Hon BILL ENGLISH (Minister of Finance) : I move—

Hon Trevor Mallard: I raise a point of order, Mr Speaker. I thought we were also going to do the second reading of the Imprest Supply (Second for 2011/12) Bill with this bill, and that has not yet been called.

Mr SPEAKER: The Minister is about to move both of those.

Hon BILL ENGLISH: I am about to do that.

Mr SPEAKER: The Minister is about to do that.

Hon Trevor Mallard: The bill that’s on the Order Paper hasn’t been called.

Hon BILL ENGLISH: The Government order of the day has been called.

Mr SPEAKER: The Clerk has called Government order of the day No. 1 and that covers both of these bills.

Hon Trevor Mallard: I raise a point of order, Mr Speaker. At the moment the Order Paper states that this bill may be taken with an Imprest Supply Bill. It does not have to be. I would have thought that for a bill to have a reading, it must be called.

Mr SPEAKER: I just a moment ago set the bill down for second reading forthwith. That is why the Minister is now about to move that both bills be read.

Hon BILL ENGLISH: I move, That the Appropriation (2011/12 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2011/12) Bill be now read a second time. As we get to the end of the Budget process it is probably the right time to recap just what the main features of the Budget were, although so much has happened in an economic sense, both positive and negative, since late May that one could be forgiven for thinking that because circumstances have moved on, maybe the debate should move on. But, in fact, a feature of this Budget is that it continues the considered and consistent decisions that the Government has been making since it came to office in 2008 with a couple of particular objectives in mind.

The first objective has been to protect the vulnerable through tough times, and over recent Budgets that has included the Government continuing to spend, maintain, and grow public services in order to maintain and grow income support to those who rely on it. The second objective has been to lay the platform for undoing the imbalances that built up through the first decade of the century, and to lay the platform for higher incomes and more jobs for New Zealanders through a better-performing economy over the next 10 years.

Those decisions have taken account of the way in which the world has changed, even since the middle of 2008. I just remark on that in passing, because in my view we will continue to see episodes of volatility, concern, and, occasionally, a crisis in international markets, and that is driven by the fact that there is a fundamentally simple issue underlying the pressures we are seeing. Certainly through the last decade and years previous to that many developed countries built up large amounts of debt. The crisis of 2008 shifted a lot of that debt from the private sector to Government balance sheets. But the debt continues to grow, and as long as that debt continues to grow it will continue to cause disruption. The only way to deal with debt is to write it off or pay it off, and neither of those things is happening at the moment.

Even then, as Governments get on top of this fast-rising debt, they will have to try to get it down from dangerously high levels, and that is just as politically difficult, maybe even more so, than trying to stop it rising. At least when debt is rising the public can see that, with some alarm, and can understand the need for action. So the Government is always taking a longer-term view of these risks. The fact that the crisis of 2008 receded in its immediacy into 2009, and certainly by 2010, did not mean that the fundamental imbalances had been dealt with, and that is what we have taken account of in Budget 2011.

Back in Budget 2009, the main feature of it was to clean up the loose ends from the previous Government, but in particular to initiate a longer-term and significant investment in infrastructure. The previous Government had begun that process, but the Government in Budget 2009 set out productive infrastructure as one of the fundamental building blocks of a productive economy. I am pleased to say that, 2 years on, the programme is well under way, adequately funded, and well understood. We are getting very good value for money from an infrastructure industry that can see the Government programme, that can invest appropriately, and that has 6, 7, or 8 years of work ahead of it.

In Budget 2010, the main focus was the tax switch. We took the opportunity—probably a unique opportunity—presented in 2010 to shift the balance of the longer-term incentives in this economy in a way that many advisers have advised over the years, but the opportunity had never quite arisen. It was focused on a pretty simple idea that there were aspects of imbalance in the economy that could be influenced by changes in tax rates. So we increased tax on consumption and the effective tax rate on property investment. We cut tax rates on income, and on the return on savings and investment. That was quite a considerable package, which was broadly fiscally neutral and measured in a number of different ways on equity, showing that it had really no particular impact on the distribution of income. In light of recent discussion about tax issues, I point out that a number of measures related to investment in property will collect in this financial year somewhere between $800 million and $900 million, effectively increasing the tax rate on that form of investment.

Budget 2011 focused on getting the Government’s books back in order and doing that at a time when we have to face the very significant challenge of helping to fund the rebuild of Christchurch. Alongside that, we must continue to work towards higher national savings, and I will deal with that issue first.

The most important driver of savings actually is not Government policy, although that can influence it; it is the attitude of wage and salary earners and business owners towards saving. There is no doubt that the global financial crisis sent an unambiguous signal to New Zealanders that more debt is not a good thing—it makes one’s country and household and business vulnerable—and more savings would be a good thing. In fact, one of the reasons that growth in this economy over the last year or so has been lower has been that people have taken that message to heart more than we might have expected, and they are saving more. An indication of that change is that in 2007 New Zealanders spent about $1.11 for every dollar that they earned. This year it may well reach 99c—that is, New Zealand households spend 99c for every dollar that they earn. Therefore, we will have a positive savings rate for the first time in about 20 years.

This Budget also includes essentially the pre-funding of the Christchurch rebuild. It was the Government’s view that it was vital there was no question over the Government’s willingness or ability to make its contribution to the Christchurch rebuild. As those who have been close to the process will know, there have been question marks over the willingness and ability of other payers to fund that rebuild. One case involves AMI Insurance. This Budget demonstrates that the Government has effectively borrowed its share of around $5.5 billion out of a total cost of $8.9 billion in addition to Earthquake Commission funding, and that money has been ring-fenced as the recovery fund. We will account for that money as we go, but there is no doubt of the Government’s commitment to it.

Of course, this Budget also shows the continued fiscal consolidation that the Government has gone through in a considered and consistent fashion, with a strong focus on maintaining public services but reducing the costs of providing those public services. I must compliment the Public Service on the way it has adapted to a dramatically changed world—not just a change of Government but a change in revenue expectations. The leadership of the Public Service is getting to grips with that, and some of them have done a very good job of taking a longer-term view of how to invest in their people and their technology and in new models for service, so that they can continue to do what they most want to do, which is in a professional and competent manner provide excellent public services to New Zealanders. I think over coming years we will be increasingly seen as a country where we are doing a good job of that, when others are struggling with the burdens of debt, slashing services, and experimenting on a grand scale with how a developed country can support the common good with a lot less resource. We will learn from those experiments, but the Government is not following a radical path in this respect; it is working with the Public Service to make improvements over time.

I commend Budget 2011 to the House. It has been the appropriate Budget for the times, and it has continued the process of balance and considered judgments from the John Key - led National Government, which is enabling New Zealand to build on the strengths that it has and to build on the resilience many New Zealanders have shown through these difficult recessionary times and the now unpredictable environment for economic growth. We have in that respect come through in pretty good shape, and we expect that we will be able to lift incomes and provide more jobs.

Hon TREVOR MALLARD (Labour—Hutt South) : I will deal first of all with the Imprest Supply (Second for 2011/12) Bill, and I say that there appears to be nothing unusual about this bill. It is a pretty standard arrangement for the Government to incur both capital and operational expenditure in front of appropriation, basically just to have a backstop to make sure that the laws in relation to the Public Finance Act are not broken, and this bill appears to be unexceptional.

I will focus more, though, on the Appropriation (2011/12 Estimates) Bill and the comments that the Minister of Finance has made on that. I think that he just slipped in one of the things when he was commenting on the tax changes, or the “switch” he referred to from the previous year’s Budget. He said that the switch had no particular impact on the distribution of income. Well, nothing could be further from the truth. This was a tax switch that went from the poor to the rich. It increased GST and cut the top tax rate such that people like the Prime Minister had a tax cut of $1,000 a week. While my constituents, who are struggling with their kids, and struggling to pay the costs of power, transport, and rent, had a GST increase, a number of people, like the Prime Minister, had a tax cut of $1,000 a week.

There also seemed to be an element of surprise in the comments from the Minister of Finance on the deficit. It was almost as though he could not quite work out why we have a deficit. I think the Minister could do well to study such renowned economists as Ronald Reagan to see exactly how countries get the sort of deficit that this country now has. Clearly there are some external factors in the deficit, and Christchurch is one factor in it, but the way to compound a deficit is to give enormous tax cuts to people who do not consume, the rich people; to make cuts to the income and services that are available to poorer people, and thereby increase unemployment—which was increasing anyway—to reduce the tax take from middle-income people; and to require payments to go to a new, increasingly larger group of beneficiaries. And that is what the Government has done. So we have less tax coming in from middle-income people, less tax coming in from the rich because of the tax cuts, a requirement for increased services because of poverty, and increased payments in unemployment benefits.

As we have heard over the last 24 hours, because of its activities the Government has managed to make a massive shift of people from the unemployment benefit to the domestic purposes benefit, which it has trumpeted as being some sort of major success, but the increased numbers of the unemployed and other beneficiaries means there is a massive deficit. The Minister of Finance, who has been around this place for a while, should not be surprised that if we have less tax and more spending on benefits, we will end up with a bigger deficit. It is a pretty standard arrangement, and the Minister should not be surprised.

What has surprised me has been the lack of any suggestion of any plan, whatsoever, on the part of the National Government to get out of this problem. In fact, what the Government has done is to pretty actively work against the plan. It has made massive cuts to science and research as they pertain to agriculture. Funds that were attracting massive private sector matching have been eliminated, and, overall, business after business in my own electorate now needs funds. Probably because we are close to Industrial Research Ltd, the old Department of Industrial and Scientific Research, there are a lot of businesses that, although they would not be described as spin-offs, have a lot of the people who either previously worked in the Government science area or have worked closely with people who have. Within the Hutt Valley, within Wainuiōmata, there are quite a few pockets of good research, and in particular there is probably more development. Jobs are being created, sometimes in twos and threes, but sometimes in 50s, 60s, and 100s.

That job creation was given a boost by Labour’s tax credits for research and development, which have been so cruelly whipped away by this Government, because, as one of the managing directors of a local company has said, “There appears to be no wish on the part of the Government to have development occur in New Zealand.” That company is facing a couple of choices, and one of them is to go to Australia, where the culture is closer and the Government research arrangements are much better, and the other is to keep a very small intellectual property group here and to do a lot of the development and a lot of the other work in China. That is the story of far too many of our businesses at the moment.

We can contrast that with Labour’s policy and plan that is developing and becoming clear. I was at a meeting of Grey Power relatively recently, and its members are very, very keen on the $10 a week tax cut that each of them will get under Labour’s policy. Couples will get $20 a week. They think that is fair; they think that it somewhat balances the redistribution that occurred—from them, because they pay GST, to people on the $1,000 a week tax cut, like the Prime Minister and his friends.

Grey Power members also think that moving to a capital gains tax is a fair approach too, because clearly once we get to the point where we know that it will not be retrospective, and where we know that it will not apply to the family home, people will say that essentially a buck is a buck. It does not matter how it is earned. It does not matter whether it is earned through capital gain or through income; it should be taxable. It is unfair for people like Sam Morgan—and in fact he says himself that it is unfair for his company—to sell for $700 million and not to have any taxation put on that. Of course, if he stayed in the company and drew the money out as salary or dividends, then he would have to pay the tax. But in this particular case, and in the many, many more like it, that tax is not paid.

I will now turn to reaction to the Budget, and say that Standard and Poor’s, I think, got it about right. They have put New Zealand on negative credit watch. I have to say we were not in such a flash position to start with. I think it is fair to say that some of the expected upgrades that should have occurred have not occurred, and I think we are now just about past the point of believability as far as the Minister of Finance is concerned. That massive decrease in unemployment, that increase in productivity, and that increase in wages, which for each of the last 3 years he has promoted as being just around the corner, I think most of us understand are not coming at all.

I will finish on what I think is the most dishonest part of this Budget. It is the suggestion that we can sell assets and be better off, in the way that John Key has promoted. We all know, as 90 percent of New Zealanders know, that we do not sell our house to then rent it back. That is a sign of desperation. That is a sign of people who are distressed.

Chris Tremain: You sell it to buy another one. You sell it to upgrade your house.

Hon TREVOR MALLARD: Well, if people are selling their house to upgrade it, then they are buying more assets. But that member wants to sell the most profitable assets in New Zealand—to sell the assets that my grandparents and lots of the grandparents of people here spent their lives paying for and building. What that member wants to do, and what Bill English went to China to do, is to ask who wants to buy our power companies. Bill English went to China and said “Who wants to buy our power companies?” That is a disgrace, and that is the low point of this Budget.

AMY ADAMS (National—Selwyn) : I am very happy to rise this afternoon to take a call in this debate on what is technically the third reading of the Appropriation (2011/12 Estimates) Bill and the second reading of the Imprest Supply Bill, but really, more broadly than that, I think this debate is a good chance to have a bit of health check on the company’s economic performance and the economic position we find ourselves in. I think there is no more important time to do that, given the situation that the world finds itself in. We have followed with horrified attention the growing concerns in the European Union for some months now. We have watched it spread from the disasters in Greece and Portugal into very mainstream economies like Spain and Italy now. I certainly do not claim by any stretch to be any sort of expert, but I know enough to be very concerned, as I know most thinking New Zealanders are, about the economic situation in the European Union.

Of course, more recently we have watched the old superpower America teeter on the brink of complete collapse, and we have seen its economy not only downgraded recently, but also put on further negative watch. That tells us how important it is that we can present to the world the face of a strong economy that has its books in order, its debts under control, and, most important, is being led by a Government that knows how to run a strong economy and knows how important it is to keep the accounts in good order and keep us in good shape. We have seen over the three Budgets delivered by the John Key - led Government a story of returning this country to the strong position it deserves to be in, putting us on the front foot and putting us in a position where we are economically competitive internationally and where the world and the lending markets know we are a good bet.

All of New Zealand can reflect back with some pride on the fact that although we are by no means out of the woods and we still have a difficult period ahead of us—and I certainly do not want to diminish the reality of that—New Zealand is in a very strong position right now. Compared with so much of the rest of the world, we are in a good position. We have a strong Government, we have a Government that knows how to manage the economy, and we have a Government that has acted early, from as soon as it was elected in 2008, to turn round the never-ending deficits bequeathed to us by the last Government. It wants to turn round the explosion of the bloated bureaucracy and to instead turn our focus back to the productive sector of this economy and say that our job as the Government, first and foremost, is to make sure that we keep our house in order. If we cannot control the 25 percent of the economy that is central government, then there is little hope that the rest of the country will follow suit. I think we have done that.

