1,500, and in 2006 it was up by another 2,000. So in the homes of this country we have just over 10,000 family violence incidents a year that were not occurring in 1999—and this Government says it puts families first. This Government will crow, for instance, about Working for Families packages, but it will not give an extra dollar to agencies that are working damned hard for families.

Also, we find that this Government funds about 70 percent of the cost of the provision of services that it expects private providers to be able to turn on for it. These are organisations that have to campaign and lobby for money. They have to get money to top up the Government’s bill by contacting Pelorus Trust and other pokie machine operators around the country. It is time that this Government started paying its bills. It is interesting to note that when Labour members want to talk about the history of these things, for their good ideas they go back to 1972 and forget completely about the period from 1984 to 1990. What this Government forgets, and what we will remind it about, time and time again, is that in 14 of the last 23 years it has been in Government it has done sweet Fanny Adams.

Hon LIANNE DALZIEL (Minister of Commerce) : It is a bit rich for a member of the National Party to stand in this House and speak as Chester Borrows did, when it was a National Government that introduced the competitive market model for funding for community agencies, whereby community agencies were pitted against each other for funding contracts; when it was a National Government that actually removed the line item for Women’s Refuge from the Budget. It is a bit rich to have to listen to that nonsense.

But in this debate I want to talk as Minister of Commerce, as Minister of Women’s Affairs, and as Minister for Small Business, and to bring some perspective to the debate on the savings culture that this Budget is designed to encourage and that relates to all three of my roles. I find it very disappointing to listen to women in this House who do not understand how fundamental it is that we preserve New Zealand superannuation into the future.

I want to begin with a memory from my youth by going back to when I was 15 years old and had to ask my parents to explain the purpose of the National Party’s political campaign that had cartoon characters of Cossacks dancing across the television screen. The cartoon pictures of the Pacific Islands people who had overstayed and who were indistinguishable from those who were here legitimately was a clear-cut message that even a 15-year-old could understand. The racism was blatant. But the dancing Cossacks required an explanation. I did not understand what that was all about. I was told it related to the Labour Government’s superannuation fund, which was going to build up over many, many years but which was going to be under the control of the Government—a Stalinist Russia Government—which was something to be avoided at all costs. The alternative, we were promised by one Rob Muldoon, would be much, much better; it was to drop the age of entitlement to 60 and lift the rate to 80 percent of the average wage, and it could be funded out of current taxes with no need for anyone to save a cent. There was no need even for a top-up at that rate. It was an act of economic vandalism that we have paid the price for over and over again in this country.

Michael Cullen will go down in history as the Minister responsible for turning the tide. Not only has he secured New Zealand superannuation through restoring the floor below which superannuation cannot fall, not only has he partially pre-funded the scheme so that the thresholds do not have to be altered, and not only has he made the scheme directly available to the public sector, but also he has introduced KiwiSaver, which will enable current and future generations of New Zealanders to put aside enough savings to provide a top-up to their superannuation entitlement, ensuring that they can better match their pre-retirement and post-retirement incomes. Thank goodness for that, thank goodness for a Labour-led Government, and thank goodness for Michael Cullen, who has had the gumption to actually get behind New Zealand and ensure that we have a future.

But I do have a concern, and it is this: I do not trust the National Party to continue with its stated commitment to New Zealand superannuation. That is because National cut the level of superannuation when it was last in Government. It lowered the floor below which superannuation could not fall, and it was a Labour-led Government that had to restore it, when it was re-elected in 1999. As Minister of Women’s Affairs, I feel passionately about this issue. The reality we need to face as a nation is that only one in 20 women currently save for their retirement, and 55 percent of women, as opposed to 38 percent of men, who are currently in retirement are totally dependent on New Zealand superannuation.

KiwiSaver cannot change the current situation for those already in retirement, but it can change the future of retirement in New Zealand. But it can never—never—be allowed to be a substitute for New Zealand superannuation. Women, on average, earn less than men. They spend more time than men out of the paid workforce and, due to their longer life expectancy, they have to stretch their retirement earnings over a longer period of time than men. New Zealand superannuation must remain as the cornerstone of our retirement income policies as a nation, and only a Labour-led Government can guarantee that to the people of New Zealand.

