Tuesday, 7 June 2011
Mr Speaker took the Chair at 2 p.m.
Hone Harawira, Te Tai Tokerau
Mr SPEAKER: I wish to advise the House that I have received a letter from Hone Pani Tamati Waka Nene Harawira resigning his seat in the House with effect at the close of Friday, 20 May 2011.
Questions to Ministers
Dr RUSSEL NORMAN (Co-Leader—Green) to the
Prime Minister: Does he stand by his comments that there is nothing wrong with Ministers accepting hospitality from the Government’s banker, Westpac?
Rt Hon JOHN KEY (Prime Minister)
Dr Russel Norman: Does he have any concerns about ministerial staff accepting the corporate hospitality of Westpac; if not, why not?
Rt Hon JOHN KEY: I expect them to act carefully, in a considered manner, and, even though they are not bound by the
Cabinet Manual, in the same way as is laid out in the
Dr Russel Norman: Does he consider that public servants, such as staff from Treasury, should be able to enjoy the corporate hospitality of Westpac?
Rt Hon JOHN KEY: That is a matter for the State Services Commissioner.
Dr Russel Norman: Can he guarantee that no ministerial staff seconded from Treasury have enjoyed the corporate hospitality of Westpac?
Rt Hon JOHN KEY: No.
Dr Russel Norman: Will he, then, follow up with the Minister of Finance as to whether any of his ministerial staff seconded from Treasury have been enjoying Westpac’s corporate boxes given that public servants are not supposed to accept such gifts?
Rt Hon JOHN KEY: No—I think the edict was over the Rugby World Cup, not prior to that—in the same way that I will not be delving into that member’s mind to see whether he changed it on his views to America when he accepted free travel from the US State Department.
Dr Russel Norman: Would the Prime Minister have any concerns about Treasury staff receiving corporate gifts in the form of access to Westpac’s corporate boxes given that Treasury is the decision maker for the Government’s multimillion-dollar banking contract?
Rt Hon JOHN KEY: No. I do not think the member is right. I think the process is being run by the Ministry of Economic Development. It will make a recommendation and that recommendation will go to Ministers, who are likely to base their decision on the recommendation. What I am fairly sure of is that we will not be following the suggestion at the Green Party conference that it goes to Kiwibank. That is because Kiwibank itself has come out and said that although it has the ambition it does not have the capability.
Dr Russel Norman: If the final decision on the master banking contract is therefore in the hands of Ministers under the influence of ministerial advisers, does he have any
concerns that both Ministers and ministerial advisers have been in receipt of corporate hospitality from Westpac?
Rt Hon JOHN KEY: Mr Speaker, I—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I know it is unusual to come to the defence of the Government at this time, but I think it is important that the question of undue influence of people on members of Parliament, even, in my suggestion, in their ministerial roles, is a suggestion that should not be made in this House.
Dr Russel Norman: If I have inadvertently made an inference of undue influence, that was certainly not my intent. I am questioning the process of awarding the contract—
Mr SPEAKER: I will allow the member to repeat his question and to make sure that there is no implication of undue influence.
Dr Russel Norman: Does the Prime Minister accept that if, as he has just said, it is up to Ministers to make the decision about the allocation of the master banking contract, the public may rightly have concerns when they see Ministers receiving corporate hospitality from Westpac?
Rt Hon JOHN KEY: No more than they would have concerns about Russel Norman going off to America, paid for by the US State Department. I do not really like the inference from the member, because it is without foundation. There are well set out guidelines in the Cabinet guidelines. There is also a pecuniary interests list. The member is simply making accusations to get on the front page of the paper, and I think the member can do better than that.
Dr Russel Norman: I seek leave to table my pecuniary interests statement, where I made it transparent about the State Department gift, unlike—
Mr SPEAKER: Order!
Dr Russel Norman: —corporate gifts from Westpac.
Mr SPEAKER: Dr Russel Norman is very lucky that I do not take more serious action, because he knows I was on my feet. He kept speaking when there not a matter of a point of order. It started out as a point of order, and I fully accept that, but then he went on to matters beyond a point of order, and we do not table publications that are as readily available to all members, as pecuniary interests are.
Rt Hon JOHN KEY: I raise a point of order, Mr Speaker. I would ask you to reflect when you have a moment on the comments made by Dr Norman. What he has said in the House this afternoon is that members are in breach—
Mr SPEAKER: Forgive me, but it was not a point of order that the Prime Minister was seeking to raise there. The questions, I accept, may have had implications, but because of that I allowed the answers to somewhat reflect on the questioner, which I may not have done under other circumstances. So I think the situation has balanced itself out. I think the questioner, in the answers received, had some of his actions questioned, and I think that is where the matter should rest at the moment. But I do urge members to be careful in asking questions to make sure they do not imply improper practice. I apologise, because I should have come down more heavily on the last supplementary question. I did err there in not making sure more quickly than I did that the question was rephrased.
Rt Hon JOHN KEY: I raise a point of order, Mr Speaker. I do not wish to prolong things, but it is against the Standing Orders for a member to deliberately mislead the House. The point I was going to make is that the member has actually made an accusation that people have deliberately misled the House.
Mr SPEAKER: I apologise, but members cannot use the Standing Orders procedure to accuse other members of deliberately misleading the House. There is a proper
procedure for doing that. If the member has offended any individual members, they can make a personal explanation. There are other procedures, though, to be followed if it is believed that a member has deliberately and wilfully misled the House. There are other procedures to be followed on that; we do not use the Standing Orders procedure for that purpose.
Hon Simon Power: I raise a point of order, Mr Speaker. As somebody who has declared in the pecuniary interests register that I received hospitality from Westpac, I do take offence at the comments made by the member that all members on this side of the House did not.
Mr SPEAKER: If the member wishes to make a personal explanation he can seek leave to do that, but he cannot use the point of order process to make a political statement in the way he just has. The Standing Orders do not provide for members to do that; there is a procedure. If the member has been offended, he can seek leave to make a personal explanation.
Hon Simon Power: Which I just did.
Mr SPEAKER: If the member is seeking—
Hon Simon Power: No, no, I am not seeking—
Mr SPEAKER: The member cannot get to his feet on a point of order and claim someone has misled the House or claim he has been offended. He can seek leave to make a personal explanation if he believes that an unparliamentary statement was made; I have already dealt with that matter. I accept that I perhaps erred in not coming down rapidly enough on the questioner when he appeared to imply, in a question, possible inappropriate behaviour. If a member believes some other member has deliberately and wilfully misled the House, there is a procedure to go through for that; it is not the point of order process.
Dr Russel Norman: I raise a point of order, Mr Speaker.
Mr SPEAKER: I have dealt with that point of order. Does the member have a new point of order?
Dr Russel Norman: I do, Mr Speaker. Just to clarify, at no point was I suggesting that—
Mr SPEAKER: The member will resume his seat immediately. This is just abusing the Standing Orders of the House. We do not carry on a debate under a point of order. Members should be careful to not abuse the Standing Orders in the first place. I have already apologised to the House; I blame myself for letting things get to the point they did. I will watch more closely in the future.
Chief Science Advisor—Advice
Hon ANNETTE KING (Deputy Leader—Labour) to the
Prime Minister: Is he satisfied with the advice he has received from his Chief Science Advisor, Professor Sir Peter Gluckman?
Rt Hon JOHN KEY (Prime Minister)
: Yes. I created the role of Chief Science Advisor to provide me with an independent channel of scientific advice. I am pleased with the contribution Professor Sir Peter has made to the broad suite of information that the Government considers as it develops its policies.
Hon Annette King: Does he agree with Sir Peter and the report of his task force that failure to use social science evidence properly is a core failing of policies, and that evidence and scientific advice is a good base for policy development?
Rt Hon JOHN KEY: As a general rule, yes, but of course one will always acknowledge that there is often quite a range of views from the science community.