We have sent a very clear message that we will get Government expenditure under control. We will not sit and preside over ever-growing Government expenditure, and what is worse is that the growing expenditure under the Labour Government did not deliver any better outcomes. Time and time again, we saw more and more money being thrown into the bottomless pit of bureaucracy, with no improvement in the outcomes. What have we had under this National Government? We have had tight fiscal management. We have put pressure on the chief executives of Government departments, yet we have seen better outcomes.

Tony Ryall stands up in this House, day after day, and reports on the fact that more New Zealanders are getting elective surgery now than ever before. More New Zealanders are getting access to more medicines than ever before, and we have not done that by simply throwing more money at the problem and hoping it will go away. We have done that by imposing some pretty tough requirements and making it very clear that our expectation is that the Public Service will do more with taxpayers’ money. It will do more with the money we take from hard-working New Zealanders, and it will recognise, acknowledge, and thank, frankly, the New Zealanders who go out to work every day and pay their taxes to enable that to happen. Controlling Government expenditure has been a core part of what we are about.

The other very important part—and if anyone doubts the importance of it, recent events should certainly put them right—is presenting a credible picture of the control of national debt to the world. I acknowledge that a large part of our net investment position is made up of private debt, but the track we have now set New Zealand on with regard to Government debt is something to be proud of. The fact that we will now see core Crown debt peak at no more than 30 percent and that we are seeing a return to surplus in a little more than 3 years is an absolute endorsement of the John Key - led Government and the work it has done to put our economic house in order. We have controlled Government expenditure, we have our debt position under control, and we have put ourselves in the position where the rest of the world can look at us and know that we are still a good bet—and if we need to borrow, it is certainly ready to lend to us.

We are supporting the productive economy, because National Governments get it. We get that Governments have money only if the productive sector is working, growing, and paying its taxes, and our job is to support it in that. It is not to get in its way, it is not to put up barriers, and it is not to smack down anyone who dares to be successful in this country. It is to say “Good on you. Thank you for being here. Thank you for working hard.” That is part of the reform of our tax system. The Minister of Finance talked in his contribution about the biggest reform of the tax system in 25 years, which this Government is overseeing. That tax switch, despite what the previous speaker, Trevor Mallard, said, was tax-neutral. It was broadly tax-neutral. The tax cuts across the board that now see over two-thirds of taxpayers—two-thirds of taxpayers—paying no more than 17.5 percent in income tax funded the increase in GST.

Labour wants to talk time and time again about the $1,000 tax cuts. Those members talk about $1,000 tax cuts. For the few people who get those cuts, let us just reflect upon the fact that to have had a $1,000-a-week tax cut, as Trevor Mallard goes on about ad nauseam, one must be paying more than a quarter of a million dollars in tax every year after the tax cuts—after them. Those people whom Trevor Mallard wants to harangue, bully, and vilify are paying, every single year, a quarter of a million dollars in income tax alone to support the families in New Zealand who need it. If we are to vilify those people and beat them up, as Trevor Mallard would have us do, I would not blame them for asking themselves why they would stay. If Mr Mallard wants to scare away and beat the golden goose, then I say good luck to him, but I ask him who will pay for his welfare and his handouts. Who will pay for his excessive government spending and lolly scrambles? I say to Mr Mallard that every time he wants to talk about $1,000-a-week tax cuts, he should just bear in mind that the people whom that member refers to are paying now—after the tax changes—more than a quarter of a million dollars in income tax every year to support this country. Frankly, I would rather that they were doing that in our economy than anywhere else around the world.

When we talk about the tax system, I think it is also worth reflecting on the fact that the lowest 43 percent of income earners in this country receive more in Government transfers than they pay in income tax. How do we give income tax cuts to people who do not pay any net income tax? Households have to earn on average more than $110,000 a year before the Government starts to make a net buck off them. That is fine, but I will not accept the suggestion that we are not being fair when people have to earn more than $110,000 before they actually start to contribute to the net performance of New Zealand.

This Government is controlling Government expenditure. It has turned round our debt position. It is supporting the productive economy. It has reformed the tax system to be fair and to be aspirational. It is building world-leading infrastructure to support our economy. It is raising skill levels across the board. It is investing in science and innovation. It is doing all of this so that we can move New Zealand forward. We will not follow the Labour plan of taking New Zealand backwards into the dark ages of more tax, more debt, and more spending. We are interested in moving this country forward and raising the outcomes for all New Zealanders, and that can happen only by fixing the economic mess that Labour left us. The three Budgets we have seen from Bill English and John Key are a step in that direction. The fact that we are in such a strong position while the rest of the world struggles under this period of global turmoil is a credit to the National-led Government. It is a credit to our economic management. It is why New Zealanders will continue to support us. They want to see us take this country forward, and that is what we are planning to deliver.

GRANT ROBERTSON (Labour—Wellington Central) : The Appropriation (2011/12 Estimates) Bill could be read as an innocuous set of figures. That is essentially what we see here. It is the estimates. There are some big numbers sitting beside things and there are some smaller numbers sitting beside others. For instance, we could look at the Department of Corrections budget. We would see that something over $800 million is being spent on prison custodial services and that a somewhat smaller amount of money—about $140 million—is being spent on reintegration and rehabilitation services, and we could say that that might indicate some of the priorities of this Government.

But this document is much more than just a set of figures. This document should represent the plan that the Government has for the country, for the future of New Zealand. It is not just numbers, but it should be the vision, the bold outline, of where a Government wants to take a country. When we look at this document, we see that it is sadly lacking in any kind of vision or any kind of plan. It does not deliver hope to New Zealanders. Where is the sunny optimism of the Prime Minister from before the last election and in the first year of his term? He is the man who said that there would be this great wealth of opportunity for New Zealanders.

Hon Member: Ambitious for New Zealand.

GRANT ROBERTSON: “Ambitious for New Zealand” was the slogan.

Hon Lianne Dalziel: Turbocharge the economy.

GRANT ROBERTSON: We were going to turbocharge. The poor Governor-General had to say “turbocharged” in his first speech when this Government came into office. Where has that all gone? It has gone—it has completely gone.

John Armstrong from the New Zealand Herald , who is someone whom I have the odd difference of opinion with—

Hon Trevor Mallard: So do I.

GRANT ROBERTSON: Mr Mallard does, as well.

Paul Quinn: I wouldn’t mention him.

GRANT ROBERTSON: John Armstrong from the New Zealand Herald —I say to Mr Quinn—described this Budget as a “fairy tale of high hopes”—a fairy tale of high hopes. Like most fairy tales, this one begins with once upon a time. Once upon a time there was a politician called John Key, who smiled and waved a lot. He was relaxed and he liked to kick the tyres with his friends, but most of all he was ambitious for New Zealand. His friend Bill said it was great to work with him, as he jumped from cloud to cloud. He liked to tell stories to his friends about catching up with Australia on wages, and he was fond of making other promises to his friends, as well, like promising not to increase GST, or promising not to sell assets. John was a happy camper, but things have not turned out so well in this fairy tale.

They certainly have not turned out well for the thousands of Kiwi families who now rely on food banks. In my own electorate, a relatively wealthy electorate, there has been a 30 percent increase in the use of food banks under this Government. Things have certainly not turned out well for those on the minimum wage, and it is important to note that the minimum wage is now worth $16 a week less than it was a year ago—$16 a week less than it was a year ago. That is one reason why I am proud of the Labour Party’s promise to increase the minimum wage to $15 per hour—$15 per hour. I am proud of that because it will put money in the pockets of working families. It will put money in the pockets of working families. This Budget does not contain anything that resembles a plan for driving this economy forward.

Amy Adams, in her speech, talked about the fears, worries, and concerns that New Zealanders have when they look at what is happening in economies around the world. Well, what is this Government’s reaction to that? It is to stand on the sidelines with its hands in its pockets, doing nothing. That is the reaction of this Government, which is hoping really hard that the Budget will deliver 170,000 new jobs. There is nothing in this appropriation document that tells me the Government has any kind of actual plan to deliver 170,000 new jobs, let alone 4 percent growth, which is in here, as well. The Government is hoping, and it has no plan to get past that hope.

The question we have to ask when we look at this is what the basis is for any kind of optimism from the Government speakers. New Zealand is on negative credit watch, 155,000 people are unemployed, and we have record high inflation. There is nothing that this Government has done, that it has brought to this House, that should give New Zealanders any hope whatsoever that the Government can deliver on the hopes that are in this Budget. It is, as John Armstrong says, a fairy tale of high hopes. We have heard, after every Budget from this Government, that good times are ahead and we just have to wait. Each time, Bill English has failed to live up to those expectations. Each time, the high hopes—the fairy tale of high hopes—has carried on. It is not good enough to have a Government that promises in the never-never and never delivers.

The tragedy is that all the policies from this Government are about the short term rather than the long term. As I said, this document should be a plan; it should be some kind of road map for New Zealanders to follow. The question I am asking, and being asked, as I move around New Zealand, is: how can we actually create a better New Zealand than this Government has? That is why the Labour Party does have a plan. We have been criticised and asked where our policy is. Our policy is out there now, and it is a plan that is based on a fair tax policy and growing a sustainable economy. My question to the members on the other side of the House is: are they actually going to release a policy at this election, or are they simply going to rely on what has failed for the last 3 years? Is there a policy? It is a genuine question.

Carol Beaumont: There is no answer.

GRANT ROBERTSON: There is no answer from the other side, because there is no plan.

What we have on this side of the House is a plan for a better New Zealand. I think New Zealand is a better place than one where money is taken out of early childhood education. I think New Zealand is a better place than that. New Zealanders are better than that. I think New Zealand is a better place than one where we sell off our assets to get some short-term money gain that means those assets are gone for ever. This is a Government that tells us that New Zealanders will be at the front of the queue for those assets. The reality is they have no way of knowing how that will happen. Time and again in this House Bill English has failed to answer the question of how New Zealanders will be at the front of the queue for assets that are going to be sold. Those assets should not be sold. They are assets built up by generations of New Zealanders, they are part of our history, and they should be part of our future. We must not let important assets like the electricity industry go offshore. We saw it with Contact Energy, and under this Government they will disappear completely.

We need a plan that is based on good monetary policy that supports our exporters, overseas investment rules that actually ensure that Kiwi land stays in Kiwi hands, a procurement policy that encourages Kiwi jobs, a capital gains tax, the first $5,000 of income tax-free, and GST off fresh fruit and vegetables. All of those things are important, but in the end they are only one aspect of what a Government should be about. A Government should be about supporting New Zealanders, investing in New Zealanders, and making sure that New Zealanders have the skills and the knowledge to develop our economy. There is nothing in this document that speaks to supporting economic development. Where is the support for new technologies? Where is the support for clean technology? Where is the way of adding value to our primary industries?

This Government is standing on the sidelines, hands in pockets, hoping the market will provide. Well, the truth is that New Zealanders need more than that. We are a better country than that. We are a country where we do look after each other. We are not a country that stands by when $800,000 is taken from Women’s Refuge, and we are not a country that stands by when money is taken away from mental health providers in our community, which are forced to close down, like the one in Marlborough recently. These are things that New Zealanders do not like. New Zealanders are people who believe that we look after each other, that we support each other, and that we invest in our people. This appropriation bill has nothing of that in it.

Labour is putting forward a coherent plan. It is a plan that is about a fair tax system, investing in skills and training, keeping our assets, and not selling New Zealanders’ future down the river. We are concerned about our economy, not somebody else’s economy. That should be the basis of this appropriation bill, but it is not. This Budget is a moral failure, a fiscal failure, and it does not invest in New Zealanders. We need at this election to ensure that the Government that is elected is led by the Labour Party, will invest in New Zealanders, will have a fair tax system, and will ensure that New Zealanders want to stay here and come back to New Zealand. We need an environment where we provide a fair basis for all New Zealanders to achieve their potential, and where we protect our environment and support those around us. That is what this Budget should have done, and it has failed to do that.

METIRIA TUREI (Co-Leader—Green) : I am pleased to stand on behalf of the Green Party and address the Government’s economic strategy through the Appropriation (2011/12 Estimates) Bill and the Imprest Supply (Second for 2011/12) Bill. In any economic debate, the values of political parties are laid bare. Politics and economics are about the allocation of resources. The decisions that politicians make, and the values that are triggered by those decisions, determine who will benefit from the country’s economy and who will not. This National Government has made decisions that shift resources from those who need the most and has given them to those who have the most. As a result, our economy has become increasingly unfair and unequal. The Government’s tax cuts, which went primarily to the top income earners, are just one example of this. They were unfair and they were poorly timed. These tax cuts have not been revenue-neutral, as Bill English likes to say—at least not in the short term.

Borrowing to grant tax relief to the wealthy is not a smart way to manage the economy. Equally, borrowing to pay for the rebuilding of Christchurch when a majority of New Zealanders are willing to pay a small levy on their income to foot this bill is similarly not a smart way to finance the rebuilding of Christchurch. The Government is also preparing to borrow to help fund its $19 billion expansion of our State highway system over the next 10 years. This is not a good time to be borrowing to build infrastructure that is vulnerable to high oil and carbon prices. The community knows this; the Government does not. Faced with a Budget deficit, in part of its own making, this Government has chosen to cut services to families and to increase debt. Despite being told that we cannot afford to have services to families, we are unnecessarily borrowing to fund tax cuts, motorways, and the Christchurch rebuild, which Kiwis have all said we should share the cost of.

This is a Government that is not afraid to borrow when it suits it. Treasury are forecasting net core Crown debt to go from $10.5 billion in 2008 to $41.5 billion this year, then to $72.9 billion in 2015. These decisions mean that as a country we will run the largest fiscal deficit in our nation’s history. The Green Party has exposed this Government’s economic decision-making as destructive to both our people and our environment, and, as a result, destructive to our economic security as a nation. This Government chooses policies that will impoverish our children, degrade our environment, and prioritise short-term wealth acquisition over long-term stability. The Green Party makes constructive, hopeful, and practical choices that will protect our environment, protect our economy, and protect our kids.

Let us consider our kids first, as 270,000 children live in poverty in New Zealand right now. That is one in four. One-quarter of all New Zealand children are growing up in poverty. International research puts the cost of not acting to address child poverty at around 3 percent of GDP per year. In this country, that means that about $6 billion every year is lost in health, justice, education, and welfare spending that could be saved if we chose to act early to prevent child poverty. Bringing kids out of poverty does not just make humanitarian sense; it makes economic sense, as well. A Unicef report, Child Poverty in Rich Countries—that includes New Zealand—states: “Variation in government policy appears to account for most of the variation in child poverty levels between OECD countries.” More important, the report also states that many OECD countries appear to have the potential to reduce child poverty to below 10 percent without—without—a significant increase in Government spending. The economic argument for investing in our kids does not require a huge amount of Government expenditure. It requires better prioritisation of existing Government spending and more compassionate decision-making—economic decisions—that looks beyond the short term and the next election.

