Hon PAUL SWAIN (Minister of Labour), on behalf of the Minister of Finance: I move, That the Appropriation (2003/04 Supplementary Estimates) Bill and the Imprest Supply (First for 2004/05) Bill be now read a second time. I want to make some comments and range over a number of issues relating to these bills.

First of all I will deal with the broad economic situation. New Zealand grew by 3.5 percent in 2003, making us one of the fastest-growing nations in the OECD. Near-term strength and growth are still present, but growth has passed its peak. However, slowing net migration, slower employment growth, and the lag effect of a high exchange rate are expected to slow growth to 2.8 percent in the year ending March 2005, and to 2.5 percent in the year ending March 2006, but a rebound is expected from the year ending March 2007, due to a lower exchange rate and continuing global growth. Unemployment is forecast to remain under 5 percent for the next 4 years—a fabulous effort—inflation is forecast to peak at 2.6 percent before falling to 2 percent by 2008, and wage growth averages are expected to be 3.8 percent per year over the period.

In the fiscal area, gross debt is our fiscal anchor. It influences our spending decisions. We are committed to managing gross debt at prudent levels; we expect it slowly to reduce over the longer term, and to pass through 20 percent of gross domestic product before 2015. We are on track to do this. Our Budget allocations have been significant this year at over $2 billion per year. New spending will be lower in future Budgets, at about $1.8 billion. This will enable us to continue to meet our fiscal goals. Net debt, including New Zealand Superannuation Fund assets, falls to zero by 2007-08, and we continue to run an operating surplus in line with our fiscal goals. Our forecast surpluses largely finance our capital-spending programme, including the Superannuation Fund, Reserve Bank reserves,andadvances and other new capital spending. This means that the Government has to borrow only a relatively small amount of $808 million in 2004-05.

As far as the Budget package is concerned, it has, of course, been well received all around the country. Working for Families, which was the key Budget announcement, has three main aims. The first is to make work pay by ensuring that people are better off by being in work, and are rewarded for their work effort; the second is to ensure income adequacy, with a focus on low to middle income families with dependent children; and the third is to ensure that people get the assistance they should to support them into, and to remain in, work. We expect to see the following from the Working for Families packages: we expect to see nearly 300,000 households assisted by April 2007; we expect over 60 percent of families with children will receive increases in family income assistance by 2007; we expect average increases to be around $66 per week; and we expect families in the lower income range of $25,000 to $45,000 will gain almost $100 per week on average. No wonder this Budget has been well received around the country!

Spending on economic development, tourism, research, and trade promotion has increased by over 25 percent since the Government took office. This year we are investing a total of over $1.21 billion in these areas, including new funding in this Budget of $181 million. We have also made significant investments in other growth-related areas such as education—for example, Modern Apprenticeships—and revenue, with, for example, compliance cost reduction. Close to $900 million extra funding in 2004-05 in our key social-spending areas, in addition to Working for Families, includes $306 million for health, $480 million for education, and $91 million for housing. There is significant new capability funding over the next 4 years for a number of agencies.

In-year decisions picked up in the supplementary estimates are of particular note in the bill, and they include $260 million for the Department of Child, Youth and Family Services, $146 million for the Department of Corrections—which is close to my heart—$144 million for the Defence Force, $76 million for the Ministry of Foreign Affairs and Trade, and $28 million for the Customs Service. The strong public services funding, which includes capability funding and strong social services funding, includes $443 million in the supplementary estimates for operating funding in 2003-04. The supplementary estimates also include $186 million additional capital funding in the 2003-04 year, of which $101 million is assistance to business, mostly arising from the rail decisions, and $148 million is to strengthen public services—$55 million for the justice sector being the largest single component.

As far as the Imprest Supply Bill is concerned, supply is sought for 2 months—one-sixth of the total appropriations contained in the main estimates. This is the usual amount sought in the first Imprest Supply Bill.

I commend the Imprest Supply (First for 2004/05) Bill and the Appropriations (2003/04 Supplementary Estimates) Bill to the House.

JOHN KEY (National—Helensville) : Was that not a revealing speech from the Hon Paul Swain, who was filling in for one of the finance Ministers who was, obviously, unable to take his call? Was it not a revealing speech when he told the House that growth was past its peak? It did not take Paul Swain to tell the House that growth was past its peak; when the Budget was released Treasury told everyone that that was exactly the situation. Over the last decade, growth in New Zealand has been about 3.5 percent, but, lo and behold, what do we see in the Budget documents, and tied up in the imprest supply debate today? We see a projection that the growth rate will fall, and fall rapidly, over the next 10 years—fall, and fall rapidly.

What a disgrace for a Government whose members have gone up and down the country to tell the people of New Zealand that its No. 1 priority is growth! That is what the Prime Minister said in her speech early at the start of this year. That is what the Minister of Finance has been telling people every time he has an opportunity to give a speech—that growth is the No. 1 objective of this Government. Well, that is not the case, because we know that we are not allowed to talk any more about this country going back into the top half of the OECD. When the Minister of Finance came before the Finance and Expenditure Committee just last week, I put to him that very question—when would New Zealand go back into the top half of the OECD. He sat there, looked at me with that typical “deer caught in the headlights” look that a Minister gets when he has completely lost control of his ministry, and said: “Not any time quickly.” That is when we will go back into the top half of the OECD under this Government—“Not any time quickly.”!

Hon David Carter: Why doesn’t he make it 2011?

JOHN KEY: The date of 2011 is a date well and truly forgotten. This is my prediction: talking about our getting back into the top half of the OECD is about as popular in the Labour Cabinet as closing the gaps is. That is right—it has gone. One is not allowed to talk about it any more. It is another one on the banished list of failed objectives from a failed Government.

After the Minister of Finance had come down and woefully delivered the Budget of 2004—and that is another point I would like to pick the Minister up on—he said it was well received. If communism by stealth is well received, then I suppose it was well received. But it was not well received by the four out of five New Zealanders who got absolutely zilch. Four out of five New Zealanders are out there today, as I speak in the House, working their guts out to produce a better New Zealand and a better country, and those four out of five New Zealanders got the doughnut from Michael Cullen. For four out of five New Zealanders the message was: “We’ll take your tax dollars; you keep working hard for us, but there’s absolutely nothing, zilch, zero, doughnuts for you in this Budget. Carry on working; we’ll carry on overtaxing you, but there’s nothing for you in this Budget.”

Why are they feeling the pinch? Well, for very, very good reason. This Government loves taxing the hard-working, productive sector of New Zealand. It loves taking extra dollars off those people at every opportunity it can. It has had plenty of opportunities. This year alone, hard-working New Zealanders will pay $500 million more; the impact of their moving up into different—

Hon David Carter: That’s $2,600 per household!

JOHN KEY: Yes, $2,600 per household extra, but $500 million more from the impact of fiscal drag or bracket creep—$500 million! Yet there is not a dollar for four out of five hard-working New Zealanders in this country. A billion dollars more will be paid due to changes in the tax rates, and a lot of that is due to the change in the top tax rate.

Hon David Carter: It is “envy tax”!

JOHN KEY: Does the country need it? Does the Minister of Finance need it? Oh, let me just remind myself that this Minister of Finance has had the largest Budget surplus in New Zealand’s history, yet he somehow still seems to think he needs to have the “envy tax”. Any Minister of Finance can produce the largest Budget surplus in New Zealand’s history if he or she wants to overtax. It is very hard to go to the Inland Revenue Department and say: “Look, I’m a bit offended by Michael Cullen taking an extra $2,600 off me, so what I’m going to do—and I hope you don’t mind—is this year I’m not going to pay it.” Unfortunately, that does not work very well, because a whole load of laws passed by Parliament mean that any Minister of Finance can get the largest Budget surplus in history if that is what the Minister wants.

I now want to turn to the Working for Families package for just one moment. What a disgraceful display that was! Labour’s re-election plan was rolled out with a $21 million fanfare. I see that a number of the Ministers opposite me are now smiling and smirking. They know in their heart of hearts that it is nothing more than a blatant re-election plan. They are spending 10 times more than National ever spent on trying to promote a Budget.

Hon David Carter: Coca-Cola spends less than that.

JOHN KEY: Yes, Coca-Cola spends way less than that. To trumpet its Budget, the Government will spend $21 million on propaganda that will be shoved into mailboxes, and at the bottom of that propaganda it will say “Vote Labour”. That is what it is really saying. That $21 million worth of propaganda will be paid for by the hard-working taxpayers of New Zealand. Four out of five taxpayers get zilch, doughnuts, from the Budget, but they have to pay for that $21 million.

Those people who do get something face a very interesting dilemma because if they have two children and they earn $38,000 or $60,000, the difference in their after-tax income is virtually next to nothing. It is one size fits all under the prescription of the Labour Government of Michael Cullen and Helen Clark. It does not matter whether people work harder, work longer, retrain for another job, have more responsibility, get up earlier in the morning, or really try hard to produce more for their country; it does not matter what people do, because they will get the same. Well, the same thing was tried in Eastern Europe and it was an absolute disaster. It was tried in China and it was a disaster. It was tried in a number of communist and socialist countries around the world and it was a disaster. And now the Government is trying it in New Zealand. My confident prediction is that it will be a complete and utter failure, like this Government has been.

We have a growth rate that is on the way down, which is absolutely despicable. It was a sad Budget that this Government delivered. It was a sad day for the productive sector of New Zealand, and it is sad that the people of New Zealand have to pay $21 million to see this drivel rolled out through their letterboxes. It is not good.

I want to speak for a moment about one of the elements of the Budget—that is, the increase in capital expenditure for prisons. What is very interesting is that it shows that the capital expenditure to build four new prisons is about $600 million. This is a Government whose only action in the commercial sector in recent times has been to close the only private prison operating in New Zealand—Auckland Central Remand Prison. Why is that? What possible reason could there be for the Government to close that prison? Well, I will tell the House the reason for it. It is because that private prison works in practice but just does not work in theory! That is the problem. It works in practice. It is 15 percent more efficient, the rehabilitation rates are better, the security is better, the people of New Zealand want it, the people of New Zealand like it, but it does not fit the ideology of this Labour Government, so it is gone. And the Government will build four more prisons at a cost of 15 percent more. That is why it is building a prison at Meremere at a cost of $350,000 a bed. It is a disgraceful waste of Government spending.

A few weeks ago there was a very interesting article on the front page of the Dominion Post that showed just how bloated the State sector has become. The Minister of State Services, the Hon Trevor Mallard, was very offended that it showed just how large the State sector is getting. What do we see in the Budget? We see a $1.2 billion increase in spending for personnel expenses over the next 4 years. This is a Government that has added about an extra 40,000 employees if we look at the widest definition of State sector, or an extra 19,000 if we look at a pretty narrow definition. It has cost about $800 million so far and we are seeing a $1.2 billion build-up in spending. This is a Government that loves taxing the people of New Zealand. It loves spending other people’s money. It is a Government that loves asking hard-working families and other New Zealanders to tighten their belts, but when it comes to tightening its own belt it does not know where the buckle is, it does not know where the end of the strap is, and it does not know how to tighten its belt—it just wants to spend more money.

We see it in the health sector all the time. The health ministry is clearly getting out of control, as well. We see billions of dollars more of Government money being spent on health, but, lo and behold, the number of operations is going down. We saw the Minister of Finance write to the Minister of Health, Annette King, saying: “Can you explain to me why we are spending billions of dollars more and there are fewer operations?”. Annette King looks me in the eye and gives me that blank “deer caught in the headlights” look as if to say: “I don’t know. I’ve got to go back to my office and check it out. I just do not know why that is the case, Mr Key.”

This was not a well-received Budget. It was not a great day in New Zealand’s history. It was a very poorly received Budget indeed.

DAIL JONES (NZ First) : This was not a very good Budget at all, because it failed to address one of the major problems facing New Zealand today, and that is the way in which our police force is being treated, not only by this Government but also by some offenders around the country. New Zealand First has made it clear that we must improve the law and order system and, in particular, in so far as the size of the police force is concerned, we have made it clear that the police force must be doubled in size. Our law and order policies are tough, but they are fair and they are non-restrictive for law-abiding citizens. We have made it clear that our police force will have the front-line police numbers, power, and resources to create safer communities. We will double their numbers.

What is the Labour Government doing about it? Absolutely nothing. We have made it clear that parole should be earned, not presumed after one-third of a sentence has been served, as stated in the law at the moment. Parole would not be treated as a right as it is today under this Labour Government. We have made it clear that there should be a rehabilitation board and that people should not be able to get parole and home detention and suchlike as a right, as suggested by this minority Labour Government supported by United Future in their soft law and order policies.

We have made it clear that we will give local police and community groups greater power and ability to deal with local problems. We will introduce new measures designed to prevent crime at its source, and we will aim to eliminate the reasons young people enter into a life of crime.

In so far as the treatment of police officers is concerned—and the standard of public behaviour to the police is going down and down and down; it is no wonder the police are having so many problems themselves—we in New Zealand First will instigate a regime of zero tolerance of abuse and crimes against police officers in the discharge of their duties. If people want to abuse the police, and to behave intolerantly and assault the police, there will be zero tolerance. Those people will be dealt with severely. We will not give in, in the way that this minority Labour Government, supported by United Future, is doing.

We have heard time and time again about recidivist offending—people who commit an offence, go to jail, come out, commit another offence, and do so again and again and again. New Zealand First has made it clear in its policy that for those types of people it is three strikes and they are out. This will mean that offenders who have been convicted of three crimes for which they have been sentenced to any period of community service or incarceration in a prison or corrections centre will be required to serve a minimum period of 10 years in prison, irrespective of the nature of their crime. That is our policy. That is a tough law and order policy.

One of the problems with people who commit small crimes here and there is that they think: “Ah well, it’s only a small crime. I know what the judge is like. I might get 6 months. I’ll take the risk.” They commit the offence, get caught finally—usually about the 21st time they have committed the offence—get charged with 21 offences, get 6 months’ imprisonment, serve about 2 to 3 months, get out, and they do exactly the same thing once more. Those people are a darned nuisance.

Nandor Tanczos: Flog them!

DAIL JONES: The Green member wants to flog them. He keeps saying “Flog them!”. That may be what the Green Party wants to do, but, no, we will go better than that, we will just lock them up. [Interruption] Was it the ACT party saying that we should flog them?