I want to talk about small business in respect of KiwiSaver. There has been some comment from the other side of the House about the cost this will impose on small business. Those who join the scheme will get 4 percent over 4 years, and there will be a tax credit for the employer. That means the reality is that the contribution does not reach even 4 percent. Leading up to the Budget, I talked to many employer groups about KiwiSaver. Almost without exception they asked why the scheme was not going to be compulsory. We have made it compulsory not for employees but for employers, in terms of the contributions they make, and those are not at 9 percent but rather at a mere 4 percent over 4 years—1 percent a year. So why did I mention the 9 percent contribution? Because that was the figure that came up at all of the business meetings I had in the lead-up to the Budget. People mention 9 percent because that is the figure in Australia. The reason businesses kept raising Australia with me time and time again is that Australia is awash with money. Australia’s compulsory superannuation fund has made it one of the world’s largest investors. That is a reality New Zealand businesses want to experience here. They need that investment money to come into their own businesses and not to be bought up by Australian superannuation funds.

Finally, I want to comment on the crocodile tears I have seen flowing from the eyes of the National Party members who have spoken of promoting the interests of low-paid workers. What a joke! I was here in Parliament when the National Government introduced the Employment Contracts Act. That was after it had repealed the Employment Equity Act. By just how much did wages go down in the 9 years of the Employment Contracts Act? Was it by 1 percent, 2 percent, 3 percent, or 4 percent—because that is what we are asking employers to contribute to KiwiSaver? It was well over that, and the National Party knows that is the case. Not only did we see the base rate workers’ wages go down, we also saw all the conditions of employment they lost. This Government has had to restore things like time and a half for working on statutory holidays. We have introduced 4 weeks’ annual leave because workers’ rights were not able to be progressed under a National Government. It was a steady retreat, year in and year out, as workers had to give up more conditions of employment. Increases to the minimum wage were a rarity in the 1990s, not the annual event they are under this Government.

National voted against the Working for Families tax credits because they are targeted to working families. National wants the people who need it the least to get the most, and the people who need it the most to get the least. A working couple running a business earning $60,000 a year with two children get $100 a week tax credit under Labour. It would be nowhere near that under a blanket tax cut from National. National MPs cannot stand in this House with an ounce of credibility and say they care about hard-working New Zealanders—particularly those on low pay, especially those who are on low pay because of National’s changes in the 1990s, and those who get pay increases today as the minimum wage goes up.

The bottom line is that National was willing to squander our future in 1975 and nothing has changed. It would be willing to squander our future once more, and I pray that it never, ever gets the chance again.

METIRIA TUREI (Green) :Tēnā koe, Mr Deputy Speaker. One of the major highlights in this year’s Budget, which has been talked about across the country, is the $8.8 million over the next 4 years that I and my party, the Green Party, have negotiated in the Budget. This money will be used, in conjunction with local communities, for the integrated habitat management of three of New Zealand’s most significant wetlands. I briefly alert Mr Cullen to the fact that in his Budget speech not only did he wrongly take credit for this new money for the Department of Conservation but also he got the description of its purpose completely wrong. I tell Mr Cullen that we do not need management of pests in this country, to the extent that he was talking about.

The three wetland areas where this money is directed are major assets to this country. The first is the Whangamarino Wetland near Hamilton. At well over 5,500 hectares, the Whangamarino Wetland is home to 239 wetland plant species, including many rare and vulnerable species, 60 percent of which are indigenous. It plays a major role in flood control in the Waikato area, it is a key waterbird habitat, and it is home to native fish, including the short-finned and long-finned eels. The Whangamarino Wetland is listed as a wetland of national importance under the Ramsar Convention. A number of invertebrates inhabit the wetland, including seven species of mollusc and—perhaps Mr Cullen might be interested in this—seven species of water flea. Aquatic insect life includes dragonflies, damselflies, water beetles, crane flies, midges, and a tiny water skate, which is possibly the most abundant animal in this wetland. The only species of moth in New Zealand with an aquatic larva is common in the Whangamarino Wetland.