The Green Party’s solutions for bringing 100,000 children out of poverty are affordable and practical. One of our solutions is to make Working for Families fairer. Working for Families helps low-income families make ends meet, but it does not provide the same help to kids whose parents receive a benefit. We would incorporate the in-work tax credit into the family tax credit and extend it to 140,000 of the poorest households in this country. That would give an extra $60 a week to those 140,000 families. It would be enough on its own to bring 100,000 children out of poverty. This policy would cost around $300 million a year. That is less than 0.3 of GDP. While child poverty is costing us $6 billion a year, this solution is just a fraction of that. It costs us more to do nothing than to do something. It is fiscally irresponsible to allow children in this country to continue to grow up in poverty.

But this Government has priorities other than children. Instead of addressing child poverty, National is allocating $1.4 billion in this year’s Budget to subsidise pollution under its emissions trading scheme. Instead of helping our must vulnerable children, National is spending money on an unnecessary “Holiday Highway”. For just a fraction of the cost, thousands of children could be brought out of poverty. Thousands of children could be provided with the opportunities that National members say those children are entitled to, but refuse to support.

This Government has made life tougher for those on low incomes. High rates of inflation and the increase in GST mean that the lowest incomes have less for the basics. A total of 275,000 New Zealanders work for the minimum wage. Many of them take care of dependent children. For every five children living in poverty, two are in households that work—for every five, two are living in households that work. Finding a job is not a panacea to ending child poverty, at least while wages remain so low. It is impossible to make ends meet on the minimum wage, so the Green Party would immediately raise the minimum wage to $15 an hour to help working parents provide the basics for their kids. Again, that is worth about $60 extra a week for someone working full-time on the minimum wage. Not only will raising the minimum wage help those families who are in work, but it will generate up to around $173 million a year for the Government at a time when the fiscal deficit is ballooning. That is smart economics in action: supporting families and children, raising children out of poverty, and raising money for the Government. What can anyone possibly suggest would be a more important priority than those families and those kids?

The recent NBR Rich List shows that there has been a 20 percent increase in the combined wealth of the 150 richest New Zealanders. A 20 percent increase in the minimum wage would have seen the minimum wage jump to $15.60. We know that most of those who are employed on the minimum wage work for very large corporate entities that can well afford to pay that little bit extra to enable those families to take better care of their families and their kids. When the National Government chooses to keep the minimum wage low, it chooses to keep families in poverty. When the National Government chooses to keep the minimum wage low, it chooses to keep children in poverty. The Greens have the courage to look at revenue-raising options, which this National Government has failed to consider out of weakness, to ensure that we can continue to live within our means in this country.

Economic and fiscal sustainability is an integral part of the Green vision for a sustainable economy that is fair. We would reprioritise Government spending towards those who need it the most, while reducing debt. We would raise a comprehensive tax on capital gains—excluding the family home—that in time would raise some $4.5 billion a year and close the single-biggest remaining tax loophole in our tax system. We would put a fair price on carbon and water, dismantling some of the last Government subsidies paid out to polluters and industrial farmers. A clean, green economy that works for everyone, including our most vulnerable, is a better and fairer alternative than this Government’s irresponsible fiscal approach. Thank you.

CHRIS TREMAIN (National—Napier) : I rise to speak on the Appropriations (2011/12 Estimates) Bill, as we move this bill and the Budget through the House today. I will commence my speech by replying to, or rebutting, Mr Robertson, who used a number of quotes by Mr John Armstrong about the Budget and projections for its future. At the same time, Mr Robertson forgot to mention that a number of economists throughout New Zealand—more than a number—believe that the Budget was relatively conservative, and that it was infinitely achievable.

What brings a lot of impetus and merit to these other projections and other comments is the growth rates for the January through March period, the first quarter of this year. The forecasts were for about 0.4 percent growth for the economy, but what did we achieve? We achieved 0.8 percent growth for that 3-month period. It was double the forecast. What is more, officials went back and had a look at the growth figures for the period of October through to December, and they bumped those up as well. On any measure, that would indicate that the projections we had for this Budget were pretty conservative and on the mark. In fact, those projections are being supported now by data—actual data—in our economy. Actual people and businesses are getting out there, starting and growing new businesses, employing more people, and paying more tax in this economy. That is a fantastic way to continue with this Budget debate.

Those projections and data deliver upon some of the key focuses of this Budget, one of which was to get New Zealand back into surplus by 2014-15. What happens when we get back into surplus? We will not have to draw down the debt that we need when we are operating in deficit. It is a key function of the Government to operate in surplus as we get back into better times. I think that that, underpinned by the data that has been shown in the economy, means we are definitely moving in the right direction.

The second thing about the Budget was that we based it on some pretty sound principles of home economics. The first principle is to spend less than we earn, over the long term.

Simon Bridges: Radical.

CHRIS TREMAIN: I know. That is quite radical, is it not? Yes. Secondly, we should borrow only what we can afford to pay back. That is another quite radical policy, but one that we put at the centre of the Budget. Ultimately we put ourselves into a position where we can save and repay debt.

These basic economic principles have been sharpened as we have watched Portugal, Ireland, Greece, and Spain struggle with debt mountains that seem—to them, I am sure—insurmountable. Just in the last few weeks we have watched as the mighty United States has battled with its debt—trillions—and has been forced to curb its Government spending. It is simple economics once again. If we spend more than we earn over the long term, eventually we get ourselves into a pile of muck. That is what these countries are doing.

We, on the other hand, took a very conservative approach when we came into office in 2008. We had a look at where we needed to be. We were presented with forecasts, and those were in the pre-election fiscal update before the election, and then in the half-yearly fiscal update following the election. The previous Labour Government left us with projections for deficits over the following 10 years—deficit after deficit after deficit. That meant, if we went back to our simple home economics example, that we had a projection of debt continuing to rise and never coming down. That is what we were left with.

I am proud to be part of this Government, proud to be part of a John Key - led Government, which has been realistic about the issues that we have faced, and which has put the policies in place to make sure we can go forward as a nation and be, quite frankly, in the position we are now, while other nations around the world are faced with huge cuts to their budgets—

Simon Bridges: Riots.

CHRIS TREMAIN: —and have riots in the streets—as citizens come to the realisation that they have to make a profit in the long term, and as they face the reality that they have to live within their means. I mean, this is pretty basic stuff, but that is what is happening. I ask members of the House, even members of the Opposition, whether we are seeing riots in the streets in New Zealand. No, we are not. It is because we are in a great position going forward, and in excellent shape.

New Zealand is in a different position from many of these other nations. Our total debt is comparable, but where we differ is in the proportion that is owed by the Government, versus the amount owed by private citizens. Net Government debt in New Zealand is about a quarter of our total national debt. That is fantastic. We are in a great position. I go back to the 1970s when Muldoon was in Government, and we had a debt to GDP ratio of about 70 percent. That was high. But over successive Governments, including the National Government through the 1990s—that was where the biggest dip in the debt curve came back—and the 9 years of the previous Labour Government, the debt to GDP ratio has come back. Where the smoke and mirrors are is that the Labour Government claimed that it repaid debt. The reality is that the economy grew significantly. The Labour Government did not pay down a cent but the debt to GDP ratio fell as the economy grew. Those are the facts of the matter.

Iain Lees-Galloway: You’re making it up.

CHRIS TREMAIN: I tell the financial whizzes on the other side of the House to go and have a look at the debt position they inherited, and at what it was when they left office. It did not change, at all. The economy grew, and the debt to GDP ratio fell. That is the reality, so those members should stop trying to tell the New Zealand public that the Labour Government repaid debt. That is bollocks.

Iain Lees-Galloway: I raise a point of order, Mr Speaker. I think the speaker on his feet has made a lot of accusations—

The ASSISTANT SPEAKER (Eric Roy): No. That is not a point of order. The member will sit down. That is not a point of order.

CHRIS TREMAIN: Thank you, Mr Assistant Speaker Roy. Going forward, this Budget reinforces the six-point plan that we have been driving, right from the start of being in Government. That six-point plan is totally a focus on taxation and changes to taxation. Members have seen us make a big difference there by changing the incentives so that people who want to get out there and work will pay, if they are earning under $48,000 a year, tax of no more than 17.5c in the dollar. Under any tax level, compared with when Labour was in Government, people pay less tax in this country when they go out and work. We have delivered a fantastic situation.

The second part of the plan has been in infrastructure. We have invested significantly in infrastructure. I am proud to see the roll-out of high-speed internet through fibre being laid in the ground. In fact, I was at a meeting in Hawke’s Bay on Monday, along with Unison, which did not actually get the contract with the Government, but which is out there as a competitive fibre-network. We will end up with a wonderful fibre-network in Hawke’s Bay, which is absolutely magic.

Trade and innovation is the third part of our plan. We are out there organising a new free-trade agreement with India. That will be a wonderful opportunity to give more markets to our traders. Particularly locally in Hawke’s Bay it is fantastic to see that move. We have worked on getting apples into Australia, and I think that within a very short space of time we will see the first shipment of apples into Australia.

Skills in education have been a major focus for us, and that is the fourth part of our plan. That has been a huge focus for us, particularly with national standards and delivering upon those. This Budget delivers an additional focus on those particular standards, in making sure that we deliver those going forward, and in lifting the competence of children within our school system.

The fifth area of the plan is Government spending in services, where we have had a major focus. We are keeping the lid on Government spending, and we are keeping a real focus on driving efficiencies in our Government departments. Earlier this afternoon Bill English complimented many of the chief executive officers of those Government departments on making a real difference in delivering better services for the same amount of money.

Hon Steve Chadwick: Gutting the regions.

CHRIS TREMAIN: To say that we have gutted Government services is absolutely ridiculous. I mean, we can take health—and education, where there had been budget education—we are now delivering more operations than at any time under the previous Government. What those Labour members struggle to understand is that Governments can be efficient, can be more productive, and can deliver more services with the same budget. I think that is a talent and a focus that Bill English has brought, which is making a huge difference in this country.

I will finish my speech there. We have a strong focus on building an excellent economy, and National is delivering upon that with this Budget. Thank you.

RAHUI KATENE (Māori Party—Te Tai Tonga) : I found it very interesting listening to the previous speaker talking about the household economy. He said that the first rule is that one does not spend more than one earns, and the second rule is that one does not borrow more than one can pay back. Does that member not realise that those are mutually exclusive? If someone is living within their means, then they should not need to borrow.

In May of this year, in the first flush of post-Budget analysis Kerry McDonald, chair of the Savings Working Group, bemoaned the continued lack of robust strategic economic thinking in New Zealand. In his view the real extent of the problems facing the New Zealand economy are fundamental structural issues that have to be dealt with. There is no clear statement of where the Government wants to take the country, and there is little attention to the structure of our economic system. Instead, we seem to always be responding to symptoms, and there is little appetite for long-term thinking in the national interest. Add to these the persistent concerns around our high debt level, a comprehensive lack of savings, and the fact that the household income for most households has not been growing, and I think we start to get some sense of the dimensions of the problem.

It is a no-brainer that we are operating within fiscal constraints, so there is even more incentive for bringing a heightened level of transparency and accountability to Government expenditure. Within the Māori Party our demand for excellence pushes us even further to demand whole-of-Government effectiveness for Māori. The rights and responsibilities of tangata whenua embodied in the concept of tūrangawaewae bring with it the highest standards of citizenship, yet in the current economy citizenship is consistently exchanged for economic access. In effect, this reduces the mana of citizenship and increases the mana of economic roles. The idea that each person is equal in value is being increasingly replaced by the idea that each dollar is equal and people with more dollars are therefore deemed more important and meaningful.

The Māori Party has great concerns about the nature of such thinking. We seek to lead the conversation for all New Zealanders that economic policies must be built upon social and cultural structures. Economic success involves more than monetary profit and consumption as solely economic factors. We believe firmly in the proposition that what is good for Māori is good for New Zealand, so our interest therefore is in establishing initiatives that replace the current policy emphasis on matching external economic indices with a policy of matching or exceeding external quality-of-life indices. Such bold thinking by the Māori Party is in line with the United Nations General Assembly, which just 3 weeks ago called on member States to undertake steps that give more importance to happiness and well-being and determining how to achieve and measure social and economic development. The assembly invited countries “to pursue the elaboration of additional measures that better capture the importance of the pursuit of happiness and well-being in development with a view to guiding their public policies.” It noted that “the pursuit of happiness is a fundamental human goal,”. The General Assembly resolution says that happiness is critical in advancing economic growth and social progress. The resolution called on a balanced approach to economic growth that can lead to sustainable development, poverty eradication, happiness, and the well-being of the planet.

The Māori Party is really pleased with the progress being promoted internationally. We see that as being very much of the same line of thinking that we have been progressing through the genuine progress indicator. Our interest in the genuine progress indicator came about in recognising that the GDP indicator was never designed to and cannot adequately reflect the happiness and well-being of people in a country. In short, it brings about an approach in which unsustainable patterns of production and consumption work against sustainable development.

I will demonstrate how we have tried to promote new ways of thinking in some of the portfolios in which Māori Party Ministers have provided leadership. In the focus on Māori economic development, we expressed our support for economic systems to be aligned with, or driven by, social and cultural systems. The Minister of Māori Affairs has pioneered key initiatives in Māori tourism, Māori productivity and export growth, Māori innovation, and Māori skills acquisition, including cadetships and the relationship with InfraTrain. His strategy has promoted the use of whanaungatanga as a Māori-led approach to international trade, commercial relationships with Māori living overseas, and Māori enterprise initiatives in the domestic economy. We have seen evidence of this strategy in both the Māori Economic Taskforce, from the Māori economic summit, and the delegation to China. What we are doing is building on both the cultural strength and entrepreneurial acumen of Māori to also lead to social and economic outcomes.

Another aspect of a kaupapa-driven approach to economic development comes through the development of a language strategy. In the Māori Affairs Committee report there was coverage of the revitalisation of te reo Māori. I noted with disappointment the comments around the inability of institutions to deliver the desired increase in the number of speakers and the depth of te reo comprehension. When we look at balancing the accounts, we see that although we know that te reo rangatira can contribute to wealth generation both nationally and internationally, the value of the language asset is not being realised if we have poor institutional commitment.

This is a complex and fascinating process, which will bring New Zealanders into close relationship with our very foundations as a nation. As a proud uri of Ngāi Tahu, I have to say how delighted I am that we have a distinguished statesman in Tā Tīpene O’Regan leading the way, along with the very impressive membership, including Emeritus Professor Ranginui Walker, Professor Linda Smith, Dr Leonie Pīhama, and Hinurewa Poutu.