Hon Annette King: What evidence and scientific advice did he seek before agreeing to allocate $2.4 million to Parents Inc. for a parenting programme that even the Minister
for Social Development and Employment said she had neither sought nor received advice on, or was she carrying out his promise that he made before the election that he would make sure that Parents Inc. got money?
Rt Hon JOHN KEY: Members will accept that, as Prime Minister, I am not responsible for the allocation of that contract. That actually goes through the Ministry of Social Development. But I would say I have seen that Toolbox; I have seen the programme. In my opinion it is a very, very successful programme that is helping New Zealand parents, and we do need to help parents in New Zealand.
Hon Annette King: As the contract with Parents Inc. is yet to be signed, is he prepared to require a tender for the $2.4 million for a parenting programme now that other organisations have come forward to say they have a similar programme but they had no chance to bid for that money; if not, why not?
Rt Hon JOHN KEY: I think that was pretty wide of the primary question. Anyway, my advice is—I will not say that, actually. My advice to the member is to take the matter up, if she wants to, with the Minister for Social Development and Employment. I can say my understanding is that no one else provides a similar programme off the shelf like that that is so successful.
Hon Annette King: If evidence and scientific advice should be the basis for policy development, why is he ignoring the task force report and insisting on putting even more money into boot camps, which it said were doing very little to help teenagers and needed a thorough assessment?
Rt Hon JOHN KEY: I do not agree with the member’s proposition. For a start, the military activity camps, which the member talks of, have had the first cohort go through. There will be an evaluation. It is a little too early to evaluate them, because those people are still in the middle of their participation. I draw the member’s attention to a letter I received on 26 May from the Principal Youth Court Judge, Andrew Becroft, in which Judge Becroft wrote, in respect of whether military activity camps were a success: “Cautiously, they could be expanded into two of the remaining three residences (Wiri and Palmerston North), which are located close to military training facilities.” He also wrote about the smaller number of people going before the Youth Court. I tend to take the view of Andrew Becroft, who knows what he is talking about, as opposed to that of the member, who has not a clue what she is talking about.
Hon Annette King: I seek leave to table the comments of Sir Peter Gluckman. They were not my comments—[Interruption]
Mr SPEAKER: I ask the Hon Parekura Horomia what it was about that seeking of leave by his colleague just two seats along from him that he did not understand. There was no need for that interjection. What we need to sort out, though—[Interruption]—no, no. The last part of the member’s seeking of leave was out of order. She was seeking leave and did not need to make the other comments. What we did need to know, though, was the source of the comments that she is seeking leave to table.
Hon Annette King: It is a press release—
Mr SPEAKER: Then we do not table it. That is the end of the—
Hon Annette King: I raise a point of order, Mr Speaker. I have just heard you make a ruling for the Prime Minister, when he rose to accuse the Green member of misleading this House. You said there was a proper place to bring that up.
Mr SPEAKER: The member is now getting into the same patch as everyone else. We do not table press statements. If the member is concerned that someone has misled the House, then there are other means of dealing with that. We do not debate it by way of a point of order. I know we have had a 2-week adjournment, but we should not forget the Standing Orders of the House. We do not debate those matters by way of points of order.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I note what you have just said, but you have in your written rulings to us indicated that you will not proceed with breach of privilege applications. You said you will not refer them to the Privileges Committee when they relate to supplementary questions, as opposed to prepared answers. The Prime Minister accused Annette King of drafting something in a supplementary question—
Mr SPEAKER: There is a Standing Orders Committee, and the member is a member of it. If he believes there is a need to amend the Standing Orders of the House, then we can do that. It is not beyond our ability to do that. The issue raised earlier on today was about deliberately and wilfully misleading the House. Supplementary questions, it is considered traditionally in this House, are not of such a formal situation to normally be considered to have been intended to deliberately mislead the House. They can at times, I accept, accidentally mislead the House. If there is a gap in our Standing Orders, there is the chance to deal with that. But we will certainly not debate these matters by way of points of order.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. In the past there have been occasions where something has been so egregious in a supplementary question that, in my understanding, cases were raised with the Privileges Committee. In this particular case it was just a straight matter of fact—
Mr SPEAKER: The member is now seeking to debate the matter—[Interruption] I am on my feet, and we will not have any more of this. I am certainly prepared to look back over the record to see how many times a supplementary question has been the subject of a matter referred to the Privileges Committee. I think it would go back a fair way, if that were to be the case, but I will certainly check the record for the member.
Jacinda Ardern: What was the reoffending rate of participants involved in the Government’s boot camp concept trials completed in 2009 and 2010?
Mr SPEAKER: Before I invite the right honourable Prime Minister to reply, I just alert members that where there is such a broad primary question, to expect the Prime Minister to have at his fingertips the details of boot camp outcomes is—[Interruption] I will allow the question, because the Prime Minister certainly mentioned these in his answer. I will allow the question, but to expect him to have the details is not easy. The right honourable Prime Minister, in so far as he can answer the question.
Rt Hon JOHN KEY: I do not have those details to hand, but what I do have to hand is a letter from Judge Andrew Becroft, the Principal Youth Court Judge, in which he actually sets out, subject to an inquiry I made when I was at a military activity camp about how things were going, and that I would appreciate his assessment—
Hon Annette King: Table it.
Rt Hon JOHN KEY: I am more than happy to table it. What he goes on to talk about, though, is very interesting. He says not only have youth apprehension rates dropped slightly in the last 2 years but “Youth Court numbers have dropped by 31% in the last two years;”. He goes on to talk about Fresh Start and the impact of those military-type programmes, and says they are working. He goes on to say they are broader than the basis on which the member is trying to comment. He then goes on to say, cautiously, that he wants to expand the programme.
Hon David Parker: I raise a point of order, Mr Speaker. I ask that the Minister table the official document from which he was quoting.
Mr SPEAKER: The member knows that a letter is not an official document. It is up to the Prime Minister whether he wishes to seek leave.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I want to make it clear that the Prime Minister can table it, without leave. He indicated that he would table it, and I wonder why he has not yet done so.
Mr SPEAKER: The member knows there is no Standing Order to provide for another member of the House to try to encourage someone else to table a document. If the Prime Minister was quoting from an official document, there is no question. But the Prime Minister was not quoting from an official document, and it is up to the Prime Minister whether he wishes—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think that one of our hearings may have been slightly wrong. I thought that, in response to an interjection, the Prime Minister said he was happy to table the document.
Mr SPEAKER: That is a matter for the Prime Minister; it is not a matter for other members.
Rt Hon JOHN KEY: I seek leave to table a letter from Judge Becroft in relation to, amongst other things, youth justice, in which he goes on to personally thank me for my clear—[Interruption]
Mr SPEAKER: I say to the right honourable Prime Minister that I am on my feet and that that nonsense will stop, because that was also an abuse of the Standing Order procedure. I have allowed abuses on both sides now, and my patience will run out shortly. But leave has been sought to table that document. Is there any objection? There is no objection.
- Document, by leave, laid on the Table of the House.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. This is just a request that you look at the tapes, later, of the way that you intervened on Russel Norman and the way that you intervened on the leader of the National Party.
Mr SPEAKER: I will look at the tapes, and I have made it very clear that I was not happy with the right honourable Prime Minister’s behaviour then, and he knows that I will be watching him for the rest of question time.
Budget 2011—Future Growth and Jobs
AMY ADAMS (National—Selwyn) to the
Minister of Finance: How is Budget 2011 supporting future growth and jobs?
Hon BILL ENGLISH (Minister of Finance)
: The Budget sets out the next steps in the Government’s plan to build faster growth and more jobs. Most New Zealanders now understand that sustainable growth and jobs cannot be based on spending and borrowing more but need to be built around saving, investing, and exporting. New Zealanders are reducing their own demand for debt. As a result, credit growth is now close to zero for the first time in 20 years. New Zealanders also expect that their Government will behave responsibly. That is why the Government has plotted a path back to surplus in 2014-15, turning round the forecasts of ever-rising debt and permanent deficits that this Government inherited.