Stephen Franks: Well we’ll think about it.

DAIL JONES: Someone over there was saying that we should flog them and I thought it was coming from the Green member. If it was not him—

Stephen Franks: It was the Green member.

DAIL JONES: Right, we know that is the Greens’ policy—to flog them. It is the new Green policy announced today by New Zealand First. We say “Three strikes and you are out.” These people have to be locked up because they are a nuisance. All the police time is often spent on catching, and trying to catch, minor offenders again and again. They know they will be dealt with leniently. They are absolutely certain about it because the judges are lenient—they cannot help themselves. The judiciary is made up of decent people and they find it very, very hard amongst themselves, or in themselves, to lock these people up for the length of time they deserve. New Zealand First will do something about it.

What it will mean, of course, is that once these people are locked away and out of the way, the police can deal with real crimes. They can catch the murderers and rapists and do something about violent crime in the home, for example, instead of the way those crimes run rampant at the present time.

New Zealand First will increase the use of mandatory minimum sentences for violent offenders with no automatic rights to sentence reduction. I am sitting on the Care of Children Bill at the moment and we are trying to grapple with the problems of women who get beaten up by their husbands and who never actually complain to police because they often find the police cannot do anything about it. We have to create a situation where, in order to make the home safe for children, if the wife is beaten up and the children are in danger of being beaten up, then those men know they will be caught and dealt with, and that the police have the time and the resources to do something about it, rather than chasing around time and time again for those people who constantly convert cars and commit what is called minor theft, but really create a lot of problems in an average police officer’s day.

As far as the Parole Board is concerned—and really that is something of a joke—as we said in the third reading of the Parole Board Bill when we voted against it on 1 May 2002, we should have a rehabilitation board with the primary objective of minimising recidivism. We are determined to cut back on people committing repeat offences. There should be a rehabilitation board. The Parole Board should not be just for people to come along and say: “Look, I have been nice for the last year or two in prison, where everyone has been keeping an eye on me. Please let me go home now or put a bracelet on me and I’ll be a good chap.” If one agrees with that, what happens? Offenders are out on the streets committing offences again.

The rights of the victims do not end, once a sentence has been passed. We will ensure that victims of crime will be given a permanent representative on the rehabilitation board. Families of victims will have mandatory rights to full information on rehabilitation hearings and to appear in person, to have an advocate, or to make written submissions. Something further has to be done about law and order, and New Zealand First is determined to make sure it happens.

Recently, with regard to the Parole Board, we had Dr David Chaplow acting as an adviser. I understand that for a while he was a member of the Parole Board, but when he ceased to be a member he still continued to give advice to members of the board about what they should do with the people in front of them. That is clearly a breach of the law. I put down some written questions to the Minister of Corrections about the situation, expecting him to get cracking and do something about it. But he said “The board is a statutory body and I understand that it is considering its options in conjunction with the appropriate Crown agencies (Ministry of Justice and Crown Law)”. That is it.

Here we have a person who, I understand, has been involved in about 160 parole decisions by advising the Parole Board totally illegally to come to certain decisions. What is done to him or that board? Nothing. All of the members of that board should be sacked. They should not have allowed that situation to arise. The Minister, if he had any sense at all, would have sacked the board and put on it people who understood their full responsibilities—including the judges who were members of that board.

Stephen Franks: Was he actually flogged?

DAIL JONES: No, no flogging as yet. I will leave that to the Greens.

New Zealand First at the last election asked the people: “What about those promises that Labour is not telling you about?”. For example, on Labour’s “debit card” we said Labour would legalise prostitution and soliciting. It has legalised prostitution and soliciting. We said it would legislate for gay marriages and gay adoptions—it is legislating now for gay marriages. We said Labour would raise further taxes on cigarettes, alcohol, and petrol—it has clearly raised taxes on alcohol to try to combat the dreadful situation amongst the aged in our community, who go on the binge on sherry and port! Labour has legislated to try and cut down on those people’s misbehaviour when they are on sherry and port. We said that would happen, we warned the people, and it has happened.

We said Labour would continue to bring in 53,000 immigrants per year. Fortunately the Labour Party has finally taken the advice of New Zealand First, and taken some action, and the level of immigration is coming down. That has been a clear success for New Zealand First’s policies.

We are seeing the sad situation now where the Civil Union Bill is being introduced, which will be another nail in the coffin for family life. I will be opposing the Civil Union Bill and I will also be opposing the Relationships (Statutory References) Bill, which constantly refers to civil union. I cannot see how anybody who opposes the Civil Union Bill could possibly support the Relationships (Statutory References) Bill. The legislation virtually runs together. I understand that the United Future leader Peter Dunne has said he will oppose the Civil Union Bill but support the Relationships (Statutory References) Bill.

Marc Alexander: That’s not true.

DAIL JONES: Last night on television I heard Peter Dunne say he would oppose the Civil Union Bill and support this one. Now a member of his party says that is not true. What is happening to United Future? It is in total disarray.

JEANETTE FITZSIMONS (Co-Leader—Green) : A large part of the expenditure in the supplementary estimates is still paying for the mistakes of the past. I will talk particularly about electricity and transport. We can see here the effects of National’s electricity deconstruction, where we ended up over the last few years with nobody regulating the electricity industry—the only country in the world that had tried to deregulate the electricity industry, put in place a market, and put no regulator in control. For some years we have also had nobody responsible for ensuring security of supply, which is a particular problem in a hydro-based system when we have dry winters. We all know the effects of that after having two winters in three when the rain did not come and we had inadequate capacity.

We have had a 2-year experiment under this Government with industry self-regulation, and it has finally been admitted that it has failed. The Electricity Commission has been put in place as a regulator, and $20 million of the supplementary estimates is to cover the cost of that. We welcome the appointment of the commission. We would have liked to see it 2 years earlier, but we welcome it as better late than never. We hope the commission will now move to put in place electricity industry rules to ensure that the very good statements in the Government policy statement on energy are actually implemented. We hope they are rules that allow the connection of distributed generation and small-scale renewables to the grid without impediment and discrimination; rules that allow the demand side to engage with the electricity market and allow for a demand exchange, which would greatly lower the cost of supply in an emergency; rules that minimise greenhouse gases so that we do not burn gas or coal and spill hydro; and rules that provide for security of supply.

The largest part of this energy supplementary estimate is a new power station—$165 million for a new distillate-burning power station in Hawke’s Bay. The really interesting thing about that is that this is a power station being built on land owned by Contact Energy, which is to manage the power station. Why? Because until a very short time ago Contact Energy had a power station on that very site. It was sold to the company by the National Government; a power station very like the one that is being built now. What did Contact Energy do with it? It dismantled it and sold it overseas because it thought it had surplus capacity. Now we taxpayers are paying for a station to be built again on that site to replace something that should never have been sold to Contact Energy in the first place, and should never have been sold by Contact Energy in the second place.

The other scandal that has led to this expenditure was the sale of New Zealand Rail in 1993. This year $116 million, and further expenditure in the out-years for some time, is required to revive the rail system that has been allowed to run into the ground under its private owners. It became a cash cow for Fay Richwhite and that company’s mates who, through a series of manipulations, managed to take out of the company more than they had put into it by far, leaving it in a very sorry state.

In 2001, the Green Party called for the Government to take back the track. That demand was also made by the transport unions and, 2 years later, the Government agreed that we cannot allow our national rail system to fail. It is an important part of New Zealand infrastructure, it is a very important part of a future in which oil will be much more expensive, and we need to make sure that it is still working—rather than having the sorts of disasters there have been on the Napier-Gisborne line—buckled tracks and heat stress, and so forth. The Government has now moved to take the track back under Government control, and we support that. So money in the supplementary estimates is providing for the setting up of TrackCo and for investing in the track to get rid of the technical problems that have formed a major barrier to enhanced use of rail transport over the last few years.

Capital is also going to provide a loan to the Auckland Regional Council for the purchase and upgrade of rolling stock for the suburban rail system. Auckland’s suburban rail system is still skeletal compared with what is in Wellington, and Wellington’s could be improved, as well. We look forward to Auckland developing a commuter rail system that will be better than Wellington’s, and that would help a lot with congestion on the motorways.

There are capital contributions for the development of the national rail corridor overall; for double tracking of the Auckland rail corridor, so that trains can actually pass each other when they are going out west; and for the purchase and upgrade of the Wellington Railway Station, which itself should never have been sold, either.

It has been a very expensive lesson for New Zealanders to find out what happens when State assets are sold off, particularly strategic ones that are crucial to our energy and our transport future. We welcome the expenditure on reversing those disasters, and we note that it will be some years yet before we stop paying for the mistakes made by previous Governments.

MARC ALEXANDER (United Future) : A little earlier in the debate members saw Dail Jones’ Mr Tough Guy impression, and, to be perfectly honest, it was not very convincing at all. From his little seat over there on the Opposition benches Dail Jones squealed that we should have double the number of police. But on what basis does he want the number to be doubled? I would like to find the rationale by which the New Zealand First members are advancing that policy, but this is exactly what that party does. Before it decides anything, it sticks its finger outside to see which way the wind blows. If the New Zealand First members are not sure about that, they go to Winston Peters. They wake him up after a night spent in Courtenay Place to decide what their policy should be, based on what they think the public may like. So their policy is not exactly well-thought-out or thought through, but that is exactly what one finds with New Zealand First. That party is called New Zealand First for a very good reason: because its members want to put themselves first. That is part of their culture—tough guy Dail Jones wants to double the police force. Well, that is brilliant—absolutely brilliant! Why not triple or quadruple the number? What rationale could one possibly have for doubling the police force?

United Future would like to see an increase in numbers in the police force too, but we have something to base that on. As a rough estimate, we would like to see 1,700 more police, to give us some kind of parity with a process that has actually worked well in New York: the broken windows policy. On a per capita basis, that would mean we would like to see roughly 1,700 extra police officers on the front line, to give us the same kind of police presence that the very successful New York process has. At least our ideas have been well-thought-through and given a bit of rationale, unlike New Zealand First’s strategy of just grabbing anything that floats, and hoping like hell that the public buys it. Well, the public is not quite as gullible as that.

Looking at the Budget and at some of the broad-ranging things that it delivers, or attempts to deliver, I see $1.5 million is directed towards Victim Support groups. Those groups deserve some extra money, but $1.5 million is not very much. Let us look at the rest of the spending. There is something like $7 billion in surplus, but from the spare change the Government is giving $1.5 million to look after victims. I tell members that victims do need some of that money—and, in fact, need more than $1.5 million. But this Government has not done very much on law and order. It has not responded to the 1999 referendum from Norm Withers, where 92 percent of the population wanted tougher, meaningful sentencing that denounced crime. What have we had? We have had 4 or 5 years of absolute pap. The Government has tightened up on a few things here and there, but that is no more than putting bandages on the Titanic, and the Government is not doing the job it is supposed to do.

Let us look at the bail and parole provisions. With increasing regularity we open up the newspaper and read yet again of another offender committing crimes while on bail or on parole. How can there be any sense of meaningful sentencing while there are 35,000 cases still outstanding that have not gone to court yet? Some of those offenders may never get to court, because the system is so crippled and paralysed. We have inherited a criminal justice system from the year dot that does not have the ability to cope effectively with the huge rise of crime. It has been taken totally and utterly unaware by that, and all that we are doing now is talking about where the deckchairs should go. That is not good enough. We have to take the criminal justice system, rip it apart, and make it address what it should be about, which is the interests of the public and of victims, but we are not doing very much in that sphere. There is an 86 percent rate of recidivism within 5 years, and for sex offenders, the recidivism rate is about 70 percent over a 22-year period. It is pathetic! We are still tweaking around at the margins. We are not doing nearly enough, and are not nearly effectively enough.

We do need to beef up the police force, but it also needs to be given the tools to do the job more effectively. What about, for example, having a research facility within the police, so that they do not have to rely on foreign consultants to make them decide what they should do? What happens in Sweden or Helsinki does not necessarily reflect what we should be doing here. The police need their own research team to assess the rate of crime and the police’s capability to address those issues. We need that. We also need the police to be armed with encrypted radio systems, so that when they get a call to go to a burglary, the bad guys have not left the scene beforehand because they have better equipment. That is exactly what is happening right now. Why are there two-man squad cars when there could be three-man squad cars, which would be far more effective? Having spent a great deal of time in the back of a squad car, when I spent nights running around Christchurch to see exactly what the police get up to, I found that half their time is spent off the road, on processing activities. They could have another person inthe car and get that car back out on the street much quicker than they do. The police need to work faster, harder, and smarter, and that is a resourcing issue. But this Government does not seem to care about the public interest or about victims, because it is not doing as much as it could be doing.

One of the things we are looking at is four new prisons coming online. Well, I tell members right now that if we did have a meaningful justice system, those four prisons would be filled up in no time, and they still would not do the job adequately. We would probably need more prisons in the intervening period. We should not go down the track of trying to rehabilitate those people who are beyond rehabilitation, but rather we need to spend money on and put resources into early initiatives and early interventions in those families who are most at risk. We know who they are; it is not rocket science. But that is what will make the difference. It may mean in the intervening period that there are more people in prisons, but in 15 years, if we go for a policy of greater intervention with those families deemed to be most at risk, we will be able to close prisons. That is the kind of thinking we need to see a Government lead on. But we will not see much of that from this Government, because there are no votes to be gained from this issue at the next election. This Government does not want to look 15, or 10, years down the track. So the victims that emerge between now and then will be on the backs of this Government, because it is not addressing the core issuesby dealing with offenders before they become offenders, and targeting families deemed to be most at risk with early intervention. The Government is not spending nearly enough on that, and it could do a hell of a lot more. Everything else is just lip service.

The whole thing is not helped by the wider issues the Budget has delivered. There are families earning up to $60,000-odd a year who are now becoming welfare beneficiaries—absolutely brilliant! Who thought that one up? Who, late at night, drinking their Chardonnay and talking socialism amongst their little mates, thought that one up—that families on $60,000 a year should suddenly become welfare beneficiaries? I tell you this: there is a reaction against that.

The ASSISTANT SPEAKER (H V Ross Robertson): The member must not bring the Speaker into the debate.