The second major platform of our policy transformation is Whānau Ora. The 2011-12 Budget invested another $30 million in Whānau Ora, which was a key source of interest at the select committee—and rightly so. Whānau Ora is an incredible initiative, which I think has received universal support around the House, and indeed around the country. It absolutely reflects the efforts we have made to model a new approach for a kaupapa-driven economy. Whānau Ora seeks to reflect the aspirations of whānau and support them in self-managing and taking responsibility for their own social, cultural, and economic development.

I have been meeting with whānau around the country who have been involved in Whānau Ora already, and even though they have not yet managed to access any of the funding from Whānau Ora those who are readying themselves for that transformation have made a transformation in themselves. They have realised that Whānau Ora means that they can make a difference in their own lives.

I have to say that as the Māori Party moves on and starts to make sure that our policy is included within that of the bigger parties, we are making a difference. We are making a difference and we are proud of making that difference. The Māori Party is pleased to support this Budget. We will be even more pleased when this Budget reflects the economic reality of what we need to be doing in New Zealand: a kaupapa-driven economy. Kia ora.

DAVID BENNETT (National—Hamilton East) : It gives me great pleasure to follow on from the last two speakers, Chris Tremain and Rahui Katene. I thought both of them indicated two fundamental points of view that I think the New Zealand public and the world are waking up to at the moment. This imprest supply debate is crucial for that, because it reflects the vision of this Government and how we deal with our economy and build a stronger future for New Zealand.

The two things I thought were important were, first, a thing that Chris Tremain talked about, which was the need to get our economic fundamentals right. The days of living—

Simon Bridges: You’re losing Steve, David.

DAVID BENNETT: No, I think Steve Chadwick needs to listen and learn. The thing we need to do is get our economic fundamentals right. As Chris Tremain said, it is like with a household: we can do only what we can afford, we have to be careful in how much we borrow, and we cannot live beyond our means. Those are some really basic economic fundamentals that Labour can never support.

The second issue was one the Māori Party raised—it is a very important issue—which is that we need to look long term. We need to look at Governments and economic management that deliver long-term solutions. We are looking at a world that has changed. The economic environment has changed in the last 5 years, and it is changing by the day. If we look at what has happened—[Interruption] No, it has changed. We have seen the Asian economies rise to become much more dominant, and the European, Western model that America and Europe have engaged in falling apart, in the sense that it is not the economic fundamentals of the future. We have gone back to a situation in which we had to earn our way in the world, work, save, invest, and sell things to the rest of the world in order to survive and progress. Those are the things the Asian economies are doing so well. Those are the fundamentals of economic management that we did so well many years ago, but due to the Labour Party - type mentality, the West lost that. The West is having a wake-up call now that it needs to get back into the game.

The other thing the Asian economies are showing is what the Māori Party has indicated: that we need to have a long-term view, and that Governments cannot just make promises any more on what will be necessary to win elections. The Labour Party is crucially defunct in this area, because it always makes promises to win elections. Its members never look at the long-term impact of what they are promising; it is all about them and their power base—that is all they ever want. The reality is coming to hit home. They are having riots in England now because people are not working and they are not getting good education, so they are not doing the economic fundamentals. We have had Government after Government promising these promises that are unaffordable and will not lead to long-term strong economies.

That is what is happening in America and Europe at the moment, but that will not happen in New Zealand, because this Government takes a long-term view, like the Māori Party. We understand the economic fundamentals that Chris Tremain talked about, and we can get it right so that New Zealand can deliver that strong economy and take advantage of the modern economic environment that will be based in this region going forward.

That will be a big lesson for Labour members to understand, because they cannot even fathom what it means at the moment. They do not even know what economic management is. Labour put this country into recession when the rest of the world was booming. How could it do that? Labour has a plan for New Zealand—the plan that Stuart Nash forgot about at question time today. Labour’s plan is to make New Zealand have deficits for the next 10 years, and to borrow billions of dollars to pay for its election promises—short-term election promises just to win votes, not to look long term at building the productive and economic base of this country—

Iain Lees-Galloway: By selling off our assets.

DAVID BENNETT: Look at that; we have them coming in with their comments about asset sales. That is all they can talk about. They cannot actually deal with the economic issues we face as a country going forward.

What the Labour plan would deliver is more debt. Is more debt a good thing to have at this time? Labour should ask the Americans what more debt means. More debt means we get downgraded. When we get downgraded, what does that mean? That means we are going to be in a situation where we have higher interest rates for our people. The people in New Zealand do not want higher interest rates. The biggest thing we can do for households is not to drop the price of milk by changing the laws around what somebody can sell a product for but to keep interest rates low, because they are the biggest bill that households face. Interest rates need to be low. And what did Labour do when it was in Government? It had some of the highest interest rates of the last decade. Do members remember those 9 percent interest rates we had when the world was growing well and Labour was in Government? What are the interest rates now? Households are saving a lot of money because we have lower interest rates and are delivering for ordinary Kiwis. That is the reality of the situation.

One speaker who spoke a bit earlier—I think in the general debate—was saying that his people have not been looked after and are not delivered for by this Government. Maybe it is not a question of this Government delivering for people; maybe it is a question of people making their futures in this country and in this region, of looking forward and not expecting the Government to deliver the answers, and of looking at themselves to get those answers. In this world you will not be given a free ride by anybody. That is the message you are getting out of the debt crisis in America at the moment. There is no free ride; you have to earn your way. You have to actually save.

Mr DEPUTY SPEAKER: In every second sentence the member brings me into the debate.

DAVID BENNETT: I am sorry, Mr Deputy Speaker. As a country—

Mr DEPUTY SPEAKER: I am standing. There are a lot of things you are saying that I agree with, but you cannot include me.

DAVID BENNETT: When we look at that we see that the country needs to earn its way in the future, and individuals need to earn their way in the future. What are the secrets of that? It is getting a good education, and National is delivering on providing standards in education and a future for New Zealanders where they get that good education to go forward. What do you also need? You need jobs.

Mr DEPUTY SPEAKER: Order!

DAVID BENNETT: Yes, I am sorry. What we also need are jobs for our people once they have been educated, and those jobs will be delivered. The jobs cannot be delivered when there is a high tax rate, which the Opposition is seeking to impose. That would be destructive to growth and to the promotion of people taking advantage of opportunities, making choices, taking some risks, and building more industry and more jobs for people going forward. National is providing that economic environment that will provide more jobs for people who are well educated, so they can take advantage of the jobs.

The next thing National is doing is providing the infrastructure so that those businesses can grow and provide even more jobs going forward. That infrastructure is crucial for this country going forward. Labour does not want to see that infrastructure going forward. It wants to cut that infrastructure spending and use the money it will borrow from overseas just for handouts for day-to-day living rather than looking long term.

The crucial thing about this economic situation the world has found itself in is that we need to look long term, we need to have that infrastructure, we need to invest in education, and we need to have a financial system that engages people, lets them take risks, and builds that economic growth. That is what National is delivering. If we compare that with the Opposition, which thinks in the short term about what it needs to win an election—which it has no chance of doing if it carries on with its current economic policy—we see that it does not look at economic policy that will actually grow an economy; it looks at economic policy that will pay for its short-term promises. It does not want New Zealand individuals to be the best they can.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I have listened to members opposite talk about the household and I consider that some of their comments have been somewhat patronising: “Don’t live beyond your means.”, and: “You’ve got to make sure that you don’t borrow more than you can afford to service in terms of your mortgage.” But they do not take their analogy that one step further. And what is that analogy that they have not managed to bring into the debate thus far? The advice they would give the ordinary householder in New Zealand is to sell their house and rent it back from whomever they sold it to. That is exactly the advice they would give: sell the house and rent it back. Does that leave the ordinary householder with an asset? No, that actually divests them of the one asset they will have in their lifetime that they can guarantee they are able to pass on to their children. They cannot pass on their rent situation to their children; they can pass on their asset. That is what National Government members never say when they are talking about this.

Let us have a little unpacking of the asset-sale argument. National members are not telling the public that the asset-sale argument is fundamentally flawed in terms of the essential asset or dividend-stripping that it bequeaths to generation after generation after generation. This is not something that happens just overnight. The return is something that happens just overnight, but the long-term effects are paid for not by us but by our children and our grandchildren and their children beyond. It is economically illogical to sell our country’s energy State-owned enterprises in order to pay down debt. The dividend yield of the four companies was 7.6 percent last year, which exceeds the 10-year bond rate of 6 percent, so the Government will be a net loser by selling half of each energy company to avoid raising new debt.

John Key says he wants to give Kiwi mums and dads the opportunity to own a stake of the State-owned enterprises. But they already own State-owned enterprises; that is what public ownership means. I have a very old poster on my wall from the 1980s, and it has a wonderful picture of these private sector vultures sitting on the sideline, eyeing up the hospitals and the various other State assets. The subtext is public they’re ours; private they’re theirs, and that is exactly what is going on here. The Government is willing to sell off this country’s future for the short-term gain it would provide to our balance sheet.

Foreign investors—not mum and dad investors—are the true winners from privatisation. Since Contact Energy was sold offshore by National in 1999, it has paid $1.5 billion in dividends to its private, mainly Australian, shareholders. I do not think the people of New Zealand will fall for it. They know this election is a referendum on asset sales, and I know on which side of that argument they want to fall.

This bill represents a Budget that does not treat New Zealanders in an even-handed fashion. I think New Zealanders have that kind of fairness in the way they think about things, the way we think about things. The fair suck of the sav, I think is a Kiwiism if there ever was one. When everyone pays their fair share, that is what it is about—people paying their fair share. What this Budget does, however, is reinforce the advantage this Government gave to the highest-income earners, with massive, unaffordable tax cuts. They were massive and they were unaffordable. They certainly advantaged those at the very highest rung of income earners in this country. The Budget has also exposed the impact that the GST increase has had on the economy as a whole, but particularly on lower-wage earners, and those on fixed incomes like superannuation.

This Budget also reinforces the stark reality of a Government that simply does not have a plan. I cannot believe it. After 2½ years in Government—and National had 9 years in Opposition—those members still do not have a plan. They do not have a plan. I have developed a particular interest this year in something called disaster recovery, because, for obvious reasons, in representing the eastern suburbs of Christchurch it is quite plain that disaster recovery is an important feature of our lives going forward. Everything I have read about disaster recovery starts with the planning process. It is so fundamental that it is an engaged process, and one that really identifies any pre-existing vulnerabilities, in order to ensure that when we build back, we build back better and stronger, and in order to ensure that we are better prepared to withstand future disasters.

It seems to me that the situation we face in New Zealand, in light of the impact of the global financial crisis, is exactly the same as the one we face in Christchurch. I think we should take some of the lessons from the disaster-planning model and apply it to our own economy. I have to say, though, that international best practice on disaster-recovery planning is not happening in Christchurch at the moment, but it should be. The principles that underpin it are what should guide our response to the recession. As in Christchurch, there is no plan, and despite all of the smiling and waving, there is no one in charge. The Prime Minister said he would turbocharge the economy, but he has not managed to get beyond kicking the tyres, as we all know.

If we look at our pre-existing vulnerabilities—and I think this is the most serious point—we see New Zealand’s love affair with property speculation, gaming the absence of a capital gains tax to ensure that the income a sale generates is not taxed at all. That has been part of our problem. That is a pre-existing vulnerability, and if we are going to withstand future crises—because they will come, as sure as eggs are eggs; we are in a cyclical environment—we have to be better prepared, and we have to deal with that anomaly. The reality is that not all income earned in this country is taxed, and somebody has to have the courage to face up to that and to address it. Not only does that mean that people are not paying their fair share—and that is a huge issue, but it is not the only issue—but it means that first-home buyers have no hope of owning their first home, as property attracts investment dollars that are guaranteed a tax-free return. That is a fundamental problem, and if we really want to take this country forward, that is a problem we must address.

National members have said in their contributions to this debate that Labour is wrong for promising to introduce a capital gains tax. I think possibly there are two reasons for that. One is that the increase National made to GST was not signalled ahead of the election. In fact, it specifically said it would not increase GST, so maybe members think it is a bad idea to tell people what they will do before they do it. We on this side of the House think it is better that we are upfront with people and tell people that we will introduce a capital gains tax. Let us not allow National’s approach of being not completely upfront about what it will do after an election to stand in the way of what needs to be done.

The bottom line is this country needs to have a tax plan that does not skew investment towards unproductive speculation and away from the real economy. That is why Labour’s tax package has been welcomed by those who recognise that it is time for what is essentially a level playing field to attract investment dollars. We want to attract investment to our productive sectors, to the real economy, to the economy that generates real income: the well-paid jobs, the ones that will not have to rely on Labour’s policy of increasing the minimum wage to $15 an hour. We are not ambitious for every New Zealander to be paid the minimum wage. We want people to have well-paid jobs, and highly skilled jobs. We want to have an economy that is able to produce real jobs that take New Zealand’s small economy to the big wide world, as it were, and enable those companies with those big ideas to invest in those international markets.

That is why the research and development tax credit is another critical component of our policy. It enables our companies to undertake the innovative work they need to, in order to ensure that New Zealand secures its place in the world. That is the sort of Budget we should be debating at this time, but, tragically, we are not.

AARON GILMORE (National) : It is an absolute pleasure to stand and speak after that prior speaker, because that woman previously was the Minister of Commerce in a Labour Government that oversaw the loss of $2 billion of finance companies. That woman over there, only a few months ago, publicly said in the Dominion Post—

Hon Lianne Dalziel: I raise a point of order, Mr Speaker.

Mr DEPUTY SPEAKER: I think I can anticipate the member. There is a courtesy to refer to members by their name or their title. What the member said is not acceptable. It is unparliamentary, and I ask the member to withdraw that comment, and to apologise for it.

AARON GILMORE: I withdraw and apologise, Mr Speaker. I was not quite sure what the bit was. I will carry on—

Mr DEPUTY SPEAKER: Carry on, and make no comment on my ruling.

AARON GILMORE: Thank you, Mr Deputy Speaker. Labour members have either no idea or no plan. They keep talking about us and saying we have no plan. But I look across the House, at those members over there who are trying to create jobs for themselves, because in a few months’ time they may need one. The Budget put forward by the Government is one that will create 170,000 jobs for the people of New Zealand. They say look at those people over there, and they turn round and say we need to create more jobs for the people of New Zealand. That is what our Budget does. It creates 170,000 new jobs.

Stuart Nash: Where from, Aaron?

AARON GILMORE: I say to the member Mr Nash that he should look in the Christchurch Press. In the Christchurch Press this Saturday prior there were 17 pages of jobs, there were 15 pages the week before, and 22 pages the week before that, I tell Mr Nash. I say for the member over there that if Labour keeps polling at 27 percent or 26 percent he will need a job. He can come down to Christchurch, because we employ people in Christchurch. We understand real businesses. It is our party that understands the real nature of wealth creation.