Amy Adams: Why is lifting national savings a prerequisite for faster growth?
Hon BILL ENGLISH: Higher national savings should contribute to sustainable growth. As the Budget pointed out, between 1990 and 2005 we grew our export volumes by over 5 percent a year. Had this trend continued, exports would today be $14 billion higher. If we want to get back to that sort of growth, then we need higher national savings so that we have the capacity to invest in faster growth.
Amy Adams: What benefits for growth and jobs did the Budget deliver?
Hon BILL ENGLISH: Over the Government’s first three Budgets we worked to take the sharp edges off the impact of the global financial crisis, protected the most vulnerable, improved the tax system, invested in infrastructure, and set a course back to surplus. There are an increasing number of positive factors for growth: growing trade links with Asia, the lowest interest rates in 40 years, the highest terms of trade in several
decades, two-thirds of the population with a marginal tax rate of 17.5 cents, and higher private savings rates. We hope these factors will underpin a growing lift in business confidence that will flow through into more jobs and higher incomes.
Budget 2011—Fiscal and Economic Forecasts
Hon DAVID CUNLIFFE (Labour—New Lynn) to the
Minister of Finance: Does he stand by the fiscal and economic forecasts in his Budget?
Hon BILL ENGLISH (Minister of Finance)
: The member will be well aware that under the Public Finance Act the projections are prepared independently by Treasury. A statement of responsibility that best professional judgment has been used is signed off by the Secretary to the Treasury, who accepts overall responsibility for their integrity. This has been a longstanding practice and ensures that the projections are objective and independent. Normal forecast uncertainty, of course, applies to these forecasts as much as to any others.
Hon David Cunliffe: Does he agree with the acting Secretary to the Treasury, Gabriel Makhlouf, that the economic outlook has worsened since the Budget forecasts were finalised, and that “the risks are weighted to the downside for the forecast period as a whole.”, and can he think of another occasion upon which Budget forecasts have lasted only 2 weeks before being talked down by his own officials?
Hon BILL ENGLISH: The member would have to ask the Treasury officials who served under the 9 years of the previous Government to see whether there was one of those occasions then. It is my understanding that Mr Makhlouf is referring to the unease and uncertainty, particularly in financial markets, as the European debt crisis gains momentum. The good news is that over the next 12 months New Zealand will be borrowing only about $5 billion net in international markets, instead of $20 billion. That means we are less exposed to those risks. So I do not agree completely with Mr Makhlouf.
Chris Tremain: How have the Budget projections been generally received?
Hon BILL ENGLISH: Most forecasters regard the Treasury forecast as pretty much middle of the pack—that is, reasonable. They show the economy picking up steam with pretty moderate growth rates, actually: 2 percent over the next 12 months, and then 4 percent in the 12 months beyond that. Those are boosted by factors such as continuing low interest rates—the lowest in 40 years—and increasing focus of our exports towards Asia, where fast-growing markets are willing to pay more, for more of our products.
Hon David Cunliffe: Given that the Minister is busily distancing himself from Treasury forecasts, does he stand by the Treasury figures released to media that confirm that Government borrowing this year exceeds requirements by approximately $5 billion; if so, can he explain to the House why he told New Zealanders—why he told New Zealanders—that the “borrowing requirement” had increased from $300 million to $380 million per week?
Hon BILL ENGLISH: Because that is what the New Zealand Government has been borrowing, on average, over the last 12 months. The original borrowing programme was for about $300 million a week, because two things happened together. One was the Christchurch earthquake, and the second was favourable conditions for borrowing at cheaper rates. New Zealand’s Debt Management Office took advantage of that. It borrowed about $5 billion more than was strictly necessary, and that means that over the next 12 months it will borrow about $5 billion less because it already has the money in the bank. Given the state of world financial markets, I think that that has turned out, in hindsight, to be a very smart move.
Hon David Cunliffe: Given that answer, who is running the economy—Mr Key, who said today that this additional borrowing would have no impact on the exchange
rate; or the Minister himself, who said that it would, and who thus provided a further reason for reducing debt?
Hon BILL ENGLISH: The member is not quoting correctly what was actually said. But I think that everyone, including him, agrees that if the Government is borrowing large amounts of money in offshore markets, such as $300 million, or $380 million, a week, to meet the deficit requirements of running our national superannuation scheme, paying for Working for Families, building schools, investing in infrastructure, and repairing Christchurch, then that could put some pressure on the exchange rate. The good news is that this Government is getting on top of that debt. We are turning it round over the next 4 years, and that will reduce the pressure on interest rates and the exchange rate.
Hon John Boscawen: Given that Treasury forecasts have consistently overestimated annual GDP growth by 1.8 percent per annum, on average, since 2005, does the Government have a strategy, if growth is once again lower than its rosy forecast, other than a strategy of borrow and hope; if so, what is it?
Hon BILL ENGLISH: The Government puts its Budget together in the full knowledge of the risks for economic growth—that is, that in any given Budget, growth could be higher or lower than the forecasts on which the Budget is based. If the circumstances changed significantly, then of course the Government might have to shift some of its policy settings—if they changed significantly. However, I think we have a pretty conservative, moderate base for the Budget. We have made some moderate but far-reaching decisions in the changes in Government expenditure, and it would take some quite significant external event to knock us off track.
Hon David Cunliffe: Given that the Minister is on top of the debt problem in the Budget, can he explain why Standard and Poor’s has kept New Zealand on a negative credit outlook?
Hon BILL ENGLISH: The member would have to address the agency directly about that, but I would imagine—
Hon Gerry Brownlee: Probably gone double negative.
Hon BILL ENGLISH: Actually, the member might be better off if he did not show up. The Government has put in place a number of decisions to reduce expenditure and to support economic growth. Like the ratings agencies, we would want to be sure that those things turned out 100 percent the way we wanted them to before we would get too excited about progress. This is a Government that consistently under-promises and over-delivers.
Hon John Boscawen: Given the Minister’s answer to my previous question, how conservative does he think is Treasury’s downside scenario or estimate, found on page 106 of the Budget Economic and Fiscal Update, of growth of 4 percent to the year ending 2013, and 3 percent to the year ending 2014?
Hon BILL ENGLISH: Well, it depends a bit on the context. Generally, when New Zealand is coming out of recession we reach growth rates of from 5 percent to 7 percent per annum. That has been common after the last two or three recessions. So compared with those, these forecasts are moderate. I think the favourable factors are high export prices and the rebuild of Christchurch. The less favourable factors are the caution that New Zealanders have about spending in the shops, and their spending more on housing, which are usually big drivers of growth. So we think, on balance, these forecasts are reasonably moderate.
Hon John Boscawen: I seek leave to table a chart showing that Treasury’s—
Mr SPEAKER: What is the source of the table?
Hon John Boscawen: It is a chart prepared by ACT researchers showing that GDP growth in New Zealand has been 1.8 percent less than Treasury forecasts over the last 5 years.
Mr SPEAKER: Leave is sought to table that ACT-prepared document. Is there any objection? There is no objection.
- Document, by leave, laid on the Table of the House.
DAVID BENNETT (National—Hamilton East) to the
Minister for Communications and Information Technology: What progress has the Government made on its election policy to roll out ultra-fast broadband to 75 percent of New Zealanders?
Hon STEVEN JOYCE (Minister for Communications and Information Technology)
: Last month the Government reached agreements with Telecom New Zealand and Enable Networks, through Crown Fibre Holdings, to complete the roll-out of ultra-fast broadband, complementing the existing partnerships with WEL Networks and Northpower. The Government will partner with Enable Networks to build an ultra-fast broadband network for Christchurch and Rangiora. The Telecom agreement will see a fibre-optic access network built in Auckland, the eastern and lower North Island, and most of the South Island. In addition, Telecom must split off its network arm, Chorus, into a completely separate company, so that all broadband retailers can compete fairly on a level playing field. These arrangements will be truly transformational for New Zealand.