MARC ALEXANDER: I apologise for that. There is a reaction against that. I have plenty of emails and letters that show people are not willing to sacrifice the wealth they create, only to have to go cap in hand to the Government, which has stolen and ripped off that money from them, and ask for their own money back. That is what that kind of socialism does. The Government talks about people being greedy. Well, I will tell members who is greedy. It is the Government that is greedy—greedy for the wealth earned by the people of New Zealand, and greedy for the votes of New Zealanders. The simple fact is that the people who create wealth have a right to that wealth. It is made from their blood and their sweat, and this Government turns around and takes it off them. Why should they have to pay for the socialist ideologies perpetrated by this Government—

Hon Judith Tizard: What! What about the kids?

MARC ALEXANDER: —and by that member who is mouthing off ? She has probably never had employees in her life, or run a business or anything of that sort. It is utterly ridiculous that the Government expects the people who create the wealth of this country to pay for the Government’s idealism and socialism. That is simply not fair. The issue is about the Labour Government extending its orbit through the means of material property and wealth, and through socially engineered policies such as legalising prostitution and civil unions.

There is an awful lot to undo in the future. A lot of damage will have to be undone in the future that will be bequeathed by the Labour Government. The problem is that middle New Zealand does need help, but it does not need the welfare mechanism through which that help is to be delivered. Middle New Zealand does need help, because wages in this country are pathetically low. But the Government’s mechanism of delivering that help is to get people to stand in line, cap in hand, and beg to be given their own money back. Socialism is a failed policy everywhere else in the world. Germany has finally realised the dubious nature of its socialism, and is now reeling it back. Germany is giving taxation cuts. It understands that socialism does not work.

STEPHEN FRANKS (ACT) : I rise for the ACT party on the Appropriation (2003/04 Supplementary Estimates) Bill. I was quite enthusiastic about the speech by the United Future member who has just sat down. There was a lot of sound comment in it, particularly towards the end. The real mystery—which I know is shared by Dail Jones, who has been sitting here in the House and puzzling over it—is that for 2 years it has been in the hands of the United Future party to stop those things. United Future could have made it absolutely crystal-clear that the Budget did not turn workers into beneficiaries, by simply voting against it. That is what people are elected to Parliament to do. However, it is easier for Peter Dunne to make speeches than to vote with integrity. There is a very puzzling problem there. I guess it accounts for the Greens, rather than United Future, being the most favoured coalition party for the Labour Party, should it keep the Treasury benches at the next election. Of course, United Future has been a very faithful lapdog of Labour’s. Life is not fair.

I want to address the extra appropriation in the Department of Corrections budget. In Vote Corrections, we see an appropriation of $1,342,000 extra in a departmental output class called “Services to New Zealand Parole Board”. That is on top of another $1.25 million that will go on extra psychology, pre-release, and pre-parole reports. There is just under $3 million extra there, and there is not really much explanation of why such a huge amount, in comparative terms, has suddenly been required by our Parole Board. There is some explanation in the Parole Board’s annual report, which tells us that the Parole Board had 93 percent more hearings than anyone had expected. That is nearly twice as many as had been expected. Why? That is simply not explained. The board just baldly states that it had nearly twice as many hearings as it had expected to have.

I will venture a suggestion: it may be because it is worth it to the criminals. Did some genius in the Department of Corrections or in the Labour Cabinet think that we could reduce the required time to reach parole from two-thirds to one-third of a sentence, ensure that the Parole Act does not mention punishment anywhere, deprive the Parole Board of any right to take account of the purposes of sentencing, and order it by means of a specific provision in section 7 of the Act to release people unless it is satisfied they are still a danger to the community, without having—surprise, surprise—8,500 or 9,000 applications to get out of prison, instead of the 3,000 applications the Parole Board had expected? What a mystery that is! The average chronic offender, according to the Department of Corrections’ own statement of intent, costs $500,000 in the first 5 years after release. So those offenders are let out to do $100,000 a year of damage to the community, and then an extra $3 million is provided to help the Parole Board members to decide whether those offenders should be let out of prison.

Let me give members a few more figures from the Department of Corrections’ annual report and statement of intent. On average, a medium offender will cost the community $3 million over his or her lifetime, and a serious offender will cost nearly $6 million over his or her lifetime. Those are people who contribute nothing to society. That is a net cost, purely in financial terms, to the community. It does not measure pain and suffering, or all the precautions that people take because they are scared—and rightly scared. The entire annual cost of the Parole Board could be met by stopping one serious offender in his or her tracks at an early age. But what do we see happening? We see that the Parole Board has decided—because it is told to by the law, not because it is evil or mean, or because it does not care—it has to let young offenders out, to have a second go. Many of the young offenders who are let out are not first offenders. They are not having their second go but their sixth, eighth, twelfth, or fifteenth go, because they have been through the youth justice system, in which we do not even record the number of times they have had to deal with the police. Then as young adults they are treated as though they are first offenders or young offenders when, in fact, they are hardened offenders.

When the poor wallies on the Parole Board let such offenders out of prison, what is the consequence? Once again, the figures from the Department of Corrections tell us. Seventy-seven percent of those let out under the age of 20 are reconvicted within 2 years. Seven out of 10! I wonder why the Parole Board feels it can do that, when it is not supposed to let anyone out if that person represents an undue risk to the safety of the community. I have asked the Parole Board what its members think “undue” may be. We know what this Government thinks an undue risk is when an employer takes it: when a director of a company has an employee who is hurt, an undue risk is any risk at all. But this Government is telling the Parole Board to let offenders out of prison, when it knows there is a statistical probability that seven out of 10 of them who get out under the age of 20 will be reconvicted within 2 years, and more than one out of every two of them will have committed a violent offence. The Parole Board says that New Zealanders out there can just bear the risk of being hurt, robbed, and stolen from, and of losing trust in their fellow New Zealanders, because this Government thinks offenders have had bad potty-training, or something like it.

I will add a little more. There are no guidelines on risk, at all. I asked Parole Board members whether they thought a 5 percent risk may be undue, or whether a 10, 30, or 40 percent risk would be. They have no guidelines on that, whatsoever. Seventy percent of those with dishonesty convictions and burglary convictions are reconvicted within 2 years. Fifty-five percent of all violent offenders—again, more than one out of every two—are reconvicted within 2 years. So, too, are 67 percent—nearly seven out of 10—of medium-security prisoners. And 43 percent—nearly one in two—of offenders are back in prison within 2 years. So we can look to the Parole Board and ask why it is letting any of those people out. What possible measure is it using of undue risk, with that kind of probability of reoffending? Then, we can look at the length of sentences. We are told that prison does not work, and that prisoners have to be let out because they will get out at some time. Well, we see the highest reoffending rate is that for people with sentences of under 2 years. It is more than twice the reoffending rate of people with sentences of over 5 years, who reoffend only at a rate of 18 percent within 2 years. That is still far too much, but it is an awful lot better than the 77 percent rate for burglars who get let out.

We have a Minister who stands over there on the Government side of the House and gives us a vein-popping speech about the safety of the community. Mr Goff will have his comeuppance. The parole system is corrupt. It is corrupt by design, and not because of the people running it, who are doing their best under absolutely impossible circumstances. They are also told by law that they must give due weight to the interests and rights of victims, but the right that most victims want is the right to know that justice is being done. In this House this afternoon, Mr Goff said he did not think that the Parole Board should be taking account of seeing the purposes of sentencing were carried out. He said that was for the courts to consider, and then closed his eyes to the fact that the courts cannot influence what the Parole Board does.

This generous Government has given an extra $800,000 to Victim Support, to take its funding up to $3.8 million. One of the things that that will be used for is to nearly double the number of counselling sessions for the family members of murder victims. I wonder whether it has occurred to the Government that the family members of murder victims would rather not have seen the murder occur, and believe that it might have been a bit better just to keep violent offenders locked up? Instead of cutting crime in half, which, as Mr Alexander mentioned, has been done in New York, we are letting people out—even someone with 777 convictions—to offend again. Today we heard of three people who recently returned to prison after 20 previous prison sentences, and the Minister of Corrections could not even give us an assurance that with that kind of record they had not been offending while on parole. He probably does not even know whether that occurred. Well, that will change; the next Budget may be the last Budget for this Government.

DAVID PARKER (Labour—Otago) : I rise to speak in support of the Appropriation (2003/04 Supplementary Estimates) Bill. This is a time when we are meant to be talking mainly about money, because it is when the Government’s finances are under scrutiny. Appropriation is the statutory mechanism by which Parliament authorises the Government to spend money, and to incur expenses and liabilities. If the supplementary estimates bill is not passed, then the Government cannot do that legally. Other than appropriations that are authorised by permanent legislative authority—and those are pretty minor—the permanent appropriations are contained in the estimates, which we debated a couple of weeks ago, and in the supplementary estimates, which we are dealing with today.

The reason why we are not hearing much talk about the supplementary estimates in terms of their numbers is that they look so good. The Opposition is not focusing on those, because the fundamentals of the economy and the Government’s books are things to be proud of.

If we look back to the mid-1980s when debt was the equivalent of about 70 percent of the gross domestic product (GDP) and when one dollar in five was spent on interest, we can think about which party was responsible for government then, and it was National. In the years since then, through some good work of the Labour Government—and, I have to acknowledge, in some part, of the National Government in the 1990s—Government debt has decreased. By the time the previous National Government left office, the debt was still at 35.6 percent of GDP, but this very good Labour Government has reduced debt to under 25 percent of GDP. The supplementary estimates show that that trend is continuing. Indeed, one of the standout facts is that following this bill being passed, Government debt will still have decreased over the last year by $2 billion to be under 25 percent of GDP. So we are now in the position when rather than one in five dollars being spent on interest, only one in 20 dollars is being spent on interest.

Against that background, one would wonder what complaints would be heard from the Opposition. Well, one of the things that has had some circulation in my electorate is a little leaflet dropped by the ACT party, which is talking about a $6 billion surplus and saying that that is justification for some great tax cut. Well, let us analyse that a little bit further, because the Budget and the supplementary estimates both show that that cut cannot be made without either a significant cut in Government services, or an increase in Government debt back up towards the high levels we had under Mr Muldoon—or probably both.

The operating balance excluding revaluations and accounting changes is one measure of the surplus. It is true that there is such an operating balance of about $6 billion, but that $6 billion is not there to be spent. If that $6 billion were to be spent without significant cuts to either health or education services, which along with superannuation are the two big spending items of Government, then Government debt would have increased in the last year by $4 billion, and would increase in the coming year by about $6 billion. So New Zealand’s debt position would remarkably go against the trend that we have managed to achieve over the last 10 to 15 years, and debt would start to climb again. That is not desirable.

What the ACT party ignores is that from that $6 billion surplus, things have to be funded. ACT might argue that the New Zealand Superannuation pre-funding is unnecessary, but if it were not being funded, then ACT would have to put more money away for reducing Government debt in order to be in a position to be able to fund the bulge of superannuation when it came along.

But let us put aside superannuation and think about what else is funded out of that surplus. There are a lot of other capital costs that have to be funded. Some of the big-ticket items include things such as making funds available for the new prisons that Mr Franks, from his last speech, obviously would like to see built, to accommodate longer and longer prison sentences. The cost of those new prisons is already significant. About $400 million, I think from memory, is being put towards those in the coming year. That sum comes out of money after the operating balance excluding revaluations and accounting changes is calculated. Mr Franks would not be able to do that if he were spending his so-called $6 billion surplus.

Other things that are funded include capital injections into the areas of health and housing to build hospitals and houses. Other things are the funding of student loans, and the purchase of assets for defence equipment, such as the new vehicles needed by the Army, and the new vessels needed for the Navy.

In terms of the criticisms we hear from Dr Brash, his criticism of the Budget last year was the same thing he parroted out again this year—that the Budget would not narrow the large gap that has arisen between the living standards of New Zealanders and Australians.

Hon David Carter: That’s right.

DAVID PARKER: Yes, that is what he said.

Hon David Carter: It’s the biggest issue this country faces.

DAVID PARKER: Well, it is interesting when the Opposition quotes that gap—and I will use the exact words Dr Brash used in a Dominion Post article. He said that the growth we have now is at “… too slow a growth rate to narrow the large gap in living standards between New Zealand and Australia that emerged during the seventies and eighties.” Well, it is very strange that in this year he actually talks about the 1970s and 1980s but forgets about the 1990s, so I went and had a look at the statistics. This is something I have said before but obviously Dr Brash is not listening, because he still parrots his misguided view of history. In the 1980s, the decade of Labour, Australia started that decade as No. 10 in the OECD on per capita earnings, and New Zealand was No. 18. By the end of that decade, it is true that New Zealand had gone back one place to the 19th position, but Australia had charged back six places.

Mark Peck: What?

DAVID PARKER: Six places back, compared with New Zealand’s one place. Well, that is hardly a criticism of Labour in its decade. If we look at the next decade of the 1990s, we see that New Zealand went backwards from position 19 to position 20, when Australia went forward by four places.

Mark Peck: New Zealand went back?

DAVID PARKER: New Zealand went back; Australia went forward, and that was the decade of the 1990s.

Hon George Hawkins: Who was in Government?

DAVID PARKER: The National Party was the Government—and who the Governor of the Reserve Bank was is another question.

Mark Peck: Who was it?

DAVID PARKER: Dr Don Brash. So his answer for everything, which is “austerity, austerity, and more austerity; cut services, cut everything” does not make the nation wealthier.

We heard a couple of months ago that the National Party was saying “Fund on the basis of need, not race.” That is what this latest Budget does. When it comes around to doing something on the basis of need, as does this current Budget, which focuses on working families and improving their disposable incomes, National says: “No. Don’t do it.”, and votes against it. New Zealand First votes in favour of it, United Future votes in favour of it, the Greens vote in favour of it, Labour votes in favour of it, the Progressives vote for it, but who votes against it? National does. It pretends it would fund on the basis of need, but that fiction is not carried out.

I will quote some other statistics in support of that. Between 1986 and 1998, the families in the bottom five deciles went backwards in terms of real income. Not just the bottom 10 percent, not just the bottom 20 percent, not just the bottom 30 percent, not just the bottom 40 percent, but half, 50 percent, of New Zealand families, went backwards in terms of their real disposable incomes. That happened primarily under the decade of National being in charge of the Treasury benches when Dr Brash was in charge of monetary policy and had his foot on the throat of the New Zealand economy.