The second wetland area comprises the Ashburton Lakes and upper Rangitata River, up behind the Canterbury Plains. It was here on the shores of Māori Lake that I announced this new funding to a group of Department of Conservation workers, Green Party people, environmentalists, and high-country farmers—and I thank them all for attending. This area is one of the best remaining high-country wetland complexes in our country. The nearby premium-braided river habitats remain outstanding examples of freshwater ecology. About 12 lakes and tarns drain generally into the Ashburton River; and Lake Heron, which is included, drains northwards into the extensive wetland and into the Rākaia catchment. The lakes are bounded by glacial moraines, outwash, and alluvial fans, and feature kettle holes and former glacial surfaces. The smallest lakes freeze over in the winter. Each differs in the details, by having either streamside swamps, stony beaches, or turflands. The upper Rangitata is one of the few braided river habitats left in New Zealand that is largely free of invasive weeds. This money will help to protect species supported by these habitats, such as the wrybill, the crested grebe, and a range of threatened flora.

The third wetland is the area of Awarua and Waituna in Southland, covering over 3,000 hectares. Waituna Lagoon was listed as a Ramsar site in 1976 and is home to at least 76 bird species and more than 150 native plant species among its unique moor-like vegetation. The species present in this wetland are otherwise confined to mountainous areas of above 900 metres in the North Island, so it is very special. It is an important summer refuge and feeding area for many migratory wading birds, and is an important trout fishery and native fish habitat. The wetland contains the Waituna Lagoon, along with adjacent peatlands, numerous ponds and lakes, and, of course, the coastline.

All three of these areas are well used and supported by community, hapū, iwi, and environmental groups. They are regularly used and appreciated by the public. Whangamarino has a human catchment of 2 million people. The money in the Budget is well over 10 times what is currently spent on the management of these areas. Only just over 45,000 hectares of wetlands remain in New Zealand—less than 10 percent of what was originally here. Habitat destruction from farming and other development has been the main cause of our wetlands loss, and because of this a number of wetland species have become uncommon or endangered.

Yet there are significant ecological and economic values in wetlands. The Department of Conservation has just released a report, The Economic Values of Whangamarino Wetland, that looks at the wetland’s role in the flood protection scheme of the lower Waikato River. That report shows that the managed use of the wetland as a store of flood waters has avoided damage bills to the area of over $5 million—damage that would otherwise have been caused during the 1998 floods. Since 1995 there have been 11 floods where Whangamarino and its water storage function have been critical to the protection of the surrounding areas. There are other similar reports such as the Economic Benefits of Water in Te Papanui Conservation Park report, which showed that the value of the water resources provided by Te Papanui and the tussock grasses of the Lammermoore Range in Otago, was around $136 million. These analyses show that for every dollar we invest in conservation, many, many more dollars are returned to our communities and our economy in the form of ecological services. Conservation funding is an investment in our future economic and ecological security.

Private interest in wetland conservation in New Zealand is also growing. I visited farms where wetlands have been restored amongst the sheep and the cows and have become a major source of pride for those farmers who care for them. I have talked with farmers—as has my colleague Nandor Tanczos—who have worked very hard to fence off waterways, and to help protect the water quality that goes into these wetland areas.

Our wetlands project is directed towards working with all the communities that have an interest in wetlands and water quality, and that means that the Department of Conservation will have to work with local farming communities. Increasing nutrient loading, for example, from increasingly intensive land use is a major, and the most common, threat to our wetland sites. This Budget funding will support riparian management of contributing waterways, through liaison with these landowners, to promote and support fencing, retirement from grazing, planting, and all those options. We expect to see the application of models of community involvement for long-term solutions, as much of the contributing land in each catchment is not managed by the Department of Conservation. So we need the support of the local community. That means that long-term restoration requires long-term relationship building with the local people. This is money invested in a transformative process.

We in the Greens do not favour quick-fix projects that support only a very narrow constituency. We use all of our political opportunities to benefit the most people, with a very clear focus on long-term ecological sustainability. This Green Party initiative is yet another example of how we prioritise funding that provides long-term ecological, social, and economic benefit to our community. Thank you.