David Bennett: How will the roll-out benefit New Zealand communities?
Hon STEVEN JOYCE: These four agreements with Northpower, WEL Networks, Chorus, and Enable Networks mean the Government will reach its goal of bringing ultra-fast broadband to 75 percent of New Zealanders by 2019. The roll-out will start immediately, with schools, hospitals, and 90 percent of businesses to be covered by 2015. Ultra-fast broadband is a key part of the Government’s economic growth agenda. These new networks will provide an economic step change for our country as we leapfrog many of our competitors to become one of the most fibred countries in the world. The competitive access prices that Crown Fibre Holdings has negotiated will ensure that the benefits of fibre are within easy reach of businesses as well as everyday New Zealanders.
Clare Curran: Will funding for broadband for the 303 schools—[Interruption]
Mr SPEAKER: I want to be able to hear the question.
Clare Curran: Will funding for broadband for the 303 schools that he mistakenly excluded from both the urban and rural broadband schemes come from the $285 million already awarded to Telecom and Vodafone for the Rural Broadband Initiative; if not, where will it come from, and how much will it cost?
Hon STEVEN JOYCE: The member continues to be incorrect in her premise, as she is about a number of things to do with broadband initiatives. The $300 million was set aside for the Rural Broadband Initiative. The contract was $285 million, which leaves $15 million set aside for the remote coverage areas and for the Rural Broadband Initiative to connect zone 3 schools. That will more than adequately cover the cost of linking the schools to their local cabinets with fibre, especially given that the drop costs are funded separately through the Ministry of Education. We had to wait to see the ultra-fast broadband footprint before we could tender to connect these schools, and the tender, I can tell the member, will be going out very shortly. Conspiracy over.
Clare Curran: I seek leave to table two documents. The first is a letter from the Minister to InternetNZ, Federated Farmers, and the Telecommunications Users Association, dated 27 May, setting out that 303 schools will be part of a planned procurement activity next year, and only—
Mr SPEAKER: We have heard sufficient on that. Leave is sought to table that document. Is there any objection? There is objection.
Clare Curran: I seek leave to table a document titled
RuralBroadband Initiative: Final Proposal, which spells out that there are no changes proposed—
Mr SPEAKER: What is the source of this document?
Clare Curran: The Ministry of Economic Development website.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.
Chris Tremain: I raise a point of order, Mr Speaker.
Mr SPEAKER: I will deal with the point of order myself. I apologise to members for taking up this matter, but the House does have a dress code. If the member Clare Curran is wearing the top of a sports team—and I can imagine an occasion when the Speaker’s permission might be sought to do that—I would ask her to leave the Chamber and come back dressed consistently with the Standing Orders of the House. [Interruption] Does the member wish to raise a point of order? I am happy to hear it.
Clare Curran: I raise a point of order, Mr Speaker. Could the Speaker please alert me to the relevant Standing Order on the dress code for women?
Mr SPEAKER: The Speaker has decided that it is not appropriate, unless the Speaker’s permission is sought, to advertise sports teams in this Chamber. Nothing is allowed to be advertised in this Chamber. If a male member of this House came into the Chamber wearing a soccer top or a rugby top, he would be asked to leave. [Interruption] I am on my feet. In the interests of fairness across all members of the House, the rules should be consistent on either side. What is expected in this House is normal business attire. I am asking the member to leave the Chamber and come back dressed appropriately, should she wish. That is all I am asking. It is not a big call.
Metiria Turei: Speaking to the point of order.
Mr SPEAKER: I am on my feet, and I am waiting for the member to leave the Chamber. I am waiting for the member to leave. This House does have certain dress standards. It would not be acceptable for a male member to be dressed in that way, and it is totally unreasonable, therefore, to discriminate.
- Clare Curran withdrew from the Chamber.
Mr SPEAKER: I let the member ask her questions, I did not interfere with her right to ask questions, but I do insist that the standards of this House be upheld.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. I thank you for the ruling you have just made, because I think it is the first step towards having some equality in this House. It is, I think it is fair to say, important to get on the record that it is the first step in having standards for women. We have had in the past Ruth Richardson regularly appear in this House in a tracksuit, and that was allowed because I think when the original rules were developed it was not contemplated that there would be women members of Parliament. Mr Speaker, I ask you to look very carefully at your ruling on sports attire and advertisements for sporting events and for sports teams. I happen to be wearing at the moment the tie that was used when there was a bipartisan approach to New Zealand becoming the Rugby World Cup host. Are you suggesting that it is inappropriate to advertise that event; if not, is it inappropriate to support a rugby team by wearing its tie or, as a number of members do, wearing the badges of those teams?
Mr SPEAKER: I hear the honourable member. It is not an unreasonable point he has raised. I fully accept that there are times when members wear ties and pins of sports teams, and I have no objection to that whatsoever. Members, I think, need to exercise some discretion. I draw members’ attention to Speaker’s ruling 16/8, which states: “The Speaker will take issue with any member who is not dressed in appropriate business attire, whether the member is male or female.” Members will note that I did not interfere in the member’s asking of questions. I think that would have been totally unreasonable. I am very happy for the member to come back into the House. It is not that the member has been asked to leave the House for any period of time at all. It is just that I believe that the Speaker needs to be even-handed in the way he treats men and women in respect of their attire.
Sue Kedgley: I raise a point of order, Mr Speaker. I wonder, given today’s incident, whether you could spell out for us what business attire is that we women are expected to comply with. Could we have it elaborated for us?
Hon Trevor Mallard: Very briefly, I had not caught up with Speaker’s ruling 16/8, which, of course, was well after the time that Ruth Richardson and a number of other women used to wear tracksuits in the House.
Mr SPEAKER: All I can say is I was not the Speaker then. I do not think women need a lot of assistance on what is reasonable. All I am asking is for members to be reasonable. I will not be pedantic about this sort of thing, at all. There is no doubt that were a male member to come into the House wearing a rugby top or soccer top, issue would be taken with that. I am just being even-handed across the House.
Sue Kedgley: I raise a point of order, Mr Speaker. I did ask whether you would please make a commitment to spell out for women what business attire for women is, because I, for one, am completely confused as to what constitutes—
Mr SPEAKER: I have just made it clear to the House that I trust members’ own judgment on that, within reason. I do not wish to be pedantic. It does not need me to indicate to women what reasonable business attire is.
State-owned Assets, Sales—Ownership of Shares
Hon CLAYTON COSGROVE (Labour—Waimakariri) to the
Prime Minister: Does he stand by his statement, in relation to the partial sale of SOEs, that “New Zealand investors would have to be at the front of the queue for shareholdings”?
Rt Hon JOHN KEY (Prime Minister)
: Yes. That was one of the tests I set out for the mixed-ownership model: that “New Zealand investors would have to be at the front of the queue for shareholdings”, and that we would have to be confident of widespread and substantial New Zealand share ownership. Treasury’s advice is that these tests can be met. In particular, there is likely to be significant demand from the likes of KiwiSaver funds, other institutional fund managers, Crown financial institutions like the Superannuation Fund and ACC, iwi, and mums and dads who are looking for good, solid investments.
Hon Clayton Cosgrove: Given that the then Minister for State Owned Enterprises, Tony Ryall, said in 1999 that the sale of Contact Energy had been “a great success” after claiming that 225,000 mums and dads had invested in the company, can we now conclude that that float was actually a great failure, given that the number of mum and dad investors has fallen by two-thirds to around 70,000?