Mark Peck: Did it trickle down?

DAVID PARKER: It did not trickle down; it trickled out of the pockets of the bottom 50 percent of New Zealanders and into the pockets of the top 50 percent. I am actually a member of the top 50 percent of New Zealanders by income. I believe in capitalism. I am a businessman. I like to see people profit, but I like to see everyone profit—not just the top 50 percent. Where did all the profit go? It was not just concentrated in the pockets of the top 50 percent of New Zealanders. That sounds pretty extreme in itself, and it was by international standards; but when the bottom 50 percent was going down and the 40 percent ahead of them were staying pretty static, over that same period the top 10 percent were increasing their disposable household incomes by 41 percent. Against that background, our statement in the Budget was that we think the focus should be on improving the incomes of low to middle income families with children. That view is one that every party in this Parliament, except National and ACT, feels it can support. When the electorate looks at the leaders of those two parties, Dr Brash and Mr Hide—the kind face of New Zealand politics?—it can see through them. It knows that the prescription of those two leaders, should they ever get into power, is more austerity and less wealth for the bulk of the population, and gains for a very small minority at the top.

Hon DAVID CARTER (National) : It is a pleasure to speak in the second readings of the Appropriation (2003/04 Supplementary Estimates) Bill and the Imprest Supply (First for 2005/05) Bill, and I start by congratulating the member for Otago, David Parker—soon to be the former member for Otago—on the vision he displayed in his speech when he very correctly termed the National Opposition “the National Government”. I thank that member for the confidence he has in the chances of his own party at the next election. I heartily agree with his comments, because we are talking here about the National Government that will be in power after the next general election.

I want to concentrate on the seriousness of the Budget as presented recently by Dr Michael Cullen. As David Parker gives what I suspect is almost his final speech in the House, we take pleasure in noting that Michael Cullen, at very best, can present only one more damaging Budget for our economy.

I ask members of the House to refer particularly to page 45 in the Economic and Fiscal Update section of Budget 2004 under the heading “Economic Outlook Mid-2004 Through 2005—the Slowdown Arrives”. I then want members to turn to page 29 of the Fiscal Strategy Report in the same document and to look at the projected growth in gross domestic product. Very quickly we can see an economy under the stewardship of Dr Cullen settling down at 2 percent growth, and it makes us remember the comments made by the Prime Minister about 12 months ago in the House when she was prepared to set a deadline of 10 years as the time she expected it would take New Zealand to lift itself back into the top half of the OECD. With the growth rate trending down to about 2 percent, there is absolutely no possibility at all of seeing New Zealand lift itself back into the top of the OECD.

So it is little wonder that Helen Clark quickly forgot her target of a 10-year deadline. She no longer has a target. More recently Dr Cullen, when he was before the Finance and Expenditure Committee, was asked what chance New Zealand had of getting itself back into the top half of the OECD. He replied: “Not at any time soon.” I say to that Minister and to Government members that it is time they actually looked at the seriousness of the situation. The skills attained by talented New Zealanders are highly marketable anywhere in the world, and although David Parker says there is no relevance to the standard of living that Australians enjoy, he is totally wrong.

What New Zealanders could do at this stage is to look at the fact that if they moved to Australia they could earn substantially more. Many New Zealanders argue that one of the reasons they will not make the decision to do that is the rather enjoyable lifestyle we have in this country. I accept that to some extent that is true, but where that lifestyle part of the equation becomes seriously compromised is when one realises that the Australian Government is able to deliver far better health and educational services than we in this country can—and that point is fast approaching.

We had the ridiculous situation quite recently where the Government had put additional money into health, for example. But even Treasury has had to notify the Minister of Finance that, despite additional money being put into the health budget, the output—the actual operations being received by New Zealanders—has actually declined. The Minister of Finance sent a “Please explain” letter across to the Minister of Health, and, to my knowledge, we have not had a response from her about why, even with more resources, the output from our health sector is actually less. That is a very serious situation.

David Parker also crowed about the Budget surpluses. They are large by historical standards, but it is relatively easy to achieve very high Budget surpluses if one continues to impose tax after tax on New Zealanders. It is no challenge to achieve huge Budget surpluses if one just keeps on increasing taxes on all New Zealanders. A most revealing figure recently showed that average New Zealand households now pay an additional $2,600 tax on top of what they paid prior to the Labour Government coming to power. It is not a total tax of $2,600 per household; it is an additional tax of $2,600 that they pay since Labour came to power at the end of 1999.

John Carter: How much?

Hon DAVID CARTER: Two thousand, six hundred dollars more tax is being paid by the average household in this country. That is now getting us to the ludicrous stage where this country is so overtaxed that it is not at all surprising we are ending up with projected growth rates of about 2 percent per annum.

When this debate finishes later on this evening, we will debate the third readings of the bills coming out of the Border Security Bill—or the “terrorist tax”, as it has been named. That is the 23rd tax increase that has been imposed by the minority Labour Government since it came to office. It is the 23rd tax increase, when the Government itself campaigned on only one tax increase—the “envy tax” that lifted the top tax rate from 33c to 39c. Commentator after commentator has been able to demonstrate to everybody but Dr Michael Cullen that that tax was totally unnecessary in view of the surpluses that subsequently have been achieved.

The most frightening part of the Budget, and the Budget debate, is the revelation subsequent to the Budget itself that in a blatant attempt to sell the message to New Zealanders, the Government will spend $21 million of taxpayer money selling itself and its re-election chances. The advertising industry found that the figure of $21 million was the biggest advertising spend in this country’s history. I read the other day that the Coca-Cola corporation, which spent only $16 million a year, was the biggest commercial advertising spend. Yet the Government is using $21 million of hard-earned taxpayer money in a desperate attempt to sell its measure for re-election.

John Tamihere had the audacity to interject that $21 million was not enough. I tell that member that the Government should not use taxpayer money. If he believed in the progress made by the Government over the last 4½ long years he should get out there to sell its message. The latest polls would suggest that it has certainly not managed to do that very well. As people start to realise that most of the promises delivered in the Budget with the Working for Families package come into effect in 2005, 2006, and even 2007, then I do not believe that that party has much of a chance to fool the electorate again in obtaining yet another term.

The central theme of the Budget is about putting people back into welfare dependency. It is time this Government faced as an issue that New Zealand will not achieve a higher growth rate unless that trend is stopped.

Hon RUTH DYSON (Minister for ACC) : It is a huge pleasure for me to be able to contribute to the debate on the Appropriation (2003/04 Supplementary Estimates) Bill this evening. The back of the Budget on 27 May was when the debate from National Opposition members became weaker and weaker. They became more and more depressed as they saw public understanding of the Budget, and its implications, seeping out. Exactly the same thing is happening now. In fact, they are down to their sort of reserve list.

We have seen the All Blacks do very well, but that is because their top team was performing—with the exception of Andrew Mehrtens. Frankly, he should have been there right from the start, but that is another debate. That is what the National Party really needs to look at. However, it has a problem putting up its top team, because it does not have a top team in the House. Its top team is any other party’s “C” team, and that must be pretty depressing. I can see the despondency in the face, and the sadness in the eyes, of the senior Opposition whip. He knows that when he tries to lift the morale of the team, when he tries to get a good, strong debate going in this House, when Opposition members try to argue against what this Government is doing, they fail. They are a total failure. The public has seen through their attempts, as well.

It is particularly a pleasure for me to speak in this debate about the social development aspects of the appropriation. They are the ones—although there are many other particularly good areas one could talk about—that I am mostly closely involved with in my portfolios. At the moment, I have the privilege of acting as Minister for Social Development and Employment for my friend and colleague Steve Maharey.

Social development is probably anathema to the poor old National Party opposite. Its members know only about social welfare. They know only about giving people benefits. They do not know anything about the Ministry of Social Development having a strong leadership position where it can constructively engage with families, individuals, and communities, and make a difference to their opportunities and ability to change their future lives for the better.

This is not about welfare cheques going out to people. It is about engaging with them and asking what the barriers are to better chances—whether education, employment, the need for a higher income, or a chance to do a whole lot better with the quality of the paid work they are involved in. This is about social development. That is why this portfolio was built around the idea of social development, and that is the big difference between the Labour-Progressive Government and National, ACT, and whoever else might like to prop them up in the future.

Social development is about building a country where inclusion is the basis, and where everybody is able to secure a job. We are not interested in very low-paid, no-future-career-prospects jobs as the only option for people. We want people to have the opportunity to do better than that, to get a good job, to build a better life for themselves and their families. We want to ensure that they contribute not just to the economic well-being of our country and society, but in their social life as well. It is better for them as individuals, for their families, our communities, and the balance sheet of our country.

The success of social development policies is pretty obvious. When one looks at the figures, one can see the graph of employment opportunities rocketing up over the last 5 years and the unemployment figures trending downwards. We now have the lowest unemployment figures for, I think, the past 17 years in New Zealand, which is just fantastic. In fact, since 1999 there has been a 50 percent drop in the number of people on an unemployment benefit—that is something that everyone in this House should be celebrating—and a 21 percent drop in the number of working-age people on a benefit.

As has been pointed out in other contributions on the employment area, we have had an increase in the number of people on invalids and sickness benefits. That is part of an international trend, and we know a little bit about it. This Government has said it absolutely knows what some of the barriers are to people on a sickness or invalids benefit, who are moving from that benefit into paid work. Frankly, there is very little of an attitudinal barrier. I work with a lot of people around our communities who are on a sickness or an invalids benefit. They do not ever say: “Look, we love being on a benefit. Could we stay on it a little bit longer?” They say: “If we had the opportunity, if these things were changed, we would be able to get a paid job and we would like to be able to tell you to keep your benefit. We’d like to be independent. We’d like to know our own worth in terms of employment, earning better money obviously, and having some self-esteem and regard.”

There is a value attached to people in paid employment, and that is a good thing we have in New Zealand society. That is not, of course, to demean the quality of the contribution that people not in the paid workforce make in a variety of ways, but for people who have the ability to get a paid job, the obstacles they see in the way of not being left there are just a huge frustration. So we are focused on those obstacles; we have asked people what is standing between them and a paid job, and offered to help them get rid of it.

For beneficiaries on the sickness and invalids benefits, a lot of the barriers were lack of access to support from the Department of Work and Income. There was not a lot of case-management and work-broker support available for CV applications or work experience preparation. Those very practical supports, which were offered to people on an unemployment benefit, were previously denied. That is changing, and changing for the better, so that people on those benefits now will be able to access the practical support that will help them get into the paid workforce.

Also, a number of people on those benefits do not meet the criteria for urgent surgery or other procedures in the public health system. Of course, if they have been on a benefit for a while, they are unlikely to have the sort of savings required for treatment under the private health system. We have said that we can help to ensure that people get those medical procedures—if we know it will make a difference and help them get into a paid job. For a lot of people that will be the answer, particularly those on an invalids benefit.

We found that the attitude and lack of understanding of employers has been a barrier. So another instigation has been that Work and Income will now deal directly with employers and say: “You have a huge potential here. You’re short of staff”—which is now a very common cry from employers. We are not saying that we are short of jobs; we are saying that we are short of staff. We have a large number of people who are able to do this work. They cannot get a job, sometimes because of lack of understanding and sometimes because of the attitude of employers. If we can help employers with better understanding and, of course, tell them the practical ways they can get support as well, I am sure that will help.

We have huge potential for a greater contribution to our economy by making sure that the people who want to work, and who are currently on a sickness or invalids benefit, are getting that help. That is a critical part of the social development model. We are ensuring that people who have been neglected by our system for too long— people who felt undervalued and second-class citizens because they were denied the support to contribute in the way they wanted to—get that support. We are giving them better opportunities so that they can take charge of their lives, improve the quality of it, and support their families.

We are also giving families a lot of very practical financial support as well. Family incomes and making work pay account for $2.372 billion over 4 years. That is going into the pockets of working families in New Zealand—people who for a long time have contributed day in and day out, either in the paid workforce, in their communities, or in raising their families. They have found it hard to increase their quality of life because they have not been getting the additional support that this year we are able to give them under the Budget.

The package is spread out over 4 years, because we have to ensure that we do not literally blow the Budget. We are being very responsible, because that is part of a Government’s activity. We have to make sure that our Budget is sustainable. People understand that. People in New Zealand are responsible, and I am delighted that our package has been so well received because of that. We have ensured that people have more affordable housing and more help with childcare costs. We have changed the hardship assistance, and we have also ensured that the very people who have felt neglected in the past get the direct practical and financial support they deserve.

There are still a lot of social areas left to tackle. I am pleased to see some expansion of the Family Start projects that we have had running, some expansion of social workers in schools, and in ensuring that families and community support services are better supported within the Ministry of Social Development. This is an exciting package, and it is a pleasure to have had the opportunity to contribute. I look forward to the progress of this bill.

RON MARK (NZ First) : I rise on behalf of New Zealand First to speak on these appropriations. I have to say right from the word go that New Zealand First has given me the law and order portfolios to watch over—specifically, police and corrections. For those two areas I grade this Government a very bad “E” for effort. The Government truly deserves an “F” for failure; failure to live up to the expectations that the public had, failure to live up to the promises that Labour made in 1999 and 2002, and failure even to live up to its own expectations—not that those are very high. In terms of closing the gaps on law and order, this Government is a dismal failure.

Let me just go through some of the areas of law and order. Supposedly, the judiciary was going to be empowered so that it could take care of sentencing and parole in line with what 92 percent of New Zealanders had asked for, but that has proven not to be the case. In fact, we now see that people who are sentenced to jail are up for parole at the one-third mark of their sentences. They are so confident of getting parole these days that they apply for back-end home detention 6 months prior to their parole date, and they get it! They are being put back out on to the streets having served less than one-third of their time in jail. That was not the expectation of the percentage of New Zealanders who voted for this Government to come into office. Their expectations have certainly not been lived up to. I am thankful that we have judges out there like Judge Erber, who can see precisely what the public views as appropriate sentences, and deals them out.

Sadly, there are some other areas where the judiciary is failing to live up to the community’s expectation, and this Government is doing nothing whatsoever. Members should look at the number of cases of children who have been bashed to death, and the rather strange sentences that have been handed out to those offenders—and I mention Kershaw as one example.