I look across to the members on the other side of the House and I wonder how many of them have created a business, have put their own capital at risk, and have thought about the nature of how to do that. Mr Burns has, to his credit. Mr Burns has created a vineyard. Things are not doing so well in the vineyard sector right now, but that is not his fault. He has put his capital at risk, and he has created a business. I congratulate the member on doing that. But most Labour members have not done that.

To be frank, their numbers at best are illogical. Labour members talk about our tax switch and say that we put up taxes on the poor by putting up GST, and when we reduce income tax they say that is a bad thing. They forget the whole full story. We put up taxes on the rich foreign corporations like Shell, BP, and the banks by changing the thin capitalisation rules, but they do not talk about that. We are collecting more money from those rich foreign corporates than at any other time. They do not talk about the changes we made in the property sector to stop the rort that was occurring in that sector. If members do not believe me they should talk to any property investor or developer in Wānaka and Queenstown about the breakdown that has occurred as a result of the Inland Revenue Department stopping the rorts on property speculation down there. Members opposite have gone quiet, because they do not like it.

If we look at the numbers and the impact of the change in GST, the reality is that it impacts on the rich more than it does on the poor. Rich people spend more money, and because they spend more money they pay more in GST than people on low incomes. The vast majority of people who earn under $45,000 a year do not pay income tax. [Interruption] Labour members do not like it, because they know it is true.

I want to touch on the issue of assets. Opposition members are of the belief that selling an asset is bad, it does not matter what kind of asset it is. We believe that if we have a better thing to put our money into, then selling our assets makes perfect sense. It is like an entrepreneurial tradesman who decides he wants to sell some of his assets to put money into his business because the return from his business will be better. That is what we are doing. We are going to build more Government assets than ever before.

Stuart Nash: What, prisons?

AARON GILMORE: No, I tell Mr Robertson that we are going to build schools, new hospitals, and roads—all those things that create wealth, not public sector jobs—

Grant Robertson: I don’t care what you’re saying. It was Stuart.

AARON GILMORE: —for Mr Robertson and his friends. We believe that in relation to creating wealth, we have to put it in the right productive sense. We believe that if we can sell some of the things we have, get some cash, and put that cash into things that create more wealth, then that is a good thing. We believe that creates jobs. And, in turn, we believe that creates opportunities for the mums and dads out there to put their money into things that are sensible. The alternative is that we either do not invest in schools, hospitals, and roads, or we borrow the money, which is what Labour members would do. They would borrow more money, put our credit rating at risk, and put up the mortgage rates for the mums and dads and businesses out there, and what will they do?

Stuart Nash: That makes no sense.

AARON GILMORE: I can tell Mr Nash that they will leave their businesses.

Stuart Nash: You’re not speaking any sense.

AARON GILMORE: The only person speaking sense at the moment is me. When we look at it, the Labour Party put up this idea of a capital gains tax. It put up this idea of a tax-free threshold. It also put up the idea of putting up tax on the so-called wealthy. What they forget to tell us is that that funds only those particular switches. It does not fund all the other promises it has put forward. Labour has promised hundreds of millions for early childhood education and all its other promises. We have not heard about those. If we ask Mr Cunliffe, he turns round and says: “Don’t you worry, we have a plan.” So we would incur even more taxes some time in the future. Labour has a lolly bag of promises and a big empty bag to try to fund them.

We heard the last speaker talk about research and development tax credits. We had a research and development tax credit under the last Government and it did not work. The only people who made money out of that were my friends in the accounting sector. Every single one of my friends who are partners in New Zealand accounting firms thought that the last Government’s research and development tax credit was fantastic for their bank balances and terrible for the bank balances of companies up and down New Zealand. It was an absolute economic voodoo that was put forward.

The Budget that has been put forward here has some wonderful things for my community in Christchurch. It has $5.5 billion of Government money that will go to rebuild those things in my community that are broken. I think that is a good thing, whether it is the road outside my parents’ house, the sewer down the road from my own house, the high school that I went to, or the shops that are further down the road. We need to rebuild our communities in Christchurch, because it is our country’s second-biggest city. In fact, my region of Canterbury creates more economic wealth than any other region in New Zealand relative to population bar one, and that is the good people of Southland.

I have a theory, just returning to the issue of State assets, that members opposite believe that if there is a dividend return that is more than the after-tax return of the cost of debt, then it make sense to keep doing that for ever. There is a thing called risk, and many Nobel Prize winners throughout the world have won many awards for putting forward the point that that is absolute bunkum. The reality is that we have to take into account the equity risk cost of capital, not the debt risk of capital. I know that Mr Cunliffe is not here right now, and that is a bit of a shame.

Mr DEPUTY SPEAKER: Order!

AARON GILMORE: I am sorry, Mr Deputy Speaker, I understand—

Mr DEPUTY SPEAKER: The member cannot refer to the absence of a member. I ask the member to withdraw that comment.

AARON GILMORE: I withdraw that comment. The issue is that very, very few members on the other side of the House actually understand the reality. Those members would have us believe that they could go out and borrow a billion dollars, put it in some productive investment, and pay the bank at a 6, 7, or 8 percent cost on that debt, and that the returns they will get back on that equity investment make sense. If they truly believed that, Stuart Nash would not have taken money from his own superannuation scheme and bought a property. He would have put it into a productive enterprise.

The reality is that the Labour Party believes that the most productive enterprise in New Zealand, which is our ability to produce food and protein up and down the country, is a golden goose that should be taxed to death. Labour wants to put up the emissions trading scheme and bring it forward sooner. Those members also want to put in place a situation whereby we have a capital gains tax on farms. They want to take the only enterprises that have a long-term ability for us to create massive wealth by feeding the people of the world the protein they want and need, and, basically, tax it to death. They believe that is the best thing to do. We say to them that they should keep putting those policies forward because our supporters love the alternative that National has.

I want to finish with a couple of comments in relation to the comments we heard from some members opposite about aspects of the nature of business creation we have seen from this side of the House. The people on this side of the House have had plenty of experience in running and operating businesses on their own. They understand the issues and risks when one takes money from one side and puts it somewhere else and there is an economic return on it, which creates wealth from those productive enterprises. Unlike when one talks to those members opposite, these people create wealth, whether it is selling sweets door to door, as Mr Bridges pointed out, the real business in terms of real estate that Mr Tremain has done, or working as a shearer as Mr King has done. It is that real honest hard work that creates the wealth that pays the taxes, that creates the situation that makes New Zealand rich, and that pays our way in the world, and that is what New Zealanders will vote for on 26 November.

SU’A WILLIAM SIO (Labour—Māngere) : When my colleague asked the member who has just spoken, Aaron Gilmore, what his list placing would be, he did not respond. He continued speaking, but I saw his colleagues sitting on the backbench all smiling and laughing. After listening to his speech, I now realise that we will never see that member again after the election, if we can gauge that by his colleagues who are sitting on the backbench there laughing and smiling at him He had no idea what ordinary, hard-working, middle and low income people are experiencing under this Government—no idea whatsoever. [Interruption] The big mouth shouting from that side of the House has no idea whatsoever, either.

Simon Bridges: Point of order—

Peseta Sam Lotu-Iiga: Point of order—

Simon Bridges: I got to my feet first.

Mr DEPUTY SPEAKER: I will decide who has the point of order. I call Simon Bridges on a point of order.

Simon Bridges: I raise a point of order, Mr Speaker. I take personal offence at those remarks. My mouth is not as big as that.

Mr DEPUTY SPEAKER: That is not a point of order. I have to say to Government members that continual barraging is unacceptable. Some interjection is fine, but continual barraging, especially when the member started his speech, meant it was difficult to hear what the member had to say to start with.

Peseta Sam Lotu-Iiga: I raise a point of order, Mr Speaker. Earlier on in this debate you asked one of our Government members to apologise and withdraw for not calling someone by their appropriate name. Calling someone “big mouth” as opposed to—

Mr DEPUTY SPEAKER: I will deal with that, thank you. The matter is that that was a generalisation as opposed to a specific direction at a particular member. But I do say be careful about how you refer to members. We are all honourable members and we should respect the positions that people hold. It would be good if we actually refer to people by their name or their title.

Peseta Sam Lotu-Iiga: Point of order.

Mr DEPUTY SPEAKER: I have ruled on this matter and I ask the member to resume his seat.

SU’A WILLIAM SIO: Thank you, Mr Deputy Speaker. You are absolutely right. I was describing and I did not name anybody personally.

I want to say to the member for Hamilton East that I totally agree with his comments when he says that we need people to have a good education. That is absolutely right. But then I have to ask him and his Government why they put a cap on tertiary education opportunities. Why did they increase costs for early childhood education? Why is the Minister of Education forcing bilingual kids to speak only one language by removing Pacific bilingual language from the Pacific education plan? Why is the Minister dumbing down bilingual kids by forcing them to speak only English in this country, when that Government knows better and should know that Pacific kids are bilingual? Pacific kids are bilingual.

Grant Robertson: I raise a point of order, Mr Speaker. I regret to interrupt the member who was speaking, but there was an interjection from the Minister of Education when she accused the member of lying. That is completely unacceptable in this House.

Mr DEPUTY SPEAKER: Speaker’s ruling 42/5 states that members cannot use the world “lie”. I ask the member to withdraw that comment.

Hon Anne Tolley: I withdraw.

SU’A WILLIAM SIO: Thank you, Mr Deputy Speaker. When—

Hon Anne Tolley: But start telling the truth!

Mr DEPUTY SPEAKER: I refer to Speaker’s ruling 43/1. I ask the member once again to withdraw and this time also to apologise.

Hon Anne Tolley: Do you want me to withdraw “telling the truth”?

Mr DEPUTY SPEAKER: There is a Speaker’s ruling that is very clear. Speaker’s ruling 43/1 states: “ ‘Tell the truth!’ Obviously, it is a phrase that creates disorder in this House, so from now on it will be considered an unparliamentary term.” I ask the member to withdraw and apologise.

Hon Anne Tolley: I withdraw and apologise.

SU’A WILLIAM SIO: I accept her apology, because she is the member responsible for cutting the funding to the Tupu language series. She is the member responsible for cutting the funding to the Folauga journal series. They are all resources for the promotion of Pacific bilingual language in schools. Instead of saying that she has cut that funding, she uses the word “pause”. So I ask that Minister who is telling the truth.

Mr DEPUTY SPEAKER: I have just asked the Minister to withdraw the comment and to apologise for saying exactly what the member has just said. I ask the member also to withdraw that comment and apologise for it.

SU’A WILLIAM SIO: I apologise and withdraw, but it does not take away the fact that that Minister, at whom I am pointing my finger, is responsible for the protests of people who would normally never protest. Those protesters turned up last Thursday. They normally never protest but turned up last Thursday because that Minister and her policy are attacking the rights of Pacific children to be able to speak their languages. That is right: $320,000 has been cut from this budget. A measly $320,000 has been cut and that will have rippling effects now and into the future for Pacific bilingual children.

Just because the Minister cannot speak any other language but English, she wants to force—

Hon Anne Tolley: I raise a point of order, Mr Speaker. I know the debate is robust, but actually I can speak more than one language. That member is making disparaging comments, which you called my colleagues up for making.

Mr DEPUTY SPEAKER: I hear what the member is saying. I ask the member who has just resumed his seat to be very careful about comments that other members can take offence from. Standing Order 116 is very clear. It is about personal reflections. When one member antagonises another member by way of a speech, it invites a reaction. I ask the member from now on to be very careful. Otherwise, I will terminate the speech.

SU’A WILLIAM SIO: I do apologise if I have offended that member, but it is a robust debate and I hope she can take what she has tried to dish it out to me.

We began with this Government saying at the beginning of its term that it was after value for money. But this is its last Budget and the mantra is now “more for less”. More for whom? More for the Government’s mates. Less for whom? Less for the rest of the population of New Zealand. Let me reflect to the House on a meeting we held on Friday of last week with the Salvation Army. I am hopeful that by reflecting to Government members on the meeting we held with the Salvation Army and on what it is experiencing on the ground, they might be able to feel what working communities are feeling under this Government’s governance. There is a general feeling that children’s well-being is at risk because of the cuts to early childhood education, because of the cuts to Pacific bilingual education, and because of the general cuts right across the board to the kinds of social services that give a helping hand to communities in need. There are so many people who are unemployed, without jobs, that—I have been told—the Salvation Army, as well as many other community organisations, has been asked to do more but with fewer resources. This Government is doing that instead of taking responsibility for the high cost of living, which is the experience of many families, for the high rate of unemployment, for those who are standing in line who are no longer able to receive housing support, and for the many families who have to try to fit into a garage shared by six other families in a three-bedroom home.

Those are the kinds of social problems that have increased.

Peseta Sam Lotu-Iiga: Where’s that?

SU’A WILLIAM SIO: That member, Peseta Sam Lotu-Iiga, has no idea whatsoever. By hanging around Mr Key he thinks he will earn his $50 million, which Mr Key has. He has no idea of what the communities out in Maungakiekie are experiencing. That is why Carol Beaumont is doing work—that member should sit down—on loan sharks and clothes factories. The only reason Government members have decided to raise that issue now is that it is election year.

All that we ever hear from Mr Key and his band of jolly fellows on that side of the House is slogans. There is nothing substantial. There is no in-depth plan for this country. I will say this: if we allow that party to return and have a second term in Government, my goodness, help us! We are going to the dogs under that Government. It makes promises that it is not able to keep. It said it was going to cut the gap between the wages of Australian workers and the wages here. What has happened to that? It said it would never raise GST to 15 percent. What has happened now?

David Bennett: All lies!

Mr DEPUTY SPEAKER: I ask the member to withdraw and apologise for those comments. He cannot say it is all lies.

David Bennett: I withdraw and apologise.

SU’A WILLIAM SIO: There is an African saying: “The dogs will bark when their master is not around.” Kia kaha.

Hon JOHN BOSCAWEN (Leader—ACT) : This debate on the Appropriation (2011/12 Estimates) Bill and the Imprest Supply Bill has developed into a form of general debate over the Budget. I think it is very timely to look back on the last 2½ years of this John Key - led National Government. Let us acknowledge that National inherited a very difficult situation. It inherited an economy that was already in recession—it was in recession long before the rest of the world joined in—and it inherited a situation of rapidly growing increases in Government expenditure that had occurred since the 2005 election.