Rt Hon JOHN KEY: No. The first thing I would point out is that it was a very different model back in 1999. The Government is proposing—if it continues to be the Government post - 26 November—to have a 51 percent minimum shareholding held by the Government, then for New Zealanders to be at the front of the queue for the other 49 percent of shares. I refer the member to a story written by Pattrick Smellie in relation to
Contact Energy’s Kiwi shareholders. He called them a loyal bunch, and said: “One of the least defensible criticisms of the Key Government’s partial privatisation plans have been regular references to Contact Energy as an example of a privatised company which lost control to foreigners. Yet nothing could be further from the truth.” I could go on, but I think I have made reference to the article before in the House.
Hon Clayton Cosgrove: Given Treasury’s advice that “significant participation by foreign investors will be essential to achieve the Government’s overall objectives”, can he provide the House with an estimate of the proportion of State-owned enterprise shares that foreign investors will end up owning?
Rt Hon JOHN KEY: My estimate is that that proportion will be quite low, for a number of reasons. Firstly, as I have said, we will be putting New Zealand investors at the front of the queue, and it is very likely, as Treasury’s advice has said, that huge demand will come from these areas. Treasury is working on ensuring that those tests can be met, and I am confident that we will meet them.
Rahui Katene: What assurances does the Prime Minister have that hapū and iwi will be at the front of the queue for shareholdings in State-owned enterprises, and what progress has been made to this effect?
Rt Hon JOHN KEY: I cannot give them an assurance that they will be at the front of the queue, but I can give them an assurance that they will be treated like all other New Zealanders.
Hon Clayton Cosgrove: How does he propose to prevent mum and dad investors from onselling their shares in State-owned enterprises to foreign investors, which is something Treasury has said will happen, and is something that clearly happened in the case of Contact Energy?
Rt Hon JOHN KEY: I go back to what I said earlier: in the case of Contact Energy the model was very different. Treasury is looking at that model, and there could well be a lot of examples—I think in Australia, for instance—of sales where loyalty bonuses and the likes were used.
Hon Clayton Cosgrove: Is the projection accurate that $300 million in fees will be paid to lawyers, investment bankers, and other advisers?
Rt Hon JOHN KEY: I have not seen that projection. I can say the Minister of Finance is working closely with Treasury to ensure that the fee structure is low. I know that the Leader of the Opposition asked for some information from my office just this week in relation to what the fee structure was for Contact Energy. I am sure the member has seen that. From the top of my head, the fee structure was 1.9 percent. That is very low, relative to what we have seen in the private sector, where it runs at anything up to 7, 8, or 9 percent. These are billions and millions of dollars’ worth of assets, so my expectation is that the fee structure would be low, relative to what we have seen in the private sector.
MICHAEL WOODHOUSE (National) to the
Minister for ACC: What action is the Government proposing to reduce workplace accidents, improve rehabilitation rates for employees, and make ACC more efficient?
Hon Dr NICK SMITH (Minister for ACC)
: The Government last week released a discussion paper on extending the Accredited Employers Programme and allowing workplaces a choice of insurer. The paper sets out the detail of the prudential requirements for insurers, a clearing house to minimise compliance costs for health providers, and the independent disputes process, and it reinforces that, regardless of insurer, employees will have the same cover and entitlements for care, rehabilitation, and compensation.
Michael Woodhouse: What evidence is there that these reforms will deliver safer workplaces and better rehabilitation?
Hon Dr NICK SMITH: The stocktake report did a comprehensive study covering the last 10 years of accident and rehabilitation rates, comparing like with like, and found 12 percent fewer accidents and 15 percent lower costs under the Accredited Employers Programme. The study attributed these gains to employers being far more engaged in workplace safety and the rehabilitation of their workers. Translated over the New Zealand workforce, this means 10 fewer fatalities, 22,000 fewer injuries, and cost savings of $85 million each year. This is the main reason the Government wants to expand choice to beyond just a few large employers.
Michael Woodhouse: What were the results of the 1998 reforms, and how does the Government’s approach this time vary from them?
Hon Dr NICK SMITH: It is interesting to note, in terms of the number of workplace fatalities, that in 1999 and 2000—the period when there was choice—fewer workers were killed in the New Zealand workplace than in any other year in New Zealand history, albeit I do accept that we are not able to draw comprehensive conclusions from just that short period. The first change we are making from that approach is leaving ACC in the marketplace—that is, companies are given the choice of an alternative insurer, but they are not compelled to choose an insurer other than ACC. There were some problems with health providers seeking payment for care from multiple insurers, so—and this is the second change—we are proposing a single clearing house for all claims. We have learnt from that record, and we are sure there will be even more gains for New Zealand from these reforms.
Chris Hipkins: How will privatising the ACC work account make the system more efficient given that an independent PricewaterhouseCoopers report found that ACC was already among the cheapest in the world, that New Zealand employers already pay half what Australian employers pay, on average, and that the private insurance industry has already said it cannot do accident cover as cheaply as ACC can?
Hon Dr NICK SMITH: Firstly, I must correct the member’s use of the tired old word “privatisation”. This reform is no more privatisation than the decision in the 1970s to provide, for instance, alternative radio providers, or the decision in the 1980s to allow TV3 to operate alongside
Television New Zealand (TVNZ). Anybody who said today that the fact that choice was provided in the 1970s and 1980s meant that TVNZ and Radio New Zealand were privatised would be seen as ridiculous. In respect of the 2008
PricewaterhouseCoopers report, the part that is most interesting is that at the very time when PricewaterhouseCoopers was delivering a report for the Government to say how good ACC’s monopoly was, ACC was simultaneously having talks with the Government about a multibillion-dollar bailout because it had huge losses over that 2-year period.
Development Assistance—Advice on Shift of Focus
Hon MARYAN STREET (Labour) to the
Minister of Foreign Affairs: What advice, if any, did he receive about shifting the focus of development aid from poverty alleviation to sustainable economic development and from whom did he get that advice?
Hon MURRAY McCULLY (Minister of Foreign Affairs)
: I consulted a wide range of individuals, including heads of mission, former heads of mission, officials, non-governmental organisation leaders, and representatives of the Governments that receive New Zealand’s development assistance. I also consulted the New Zealand public, who considered National’s policy of changing the previous focus of the aid programme and elected a National-led Government.
Hon Maryan Street: Would he agree with Dr Ganesh Wignaraja, a leading Asian Development Bank economist, who said at a recent World Trade Organization seminar in Singapore that the best bang for the aid buck was still found in educating girls; if not, why not?
Hon MURRAY McCULLY: I have not seen the specific point, but I would agree that education should be one of the cornerstones of the development programme for both girls and boys. It is a matter that the Government is giving some considerable priority to at the moment, and, indeed, it is one of the reasons why I have invited my colleague Mr Allan Peachey, who used to be the principal of New Zealand’s largest secondary school, to lend some special assistance to us in refining our education programmes around the Pacific.
Hon Maryan Street: Why, when an Asian Development Bank report released in April this year found that only 62 percent of primary-age girls in Papua New Guinea were attending school, does the Minister consider gender issues “not a preoccupation” in the long-term efficient application of aid?
Hon MURRAY McCULLY: As I made clear in my earlier answer, I think education is one of the cornerstones for the future of the region, particularly if it is going to lead to sustainable economic development. I do not believe that it is excusable to ensure that either boys or girls miss out on those opportunities.
Hon Maryan Street: Does he consider gifting an unwanted tourism project in Niue to former National MP Mark Blumsky to be a model of the success of sustainable economic development over poverty alleviation?
Hon MURRAY McCULLY: Yes, I do. In the year in which I inherited the portfolio New Zealand spent $21 million in development assistance in Niue. Niue, for the information of members, has a population of 1,000 people. I took the view that we needed to do somewhat better than that, and it is fair to say that relations were sour with the administration of Niue at the same time. We have in the last 18 months made very substantial progress to convert the aid dollars that we are investing in Niue into a sustainable economic future, particularly in relation to the tourism sector. I invite the member sometime to go and look at the specifics of that project, and she will see for herself.