With regard to fines and enforcement, what value is there in the judiciary handing out fines if those fines are not enforced? The Courts and Criminal Matters Bill is still before the select committee, so I will not go into that territory. However, I will say that when New Zealand First started raising the problem of outstanding fines the bill was something like $480 million. The Government fluffs around the edges, it does a little “name shame” here and a little of this and that there, it puts people’s photos on buses, on the backs of cars, or wherever, but the fact remains that if this Government were serious about making the most of the good police work that is done that obtains convictions, obtains sentences, and sees fines being allocated, if this Government had any concern about the integrity of the judicial system and the law enforcement wing, it would pass legislation to give the courts access to the information that the Inland Revenue Department has. Then, anyone who is on a benefit, anyone who is being paid any sort of money at all and is paying taxes, who has any outstanding fine would be snaffled immediately and held to account for non-payment of that fine. The Government’s failure to do anything there is a failure for the whole of New Zealand.

What can we say about parole? Parole is a disaster. New Zealand First has long said that parole should be earned. But we have a Government that hands it out willy-nilly to these people, only to find—just like with Mr Isherwood and Mr Jarden—that within days of their release on parole they offend again. What has the Government done about it?

I can tell the House that we now have revelations that Dr David Chaplow, who is supposedly an adviser to the Parole Board, has actually been taking part in the decision-making process. My colleague Dail Jones, who is our justice spokesman, has put through a number of written questions to this Minister of Corrections asking: “What steps does he intend [to] take to review Parole Board decisions involving Dr David Chaplow as an adviser, and if he does not intend to take any steps to review those decisions, why not?”. This is the answer he gets: “The Board is a statutory body”—we know that—“and I understand that it is considering its options,”—we know that, too—“in conjunction with the appropriate Crown Agencies (Ministry of Justice and Crown Law).” We know that, too. But what is the Minister’s answer? There is no answer.

We will have a look at that to see if in any way it allows us to take a case to the Privileges Committee, because it is not in keeping with Helen Clark’s statement that we would see a new era of accountability ushered in. It is buck-passing and duck-shoving, and at the end of the day there is a whole list of victims whom this Government just turns a blind eye and a deaf ear to. Under this Government parole is a joke. This Government needs to be held personally accountable for some of these decisions.

Government Members: Ha, ha!

RON MARK: People can laugh, but in Mr Isherwood’s case alone, for which this Government has tenure and responsibility, a woman was raped, drugged, and put into prostitution, and he was jailed for it, but when he was let out on parole he did the same thing again. Who in this Government will stand up, put up his or her hand, and say: “Sorry, I’m responsible. I resign.”? No one! What does that say about Helen Clark’s new era of accountability?

Let us look at the corrections system and at sex in prisons. We had a year or two of Matt Robson as Minister saying inmates should have conjugal rights. We now have Paul Swain as Minister, and they do have conjugal rights, but the problem is that male prisoners are having them with female prison officers! We actually have a report of one case where an inmate had sexual relationships with a male prison officer and with a female prison officer. What is this Government doing about it? Nothing. The Minister and this Government stand up day after day and protect and defend the inexcusable actions of the “goon squad”, but I do not see anything in the Government’s Budget, anything in its policies, or anything in its initiatives that would protect good female prison officers who do sterling work but are now becoming the victims of stigma and innuendo. [Interruption] Members opposite prattle on. When the Minister was first asked about this matter he said there were three cases. Then he confessed there were five. Then he admitted there were 12. Now we hear there are 21 cases. The truth is the Government does not know, because the Department of Corrections has deliberately kept these complaints as informal investigations, so there is no record. The truth is this Government has no idea of the level of offending inside prisons.

I want to talk about home detention. Well, what can one not say about home detention! Under this Government, inmates can be put on home detention. It is great for gamblers, because they can gamble on the Internet at home. It is great for alcoholics, because if they have got themselves into trouble and broken the law, or have been violent criminals, they can booze up at home with all their gang mates. It is great for drug dealers. They can set up a speed laboratory at home, and die of a P overdose. What did this Minister say about that? He said that it was not true, and that the member was making it up. Well, the member was not making it up. It was true. The case was reported in the newspapers. What is the Government doing about it? It is doing nothing. It is just trying to justify itself.

Then there is the real, sharp end of law enforcement—that is, the police. This Minister of Police has had personal letters, going back to 29 September 2002, from police officers telling him of the problems inside the communication centres, yet he has done nothing. He is batting that problem off to one side in the hope the Land Transport Safety Authority will pick up the funding, because he does not have the gumption to put in his own money to look after his own police officers. He uses policemen and policewomen as pawns in a little Treasury game between himself and the Minister of Transport, whilst he sends his officers out there to collect revenue by issuing 27 percent more traffic tickets. This Government has increased its revenue take from quota ticketing by $52 million since this Minister has been in the job, but that has been at the expense of the reputation of the police force, and at the expense of the reputation of policemen and policewomen. But the Minister does not care. Well, I have a message for him. New Zealand First will be part of the new Government after the next election.

Hon George Hawkins: Ha, ha!

RON MARK: We will be. He can laugh. If he does not want to be in Government, that is fine. But we will be addressing these issues in the way that the public expects them to be addressed. That he can bank on.

Hon JOHN TAMIHERE (Minister of Youth Affairs) : Before I concentrate solely on the supplementary estimates and imprest supply debate, I want to acknowledge the member who has just resumed his seat. I commend him because he is one of the few in New Zealand First who can string a sentence together, although the jury is still out on whether he makes any sense. But I do commend him. There will always be a life for Ronnie Marks after Parliament; any pharmaceutical company that heard that speech would take him on tomorrow, because he would drive anyone to take Prozac or Valium! He always leaves us feeling really depressed.

I want to celebrate the Budget and the Budget settings with regard to the current supplementary estimates debate, and to concentrate on economic management, which is an area for which Labour Governments have often been attacked in the past. Between 1990 and 1999 New Zealand’s economic growth averaged 2.6 percent per annum—below the OECD averagegrowth rate. But our annual economic growth rate over the last 3½ years has compared well with the OECD average of 1 percent. Our rate has been 3.4 percent. Under Labour the economy has expanded by over 15 percent in 4 years. It is no wonder that members opposite do not want to talk about the economy. They might want to talk about law and order, they might want to talk about race, but the real issue, which is economic management and business management in this country, is over, and Dr Michael Cullen will go down in history as one of the finest finance Ministers this Parliament has ever seen. The facts are on the table. No one will stand and refute them. No one will stand and rebut them—no one.

I want to make some more comments about that, because it is vitally important that we start to make some comparisons between the management on this side of this House and that on the other side. I refer to the domination of our front bench, which is not just formidable but absolutely capable and hugely confident. I know that most people think Stephen Franks was the big loser in the recent ACT party shemozzle—and that is what it is when, to obtain leadership, one has to rely on one’s own vote! There was no great majority, and God bless Rodney Hide, as a consequence! The Labour Party rejoices in that result. We hope Rodney Hide gets a lot more coverage, a lot more photos, because we know he was one of the greatest inspirations of the creative directors and producers of the main character in Shrek. The more we can promote him out there in the community, the more we see of the policies of the ACT party, then the greater the chance that Kiwis will start to understand that any Government with Brash and Hide in it is scary.

The ASSISTANT SPEAKER (H V Ross Robertson): Surnames only are not permitted.

Hon JOHN TAMIHERE: I sort of went off the track there. I shall move back to the debate on the supplementary estimates and imprest supply.

When we look at policies in Budgets we see they are reflective of ideas. In this Budget, we know we have set, and will continue to set, a very tight labour market. We can be the victims of our own success in that regard, in that people with skills are greatly required. With this Budget, with the way in which the Hon Steve Maharey has recalibrated tertiary education and training, and with the way in which Mr Mallard, in terms of the education portfolio, is getting a business culture going in schools, and is actually getting Kiwi kids to start to think about themselves as future employers rather than their just “working for the man”, we expect to see great shifts in culture as Kiwis start to take a greater world view. We want them to have greater acknowledgment of their own capacity, competency, capability, and potential. We say the potential in our communities is significant but latent. This Budget and, in particular, these supplementary estimates go a long way to endeavour to release that potential.

What does the Opposition have to offer in that regard? Well, what we do know is that its key finance spokesperson develops National Party policy with Fran O’Sullivan in the New Zealand Herald. He does not go to his caucus. He does not go to his leadership. The National Party finance spokesman now develops National Party policy on the pages of the “Business Herald”. That is where it happens. That is where his caucus gets to read about the tax policy of the National Party, and its policy with regard to debt management. It is all there in the New Zealand Herald. It is not even on the National Party website.

When we are comparing the way in which we manage the economy with the way in which National would do it, it is very important in this debate to start to acknowledge the differences. What are those differences? Mr Key would tell us that this country has been managed so well in the last 5 years that we can now borrow. Any little deals that the boys and girls who line up to become members of the Opposition want done can be funded—there are plenty of dollars in the kitty. But he says they can be funded out of direct borrowing. Well, we say this country has had enough of that type of politics—enough of largesse being granted to a few at the expense of the mainland and heartland of this country. We are managing the debt load of this country by setting a system to drive it down to under 21 percent by 2008. That is a big ask, but good Governments have to set strong targets. They do not go out into the community and promise to borrow to fund largesse for the few, the rich, the minority—the likes of the ACT party and National Party.

What else has been said? Well, Dr Brash has said this: “That is certainly one option. Most governments do borrow for capital expenditure … If the rate of social return is appropriate, then it is a perfectly rational thing to do.” Well, what we do not know about the National Party is what it would actually borrow on. What we do not know is why it would borrow—we do not know that. We do know that it would spend a huge amount of money on the military, but we do not know how much it would borrow to do that. And, having done that, we do not know how many hospitals would have to close.

Another issue that is significant and that we need people to come clean on is superannuation. We understand what the Superannuation Fund is doing. We are banking for a major demographic profile coming through from the baby boomers, and we have to manage prudently so that our children and grandchildren can manage the process as the population ages. What does Dr Brash say about that? “We haven’t reached a decision on that one yet.”, he says. Surely, voters need to know. Surely, we need to know what National would do with the Superannuation Fund, which has been put in place for, and on behalf of, all Kiwis, in the most prudent fashion possible. Surely, the elderly of this country deserve to know whether their entitlements would be slashed, whether surcharges would be—

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

Hon JOHN TAMIHERE: I want to conclude on a number of matters. In terms of competency, capability, and the like, this front bench is absolutely dominating—

Hon Marian Hobbs: And the second one!

Hon JOHN TAMIHERE: —and also the second and third rows; the third row, where I sit, is not too bad. But the front bench is absolutely dominant. Those members can walk into this House and be without peer or competition in terms of the Opposition. When we are talking about Budgets and supplementary estimates, we are also talking about the capacity and the capability, the integrity and the credibility, on this side of the House to make things happen, and I am grateful for that.

I conclude by saying that John Key is making a wonderful run for the front bench—running right over the top of the rest of his caucus. In his own inimitable style, he is providing National Party policy in cahoots with Fran O’Sullivan of the New Zealand Herald. His caucus woke up one morning and found that John Key had opined on the fact that his party would actually cut superannuation.

Mark Peck: Is that what it is?

Hon JOHN TAMIHERE: It would have to do something like that—lift the age or, alternatively, take on debt. We have managed the Government’s finances so well that he has opined that the low debt is crazy, and that National would borrow to dispense largesse to some of its mates. It would have been great, if only he had told his caucus colleagues that.

Mark Peck: No, no, never tell them when they are drawing the policy up.

Hon JOHN TAMIHERE: Oh right, that is National Party policy. Mr Peck knows the way the National Party operates. Obviously, it operates in cahoots with Fran O’Sullivan in terms of delivering exactly what the National Party policy is, which is, given the low debt levels that this Government has managed, to take borrowings on board—but to spend on what?

Mark Peck: Well, what?

Hon JOHN TAMIHERE: That is a good question. We know that our old people out there will be shuddering and wondering whether they will be 70 or 75 before superannuation kicks in. Would they have the Superannuation Fund under that lot? How would that lot manage the tax system in terms of its tax take? What hospitals would close? What operations would be stopped? I do not like to depress Kiwis listening to this debate—and thousands of them will switch off after I sit down—but I say they should be afraid of Rodney Hide and Don Brash.

Dr the Hon LOCKWOOD SMITH (National—Rodney) : One of those front-bench members whom Mr Tamihere has just been referring to is, of course, the Hon Trevor Mallard. I have a cutting from today’s Hutt News that has an article by the Hon Trevor Mallard in it. In this article Trevor Mallard is waxing on about why tax cuts do not work and why the Budget is so wonderful in delivering to low-income families. Trevor Mallard said: “So, how can we deliver an extra $100 per week to a family on $30,000 with 2 children? If we were to try and achieve that through tax cuts—they are paying around $100 a week in tax currently. So to gain $100 through tax cuts we’d have to have made the first $30,000 of income completely tax free—for everyone.” Well, I guess that is the way the current arrangements work, but the Hutt News was not that impressed with Mr Mallard’s arguments.

The Hutt News went back to Mr Mallard and asked why that tax break would have to be extended to everyone. It asked: “Why can’t it be that if you only earn ‘x’ (say $30,000 or less, or whatever other figure is decided) you don’t pay any tax? If you earn $30,000-$40,000 you could pay a certain tax rate; $40,000-$50,000 a higher rate of tax, etc. Why do we have to have a very complicated set of allowances and subsidies administered by a large bureaucracy (Work and Income), and we have people missing out on their entitlements because they’re not aware of them. Can’t we simplify the whole thing using tax rates?”. Now Mr Mallard came back answering that question—of course, he could not answer it because such innovative thinking is quite beyond Labour. Trevor Mallard went on to say: “The main objectives of the Working for Families package were to ensure that work pays. In the past there has often not been a significant incentive for beneficiaries, particularly those with children, to seek work.”