Dr PAUL HUTCHISON (National—Port Waikato) : Michael Cullen’s Budget should be looked at in the context of what the Labour Government tried to set out to do way back in 1999, and that was, of course, to reach the top half of the OECD. The Prime Minister said that this would occur, Michael Cullen said that this was Labour’s aspiration, and what has happened? New Zealand has moved down two slots from 20th to 22nd. Not only that—productivity has gone down, 700 New Zealanders go across the ditch every week, and even worse, the number of New Zealand graduates overseas is something like 10 times the number of Australian graduates overseas. There are 10 times more New Zealand graduates overseas than Australian graduates. So what has this eighth Budget of Dr Cullen done? It has done absolutely nothing. Productivity is down. Will it close the gap with Australia? Absolutely not.

I will talk just a little bit about a double whammy that has occurred in my electorate, the excellent electorate of Port Waikato. The local editor of the Franklin Times—an excellent paper, which prints 40,000 copies once a week—is very glad that he has a business tax reduction from 33c to 30c. He is happy about that, but what he is particularly concerned about are the compliance costs that he and his employees will be faced with when KiwiSaver comes on board, as he will have to pay a certain amount in employer contributions. He is also very annoyed because he and his employees will be paying a 10c a litre petrol tax for electrification of the Auckland railways, which do not come to Pukekohe or Tuakau—and this Government has made no provision for security of parking in Papakura, let alone in Pukekohe or Tuakau. But the Government has the absolute gall to go on charging that 10c a litre petrol tax all the way down to Mercer, far beyond the boundaries of Pukekohe and Tuakau.

If only Dr Cullen could learn the basics and keep things simple. The rules are obvious: a simple, low-tax system, a flexible labour market, and an efficient, effective regulatory regime. But for a man like Dr Cullen that is impossible. He is a man who has lived all his life—as I heard Tau Henare say earlier on in the day—either in the university or here in Parliament. He has never had a job out there, never run a business, and never understood how difficult it can be to fill in forms in a business out there. He just does not understand those things, so instead he has devised a very complex savings scheme. He has put on yet more taxes to add to the 44 that he has brought in over the last 7 to 8 years, and I am sure that he will draw up a whole scheme of complicated regulations as soon as he can think about it.

When this Labour Government came in, back in 1999, the growth rate was 4.6 percent. It has never risen higher than that. So I ask Clayton Cosgrove, whom we see pointing his finger over there, whether the growth rate has ever gone above 4.6 percent. No, it has not. The Labour Government has failed to sustain the growth rate that it inherited when it came into Government. That is because it decided to do some very silly things, like making massive so-called reforms to the health system and massive so-called reforms to the tertiary education system.

We now have 21 district health boards and we now have the most bureaucratic, complex health system in the Western World. Back in 1998 one Annette King said it was criminal to have a waiting list of 89,000, and now the hospital waiting list is over 150,000.

Hon Lianne Dalziel: You don’t even know your own history.

Dr PAUL HUTCHISON: I do know my history very well. In this House Annette King said that a waiting list of 89,000 was criminal, and now, under a Labour Government, we have a waiting list greater than 159,000. That is despite spending $4 billion extra every year. And we learn today that fewer people are having specialist first assessments than there were back in 1999. That is the sort of indictment that Dr Cullen should wear for setting up the wrong policy settings—as he has continued to do with his eighth Budget.

One of the things I turn to for just a moment is the disability sector.

Hon Clayton Cosgrove: How’s your right hook, Smoko?

Dr PAUL HUTCHISON: Although Clayton Cosgrove might not be interested in the disability sector, those people are some of our most vulnerable. When Labour first came in it said it would restore social justice. It created a Minister for Disability Issues, and it created an Office for Disability Issues, which produced two papers: New ZealandDisability Strategy: Making a World of Difference: WhakanuiOranga, and To Have an Ordinary Life.

Hon Lianne Dalziel: I bet the member hasn’t even read it.

Dr PAUL HUTCHISON: The member might not even know there is an inquiry going on right now. Yet in the Social Services Committee we hear every day of deaths, of abuse, and of intimidation of our most vulnerable people under this Labour Government, 8 years after it said it would restore social justice. We hear stories of people in the disability sector who are too frightened to complain about their carers for fear of retribution. This is what is happening under the Labour Government. The sector is saying that the Labour Government has put in all of these high-sounding, ideological papers but that it has failed to implement them in reality.