NIKKI KAYE (National—Auckland Central) to the
Minister of State Services: What is the Government doing to ensure New Zealand’s Public Service provides better value for money?
Hon TONY RYALL (Minister of State Services)
: Last week the Government announced that it is looking at reducing a number of Government agencies to improve efficiency and responsiveness. These proposals include disestablishing five Crown entities and three tribunals, merging two Government agencies, and establishing shared-service corporate arrangements across the three central agencies. Such analysis of how services are provided will become a part of how the Government does its work into the future, as we move resources from the back office to the front line.
Nikki Kaye: What reports has he received about public sector reforms?
Hon TONY RYALL: I have seen a number of reports that show that Governments around the world are looking at substantial savings in their public services to help deal with their billion-dollar debts. In the United Kingdom, 490,000 public sector jobs are expected to be cut by 2014-15; in Ireland, public servants’ pay has been reduced by up to 15 percent; in Portugal, only 50 percent of vacated positions are being replaced; in Spain, public sector pay has been reduced by 5 percent and recruitment frozen; and France is reducing 100,000 public service jobs by 2013. However, in New Zealand we
continue to boost front-line services, and under our watch there are more police officers, more teachers, more nurses, and more doctors.
Question No. 8 to Minister
Hon MARYAN STREET (Labour)
: I seek leave to table the Asian Development Bank report
TheMillennium Development Goals in Pacific Island Countries, issued in April 2011, which shows the stark gaps that appear in health, education, and poverty alleviation.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.
- Document, by leave, laid on the Table of the House.
Budget 2011—Papers Relating to Department of Prime Minister and Cabinet
GRANT ROBERTSON (Labour—Wellington Central) to the
Prime Minister: Did he read all this year’s Budget papers relating to the Department of Prime Minister and Cabinet?
Rt Hon JOHN KEY (Prime Minister)
Grant Robertson: Under which appropriation within Vote Prime Minister and Cabinet does the $300,000 contribution to the running costs for the waka on the Auckland waterfront sit?
Rt Hon JOHN KEY: The answer given by my spokesperson to the
New Zealand Herald
reporter who ran that story was incorrect, as the advice received by my office from officials was actually incorrect. The money was in fact new money, which was drawn from a 2010 between-Budgets contingency. It was not from the Vote Prime Minister and Cabinet, nor was it appropriated via Vote Prime Minister and Cabinet. The money was appropriated to Vote Māori Affairs as part of Te Puni Kōkiri’s March baseline update. The reporter who received the incorrect information has since been informed of the error.
Grant Robertson: Why did the Prime Minister not correct the error any earlier than today?
Rt Hon JOHN KEY: Actually, the error was corrected the day after the story was run. As soon as the story was run, our office noticed that that would have been likely to be incorrect. We went back and rechecked with the officials, they apologised for the mistake they made, and we went back to the
New Zealand Herald.
Grant Robertson: Can the Prime Minister confirm that this money has in no way come from the Department of Prime Minister and Cabinet’s budget at any point in the past?
Rt Hon JOHN KEY: Yes.
Mr SPEAKER: Question No. 11, Katrina Shanks. [Interruption] I have called Katrina Shanks. I do not like the interjections I am hearing here. I have called Katrina Shanks.
KATRINA SHANKS (National) to the
Minister for Social Development and Employment: Has she received any reports about the Government’s proposals to make significant changes to the welfare system?
Hon PAULA BENNETT (Minister for Social Development and Employment)
: Last week the Prime Minister announced the formation of a special ministerial group to lead further work on the Welfare Working Group’s recommendations. This group will be concentrating on supporting those on welfare with training, education, health, and intensive case management to see positive changes for those who need us most.
Katrina Shanks: What other reports has she been made aware of regarding the Government’s proposed changes?
Hon PAULA BENNETT: Yes, I have seen a report, which I will quote from. It said: “Our reforms are founded on high expectations, that everyone who can work should work. I will fight the prejudice that says some people’s lot is drawing a fortnightly cheque, that we shouldn’t expect anything more of them and it doesn’t matter if they are forgotten by our policy makers and the society around them.” That statement was made by Labor Prime Minister Julia Gillard earlier this year.
Jacinda Ardern: Does she agree that the best means of reducing benefit numbers is to provide employment opportunities; if so, does she still believe the Government does not have a role in job creation, as she stated in this House in February of this year?
Hon PAULA BENNETT: Yes, and that is why I was so surprised during the years 2000 to 2008 that the number on the sickness benefit doubled, that we saw the number on the invalids benefit go up by 50 percent, and that we saw those people just left on the scrap heap and not making the most of the supposed great economic times there were then.
Mr SPEAKER: Question No. 12, Jacinda Ardern. [Interruption] I say to both sides’ front benches, please, I have called Jacinda Ardern.
Budget 2011—Job Creation
JACINDA ARDERN (Labour) to the
Prime Minister: Does he stand by his statement “the Budget will create in the order of 170,000 jobs”?
Rt Hon JOHN KEY (Prime Minister)
: I stand by my full statement, which was: “The Treasury forecasts are that the Budget will create in the order of 170,000 jobs.”, and that is true.
Jacinda Ardern: What specific initiatives did Budget 2011 contain that he predicts will create in the order of 170,000 jobs?
Rt Hon JOHN KEY: I thank the member for asking that question. It will create an environment where interest rates will certainly stay lower than they would have under a Labour Government. We know that, because Labour members cannot even work out what a research and development tax credit costs. They are out there telling the country it costs $800 million when it costs $1.55 billion. It creates an environment through education, where young New Zealanders will get a chance to be sure that we can be tracking their progress through national standards. It allocates $550 million to early childhood education over the next 4 years, and we are sure that that will make a significant difference. I could go on, but, given that it is question No. 12 and we want to get out of here before 5 o’clock, I will sit down at this point.
Jacinda Ardern: Is he aware that the Budget additional information estimate of 155,000 new jobs from now until 2015 is actually 10,000 fewer jobs than the estimate in last year’s Budget; if so, is this Budget a step backwards in terms of job creation, albeit an ambitious one?
Rt Hon JOHN KEY: Let me just alert the member to a couple of facts. Firstly, just to give her an idea, if we go to Budget 2010 and the forecast that 26,000 new jobs would be created over the year to March 2011, in fact, 39,000 new jobs were created. If one looks at the 170,000 job number, we see it is basically a little over the trend of the last 20 years, at 35,000 new jobs a year. In fact, as I say, we are ahead through creating those 39,000 new jobs against that forecast. I think it is fully achievable.
Carol Beaumont: How will the $19 million cut to industry training made in this year’s Budget help the 77,000 young New Zealanders who are not in school, not in training, and not in work to get the skills they need to get a good job?
Rt Hon JOHN KEY: All I would say is that overall, if one looks at the amount of money going into education, one will have noticed that in a zero Budget that increased by about $1.3 billion, I think, over the forecast period.
- Debate resumed from 19 May on the
Appropriation (2011/12 Estimates) Bill.
Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery)
: It is my great privilege to spend a few minutes this afternoon speaking about Budget 2011. I shall reflect on how well this Budget has been received by people throughout New Zealand, not only by those many commentators who have gone public with their support for this Budget but also by the tens—even hundreds—of thousands of New Zealanders in their homes who have been advantaged by this particular Budget.
One of the biggest spends in this Budget was the commitment of some $5.5 billion to the rebuild of Christchurch. The devastation caused by the earthquakes has been well rehearsed in this House and comes as no surprise—[Interruption]
Hon Trevor Mallard: I raise a point of order, Mr Speaker. It is partly about the disruption, but I wonder whether the disruption might be caused by your wearing a rugby tie.
The ASSISTANT SPEAKER (H V Ross Robertson): No, that is a frivolous point of order, Mr Mallard. I call the Hon Gerry Brownlee. While I am on my feet I urge members who want to have private conversations to please leave the Chamber. Thank you.