If that is the objective of the most recent Budget and the Working for Families package, I want Government members to contemplate this situation: a low-income family—low income because it is not that skilled—with three children is seeking to increase its income. Maybe there is one breadwinner in the family working at $10 an hour. After that breadwinner has worked 20 hours a week at $10 an hour that family will have earned a certain amount of income—$10,000 a year. To earn another $1 of income once this Government’s Working for Families package is implemented, that breadwinner would have to double his or her hours of work to get another $1, and Trevor Mallard claims that that is a policy that makes work pay.

I would like the Government members opposite to take a call and explain to me how an effective marginal tax rate on the next $1 one earns of 101.2 percent makes work pay. I would like the next speaker to explain that because it has got me absolutely whacked. If a working person earns an extra $100 but loses, through that, $101.20 through tax changes, how is that making work pay? [Interruption] What did that Labour member Mr Peck just say?

Mark Peck: Why don’t you listen?

Dr the Hon LOCKWOOD SMITH: I would be delighted to listen to Mr Peck if he was prepared to explain to this House how an effective marginal tax rate of more than 100 percent makes work pay.

Mark Peck: Get your calculator out and do the sums yourself.

Dr the Hon LOCKWOOD SMITH: That shows the appalling lack of arithmetical understanding of Labour members like Mr Peck. An effective marginal tax rate means—if I could just explain to Mr Peck—that on the next dollar one earns, it gives one the tax rate one pays. On the next dollar one earns, with an effective marginal tax rate of 101.2 percent, it means one pays more than $1 in tax for that $1 earned. For Mr Peck’s sake, I point out that it actually means one is worse off.

Mark Peck: Oh, no!

Dr the Hon LOCKWOOD SMITH: Suddenly Labour does not care about low-income, hard-working families trying to earn more for their family through work instead of just being on a benefit. Mr Peck says: “Oh, no, that does not matter.” That might be Labour’s attitude towards low-income, low-skilled people, but where it will suffer hugely with this Budget is that, now, that kind of high marginal tax rate is going to affect middle-income New Zealanders. These are not my figures. These are figures from the Inland Revenue Department made available through written questions.

I asked the department for the effective marginal tax rates at $5,000 intervals from $5,000 of income right through to $100,000 of income for various family configurations. Let us take the example of a family with three children—a typical family, and it is the one I have been talking about up until now. Once that family, with three children, has earned $10,000 a year, do members know what that family’s effective marginal tax rates are from there up to $100,000 of income? I want to share them with this Parliament because I think the information is hugely important in relation to what this Budget will do to middle-income New Zealand.

At $10,000 of income, as I have said, there is a 101.2 percent effective marginal tax rate. At $15,000 of income there is a 101.2 percent effective marginal tax rate. At $20,000 of income there is a 101.2 percent marginal tax rate. At $25,000 of income, whoop-de-doo, the effective marginal tax rate is down to 47.2 percent. But, sorry, it is only for $5,000 of income. For $30,000 of income the marginal tax rate is up to 77.2 percent. At $35,000 of income there is a 77.2 percent effective marginal tax rate.

If losing 77 percent of one’s earnings in tax sounds bad enough, once people hit $40,000 of income—which is the average New Zealand salary—the effective marginal tax rate is such that, whether a family has one child, two children, three children, or four children, on the next dollar earned the Government will take 89.2 percent of it off them. That means that if people earn an extra $100 in overtime, the Government will take 89 percent off them and leave them with just 11 percent. If people earn an extra $100 through overtime, they will keep less than $11 of it. They will keep $10.80. It goes on. People with three children who earn from $40,000 up to $60,000 will keep only 10.8c in every extra dollar they earn. It is an outrage. But it gets worse, because at $60,000 of income the marginal tax rate hits 95.2 percent.

Mark Peck: Lockie has got it wrong.

Dr the Hon LOCKWOOD SMITH: Mark Peck says that I have got it wrong. These are official Inland Revenue Department figures. What that means for a family with three children and an income of $60,000 who wants to go on holiday and decides to work overtime to earn an extra $5,000, is that they will keep $240 of that extra $5,000 because the effective marginal tax rate they will pay is 95.2 percent. That is what this Labour Government and its mates are doing to our hard-working families in New Zealand—taxing them into oblivion on any extra dollars they earn. That is a disgrace and it why this Budget will see this Labour Government thrown out—and good riddance.

The ASSISTANT SPEAKER (H V Ross Robertson): Before I call the next member, I am advised that this particular speaking slot will be shared between the Greens, 5 minutes, and ACT, 5 minutes. For the benefit of members I will ring the bell with 1 minute to go.

SUE BRADFORD (Green) : Today’s front page of the New Zealand Herald once again reveals that actions of the Department of Child, Youth and Family Services are under review, this time after a tiny baby was left fighting for its life in Starship Children’s Hospital, his mother facing a charge of assault. While I do not want to get caught in that old trap of blaming the Department of Child, Youth and Family Services for the actions of the adult who injured this baby, this incident once again highlights the adequacies or otherwise of a department that continues to struggle.

While overall the supplementary estimates do not show big variations for the department, with only just under half a million dollars being added to its budget, this does not really reflect what is going on with the department. Capital investment is down because of delays in implementing the residential youth justice services strategy. Funding for prevention and for what is called Family Wellbeing Services is down, while there is additional money for care and protection services. I presume some of this latter amount is to go towards the employment of the new social workers the Minister referred to in the House this afternoon, and I certainly acknowledge the progress the department is making towards improving its capacity to carry out its core statutory functions. But it is the lower than expected spending on prevention and family well-being that I am really questioning here this evening, especially in the light of this morning’s news.

I would like to be a little clearer about what sort of service, if any, the department provides for parents whose children are taken into statutory care. If a mother, like the one in today’s story, goes on to have or adopt another baby, or child, or children, having had earlier children taken away, does the department work with her to help her look after the new addition or additions to the family? Does the department step in only when there is an emergency or crisis, or is there ongoing support, and even education, for families and parents who have had their children removed?

The Green Party totally supports the underlying kaupapa of the Department of Child, Youth and Family Services, which is that the welfare of babies, children, and young people must come first. However, parents and other family are an intrinsic part of each situation and surely they should not be ignored except when there is a crisis. Families in trouble do need lots of support, but particularly if they are once again entering the situation of caring for children, having lost earlier ones because of care and protection issues.

I know that, in the end, no social worker or nurse or anyone else can ultimately protect any child—the recent situation in which a 2-month-old baby was assaulted by her father while she was an inpatient in Whangarei Hospital is another case in point—but I do get the feeling that more could be done to help those parents who struggle hardest in the most difficult of situations. My underlying question is this, in relation to what is after all the estimates debate today: why is even the originally allocated funding for prevention and Family Wellbeing Services being underspent, or spent elsewhere, at a time when there are families, parents, and children in need of support all over the country and at a time when simultaneously many of the community organisations that work with the Department of Child, Youth and Family Services to provide assistance to families are also crying out for sustainable funding and contracts? There does need to be better support for families who are within the purview of the department. Preventing both first instances and the reoccurrence of child abuse and neglect is very much a bottom-line outcome for the service, and this work with families should be considered an integral part of this, not some kind of added extra.

In terms of the Department of Child, Youth and Family Services’ relationships with community organisations, one of the jobs that the baseline review undertook was to look at the interface between the department and the voluntary sector. My understanding of the result of that review is that a mandate for the department does continue to ensure that it builds effective and collaborative relationships with the non-governmental organisations that work in its area, and to help strengthen its work and the synergies between the department and the community sector. However, again, if the department is serious about supporting and making the most of what the voluntary sector can offer in terms of prevention and support, and Family Wellbeing Services, I cannot understand why this part of the department’s budget is underspent or put to other areas. Too many groups and services are struggling to survive right now around the country. Some are going under. Every dollar unspent in these comparatively small budgets would go a very long way in helping some groups, and the important work they do, survive.

Dr MURIEL NEWMAN (Deputy Leader—ACT) : I rise to speak on behalf of the ACT party in this estimates debate, and I would like to touch on the Department of Child, Youth and Family Services, as well. In the department’s statement of intent, on page 10, it talks about the intended outcomes of its care and protection strategy, which are to prevent the occurrence and reoccurrence of child abuse and neglect. The department wants to address the effect of harm, and to restore and improve the well-being of children. The statement of intent then goes on to talk about youth offending outcomes, and states that the department wants to reduce youth offending and to hold young people to account for their offending. I ask the Government where in that statement of intent there is any mention of holding the perpetrators of child abuse to account for their offending.

I have been watching the child, youth, and family portfolio since I came into Parliament in 1996. The incidence of child abuse in this country has continued to rise relentlessly, and the number of cases coming before the department has continued to rise. Just a couple of months ago a headline stated that there were some 6,000 cases of potential child abuse waiting to be allocated to a social worker. I want to know why it is that as a society and as a House of Representatives we are not calling out for a zero tolerance to child abuse, and saying that anybody who is responsible for it will be held to account and sentenced to a tough sentence so that, firstly, child abusers are not free to go out and abuse more children, and, secondly, a very strong signal is sent out to the community at large that child abuse will not be tolerated in New Zealand.

It seems to me that we end up with a situation whereby the department does all that work in removing children from their homes, and trying to keep them safe. The department has already seen many of those children before; they are from families that cannot keep them safe. But nowhere do we hear that the people responsible for child abuse are in prison. Occasionally we do hear that—I should put the record straight by saying that occasionally we do—but not in the same volume as the number of cases that come before the department. I say it is time we woke up. It is time we said that we have a zero tolerance to child abuse, and that that is what we want the department to have. When the department puts together its statement of intent for the next financial year, I suggest that that be one of the outcomes stated in it. The department probably would not do that work—it should be done by the police—but the point is that it can put such a policy in the statement of intent, and can work in a collaborative fashion with the police to ensure we have a zero tolerance towards child abuse.

The previous speaker spoke about a case that happened recently. A mother has now been charged with assaulting her 6-week-old baby. She had previously had her other two children removed from her, because she is incapable of looking after children. I would like to ask this House again why we are not saying that women who have children, and who have a record of not being able to look after them, should be encouraged to adopt out those children. I think that the decline in adoptions in New Zealand, when we see the corresponding rise in child abuse, is a scandal. If people cannot care for children, we as adults have a responsibility to ensure they are put into a family that will love them, raise them, and care for them in the way that we would want our own children to be raised.

We need to look at the whole way that we have organised the Department of Child, Youth and Family Services. A number of us now believe that the department is outmoded, and that we need to rebuild it as a community-based one-stop shop. I further believe that we need to have a long, hard look at the welfare system, which is encouraging people into long-term, intergenerational dependency, whereby child abuse goes down from one generation of a family to another.

Hon Rick Barker: Rubbish!

Dr MURIEL NEWMAN: I challenge the Minister to come to the House and show us that that is not true. Most of those children have been seen by the department before, and so have most of those families.

Hon MATT ROBSON (Deputy Leader—Progressive) : On behalf of the Progressive Party, I support this bill of the Labour-Progressive Government. The Appropriation (2003/04 Supplementary Estimates) Bill is required to ensure the revenues are raised to pay for the ongoing smooth running of Government administration through to the end of the financial year on 30 June, and through the first 2 months of the 2004-05 year. This debate once again highlights the reality that this minority Labour-Progressive coalition Government is able to govern for the good of our country thanks to the constructive relationship we have with, and the crucial support that we receive from, the United Future Party’s eight votes of support. The money raised previously from taxpayers in this bill, and to be included in the money-raising legislation related to Budget 2004, for the new financial year starting on 1 July, can proceed to be used only because there is rationality, no surprises, and honest cooperation between three parties in this Parliament.

For 2 years now, the public’s vital interest and concern that there be a stable and forward-looking Government has been possible only because Labour, Progressive, and United Future are making our proportional representation electoral system work for the electors of New Zealand. Based on our policies, we are getting good things done for people because we are working constructively together. Labour and Progressive could not do it alone, because we do not have the numbers. Nor could Progressive and United Future do it alone; we have not got the numbers. Labour and United Future could not do it alone. They do not have the numbers, and have not had the numbers since this Parliament was elected in July 2002. But by working together we are able to advance policies that strengthen our economy, build safer communities, and benefit our families. That is why this bill is so important. Money bills are about as serious and significant as any bill that we can get in a Parliament. Civil wars have been fought over money and Parliament.

Tomorrow we will see some more practical examples of the benefits of the cooperation in this Parliament that allows for money to be raised in order to be invested in securing a better future for all. Tomorrow we will have an announcement on the appointments to the new Families Commission. The three Government-related parties in Parliament are responsible for establishing the Families Commission, an agency that from 1 July will be working to advocate for the interests of families.

Peter Brown: It’s the last thing we want.

Hon MATT ROBSON: New Zealand First can wait; I have a little bit in this speech for its members. The commission will encourage intelligent and rational discussion on issues affecting families, and it will commission research into family issues and make independent comment on policies that affect families. Together with representatives of the other two parties in Government, I met with the commissioners for the Families Commission this evening. They are people who will produce intelligent research and advocate for policies that will help families in New Zealand. The commission will be to the benefit of every single family; I am certain of that. In particular, the commissioners will be able to address how underlying issues of poverty and low income affect families to their detriment.

In a confidence vote last week, the Labour-Progressive Government won an absolute majority of support. Whereas an absolute majority of 61 has confidence in this Government, just half that number—or 35 members—expressed confidence in the only other alternative available to govern the country, which would be a National minority Government led by Don Brash. National has already shown us that if it were in Government it would return us to the nuclear umbrella, would sell Kiwibank, would repeal 4 weeks’ leave, and would put taxation cuts for the richest New Zealanders on its agenda. The reason the Labour-Progressive coalition Government has double the support in this Parliament of that of the right-wing alternative is highlighted by Budget 2004 and by money-related legislation like the legislation before us now. The key to understanding the Labour-Progressive programme is to appreciate that its value lies in the work it permits in propelling the base of the New Zealand economy on to a higher level. There are many, many examples of that in New Zealand.

Perhaps the key point to make is that every region has now had growth for a considerable number of years. We are taking a comprehensive approach to economic development. We are focused on strengthening and deepening New Zealand’s connections with the world economy. In the Budget we have allocated $500 million over 4 years to help unleash New Zealanders’ creativity and talent. That broad approach is not limited to the economic development portfolio but is across the board: in commerce, small business, finance, education, science and technology, immigration, and a number of related portfolios. This Budget includes nearly $54 million for the war on drug peddlers, and on initiatives to try to help their victims. The Budget includes $5.5 million for suicide prevention initiatives, because we must do more to fend off that blight on our communities. I am sure no member in this Parliament will want to see the New Zealand suicide level, particularly for youth, stay at the level it has been at for too many years. The Government is also increasing the overall level of investment in infrastructure, both by direct Government expenditure and by encouraging others to invest in our nation’s future economic and social development.