The tragedy of the 2005 general election is that the result looked as though it was going to be very close, so the Helen Clark - led Government went on a massive spending spree. It tried to buy the votes of ordinary New Zealanders, and we are still paying for it to this very day. I suspect we will be paying for it for many years yet. The Labour Government extended the interest-free student loan scheme. It made it so generous that any student studying at a tertiary institution would be absolutely crazy not to borrow the absolute maximum amount of money they could. Why would a parent contribute to their own child’s education if they could put that money into a bank and earn interest over the many years that their child would be studying, when under the interest-free student loan scheme that money can be paid back in debased dollars many years into the future?

The extension of the interest-free student loan scheme, just like the substantial extension to the Working for Families package was an indication of the massive increase in Government expenditure that National inherited. However, one has to query and look very critically at how National has dealt with that situation. National did not cause that situation, but it was the National Government’s responsibility to address that issue. Earlier in this debate the Minister of Finance said that the 2009 Budget focused on infrastructure. The National Government went about putting in place the building blocks for infrastructure—very important—and there was investment in roading, particularly in Auckland, in schools, and in hospitals.

The 2010 Budget was the tax switch Budget. The rate of GST went up, so the cost of consuming went up, and additional controls were put on the deductibility of depreciation so that property investment was not such a profitable business, but in return we had reductions in income tax, which rewarded people who went out and worked, and it provided an incentive to work. It also rewarded people who wanted to save. The Minister referred this afternoon to the 2010 Budget being the tax switch Budget. Finally, he went on to 2011. That was the Budget where we actually tried to get the Government books back into balance.

I believe that the last 2½ years have seen many lost opportunities. There is no doubt that the National Government inherited a very difficult situation—the world was going into recession. In fact, just this week we saw the debt crisis escalating in Europe, and we saw brinkmanship in the United States just last week. If we actually look at what the Government said back in 2010, we will see that it budgeted to spend $1.1 billion on new initiatives last year, and $1.1 billion on new initiatives this year. However, what happened was that we had an earthquake. We had a very serious earthquake, which reinforced to New Zealanders the difficult situation New Zealand was in and caused a re-examination by the National Government of its spending priorities.

The Government very proudly told us during the Budget that it had identified $5.2 billion of expenditure over 4 years that could be reprioritised, and of that $5.2 billion it allocated $4 million back into front-line services, whether that be in education, health, justice, or whatever area, with a net saving of $1.2 billion. What I am trying to say is that the Government went from anticipating spending an extra billion dollars to a net saving of $1.2 billion over 4 years. That is a turn-round of about $1.5 billion a year.

It actually took the Christchurch earthquake for this Government to have a serious examination of expenses, so when push came to shove, we saw a $1.5 billion turn-round. We know some of the areas where cuts in expenditure were made: in KiwiSaver, by trifling around the edges of student loans, and in other areas of Government expenditure. The ACT Party says that the Government has been far too lackadaisical about it. It has not identified the real issue.

We heard the Minister of Finance speak this afternoon about the need to get our debt under control, yet what do we see? We see a Budget with a $16.8 billion deficit. We know that that has been accentuated by the Christchurch earthquake. We know that of that $16.8 billion, $5.5 billion relates to Christchurch. But if we take that out, we would still see a Budget with an $11 billion deficit. If it had not been for the Christchurch earthquake, the Government would not have taken that critical look at its expenditure. The ACT Party says that has been a lost opportunity, but worse, the Government has not done a good enough job of it.

There are so many areas of wasted expenditure. One need only look at the issue of student loans. Yes, the Government has made changes around the edges; yes, it has said that people over 55 cannot borrow for their living costs; yes, it has said that people studying to become pilots cannot borrow as generously; and yes, it has said that people overseas may have to start paying interest on their loans sooner than they otherwise might. But the Government has essentially left the interest-free student loan scheme in place. A parent or student would be absolutely crazy not to borrow the maximum amount of money they possibly could. The Government is essentially telling students and their parents to borrow money for living costs and course fees, and it is telling them it will not charge any interest and they can pay it back in several years’ time.

Our country faces a crisis where we are forecasting to spend $16.8 billion more than we take in from income tax this year and just under $10 billion next year. We are facing a crisis. The Minister of Finance claims he has got the books back in order. He claims that the deficit will be back into surplus by 2015. But those claims are based on the assumption that the New Zealand economy will grow at a rate of 4 percent in 2013, and 3 percent in 2014. But if we look at the last year, we see that growth was only 1 percent. This year it is forecast to be 1.8 percent, but to make the books balance, Treasury is forecasting growth of 4 percent. Is that realistic?

I ask National members to ask themselves whether it is realistic to expect growth of 4 percent at a time of global financial meltdown. We do not know what is happening to our major trading partners in Europe and the United States. Yes, we know that a lot of our export revenues come from Asia, but we are enjoying record high commodity prices right now, and we cannot be certain that we will retain those.

The Government has also made cuts to KiwiSaver. I have said to this Parliament before that the people who gain from those cuts are the low-income earners. It is the low-income earners, who cannot afford to be in KiwiSaver, who are paying taxes so that the middle class gets those subsidies. It always fascinates me when Labour criticises tax cuts to the subsidies on KiwiSaver, because those subsidies are being paid for by the very people Labour purports to represent.

National inherited a crisis that was not of its own making, but it could have done a lot more, and still can do a lot more, and the ACT Party intends, if it possibly can, to put a lot more backbone into the National Party’s spine following November 26.

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

JONATHAN YOUNG (National—New Plymouth) : I am very pleased to speak on the third reading of the Appropriation (2011/12 Estimates) Bill and the second reading of the Imprest Supply (Second for 2011/12) Bill. I will start by congratulating, first, Bill English on his good, firm, steady, long-sighted stewardship of the New Zealand economy. I think that this is what this debate is about. It is about recognising the stability that the National-led Government has brought to this country. The second person whom I will congratulate tonight is Colin Cooper, the coach of Tenderlink Taranaki, who last night led our team to a great win: after trailing 26 at half-time, it came through to a 39-33 win. I raise that because Taranaki is typical of what the National Government can do: we can come from behind to win against the odds. That is what we have done with the economy. Labour left us in a losing position. We turned that round and we have brought stability during a time when we would say that the world is still experiencing the ramifications and reverberations of the debt crisis.

The Budget that we are speaking about addresses the issue of reducing debt. It is very important to see that this Government is led by sound and sensible people, who have presented what I believe the New Zealand public are acknowledging as sound and sensible policies. Because of global uncertainty, New Zealand needs more than ever to have these sound and sensible policies, led by solid leaders. New Zealand is not immune to what is happening around the world. We trade with the rest of the world, and if the world slows down, then yes, it will have an impact on us. So being able to foresee those movements and make adjustments, and being able to continue to trade with countries overseas such as Australia, which is our largest market, and China, which is now our second-largest market, are very important for the future prosperity and security of this country, and for the jobs that we are seeing come into the market place more and more.

We still have flexibility in our economy, which a lot of other countries do not have. In theory, there is room for the Reserve Bank to cut interest rates if necessary. Our exchange rate is still relatively high, so again there is the opportunity for that to ease back if we see global commodity prices coming back. We have some headroom, and all of that is because of the result of our efforts over the last 3 years to see New Zealand placed in a far better position than many other countries to manage what will remain an uncertain global environment for a number of years ahead.

The comments that I have made are not what people might think—just biased comments from a member of the National-led Government and the National Party—because media reports and companies like, for example, Fairfax, which pride themselves on being unbiased, say that New Zealanders are recognising the solid leadership that this Government has brought in such difficult global times. Eighty-five percent of voters view the state of the economy as being either important or very important in deciding their vote. We understand that; we know that. Furthermore, Fairfax Media - Research International polls show that 49 percent of voters think that National has the best plan to fix the economy. That is well ahead of Labour, which is on 17 percent. Fewer than two voters out of 10 have any confidence in Labour’s plans. What is really astounding is that only 48 percent of Labour’s supporters back its plan to fix the economy.

Michael Woodhouse: We didn’t know it had supporters.

JONATHAN YOUNG: We did not know that Labour had supporters. That is a crisis in the can, without a doubt. Among National voters—

Hon Steve Chadwick: Tell us the plan.

JONATHAN YOUNG: No, this is the plan that Fairfax Media are perceiving or are hearing from you, and it says half of your voters—half of your supporters—do not have confidence.

Stuart Nash: Mr Speaker’s supporters?

JONATHAN YOUNG: Among National voters, on the other hand—thank you, I say to Mr Nash—81 percent support our party’s economic plan.

Hon Steve Chadwick: Well, that’s not surprising. They’re National voters.

JONATHAN YOUNG: As a comparison, 48 percent of the member’s voters do not have confidence in her party’s plan. Do the maths.

I was brought up to believe that one should borrow only for assets and never for consumption. We have come through a decade when many people have borrowed for consumption. The balance to that is that when our country goes into recession, this Government has continued to borrow in order to take off the sharp edges of the recession for New Zealand families as they go through very difficult times. But whatever we borrow, we have to pay back and with interest on it, so we know that that level of borrowing is simply a ticking time bomb.

The reason why we went into recession was poor management and excessive spending in unproductive areas of our economy. Budget papers of the previous Labour Government, released under the Official Information Act and available on Treasury’s website, show that in 2007 Labour Government Ministers were well aware that their spending was contributing to higher interest rates and higher exchange rates. Treasury warned them that they needed to stay as closely as possible to their previously agreed spending limit in the Budget; otherwise they would risk an interest rate response from the Reserve Bank, the exchange rate would stay higher for longer, and there would be a more pronounced economic slowdown. Those same papers show that Dr Cullen and his Cabinet colleagues signed off on an overspend of some 50 percent more—almost $4 billion in total—than the limit they had agreed on among themselves only a few months earlier. They did so in the full knowledge that this would place pressure on householders and exporters. I think it is very rich that those members would stand there and criticise us, when they made such a poor effort of managing the economy.

When National became the Government in November 2008, we knew that we had inherited a decade of deficits. We had falling economic growth, unemployment was already rising, and we had high inflation, which was caused by high Government spending, as I have just noted. We had a rising current account deficit, annual productivity growth of 1.1 percent between 2000 and 2008, deteriorating fiscal deficits, sharply rising Crown debt, floating mortgage interest rates at almost 11 percent in June 2008—currently, they are at less than 6 percent—finance companies collapsing left, right, and centre, and the economy was on two negative credit watches. Per capita GDP had stalled since 2004. That is what we inherited; that is what happened. The tradable side of the economy had peaked in 2004, and it had been shrinking ever since. Growth in exports was at just one-third of previous levels—and those members are the people who want to run the economy again!

I think that New Zealanders are very, very happy with the leadership of John Key, and with Bill English as the Minister of Finance. They are doing a fantastic job of bringing stability in difficult times and of bringing growth. We are seeing that jobs are beginning to be created in this environment. I believe that we have the right principles in place and that we will continue to see our economy grow and prosper. New Zealanders have good jobs and earn good money. Thank you.

STUART NASH (Labour) : This election, the people of New Zealand have a very clear choice. They can choose between a Government that wants to sell State assets and a Labour Party that has delivered a clear, bold economic plan that will allow every single New Zealander to retain ownership of the assets they currently own, and we will plug a hole in our tax system that at the current time is inherently unfair. There is a choice between a party that will give a hard-working New Zealand family $1,000 extra a year—every single New Zealand family $1,000 extra a year—and a Government that gave someone who earned $1 million a year $1,000 a week. The top 700 people, who earn over $1 million a year, got $1,000 a week in the hand when the good, hard-working, struggling people of Napier received about $11 dollars a week. The price of petrol ate away that, let alone everything else.

I would just like to run over some of the comments a couple of the previous speakers made. I tell Jonathan Young there is an expression, and it goes “lies, damn lies, and statistics”. One can use statistics for anything one wants, but we know there is only one poll that matters. To quote a former Prime Minister of New Zealand Jim Bolger, there is only one poll that matters and it is the poll on 26 November. Jonathan Young told us what he thought. Well, I do not believe that many people in New Zealand really care what Jonathan Young thinks. I do not think he has anything. But Jonathan Young did say that his Government took off the sharp edges of the recession for hard-working New Zealand families. Well, I do not know about that, because when the Government gave $11 a week back to the hard-working people of Napier, the price of petrol went up by $15 a week. Yet those who earned $1 million a year got $1,000 a week. That is not particularly fair as far as I am concerned.

Aaron Gilmore stood up and said that the Government should not be in the business of owning businesses, because of the risk. Well, that is a tired old argument—it is a tired old argument. What I say to Mr Gilmore is: what about the risk of not owning our key infrastructure? What about the risk of foreigners owning our key infrastructure? There are many examples of foreigners who have come in, bought our assets, stripped them, and raised up the price. Do members know who suffered? It was the good, hard-working people of New Zealand.

The last major piece of infrastructure that was sold was Contact Energy, by Mr Bill English. Now what we have is $100 million—

Hon Member: How much?

STUART NASH: One hundred million dollars every single year flows across the Tasman to Australian shareholders. Personally, I do not think that is a way forward. I do not think that is a great plan for growing New Zealand, at all. Polling, I say to Mr Young, tells us that not many New Zealanders think that is a great plan either.

There is the political risk, which Mr Gilmore did not go on about. I think the current Government did not calculate the odds on the political risk of selling assets, because polling tells us this is not a very popular policy—not a very popular policy, at all.

Michael Woodhouse: You don’t believe it.

STUART NASH: I know Michael Woodhouse is sitting over there, and I know that he has been told by many of his would-be constituents that this is not a good policy.

I suppose the one who really does make me smile—and no doubt he would make Rodney Hide smile, as well—is John Boscawen. John Boscawen stood up and for 10 minutes railed against the Government’s economic policy. He said how poorly it had managed the fiscal perimeters, how badly it was managing the debt problems, and what a shoddy job it was doing. Mr Boscawen wants to lead a coalition with the National Government. He is the same Mr Boscawen who stood up in a split vote and said that the ACT Party was voting for the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill because it was No. 2 on National’s pledge card. Well, I do not think Mr Boscawen can have it both ways. He can either support the Government, or not. What the House heard was the parliamentary leader of the ACT Party—which should be Rodney Hide—stand up and give a damning speech against the economic management of the National Government. I suspect Mr Key will be taking Mr Boscawen into his office and giving him a good hard smack around the ears.

As I said, there is a very clear choice at this election. Mr Key actually said himself that this election would be a mandate on asset sales—Mr Key said that: it is a mandate on asset sales. So the people of New Zealand can choose whether they want a Government whose only plan for economic growth is to sell State assets. That is the choice: sell State assets, or do what the Labour Party has said needs to be done, which is to retain our State assets in New Zealand ownership. We all own them anyway. These are assets that have been built on the blood, the sweat, and the taxes of the New Zealand taxpayer over generations, and they will be sold on a declining market in the blink of an eye. They will be gone by lunchtime—gone by lunchtime. Do members know what? Once we sell those State assets, we can never get them back. That is the travesty of it.