Hon GERRY BROWNLEE: I will not say anything other than that rugby tie you are wearing is not half as fetching as the scarf you often adorn yourself with in this House. Although the scarf itself is not a cause of disorder, it is most certainly the cause of distraction at various times.
Everyone knows that Christchurch is facing a degree of difficulty at the present time. That is significant. For many homeowners it is particularly difficult. The Government has made commitments to ensure that we get people back to close to a 3 September position as quickly as possible—albeit that will prove somewhat difficult.
The thing that matters most to the vast majority of New Zealand families is the ability to purchase their family home and to hold that ownership. One of the pleasing things about this Budget is that it will ensure that mortgage rates for families in New Zealand remain low for a much, much longer period of time. Just a short time ago—just prior to the 2008 election, in fact—interest rates were well above 10 percent. Over the last 3 years we have seen those rates drop back to just over 5 and up to 6 percent. For an average family on an average mortgage that means the savings are about $200 per week—quite a significant amount. That is one of the reasons why I think New Zealanders as a whole have embraced this Budget as being particularly good for them. There was no lolly scramble in this Budget, no attempt to buy off small pockets of the community with various little pet projects and other such things. The consequence of having a fiscally strong budget is the ability to deliver mortgage savings for New Zealand families.
One of the hallmarks of the last 2½ years of the National Government has been the willingness to do what is right in the interests of the widest number of New Zealanders. We came off the election trail after the 2008 election to find that the New Zealand economy was in serious decline. As we all know, despite what Mr Goff says, the world was in economic meltdown. There were—and there are—ongoing effects from that meltdown. To suggest, as Mr Goff did, that it was all over in 2009 is simply wrong. We have a situation where the Government has had to hold up the New Zealand economy
via a significant borrowing programme. One of the key features of this Budget is that from the middle of next year weekly borrowing will reduce by some two-thirds, to the point that we will be looking at surpluses at a much earlier time than was previously forecast. The point about that is simply that any debt that is carried by a Government is equally shared by anybody who is a contributor to the economy. The concept of debt reduction, of a Government making sure that its expenditure is not excessive while at the same time ensuring that we do not dislocate the economy so as to cause social disruption, I think is something this Government can be very, very proud of.
One of the consequences of this Budget is the effect on incomes. Certainly the previous Budget, which of course flows through into this one, saw that two-thirds of the tax reduction was shared by all of those people whose incomes are under $48,000. What does that actually mean? It means that most taxpayers now are paying about 17.5 percent as a tax rate. So we have, I think, an economic picture developing of a country that has high growth rates and low taxation rates. Ultimately, that will lead to higher wages and higher incomes for New Zealanders. There is no reason to assume this country will be any different compared with other countries that have experienced the same sort of situation.
One of the interesting things about the New Zealand economy and its growth will be the Christchurch effect. There are those out there who suggest that we may see in that part of the country some depopulation and various declines in economic activity. But I am full of admiration for the large numbers of people who have stayed in the greater Christchurch area, who continue to operate their businesses, who continue to keep their workplaces going, and who continue to live their family life in those circumstances. One thing we can all be certain of is that as the $20 billion - plus that is required to repair Christchurch is spent over the next 5 years—the good news about that is that $20 billion is available and will flow through—we will see a considerable increase not only in economic activity but also, I suspect, in the population of the greater Christchurch area. That will flow through to the rest of the New Zealand economy. The amount of $20 billion is about 10 percent of the country’s GDP. Concentrating it—even over a short period of time—as a one-off in a small area of the country will result in significant economic growth.
One of the confusing aspects of this Budget was the response to it from the Opposition. I have to, unfortunately, go through some of the contradictions that are coming through from our opponents in this particular circumstance. First, we have Mr Goff’s inexplicable comments in which he is highly critical of the previous GST increases, highly critical of the previous tax reductions, and, now, highly critical of almost everything in this Budget, including KiwiSaver changes and many other aspects, one of which is the shared-ownership model. Not once has he said that he would reduce GST, other than on a certain product line that is subject to an enormous amount of price fluctuation on a seasonal basis, not once has he said that he would increase taxation, although everybody on that 17.5c tax rate desires a higher income in time, and would not want to be unduly penalised for their success by picking up a higher tax rate imposed by any future Labour Government, and not once has he indicated what a Labour Government’s attitude would be to KiwiSaver changes. All of those comments we have heard are either Mr Goff contradicting positions or wanting to keep his options open. Second, we know that in many cases on all of those issues there has been a counterview from his finance spokesman, David Cunliffe, and we know that is just part of the ongoing difficulty that the Opposition has in this House.
All in all, I think this Budget has delivered for New Zealanders, has set forth a path to lower Government debt, and has put us back into a position where the Government will be running surpluses much sooner than was expected. Importantly, it makes a
commitment in health and education and in other social service areas that New Zealanders deeply appreciate and expect.
This has been a very good Budget that has been well received by New Zealanders. I am delighted to support it.
PESETA SAM LOTU-IIGA (National—Maungakiekie)
: Malo le soifua, lau afioga, Mr Assistant Speaker Robertson. I just greeted you in my native tongue—Samoan. It is Samoan Language Week, so I greet you in Samoan.
Before I talk about Budget 2011, I want to touch on an incident that occurred in my electorate of Maungakiekie. It was a gas explosion on a worksite in Onehunga, where I reside and work. This tragic event occurred last Saturday morning at approximately 7.30, and, sadly, a Watercare worker, Philomen Gulland, passed away. She was tragically killed, and other workers were injured, including Ian Winson, an engineer with Watercare Services, who was seriously injured. Certainly our prayers and hearts go out to the families of those who have been affected by this tragedy.
As we speak I have reports from the site that tests are continuing in terms of gas deposits. Those involved are looking forward to proceeding with the important infrastructure work that is being conducted in my electorate. I spent some time at the site over the weekend, and I thank Steve Lakin and Murray Binning, the fire chiefs who were in charge of the situation; George Fraser, the police superintendent in charge; and representatives from HEB Construction, as well as Watercare Services, who were extremely helpful in giving the local representatives, myself and others, including the Mayor of Auckland, the right information in order that we could communicate with our constituents. A very good job was done by our emergency services.
Budget 2011 was about building our future. It was about building prosperity in this country, which suffered in the 9 long years of the previous Labour Government. It is about building jobs and it is about building a brighter future.
Hon David Cunliffe: Why is unemployment going up?
PESETA SAM LOTU-IIGA: “How does this happen?”, Mr Cunliffe asks. Well, it is about returning the economy to surplus by 2015, and that is a year sooner than forecast last December. The reason we are returning to surplus earlier is the fiscal prudence that this National Government has demonstrated over the last 2½ years.
But the Budget is not all about rosy forecasts. It is, as the honourable Minister Gerry Brownlee alluded to, about reconstructing our second-largest city. The Government is committed to spending $5.5 billion, as well as $3 billion in ACC funding and Earthquake Commission funding, to reconstruct our schools and our infrastructure, and to provide housing and trades training for the people of Christchurch. This Budget also signals an investment in front-line public services. We have not spared the expense on health and education. But this Budget is also about looking at the programmes that the previous Labour Government put in place and looking at how we can better streamline KiwiSaver, how we can trim Working for Families, and how we can make student loans more workable and sustainable in the long run in order to reduce the need for the Government to borrow.
As the Prime Minister alluded to earlier this afternoon in question time, this Budget is also about providing investment opportunities for mum and dad investors by extending the mixed-ownership model to four State-owned energy companies, as well as extending the programme that has already been put in place for Air New Zealand. In the health area—and, obviously, the health portfolio has been well looked after by the Hon Tony Ryall—we are delivering an extra $2.2 billion to public health services. Although we are balancing the books and reducing Government debt, we are committed to providing the health services that New Zealanders demand and expect. Those services will be given to New Zealanders in the next few years.