We do not want a National-led Government, because we know of National’s dire record. In the years from 1994 to 2000, when many New Zealanders fled the country, the net purchases of physical assets by the then National-led Government added up to a mere $800 million a year. For the period 2001-08, in contrast, the Labour-Progressive Government has committed to increase that investment in the future to an average of $1.1 billion a year. For over two decades we have had under-investment in New Zealand’s infrastructure, to the detriment of the welfare of all our people. Overcoming that lag has been an enormous task, but already this Government has made an enormous dent in those sorry figures. The financial transparency of the Government’s books has improved dramatically since the Labour-Progressive coalition Government first came into office in 1999. We now have a system of line-by-line consolidation in the Government’s accounts that allows all New Zealanders to understand much better the level of investment their elected Government is making, as well as the actual capital investment in the future being made by Government-owned commercial enterprises or State-owned enterprises—and I would like to put Kiwibank right up there with the best of them. This Government has been prepared to shoulder its responsibilities to the regions of New Zealand when the market failed to deliver. We have invested in the rail network, in Auckland’s transport needs, and in the national airline.

Cooperation and building for social and economic progress are the key themes for the Labour-Progressive Government. That is the antithesis of the approach taken by parties like National and New Zealand First, which foster divisions. National does that by using Māori as the scapegoat, in its attempt to draw many New Zealanders into a campaign against Māori. New Zealand First makes continuing attacks on migrant communities in New Zealand, and attempts to scapegoat those communities for all the social ills of New Zealand. Labour and Progressive, in contrast, are drawing our various communities together, and will continue to do that for the sake of the health of New Zealand.

BRIAN CONNELL (National—Rakaia) : Thank you, Mr Assistant Speaker, for the call on the supplementary estimates debate. I was not sure what I would talk about when I came down to the House today, but after listening to that drivel from the last speaker I decided I had to deal with the Budget and put the record straight.

Let me start by saying that if Michael Cullen is sitting in his office listening to this debate, he must be tearing his hair out. This was going to be the Budget that would be the saviour, the bribe to end all bribes, the circuit-breaker that would put the Labour Party back in front. This was going to be the Budget that would put dim-witted Ministers like Trevor Mallard back in office.

I mention Mr Mallard because I heard him refer in the House to one of my colleagues as being stupid. I think that showed great audacity, coming from a member who is regarded as being so dense that light bends around him. He is the member who set about closing all the schools around rural and provincial New Zealand, and only when he had done great harm to his own party did the Prime Minister drag him into her office, kick him from wall to wall, and say: “Mr Mallard, if you don’t stop this, then I am going to.” That 20-watt light bulb that he calls a brain showed a dim glow of recognition in his eyes, and he was told to go out and announce a moratorium. But what was worse was when the Prime Minister made Mr Mallard say that, she looked down the barrel of a camera—

Hon Rick Barker: I raise a point of order, Mr Speaker. That member knows he has to say members’ names correctly. Mispronunciation of members’ names is unacceptable in this House. That is the third occasion on which that member has deliberately mispronounced Mr Mallard’s name, and I ask you to direct him to pronounce it correctly. It is a cheap and undignified shot.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the honourable member for his contribution. I suggest that perhaps the member on my left look at Speakers’ rulings 26/7 and 26/8, and come to order.

BRIAN CONNELL: Certainly. Thank you for your guidance. It is amazing, though, is it not, how that member’s colleague can take cheap shots and accuse people of being stupid, but when I give his colleague’s name a little bit of emphasis, that member gets on his feet. He can give it but he cannot take it, which is typical of the Labour Government—

Hon Rick Barker: I raise a point of order, Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): I know what the member is going to say. The member on his feet cannot refer to that; he must get on with the debate.

BRIAN CONNELL: I was saying that the Prime Minister looked down the barrel of the camera and said—despite the school network closure programme being in every daily newspaper for months, and being the lead item on television for 6 days out of 7—“My Cabinet and I didn’t know about it.” Well, that is stretching the truth, is it not? It is so perverted that she is a woman who could not lie straight in a coffin. Michael Cullen has fallen flat on his face—

Hon Rick Barker: I raise a point of order, Mr Speaker. It is a well-known Standing Order in this House and convention that people are not accused of certain things, and that members do not use mechanisms to achieve that. That is what the member has done. He has accused the Prime Minister of telling a lie. That is the very essence of it. Without saying those words, he has used a mechanism to subvert the Standing Order, and I ask you to draw him to order.

John Carter: If every statement that was made in this House were to have an interpretation put on it, then I have to say that from the time we start at 2 o’clock until the time we finish at 10 o’clock there would be inferences and references that would lead one to draw the conclusion that members were accusing others of lying. It is well known in this House that members are not allowed to accuse anyone of lying, but I have sat here for many hours, as has that Minister, and I know that he has made comments that were very similar, if not the same, in the same vein, about other members. If we are getting to the stage where statements such as “can’t lie straight in a coffin” are excluded from our speeches, then I am afraid that speeches in this House will be narrowed down to something that is hardly worth listening to.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the honourable member. The member was skating on thin ice, and I was considering Standing Order 116, which is about personal reflections. He was not quite there, but I think the member should come to the point, continue with the debate, and come to order.

BRIAN CONNELL: Thank you for your guidance. Michael Cullen has fallen flat on his face. He has committed $4 billion of taxpayers’ money over a 3-year period to the pursuit of cheap votes, and it has been soundly rejected by mainstream New Zealand. The message back to Dr Cullen has been: “Naff off. We do not believe you any more. You can’t buy our vote—we’re not going to put up with it.” Do members know why it has been rejected? It has been rejected because Dr Cullen and his colleagues are so out of touch with mainstream New Zealand that they forgot about the most basic Kiwi test of all: the test of fairness. When there are 1.5 million families in this country, and the Government gives all the Budget funding to 300,000 families, people look at each other and say: “Well, that’s not fair.” When four out five families do not get one red cent out of this Budget, Kiwis look at each other and say: “That’s not fair.” When the very people who are the productive sector of this country—the very people who put this $6 billion surplus together—do not get one red cent out of it, they also will reject it. So that has been the message for Michael Cullen and his cohorts.

Hon Marian Hobbs: It’s a good number of hip replacements.

BRIAN CONNELL: The Minister is yelling out. I would engage in a battle of wits with her, but I will not attack an unarmed person.

What message do we have when there is a $6 billion surplus? It is simply that we are being taxed too much. This Budget tells me that this Government has no vision or aspiration for fellow Kiwis. What it has done is take the cheap option. It will try to buy votes instead of reducing tax and doing something about removing the impediments to growth. We have missed a huge opportunity to improve growth. Those members opposite know it. They just do not have the decency or the honesty to look themselves in the mirror and admit it. We have missed a huge opportunity for growth. We have had the best conditions for growth in decades—the three stars of low interest rates, high commodity prices, and a low dollar have been aligned—but the best we can achieve is 4 percent growth. Those members pat themselves on the back and say we achieved it in one year, 2003, but now Treasury is forecasting 2.2 percent growth. Those members have no aspiration and no vision.

If we take a hiding on the rugby field from the Australians, we have a year of mourning to look into it, yet we have been so conditioned that if we are beaten to the tune of $200 a week by the average Australian worker we think that is our lot. I have a better vision than that for this country. Not only could we have reduced taxation but we could have removed the impediments to growth. The Resource Management Act, the occupational safety and health legislation, the Holidays Act, and the draconian employment law that is coming down the line are just impediments to growth. They are stifling growth. [Interruption] At least I am getting a response from members opposite. It is the first time they have woken up today. They are so dumb that they would not recognise an economic spur if they saw one.

What has this Budget done for water infrastructure on the east coast of the South Island? It is silent on that. That is an indictment on those members opposite. Providing infrastructure for South Island water would put billions of dollar into the local economy. That is aspiration. That is how one grows an economy. What has the Budget said about forestry? The only thing it has said is that the Government would steal people’s carbon credits and do absolutely nothing else for them.

What this Government has done is take the cheap option of welfare dependency. In this country, the working-age population on welfare is bigger than the population of the city of Christchurch. Our welfare population has grown twelvefold in the last 30 years, while our population has not even doubled. We are spending $20.5 million a day on welfare dependency, and nothing on growth. [Interruption] That Associate Minister of Finance does not have a clue what he is doing, other than yelling out drivel. Worse is the fact that the welfare dependency cycle is just keeping people impoverished. The correlation between those on welfare and high representation in crime and health statistics, and low representation in education, is there for all to see. Because of that mismanagement, the country is heading to Third World status—unless we have a National-led Government in the next term. That is how acute the situation is.

What has the Budget done for policing? The Minister of Police, George Hawkins, appeared before the Law and Order Committee the other day. The Southern Communications Centre is under stress. It is understaffed, and 111 calls are not being picked up. When I spoke to the Minister about it he said: “Oh, we’re budgeting for more staff.” When I asked him how many, he said: “Oh, we haven’t thought of that yet.”

This Budget is a disaster, and it is a reflection on that Government.

MARK PECK (Labour—Invercargill) : The kindest thing one can say about that speech is—nothing, actually.

Hon Marian Hobbs: It’s over!

MARK PECK: Yes, it is over, and the member highlighted the reason why: for the National Party, it is over. One of the things that amazes me, when we listen to Opposition members debating any economic matter in this House, is that they try to convince us that what we need is a whole bunch of tax cuts. Despite Lockwood Smith, who seems to have a particular bent at the moment for what might be called a base income flat tax idea, where people with a low salary would have no tax and everybody else would be taxed—and he is the only one talking that way—the rest of his colleagues are talking about cutting the top personal tax rate and the corporate rate, and—to get a coalition—they might even buy Rodney Hide’s idea of the flat tax of 20c. They might just have to do that. It might be the deal they have to make to get a coalition.

I have only one question for them. They go on about having this tax cut and that tax cut, having to do things for low-income families, fixing education and health, doing something about superannuation, getting all the F16s back again, having more frigates, and doing this, that, and the next thing—but how will they pay for it?

Hon Marian Hobbs: They’re not.

MARK PECK: Of course they are not. So what they will have to do, if they go down the Rodney Hide, flat tax regime route, is close hospitals, sell off schools, sell off the roads—

Hon Marian Hobbs: And ACC.

MARK PECK: —and they will have to get rid of accident compensation.

I am also aware of one other thing. I have never forgotten, Madam—Mr Speaker. I do apologise to the Speaker in the Chair, Ross Robertson, who is a good member of the Commerce Committee and who reminds me often that he is entitled to supplementary questions. I am reminded of one other thing. The entire time that we go through the drama and destruction that those members opposite say is a result of this very good income-redistribution package that the Government has put together, I will never forget that they brought in the “mother of all Budgets”. Their Government slashed benefits and made sure that the very poor simply could not live—that was the effect of it—and at the same time they brought in the Employment Contracts Act, from which the wages of workers up and down the country never recovered from the position they were in. I see my mate across the Chamber Peter Brown, who was an employer in the shipping industry, one of the toughest industries in New Zealand. Yet he understands exactly what it was that that Act did to those on casual and part-time rates.

It is no accident that that was part of the National Party’s prescription, because that prescription was about a low-skill, low-wage economy, in which we could turn out commodities cheaper than elsewhere. It was not a vision for New Zealand having a future of high-skilled, high-quality workers and a growth economy, but of having us compete with the lowest-waged economies to get our commodities to market a little cheaper than might have been possible during the 1980s. There was no strategy in that. It was simply about playing to the lowest common denominator.

It is no wonder the National Party no longer talks about growth. Its members occasionally like to raise the issue of when we are going to get to the top half of the OECD. I heard a report on Morning Report only this week that showed that our quarterly growth rate was at 1.7 percent, which actually, at the present point in time, does put us in the top echelon of the OECD. The financial commentators are cautioning along the lines that it will not be as good in the next quarter. In fact, I think they are predicting 0.7 percent for the next quarter, and that is fair enough. But when we look at the economic growth rates, and when we think about how this particular package of economic growth has been able to be put together in the first place, we look at it for 2004. In John Carter’s area, Northland, there was substantial growth of 4.5 percent. In Auckland, the Speaker’s own area of the country, there was 3.5. percent. In Tony Ryall’s area—God bless his cotton socks—there was 4.5 percent. In Janet Mackey’s and Moana Mackey’s area, Gisborne, there was 2.4 percent. In Rick Barker’s area, Hawke’s Bay, there was 4.5 percent. Marian Hobbs’ area, Wellington, achieved 3.7 percent. Not bad for a bunch of pen-pushers, I say to Marian Hobbs.

Hon Marian Hobbs: Excuse me, we’ve got creative pen-pushers.

MARK PECK: Absolutely. They are creative pen-pushers. In Nelson-Marlborough, Mahara Okeroa’s area, there was 4.6 percent. Where are my Canterbury colleagues? They are all around listening to this—Lianne Dalziel, Tim Barnett, Ruth Dyson, et al. Canterbury achieved 4.1 percent.

Shane Ardern: Tell us about Wanganui.

MARK PECK: I am coming to Wanganui. Wanganui is doing very well, actually. The member will be quite surprised. In Otago—the area of David Benson-Pope, Pete Hodgson, and David Parker—the rate was 5.3 percent. When I look at those numbers, I see that that is the top figure. That is pretty good, for the year’s growth rate to March 2004.

In Southland, my own neck of the woods, the growth rate was 3.6 percent. And the Sting won the National Bank cup in netball for the sixth time. There was no North Island team in the final so we had to play Canterbury, and beat them for the 13th time. I apologise to my Canterbury colleagues for that. For the West Coast, with good old Damien O’Connor, the rate was 4.6 percent, and for Manawatu-Wanganui I congratulate Jill Pettis, because she beat Southland—but not in the netball—with 3.9 percent. Regarding Taranaki, I tell Shane Ardern that he has not done a good job, because its rate was 2.3 percent. Waikato’s rate was 4.4 percent.