I now turn for a second to the tertiary education sector under Dr Cullen. What we do know is that hundreds of millions of dollars have been wasted on soft educational courses under this Labour Government—twilight golf, homeopathy for pets, singalong, basket weaving, you name it. But we also know that only 4 weeks ago the Chief Executive Officer of the Tertiary Education Commission, Janice Shiner, said the Tertiary Education Commission was not fit for purpose and that there were bound to be more courses that would wind up in the ether. Yet in Dr Cullen’s eighth Budget a quarter of a billion dollars more is being put into tertiary education. He is saying that he is setting up a reform focusing on value for money, quality, and relevance. He is putting a quarter of billion dollars more into value for money, quality, and relevance, while the chief executive officer of the Tertiary Education Commission is saying the organisation is not fit for purpose. This is the sort of absurdity that Dr Cullen is working under. This profligate spending that Dr Cullen is doing is the very type of spending that is causing interest rates in New Zealand to go up to the level that they are.

There is no doubt that Dr Cullen’s eighth Budget has been an utter failure. It should have been about growth and it should have been about aspiration, but it will be about Dr Cullen and the Labour Government walking out. We should not see them again, because they have utterly failed.

MARTIN GALLAGHER (Labour—Hamilton West) : I listened to Dr Paul Hutchison with a huge sense of sadness that his career should have led him to this House today to be negative, when secretly in his heart he wants to be positive. He knows in his heart that this is a fantastic and wonderful country to live in. I just feel for members on the other side, who must feel deep depression that that they have to stand there and belittle.

I was talking to my good colleague Barbara Stewart before, and I know that in her speech she mentioned a Jane Clifton article. I do not always agree with Jane Clifton, but, gee, she was right: “Budget envy is a perfectly reasonable reaction, but are we really worse off than our Aussie neighbours? Over the past five years, a new fixture has been added to the political calendar: the annual Australian Budget snivel-fest. It’s becoming not only an embarrassing development in our national character, but also it’s infantilising.” Believe you me, there is no snivel-fest on the Government side of the House, because we are proud to be New Zealanders. We are proud of this country. We will not sell it down, because it is a great, great country. It is absolutely amazing. I just cannot believe the constant stream of negativity that has come from the Opposition side of the House.

Chester Borrows: Oh yes, you can.

MARTIN GALLAGHER: The National members of the Law and Order Committee, which I chair, are excellent members of that select committee. Chester Borrows, Kate Wilkinson, and particularly Simon Power are very positive members. If members come to our select committee, they will see those members in a positive light, because they are doing very constructive things. All of them seem to change when they come into this Chamber. They change into the dour, negative beings that they have become tonight. I feel for them because in their heart of hearts they want to be positive about this country.

Talking of positive events, as the member for Hamilton West I made a submission a few days ago to the Hamilton City Council draft annual plan and its 10-year plan. I took the opportunity at that meeting to pay great tribute to the outgoing—now former—mayor, Michael Redman. I take this opportunity in the House, as one of the representatives of the city of Hamilton, to compliment Michael Redman on his outstanding and superb leadership of that city. I want to commit to the record of this Parliament that he has been an excellent leader. I wish Michael Redman and his wife, Kelly, all the best for the future, and I acknowledge the very excellent role he will play as the city’s chief executive. We have exported our very good former chief executive, Tony Marriott, to the good city of Christchurch. Hamilton produces some very fine, quality people.

Tonight my electorate manager was at the Hamilton City Council meeting, and I take this opportunity to wish Bob Simcock all the best—as would, I am sure, all members, from both sides of this House. Tonight he has been appointed mayor of the city of Hamilton. I wish Bob Simcock and Anthea, who is our new mayoress, all the best for the next few months until the mayoral election in October. I am sure I join with all the Waikato members in saying we will continue to work with him and the council to promote and advance our wonderful and great city.