What Labour did was to come up with an alternative, because the Labour Party does not believe that the sale of State assets is a plan. We said there needs to be another option. So what we did was to present to the people of New Zealand a fair option. It is an option that allows New Zealanders to retain ownership of our State assets, pay down debt just as fast as the National Government, get into surplus just as quickly as the National Government would do if it sold State assets, and plug a hole in our tax system. This is a capital gains tax. It is a capital gains tax that will affect only 8 percent of New Zealanders—only 8 percent of New Zealanders. Ninety-two percent of New Zealanders pay their fair share—they pay their fair share. Eight percent of New Zealanders will be affected by a capital gains tax; that is all. It is not an imposition on the vast majority of New Zealanders.

The figures are not Labour’s—the figures are not Labour’s—they are from Business and Economic Research. In fact, when Business and Economic Research came back to us with the figures for our capital gains tax, we said “Goodness me, this is a much more pessimistic outcome; a much more pessimistic forecast than National used in its Budget.” But Business and Economic Research said “No, we stand by only these figures.” Of the money that will be raised from Labour’s capital gains tax, 50 percent will go back in taxes to New Zealanders. Thirty-eight percent will go to pay off debt, and only 12 percent of that money will go into programmes to help New Zealand families, to help New Zealand children, and to bring back programmes that have been decimated by that Government. We made sure that we came up with a fiscally prudent economic policy that would stand scrutiny by any independent commentator who chose to cast his or her eye over it. Do members know what happened? Many have, and many have said that this works—this works.

I would just like to reiterate one more time that the voters of New Zealand have a very clear choice: sell State assets and retain a tax system that favours the very wealthy, or keep State assets, modify and reform the tax system, and have a plan for real economic growth. That is the plan of the New Zealand Labour Party, and it is the only plan that can work for all New Zealanders in a sustainable way going forward. Thank you very much.

MICHAEL WOODHOUSE (National) : It is often said that imitation is the sincerest form of flattery, and I must say that Labour members have flattered the Government with their imitation of what they say is now important to grow the New Zealand economy, after 2½ years of railing against Government policy. They have had something of a road to Damascus experience. Do members remember in the 2009 Budget debate when Messrs Cunliffe and Goff both decried the Budget because it was pandering to the ratings agencies? They did not think that maintaining New Zealand’s credit rating was important. Well, they are not saying that now. I think there is some mimicry in their campaigning on a fairer tax system, the controlling of Government expenditure, and reducing debt. I will come back to Labour’s policies and the merits of some of its policies soon, but I want to touch on some of the highlights of National’s 2011 Budget.

It is quite remarkable—certainly to my friends on the other side of the Chamber—that in an election year the Government would campaign on a zero Budget. But what is less remarkable is the fact that there has been such little negative feedback on it from members of the public. Fundamentally, they understand the need to have spending discipline, given the very challenging economic conditions we face and the need to rebuild Canterbury after the earthquakes. That spending discipline will ensure that the country returns to meaningful surplus by 2013-14.

Stuart Nash: Exactly the same as Labour’s plan.

MICHAEL WOODHOUSE: Well, we will come to a comparison with Labour’s plan in a minute. Notwithstanding that zero Budget, I am particularly pleased with a couple of the spending initiatives and Budget initiatives where we have managed to maintain what, by the standards of this Budget, is an extremely generous increase.

The first one is in Vote Health, which reflects the importance the Government and the public place on this area of spending. Not only is that the case but the messages of productivity are certainly getting through to those working in the health sector, and there have been excellent improvements in throughput and reductions in waiting times. It is worth comparing that response with other jurisdictions around the world and what they are doing in their health budgets. In Britain they are planning a reduction of 50,000 staff in the National Health Service. In Ireland they are slashing 5 percent off their health budget. The Italians are planning health budget cuts of between €2.5 billion and €5 billion over the next couple of years. In Ontario, Canada they are reporting that 2,500 nurses will lose their jobs in the next couple of years. So I am very proud of the fact that we have maintained spending in Vote Health.

The other area in the Budget that I think is very good is Vote ACC, and that is for a couple of reasons. Obviously, Vote ACC funds the non-earners account, but the scheme generally is such an important part of the Crown accounts because even small movements in rehabilitation performance can have quite dramatic impacts on the Government’s balance sheet. One of the most disappointing aspects of Labour is that after 2½ years in opposition, Labour members simply cannot bring themselves to apologise for the mess they left ACC in. Not only is that the case but they are now accusing the Government of somehow cooking the books to create a crisis. I think that insults the hard-working members of ACC, its auditors, its actuaries, and the Office of the Auditor-General.

It was not Nick Smith’s signature on the 2008 ACC financial report, which oversaw a $2.4 billion deficit. And it was not Nick Smith who presided over half of the following year. When National came to power 5 minutes later, ACC had its hands out for $305 million in the non-earners account. The Labour Cabinet brushed that crisis under the carpet, which was in breach of the Public Finance Act. Labour can certainly not take the credit for the half a billion dollars of cash that this Government is putting back into the pockets of hard-working New Zealanders, thanks to the turn-round efforts of ACC.

It is worth reflecting on the comments made by members on the other side of the House about the health of the economy when Labour left office and the impression that everything was well in the economy at the end of 2008. Here is what Labour left behind.

Hon Steve Chadwick: The lines. Feed them out.

MICHAEL WOODHOUSE: Well, it is worth repeating them, because they are very important context to this Budget. Labour left behind dramatically falling economic growth, a country in recession 9 months earlier than the rest of the world, a rising current account deficit, annual productivity growth in the 8 or 9 years of the Labour Government of just 1.1 percent, sharply rising Crown debt, business-based lending rates that were through the roof, an economy on negative credit watch, and—here is the kicker—10 years of projected deficits. So far Labour’s plan for the economy is to take $800 million out of the pockets of hard-working farmers and pay it to tax accountants in the form of research and development tax credits. It does not work. It did not work then; it will not work in the future.

Labour’s plan to reintroduce a punitive top tax rate of 39c in the dollar would completely undo the good work this Government has done following the recommendations of the Tax Working Group, which said we had gone from the least distortionary tax framework in the OECD to the most distortionary. Labour’s plan is to remove GST from fruit and vegetables, leaving people better off by probably a maximum of a dollar a week. I was absolutely amazed at the audacity of the member Lianne Dalziel criticising the Government for an apparent turn-round on GST—a criticism I certainly do not agree with—when her party spent $30,000 worth of taxpayers’ money jumping on a bus that said “Axe the Tax” but it is not prepared to campaign on axing the tax. Labour members talk big, but they are not prepared to go out and say they would want to take the money that was put in the pockets of low and middle income New Zealanders in order to return GST to 12.5 percent. There is lots of noise but no action.

It is certainly well known that Labour wants to return to what it calls a fairer tax system, and that it says higher-income earners need to pay more. Mr Goff talks about them paying their fair share, but I questioned the Minister of Finance a couple of weeks ago about the fairness of our tax system, and the answer revealed some interesting facts. When the redistributive policies of Working for Families and accommodation supplements are taken into account, 44 percent of New Zealand households—the lowest-income New Zealand households—pay no tax. In fact, they are net tax recipients. But 17 percent of the highest-income households after redistribution pay net 97 percent of New Zealand’s tax base. Mr English said in answer to my question that the system is highly redistributive and that it was believed to be fair. I agree with him, but I do not believe it is fair to continue to punish hard-working and high-income New Zealanders by taking more than net 97 percent of the tax base out of the pockets of 17 percent of households.

Labour members talk about the policies of fairer tax, spending control, and debt reduction, but what Labour would deliver is more punitive income and capital gains taxes, more Government spending, and higher debt—that is right; actually billions of dollars worth of extra debt in the first couple of years, on Labour’s numbers. Even if the capital gains tax policy is as effective as Labour claims it will be, it would require Labour to borrow to fund the spending policies that will kick in straight away, because the capital gains tax will take several years to take effect, if at all.

Labour members talk about spending control, but they cannot bring themselves to deliver it. Mr Grant Robertson talks about big increases in health spending, and Miss Moroney wants to spend another half a billion dollars on early childhood education. It will go on and on.

Hon Tony Ryall: Ruth Dyson has promised half a billion dollars to the—

MICHAEL WOODHOUSE: Let us add another half a billion dollars, thanks to Miss Dyson. Mr Cunliffe wants to borrow in the name of the taxpayer on a financial crapshoot that would have investment in equity markets around the world through the New Zealand Superannuation Fund and more debt. If he was really good at picking the markets, he would have been telling this House what was going to happen. In fact, 3 years ago he would have strolled down the corridor to Mr Cullen’s office and said: “You know what? I think these equity markets are going to tank. The New Zealand Superannuation Fund and ACC should put their money into fixed interest.” He did not do that. He is no better at picking the markets now than he was then. It would be a complete financial crapshoot.

And with a capital gains tax the distortionary effect on the capital markets would be huge, because many of our largest companies that are listed on the stock exchange fund their capital growth through tax-paid retained earnings. If Labour was in Government, it would tax capital gains twice.

Hon Steve Chadwick: It’s very flattering; the whole speech has been about Labour. That’s lovely.

MICHAEL WOODHOUSE: Well, it is worth talking about, is it not? We have talked about spending constraints. We have had 3 months of talking about a zero Budget, which is very prudent in the circumstances. We will return this country to surplus within 2 or 3 years, and it will leave our debt at below 30 percent and then drop to zero by 2024. I challenge Labour members—

Hon Steve Chadwick: A pity about the figures; they’re all wrong.

MICHAEL WOODHOUSE: Ah, they are all wrong. OK. Well, I challenge Labour members to go out on to the hustings and put their numbers against ours, and we will see whose party is to be believed.

BRENDON BURNS (Labour—Christchurch Central) : I am pleased to follow the member opposite, Michael Woodhouse, who had the temerity to talk about tax and fairness, when he is a member of a party that introduced two rounds of tax cuts that favoured the top end of town, the “Tea Party” of New Zealand. He had the temerity to also talk about opposing the inclusion of agriculture in the emissions trading scheme, when agriculture makes up 48 percent of our emissions profile. The equivalent of our continuing to exclude agriculture is like Australia saying it will not tax the emissions that come from its coal industry. There has to be fairness across the globe.

That member also wanted to talk against the capital gains tax, yet we want to emulate Australia. It has had a capital gains tax for 20 years, and it has done nothing to constrain its growth. If we do not adopt a capital gains tax, we will be the only turkey of the Western World that does not have one, other than the tax haven of Switzerland. There is the international comparison.

We are considering the Appropriation (2011/12 Estimates) Bill and the Imprest Supply (Second for 2011/12) Bill at a very dark and worrying time, and I speak both of the international horizon and for my city of Christchurch. At the moment riots are occurring in the city of London and in other parts of England. Why is that happening? It is happening because of inequality. The world financial markets are in turmoil, and the fears are that we could be heading back to the dark days of 2007 and 2008.

Where is the National Government’s plan to deal with these issues? In the House today Bill English said that we need to save as a nation. He is the very Minister who took away one of the pegs underneath the KiwiSaver scheme in 2008 so he could fund the first round of his tax cuts. Why is he saying today that we need to save, when 3 years ago he cut one of the very schemes encouraging New Zealanders to save? Where is the consistency and coherence in policy when he does things like that?

Bill English also said in the House today that we should not be talking about the need to keep assets here, and away from the hands of foreigners, when we are prepared to borrow from foreigners. The point is that when we keep assets in New Zealand hands we retain an income stream and we are able to repay our debts. Once those assets are sold, they are gone, and there is no income stream to repay our debts. Labour has a plan around asset sales. We say to keep assets in New Zealand hands and not sell them off. Labour has a plan around the capital gains tax, which everyone knows in their heart of hearts is the right policy because it has been adopted by virtually every other nation in the Western World. We have a real commitment to training and skills, not like this Government, which has taken $130 million off training schemes over the last 2 years.

Here is where we are as a nation at the moment—here is where we are. We are a tiny cork on an ocean of international debt. We cannot influence international markets, but we can and must have a sound financial management policy and a plan for the future. When those members opposite stand and talk about financial management, they always forget how sound the economy that they inherited was. I asked the Parliamentary Library today to tell me what the situation was with Crown debt under the last Labour Government. Here is what it was: when Labour came into office in 1999, following a National Government, net Crown debt was nearly $26 billion—$26 billion—which is equivalent to 24.4 percent of GDP. What was it when we went out of office? It was down to $2.6 billion—$2.6 billion—which is equivalent to 1.5 percent of GDP. That was our proud record in office. We paid down the debt. We resisted the urges of National in 1999, in 2002, and in 2005 to cut taxes at the time of surplus, at the time of boom, which would have been absolutely the wrong thing to do by any orthodox economic measure—absolutely the wrong thing to do. Instead, we paid down the debt and left this nation in a very sound state to go through the difficult times that we are going through today.

There is one other figure from the Parliamentary Library about the payment of debt: the percentage change in general Government financial liabilities as a percentage of GDP between 1999 and 2008. One country did better than New Zealand, and it was Norway. It had oil revenue. It paid down more debt than we did, but we were the second-highest nation in the world in terms of paying down debt through that period of boom. That is the financial record of the Labour Government, that is the record that National inherited, and that is what has helped this country through its difficult times to date.

But we still need a plan, and we still need a sense of coherence and direction. We do not get this at all from this Budget. The Budget, of course, includes money for the Canterbury earthquake recovery, and I acknowledge tonight that the Government—through the Budget and, indeed, through this Imprest Supply Bill—has put up funding towards the recovery of Christchurch. We need that funding. I acknowledge that the Government has done the right thing in that respect. Around $5.5 billion of funding has been provided.

But let me also tell members about one of the other sources of funding that I believe is a prospect. I am pleased that the member for Rangitata, a Canterbury MP, is in the House tonight. I again issue my challenge, as I do every time I speak on this issue, to a Canterbury member to stand and take a call and tell me that I am wrong when I say that this Government, if it is re-elected, is very likely—is on course—to force the Christchurch City Council to sell its asset base to fund its share of the recovery. It is the same philosophy this Government adopts in terms of national debt. Why would it not do it locally in Christchurch?