The picture that that shows, and the important thing about it, is that from 2000 to 2003 there has been a 15.3 percent increase in our economic activity across our gross domestic product (GDP). In dollar terms the best part of an additional $15 billion has gone into the nation’s income, if one likes. That is huge. I say to the National Party that when its members start going on about that huge Budget surplus, they should not try to mislead people who run household budgets.

I know that my mother and father were very good at running the household budget. They had a certain amount of money to use, and part of that money went to paying the mortgage. The house was worth a whole bunch of money. If it was shown on a balance sheet, it would probably have been worth in those days—I am talking about the late 1960s, early 1970s—about $30,000, which in today’s money is $300,000 to $400,000. But there is no way my parents would have gone on a spending spree on the basis of the worth of the house, even when they did take the mortgage off and have whatever the capital gain might have been. They would not have gone spending that, because they could not have bought the groceries.

People understand that if the Government is to bring in assistance packages like the one it has brought in for working families, then it must be brought in on a basis that is sustainable. That means we pay the bills. It means that we count our assets as part of our net worth, but we do not go around kidding ourselves that we can realise all that cash in 5 minutes if it were needed in a hurry. That is where the National Party’s argument falls down, and when John Key—who is rapidly crawling over the backs of everybody else to reach the front bench of the National Party—goes on about how he can borrow and hope, that raises in me the spectre of one politician who used to dominate this Chamber through the 1970s and 1980s.

Government Member : Heh, heh, heh!

MARK PECK: My colleague is doing a pretty good job of imitating the chuckle. Rob Muldoon believed in borrow and hope, and he also believed that nobody would recognise a deficit if they fell over it. Well, not only did we recognise it but we fell over it and we had to deal with it. Now, we have debt at historically low levels, and dropping, at a time when we are able to bring about the most significant redistribution of income back to low and middle income families in 20 years. There have been two redistributions of income to those who are better off, and now we are redressing the balance. The National Party does not like that message; its members would much rather talk about marginal tax rates. But let them never forget that the very people they attacked in the “mother of all Budgets” are now starting to get a little bit back. That is good, and the bills before the House today ensure that it can be delivered in a timely manner.

Hon DAVID CUNLIFFE (Associate Minister of Finance) : I am pleased to rise in the debate on this Appropriation (2003/04 Supplementary Estimates) Bill, which is necessary for the ongoing, efficient running of the Government. The debate provides an opportunity to highlight the various areas of expenditure of the taxpayers’ funds we are appropriating today. In the words of my colleague the Hon Matt Robson, it also highlights the smooth functioning of the Government based on the strong coalition between Labour, the Progressives, and United Future and, I might note, the increasing cooperation of the Green Party, which is also valued. It is appropriate for us to consider seriously the uses for which these funds are put, because this is the taxpayer’s hard-earned money, and it is absolutely important that this House debates thoroughly what it is being spent on and how.

Tonight I would like to cover three things. Firstly, I would like to summarise and, to a large extent, rebut the claims the Opposition has made in this debate—at least, while I have been listening. Secondly, I would like to draw the attention of the public to how things have changed since the Government took office in 1999. Thirdly, and perhaps most important, I want to really emphasise that the job is not done yet. We have a historic mission to take New Zealand forward, and New Zealand cannot risk a change of Government and another few years of parties on the other side trying to run things, because their track record last time they were in office was so miserable. It was so ineffectual that New Zealand cannot afford another lost decade and still hope to be a sovereign nation.

Let us turn first to the Opposition’s affairs. If I were Don Brash, I think I would be despairing. When we look down the newly promoted members on his front bench and tick off their contributions in this debate, we ask ourselves whether there is anyone there. There is John Key. Yes, he knows how to trade foreign exchange, and I think he also knows how to tell the truth, which is why he has been quoted in the New Zealand Herald as advocating a tax cut for high-income earners. That is the Opposition’s agenda, and that is what we would get from a National-ACT coalition. Let there be no mistake: we would be going back to the dark years of the 1990s, when the top 10 percent got 30 percent richer, and the bottom 50 percent got poorer. New Zealand cannot afford to go back, and although I appreciate Mr Key’s honesty, I think his leader must be gnashing his teeth, because he was not supposed to say that.

Looking down the line, there is tired old Lockwood Smith, with the tax-cut mantra and the marginal tax rate. Would someone please explain to that member that it does not matter where the level of family assistance is set, the problem of marginal tax rates is exactly, 100 percent, the same. All this Budget does by supporting lowest-income people, children, and middle-income earners is just raise the level a little, and that does not change the problem at all. We cannot have it both ways; we cannot target benefits to the people who need them and avoid the problem of marginal tax rates. That is just a fact of mathematics, and it is time that member learnt some.

Simon Power is next along the row. What is it about the defence portfolio that seems to give people foot-and-mouth disease? It is Simon Power who said that National would unreservedly go wherever Uncle Sam or Uncle George W sends us. Goodness me, Don Brash must be pulling his hair out at that one! That reminds me of the previous defence spokesperson, Richard Worth, who enjoyed camel rides and pyramid gazing. Then there is Mr Wayne “let’s buy fighter planes” Mapp. If we think Dr Cullen has a steady hand on the exchequer, what sort of problem will Mr Key have when his colleagues start to spend money a billion at a time?

Brian Connell—the man whose contribution is matched only by his CV, who has finally lowered his sights from being leader to being Minister of Finance and is equally likely to achieve both offices—delivered the expected drivel. We have news for Mr Connell. He alleged that this Budget was a bribe. If we were going to do a quick bribe of a Budget, we would not have spent 2 years working on the social policy that underlies it. If we had wanted a public relations winner, we would not have targeted income supplements to the most marginalised in our society. Instead, we would have given chardonnay to the chattering classes.

This Budget gives help to children who need it. Lockwood Smith says: “Oh, it’s only one family in five.” Brian Connell says: “It’s only a few who benefit.” This Budget cuts child poverty by three-quarters, and two-thirds of all New Zealand families who have any children at all will benefit substantially. That is not marginal; that is mainstream.

Despite the fact that this is a solid, targeted Budget and not a public relations exercise, the polls have shifted all right. The Government has won by a net 6 percent against National in the last month, and its lead in the UMR Insight poll is increasing, so do not tell me that this Government is not appreciated by the public. Mr Brash’s one-hit Ōrewa wonder, by teasing the lowest common denominator of our social underbelly, has passed—and good riddance to it.

Finally, Mr Connell talked about what his real agenda is—the so-called productive sector. I want to peel that back. Is it true that only the rich work hard? Is it true that only the rich are morally valuable in our society, or do hard-working New Zealanders who go to the factory or the office each day for their 15 bucks an hour count too? Do they not count just as much as Mr Connell, or Mr Key with his house that Merrill built?

I know what we stand for. We stand for the great Kiwi tradition of fairness for the ordinary bloke. It used to be part of the National Party’s tradition. I believe it is still a part of Mr Ardern’s tradition, but it is not a part of his colleagues’ agenda. Mr Ardern should be National’s agriculture spokesperson. He is the only one who knows anything about it. He is a good bloke. I am on a select committee with him. He should be on National’s front bench.

Mark Peck: And he can drive a tractor.

Hon DAVID CUNLIFFE: Badly at times, but is he on National’s front bench? No, that party has a Fendalton farmer, Mr David Carter, running the agriculture show. Don Brash must despair.

That is enough about those members; let us talk about us. When we took office, the National Government had left the economy with a decade’s legacy of growth of only 2.6 percent per annum. Since then it has risen to 3.4 percent. Not only that, the OECD average in these so-called “good luck” years has been 1 percent, and we have tripled it. How much good luck can one Government have?

That genius, Mr Connell, reckons it is because of our low exchange rates. When was the last time he read the business pages of the New Zealand Herald? When we took office, it was around 52c against the US dollar; a month ago it was around 71c. When was the last time he talked to a cow-cocky trying to export milk? Don Brash must despair.

When we took office, unemployment was at 6.7 percent; now it is at 4.3 percent. Inflation has stayed down, and there we agree with National on one thing. We need an independent central bank, but we put in a Policy Targets Agreement that means that the Reserve Bank does not hit the brakes every time there is a stutter in the exchange rate. We smooth it out so exporters can export.

I could go on about all the good news, but I will not, because I want to be honest about something: the job is not done yet. Kiwis know the job is not done. They do not actually care about all the good things we have done for the last 3 years, because they will ask us in 15 months’ time what we will do for them in the next 3 years. That is a fair question. Our historic mission is to raise the level of value and information in the products we export. Let us think about the way the world is changing. It is globalising, and in a global world, we have to get good or get out. That means we have to know what we stand for. We need a unique selling proposition to take out and market to the world, and that means we need a strategy for what we do well. If we do not know, no one else will tell us.

That is why we cannot afford 10 years of the Tories. They never had a clue. Their excuse was to leave it to the market and just hope that someone else could dream it up. But they did not, did they? That is why we had miserable low growth. That is why their cheap solution resulted in social dislocation like one would not believe. That is why they have no answers even now. That is why we come to work every week in Parliament. We know that only a Labour-led Government can lead New Zealand into the future that New Zealanders deserve. Next September, or whenever the election is, New Zealanders will prove that that is what they want.

The ASSISTANT SPEAKER (H V Ross Robertson): Just before I call the next speaker, I understand that United Future and Labour will share this slot, each member speaking for 5 minutes. For the benefit of members, I shall ring the bell when 1 minute remains.

BERNIE OGILVY (United Future) : This debate on the Imprest Supply Bill is really about how best to use taxpayers’ money. We know that it is taxpayers who bring the money to Parliament and that it is the Government that has the responsibility of spending it and using it efficiently and effectively. We know that money is required for a lot of things in the governing of a nation. Tonight I want to take a moment or two to touch on some of the requirements in education. When we talk about education, we realise that there are many needs requiring help, and that there is only so much money we can give in terms of fulfilling those needs. We therefore have to choose, I imagine, what are the most appropriate. United Future asks what we should be teaching in this 21st century. What should we be looking at in terms of our knowledge society? In 30 to 50 years’ time, what will we here have left behind? Why are we doing it? How can we best use taxpayers’ money to achieve the maximum set of results?

Tonight I suggest that there are areas we could allocate moneys to that I believe would be minimal in cost but have lasting benefits in the long term. At this stage I applaud the Government for putting money into early childhood education to an extent that has never happened before. This is a positive move in early intervention, and I do not think that anybody in this Parliament would rail against the approach of lifting up our children from the very beginning of their lives so that they can make the greatest possible contribution to the future. Leaving no child out, as it were, in the endeavour, is a maximum way of achieving this.

The Government has poured enormously into this Budget a programme for the way forward. I have questions about what it means by “beyond 2007”. What does that really mean? How is that held? The Government has made a start in handling some of the tertiary student requirements, and I applaud that. It is looking at the quality of teachers and is raising the standards. It is looking at literacy. May I make a statement tonight on behalf of United Future. One of the areas of literacy that we really need to look at is financial literacy. We need to train our children from primary school level onwards in how to look at and handle money—how to manage it properly. When every child grows up, he or she becomes an adult, and one of the things that adults do is to handle money—to earn it, spend it, and to learn how to accumulate it.

One of the missing literacies within our education process right now—and I ask the Government to consider this—is a literacy programme that would help all our boys and girls become incredibly capable in terms of learning how to become entrepreneurial, create capital, look at investments properly, create a surplus, and become a contributor in our society. United Future says that we need to start with our children. Why not lift up our children, and therefore our future, by encouraging them to become literate in handling finance and money?

LYNNE PILLAY (Labour—Waitakere) : In starting, I would like to congratulate Bernie Ogilvy on a great speech, and I commend him. I think that United Future is a party that is looking forward. I would also like to talk about my colleague, my ”westie” colleague, David Cunliffe, who spoke earlier in the debate, and he spoke passionately. We are a passionate party. He spoke from the heart about what we stand for—about how we are looking forward into our future and delivering for all New Zealanders. I was in my office working away when Iheard my colleague Mark Peck talking about the pillaging and plundering that went on through the 1990s under the National Party. I look over to the Opposition benches now and see two hard-working, older gentlemen. Peter Brown says proudly: “I’m just a seaman.”, but he knows the value of hard work. Doug Woolerton, who is sitting beside him, is a hard-working farmer. Like the Labour Party and this Government, they believe in hard-working families and hard-working people reaping the rewards. That is what this party stands for. That is what this Government stands for.

In contrast, we heard drivel from members on the other side of the House. It was absolute nonsense. Shane Ardern is off his tractor! At dinner time I saw him eat very unhealthy food in the cafe. He was eating a big hamburger and chips; Sue Kedgley would have been shocked. Then he comes into this House, along with his colleagues, and talks a lot of drivel and absolute nonsense. That is all we have heard from that side of the House.

I have no time for nonsense. This party has no time for nonsense. This Government is not into nonsense. It is into good, stable, government that delivers. It is into quality education and an affordable, effective health system that promotes good living, a good diet, and healthy living. This Government is into security in retirement for those older people amongst us now who will be looking towards their retirement. Those of us who are 50, and approaching it, know that this Government will provide. Will a National Government provide for people? No, it will not. There are no guarantees whatsoever. Quality education is what this party stands for. We invest in quality education.

Shane Ardern: How long?

LYNNE PILLAY: Forever, and for as long as we are in Government. If there is a change of Government, that is when those things come to an end. Opportunity in jobs and training, and affordable tertiary education and apprenticeships, are things very dear to my heart. Apprenticeships bring skills into our businesses and production, and that means that our businesses grow. The result is a buoyant, winning economy, and with that we can invest in our people, in working families in New Zealand, and in our future. That is what this Government is about. We are upfront. We say “Here’s the deal. We invest in people. We get you into work. We’ll support you and your family in work. Why? Because it’s good for you and it’s good for our country.”

The leader of this party, the leader of this Government, and the MPs in this party, talk about our policies. We wear our policies, like our hearts, on our sleeves. I can see National Party members and its leadership members hang their heads in shame. Where are their policies on health, education, holidays, defence, nuclear issues, and superannuation? They do not have any. They flip-flop around and New Zealanders simply will not accept that. New Zealanders want to stay with a Government that works for them and with them. Labour does not want to beat up on people.