I also take this opportunity to congratulate Councillor PippaMahood, who has been selected as the deputy mayor of our city. She has an outstanding record of service to our city over the years. She is a good friend and colleague, and she will continue her good work. Councillor Daphne Bell, who is a relatively new councillor, has now taken over as the chair of recreation and community services. [Interruption]

Members ask what this has to do with the Budget, but I am talking about a city that has benefited from this Budget. That is what I am talking about. I am talking about a relationship between central government and local government that is not one of sneering and dismissal—as we had under the previous National Government—but one of mutual respect, of mateship, and of getting on with it. In Hamilton we see excellent and fine civic leadership, and I am very surprised that when I am acknowledging the leadership of my city, members opposite should belittle that by waving around a document.

But it is appropriate that they should wave the Budget 2007 document, because that Budget is the reason why my city and region are on a roll. It provides the building blocks. Let us take the special transport package put into my city, in large part because of the excellent lobbying done by Government members working together with the local authorities. Let us pay full tribute to the fact that an extra $145 million has been put into the State highway budget to keep that State highway project on a roll. Let us pay tribute to this green Government, to this really environmentally sensitive Government, for electrifying Auckland metropolitan rail. Why should I, as a member for Hamilton, be enthusiastic about that? I will say why. Because even someone who has studied just Economics 101 knows that if the Auckland economy is working, then of course the Waikato benefits. Obviously, conversely, if the Waikato economy is working, then Auckland benefits as well. I join with my council in saying that we continue to be very enthusiastic about the potential for a commuter rail link between Hamilton and Auckland, and, no doubt, the massive improvement of rail infrastructure in Auckland will support that.

I went to primary school in Hamilton, to Whitiora School and Maeroa Intermediate School. I was at primary school when Keith Holyoake was in Parliament. I remember meeting him at the Founders Memorial Theatre years ago, in 1963. Keith Jacka Holyoake was a bit of a hero of mine. He was a wonderful, constructive Prime Minister. In those days we had the Post Office Savings Bank Squirrel account. We saved. What is its successor under this wonderful Government? It is called KiwiSaver. The sad remnants of the National Party do not deserve to be mentioned in the same breath, and be in the same room, as Keith Jacka Holyoake and the vision he had for this country.

Indeed, I like the statement “Budget for the battlers”. Yes, Budget 2007 is a Budget for the battlers, and nothing more exemplifies that than the wonderful KiwiSaver programme. It is a wonderful incentive to get our people saving. Comparisons with Australia are all very well, and all the people over there on the Opposition benches try to make some sort of comparison with Australia, but they totally ignore all the various taxes that the Australians pay. They forget also that Australia, when compared with New Zealand, has a much better, concise savings record, and has a much greater focus on saving for retirement.

I believe that KiwiSaver will be the circuit-breaker this country has been looking for. It is about vision. I come from a visionary city. I am so proud to be part of a visionary Government. It is about vision. KiwiSaver is about vision. The reality is that when the history books are opened, the people opposite will be but a footnote. Michael Cullen and the Rt Hon Helen Clark will have chapters and chapters of New Zealand’s history dedicated to them, this Government, and their leadership. This Budget is about leaving a legacy for our children, grandchildren, and great-grandchildren. I genuinely have a sense that we are in historic times, and it is such a pleasure to be part of the wonderful building blocks.

The Budget has done a whole lot of other great things. I have talked about the advances in transport. But the one thing that really gets me excited is KiwiSaver. I reflected very deliberately on the time when I as a primary schoolkid, along with so many other primary schoolkids, had a Post Office Savings Bank Squirrel account, I think it was called. We were putting something away for the future. It was about a vision for the future—something that Keith Holyoake and an earlier National Party had. Sadly, the National Party has lost that vision, under the bunch of money traders who are now running it today. KiwiSaver is about vision; it is about putting away for the future, and giving New Zealanders security in retirement. But there is a warning. We are getting hints already that if the other crowd becomes the Government, somehow the retirement pension will be whittled away. Labour guaranteed a State pension, hence the so-called Cullen fund. But, in addition, we want to encourage as many people as possible to save through KiwiSaver, to supplement their retirement income. I think that is a great step forward.

In the few seconds I have left I want to say how proud I am to represent the city of Hamilton. I again congratulate our new mayor and deputy mayor, and say it is wonderful to be part of such a positive region that is benefiting from such a wonderful, positive Government.

• Debate interrupted.