More than that, here is the record of the Finance and Expenditure Committee report on the estimates for Vote Finance 2011. The commentary states: “As the Canterbury Earthquake Recovery Act 2011 allows the sale of Christchurch City Council assets to fund the rebuilding of the city, we asked the Minister of Finance whether he would guarantee that this would not happen. The Minister said that this was a matter for the city council to decide. He added that the Government would discuss cost-sharing with the city council, but that it was important that the council have a stake in the process … discussions are just beginning,”. They are beginning, all right. They are starting to begin. Again, I invite a Government member from Canterbury to stand, take a call, and put it as a matter of record in this House that this is not being steered by this Government for delivery. After the election the assets of $2.2 billion held by the Christchurch City Council through its holding companies—including the Orion network, the port, the airport, Enable Networks, and Red Bus Ltd—will deliver an enormous stream of dividends to ratepayers. In the case of Orion alone, $1 billion has been paid back over the last 20 years to the ratepayers of Christchurch, which is $1 million a week.

I again challenge members opposite, especially from Canterbury, to stand, take a call, and put it on the public record that under the fearful prospect of a re-elected National Government we will not see the assets of Christchurch sold down, and we will not see an enormous increase in rates in Christchurch as a result. Those assets prop up our city and contribute to the repayments that we are able to make for the recovery. We are prepared to pay our share, but we are not prepared to see our assets sold down the river by this Government with its economic philosophy that it is all right to sell assets: that we pay down the debt, forget the dividends, and get the money in the bank as quickly as possible—that we forget about tomorrow and make the balance sheet look good today. That is the basic premise of this Government: selling State assets. National will do the same, I believe, if it is re-elected.

I again challenge members opposite to stand, take a call, and deny that this is a prospect, because it is on the record of the Finance and Expenditure Committee that it is actually allowed by the Canterbury Earthquake Recovery Act. The Minister of Finance told the Finance and Expenditure Committee that it is there. Again I challenge members opposite to deny that that is a prospect under a re-elected National Government, following on from this Budget appropriation for 2011.

Hon JUDITH COLLINS (Minister of Police) : There is one thing that the member who has just resumed his seat, Brendon Burns, said that I agreed with, which is that this Budget has delivered funding of $5.5 billion to the people of Christchurch and the Canterbury region at a time of great global difficulties, in terms of the economy, and a time when many people would have thought it would be impossible for a country of this size to deliver that funding during these tough economic times. The fact is that this Government inherited a recession. This country was in recession at the start of 2008—8 or 9 months before the rest of the world went into recession. We inherited a recession.

After this Budget what did we hear from the Opposition when the Minister of Finance said we wanted to have a Budget that would protect our country’s credit rating? We heard from the Opposition that that was nonsense and rubbish, and that we were just giving in to people like Standard and Poor’s and not standing up to them. Well, we have seen this week in the United States what happens when a nation’s credit rating goes down. We have seen what happens. What happens is that interest rates go up—interest rates for the job creators, interest rates for mum and dad investors, interest rates for homeowners, interest rates for people with mortgages, and interest rates that translate through to everybody’s pocket.

Hon Tony Ryall: People with credit cards.

Hon JUDITH COLLINS: Interest rates go up for people with credit cards. Everything gets affected.

There is not a word from the Opposition about how this Budget prevented a downgrade of our credit rating, which would have affected every New Zealander in some way. Instead, we heard some nonsense about taking GST off fruit and vegetables, and food, generally. We do not know whether that is for fresh food or for cooked food. Is that for a cooked chicken or a fresh chicken? What about a hamburger? I thought that was one of the best things when they talked about fruit and vegetables. Well, what about a hamburger? Would the tomato have GST on it? The lettuce? Probably not. The meat patty? Yes. What about the bread? That is made out of flour, which is made out of wheat. That would probably be covered. What a load of nonsense. The administrative costs alone for every small business in this country would kill them—just the business costs. Labour has suddenly promoted this. Why did it not do it in its 9 years of Government? Because its members know it is a nonsense. Michael Cullen knew what a nonsense that would be, and he was right.

Instead, we have seen with this Government in the last 3 years that we have got on top of Government debt by keeping it below 30 percent of GDP. We will be back in surplus by 2014-15 at the latest. We have had a very responsible attitude towards government. Labour’s answer to everything is a capital gains tax. Some of the quotes Labour members have used from people who support that idea are amazing. They have talked about a comprehensive capital gains tax. Anybody who owns their own home should realise that that means them. “Comprehensive” means everything. If, for instance, someone’s parent dies and he or she inherits a property along with his or her three or four brothers and sisters, what then? That would be a capital gain, too. Yes, that is absolutely included as well.

Then there is every other little thing, like shares and any extra properties. Of course, this country already has a capital gains tax on investment properties—properties that are purchased for a business purpose. It already has that. So what is Labour after? By the way, has anyone noticed that there has been a recession over the last few years? How many capital gains does Labour think there are in this country at the moment? Not an awful lot, but Labour members have said they will go after people who have something. How many people in this country get to be 50, 55, or 60 and purchase a second home for an investment? The reason they do that is that they do not want to put their money into failed finance companies, which were allowed to go absolutely crazy during Labour’s 9 years of power. No, they want to put it into something they can see every day.

Do they want to put it in the sharemarket? That is a good idea. How about the sharemarket? Let us have a look at some of the companies: Air New Zealand. Oh, that is right; it is partially owned by the New Zealand Government, and it is also partially owned by people who bought into it as shareholders. What is wrong with that model? It seems to work really well, but Labour does not want that model now.

Hon Tony Ryall: Port of Tauranga.

Hon JUDITH COLLINS: Port of Tauranga is an example. It is an extremely successful port. In fact, I would say it is the most successful port.

Hon Tony Ryall: 55 percent owned by ratepayers.

Hon JUDITH COLLINS: It is 55 percent owned by ratepayers, and yet it is owned by other shareholders as well. Mixed ownership works. The fact is that Labour knows it works, but Labour members just cannot bring themselves to use those terms. They keep talking about selling off the silver. The only person I remember in this place who sold off a lot of silver is the Hon Phil Goff when he had the chance back in the 1980s. He just sold everything roughshod.

We are seeing a party in opposition that cannot bring itself to admit that this world is going through very difficult economic times. The last thing this country needed in this Budget was to have a Government that came in and decided to tax and spend, as the previous Government had done for 9 long years. This Budget, like the Budget before it, needed to have a very steady eye, a very careful consideration, as to what was needed.

Nobody predicted the Christchurch earthquake in February. Nobody predicted that would happen. Nobody predicted Pike River. Nobody predicted some of the tragedies that have occurred. Yet for a country of this size, which is an exporting nation that exports, fortunately, to Australia and China as our main trading partners, we have done extraordinarily well. We have not seen some of the behaviours in New Zealand that we have seen overseas. We have not seen our credit rating downgraded, which has meant, for instance, that we have the lowest interest rates now for around 45 years. That means for mums and dads and families with a $200,000 mortgage—which, frankly, in the Auckland region is a pretty modest mortgage—that they are now paying around $200 a week less in interest payments than they were in 2008. They now have $200 a week in the hand that they did not have before. That is why it is so important that we do not just spend, spend, spend and then turn round and say “Never mind; we’ll catch up later.”

The fact is that as a small economy, ours is one of the first that slows down when the world goes into recession or into a downturn. As a small economy it is also one of the last to come up again.

Brendon Burns: Like in 2008?

Hon JUDITH COLLINS: Except in 2008, of course, when there was appalling spending by Labour, so we ended up in recession 8 or 9 months before everybody else. That is what happened.

Hon Trevor Mallard: It’s called a drought.

Hon JUDITH COLLINS: Mr Mallard says it is called a drought. Well, we have droughts almost every few years in this country, I say to Mr Mallard. That is simply not good enough. The only thing that was in drought under Labour was some common sense in those last 3 years, when it decided to tax and spend everybody to the hilt.

In these tough times we have seen, for instance, a drop in unemployment. At a time when everybody was predicting an increase in unemployment, there was a drop in unemployment in the last few months. Minister Bennett has done a great job, along with her team. We have also seen a drop in the crime rate, despite Labour members saying that if people are poor then they commit crimes. We on this side do not believe that.

I noticed that the previous speaker spoke about the UK situation and what is happening in London and other parts of England at the moment. He said it was all because of social inequality. What a load of rubbish. It is all because criminals think they can act in a criminal manner. Nobody went looting for food; they went looting for plasma TVs, gold, and people’s property. They burnt down people’s property not because they did not have bread on their table but because they thought they could get away with it. That is what happens. It has nothing to do with social inequality. Most of the world has social inequality in some form or other, but, unfortunately, that sums up exactly why crime rates went up so much under Labour. Its members are always looking to blame society for the acts of criminals. It is never the criminals’ fault; it is always society’s fault and because society did something wrong.

This Budget is an excellent Budget. It is just what this country needs. I congratulate all my colleagues on the work they have done on it. This is one of the best Budgets we have had.

The ASSISTANT SPEAKER (Eric Roy): Just before I call the last member, I say that this is a 3-hour debate and there are about 8 minutes remaining. Jami-Lee Ross, I will ring the bell with 2 minutes of your speech remaining.

JAMI-LEE ROSS (National—Botany) : It is always a pleasure to follow the honourable Minister of Police and Minister of Corrections, because she is a Minister who knows the value of investing in the important areas, as this Government is doing. It is not something that previous Ministers in the last Government understood very much, but it is something that Ministers in the National-led Government understand, and something that the Hon Judith Collins, especially, understands. The people in Botany say thank you for the extra police who are now on our streets in Counties-Manukau, and for the reduced crime rate. That is something we never saw under a Labour Government, but it is something we are seeing under a National Government.

I enjoy listening to these debates. I enjoy listening to these debates because it is so clear when listening to Labour members that they just do not get it. They just do not get it, and do not understand that the people outside this Chamber, who are looking in at the way we are debating matters of importance to this country, can see right through them. They can see right through all the rhetoric. They can see right through everything Labour members have been saying about this Government’s plan to get the economy back.

I think it is a bit uncharitable when some people say that Labour members do not have a plan. I think they do have a plan. They have a plan for more spending, they have a plan for more debt, and they have a plan for more taxes. That is the grand plan. The grand plan is for all of that: more spending, more debt, and more tax. They do not understand that out there in the real world people are watching. The markets at the moment are in turmoil around the world, European countries are struggling with their debt, and the US has just had a credit rating downgrade, but Labour members just do not get it, though. They think that more spending will solve all those issues. Well, it will not. They think that more debt will solve all those issues. Well, it will not. It will put us in a situation where we would have a credit rating downgrade if we continued along the debt projection that the last Labour Government left us with. It would be a shambles.

Labour’s grand plan, its grand plan to win the election, its grand plan that it thinks it can convince voters to sign up to, is just to have more tax—as if the people in New Zealand really think they want more money taken out of their pockets by the long hand of a Government led by somebody like Phil Goff. Phil Goff cannot really remember anything he did in the 1980s. I had to laugh when I heard Stuart Nash talking about State asset sales and the vast concerns Labour has about asset sales. Well, let me remind everyone here tonight that it was the Labour Government in the 1980s that sold a heck of a lot more in assets than the National Government in the 1990s ever did: $9.5 billion worth of assets was sold by the Labour Government.

Hon Rodney Hide: What was wrong with that?

JAMI-LEE ROSS: I am not saying anything is wrong with that, I say to Rodney Hide. I am just pointing out the sheer forgetfulness of the Phil Goff - led Labour Opposition. Its members cannot remember meetings they had even a few months ago, so I do not expect them to remember the assets they sold in the 1980s: $9.5 billion worth, versus $9.3 billion worth sold in the 1990s. So when we hear people like Stuart Nash complaining about asset sales, we should remember what the record of those members is. They do not remember it. They do not remember meetings held a few months ago, and they do not remember their record either.

This Government has done well over the last 2½ years. This Government was left with a decade of deficits planned by the last Labour Government.

Hon Steve Chadwick: Just a young kid.

JAMI-LEE ROSS: What is that noise I can hear? I can hear an alarm clock going off. I can hear a screaming banshee over on the other side. What was that?

This Government has done well. We are seeing a plan to reduce debt. We are seeing a plan to get the Government books back to surplus by 2014. I know it is hard to hear that, but it is the truth. It is the truth, and the people out there in the country understand. People out there in New Zealand do not understand the Labour plan. Well, actually they do, but only 49 percent of Labour’s own supporters support its plan.

Jonathan Young: 48.

JAMI-LEE ROSS: Forty-eight percent, is it? I am sorry; I am being uncharitable. I had given them 49 percent. Is it 48 percent? I thank Mr Young. Even Labour supporters do not agree with its plan.

Eighty-one percent of National supporters agree with our plan. They agree with National’s plan to reduce debt. They agree with National’s plan to get us back to surplus. They agree with the fact that National wants to keep Government debt below 30 percent of GDP. Members should have seen the projection of debt we were left with. It saw the figures going up and up in a never-ending increase. Well, this Government, after the Budget that we have just passed, will see that debt come back down. It will stay below 30 percent of GDP—a sensible level to keep it at. European countries, as I mentioned before, are struggling with their debt. But if we were to have Labour in power, we would probably end up going towards a similar situation where we would struggle with high debt levels. High debt levels would lead to a credit rating downgrade, and that would lead us back to the area of high interest rates for New Zealand homeowners.

I was one of those people who had to buy a house during the high interest rates of the last Labour Government. Interest rates under the last Labour Government peaked at about 11 percent. I was one of those homeowners who had to buy a first house with interest rates at that high level. Now, interest rates under National are at some of the lowest levels they have ever been, and we are leaving more money in people’s pockets as well. Labour members just do not understand that. They do not understand that people like having their own money in their own pockets. We have a tax system that rewards work, we have a tax system that rewards savings, and we do not have a tax system that hurts the people who are investing in core assets, which they want to increase in order to look out for their own futures.

I am proud to be part of this National-led Government, and I am proud to be the last speaker in this debate. We have a very good story that we are out there selling. We have a good story that people understand—a good story in which people can see John Key, as the leader of National, leading us. He is one of the most popular Prime Ministers this country has ever had, and, despite what we hear from members on the other side, people like moderation, people like pragmatism, and they like a carefully managed economy. They do not want to see more debt, they do not want to see more taxation, and they do not want to see more spending.

Hon Steve Chadwick: That’s what happens. For the next 6 years it goes like that.

JAMI-LEE ROSS: No, no. I say to Steve Chadwick that she should really look at the figures. The debt will be kept below 30 percent of GDP. We have completely reversed the situation Labour left us with. We have completely reversed it, and we now have a sensible situation where debt will be reduced and we will be back in surplus by 2014.

I am pleased to speak in this debate on the Appropriation (2011/12 Estimates) Bill and the Imprest Supply (Second for 2011/12) Bill. The people out there understand the plan that the National-led Government has. We do not want more debt, we do not want more taxation, and we do not want higher spending. That is what we would get with Labour.