What are the programmes that have been extended? Maternity initiatives have received $54.5 million to improve the safety and the quality of maternity care in this country. That is a welcome initiative. Certainly, having experienced fatherhood recently I know that the care and the expense that is taken in our hospitals is second to none when compared with the services provided around the world.
We have provided $80 million to widen access to medicines, and $68 million for more elective surgery. In Greenlane, in my electorate, the Minister of Health has opened more elective surgery facilities that will cater for 4,000 extra operations in the years to come. Funding for disability support services has been increased by $130 million, and we will continue the programme that was set out by the last Labour Government in terms of general practitioner visit subsidies for the elderly and children. We are certainly proud to continue with that.
We know that education is the cornerstone for economic growth long term, and we know it is the cornerstone we must provide for our children in the coming years. We know that early childhood education is important, and we have provided $1.4 billion extra in operating capital funding for education. Specifically, and importantly, we are focusing on those with high needs. So $550 million will be provided to increase participation rates for Māori and Pasifika families as well as low-income families. That is to be applauded.
I have visited a number of early childhood centres, not just in my electorate but across the country and certainly in South Auckland. They are demanding that the Government respond to the needs of those communities. Certainly, one of the best things we can do for low-income communities and high-needs communities is to provide early childhood education services that will give children the best start to life.
We have also provided for infrastructure spend, which will provide the networks, the infrastructure—the pipes, if you like—for our future learning. As we indicated 2 weeks ago, we are committed to the ultra-fast broadband roll-out not just in our cities but across our regional and rural areas. That will be a $1.5 billion investment over time. If Labour was in power, it certainly would not commit to this investment, and it certainly would not have a plan to bring about this change in a convenient and appropriate way.
We are also providing infrastructure for KiwiRail. We know that KiwiRail was a mess when it was first bought, but we are continuing our 10-year turn-round plan, and that will bring about some change to KiwiRail, bring some business rigour to its operations, and will, hopefully, in 10 years, bring about some commercial gain and some return on the investment we are putting in.
Finally, I tell members that we are looking forward to better public services and $980 million of savings over 3 years. If members do not believe me they should listen to the comments of Age Concern, which says that Minister Ryall is committed to protecting and growing our public health services, and it welcomes that assurance.
The feedback on this Budget in my electorate of Maungakiekie has been hugely positive. People welcome the Budget. They welcome the Government’s prudence in terms of its fiscal approach, and they certainly welcome the Government’s investment in services such as health, education, and infrastructure. This Budget has been well received in New Zealand. Thank you.
Hon DAVID CUNLIFFE (Labour—New Lynn)
: Talofa lava. I join with the previous speaker, Peseta Sam Lotu-Iiga, in welcoming Samoan Language Week this week.
National MPs must think New Zealanders are stupid. They stand up and describe that they are allocating new money to this or that programme, and they assume that Kiwis do not understand that the new money is less than the cost of inflation to those votes, and less by a considerable margin than what the previous Labour Government gave to
them. Take health. The Government has budgeted roughly an additional $500 million in this year’s Budget. Health used to get between $700 million and $800 million extra under Labour. Education used to receive an additional $400 million to $500 million under Labour. It received around half that amount this year, and that is before one takes out the additional KiwiSaver costs, which are being taken from within departmental baselines. This is a subzero Budget, as Phil Goff said. It is not a zero balance; the Government is taking out about $1.5 billion from front-line public services that New Zealanders need. Let us have no more of those comments from the other side of the House.
Labour has no confidence in this subzero Budget, because it hurts and does not help New Zealand. It is full of rosy growth projections and rubber numbers, and it leaves unaddressed the key and most crucial structural questions that need to be addressed in order to turn this country’s economy round. It may surprise some New Zealanders to hear the Labour Opposition say we agree that debt is too high and must come down, but what matters to New Zealanders is that that change is managed in a sensible and balanced way so that we can get New Zealanders back to work, grow our savings, and take care of the most vulnerable at the same time as we reduce net debt over the medium term. It is becoming increasingly clear in this most crucial of all election years that New Zealanders will have to turn to the Labour Opposition for leadership on those questions.
Today I will cover three key issues around this Budget. Firstly, what is the nature of the problem it is trying to solve for our country? Secondly, what does it propose to do, and what results does it project? Thirdly, what would Labour do, in broad terms, if we were on the Treasury benches this year?
In terms of the first of those issues, what the Budget tries to achieve, well, if we take the Government at its word, its overriding priority is to move the economy out of debt by running a fiscal surplus, which it says it can do a year earlier than had been projected. But that ignores some of the other hugely important symptoms that reflect the disease in our economy. Firstly, the unemployment rate is 6.5 percent. That is high by New Zealand standards, and it is nearly double the 3.4 percent rate under Labour. Worse still, 271,000 New Zealanders say they are jobless, and many of them have not even registered as being unemployed. Prices are rising faster than wages, and New Zealand families are paying the price. The rate of wage growth was 1.9 percent in the last year, compared with an inflation rate of 4.5 percent, a food price inflation rate of 5.1 percent, and an increase of over 10 percent in petrol and fuel costs. But New Zealanders are not stupid; they feel worse off because they are worse off. The difference between those numbers is a real-term cut in every New Zealander’s standard of living.
Behind the numbers are poignant stories that have been made available to members of the Opposition, like that of the pensioner who cannot afford to use milk in her tea, and who saves a little bit for special occasions when she has visitors, or that of the family with three boys, the youngest of whom is calcium deficient. They tell me they cannot afford to buy milk at the supermarket. There are pensioners huddled in blankets in damp, cold flats because they cannot afford to heat them, with the price of power rising as fast as it does. There are babies and children suffering respiratory disease because mould is growing up the walls in State houses, and this Government has cut the Budget for retrofitting them.
The Government will tell us that it has no choice but to cut Government spending, but it has made choices. It made the choice to give $23 billion worth of tax cuts in the last two Budgets and run a $16 billion deficit now. Those were real choices in order to give major tax cuts to the New Zealanders who least needed them, while other Kiwis were suffering.
Labour believes it has a credible and balanced plan to get debt down while getting New Zealanders back to work and getting our savings rate up. But what does the Budget propose, and how is it going? I say the Budget numbers are not credible. The $380 million borrowing requirement that the Treasurer is trumpeting has been proven to be self-inflated. Treasury documents show that the Government is choosing to borrow an extra $5 billion—$100 million a week—because it says perhaps it is getting a better deal. Or has that been done simply to frighten New Zealanders into thinking that radical surgery is required, by pumping up the numbers this year and taking them down again before the election? The rosy growth forecasts in the Budget are just so incredible that they have convinced nobody, particularly not Standard and Poor’s, which has refused to take New Zealand off negative credit watch.
Commentators believe that the wage growth projections are rubbish when the KiwiSaver cuts are taken out. They note that the revenue forecasts of Treasury and of the Inland Revenue Department are nearly $1 billion a year apart—$3.8 billion over 4 years—and the Government has booked the higher number. The commentators note the billion dollars in unspecified cuts—cuts of a billion dollars, with no clue given to the public of where those will come from. There are only two possibilities: either the Government does not know because it has not figured it out, or it does know and it is not being frank and honest with New Zealanders, because it does not want them to know which services are being cut before they have the chance to vote on that.
There is all that pain and all the cuts to health, to education, and to KiwiSaver. Ten dollars a week has been taken off the KiwiSaver member tax credit, and another $3 or $4 a week has been lost from higher employer taxes being passed through to the employee. There is the loss of every New Zealander’s birthright in the selling of our assets. The cuts to Working for Families will affect over 50 percent of all the families who receive Working for Families payments, and there will be costs to families on $80,000 a year of $50 a week by 2015.
There is all that pain, but what is the gain? Let us judge that question by looking at Treasury’s own numbers. Does the Budget build savings? The Government may have broken its promise in cutting KiwiSaver by 1 July this year, but, extraordinarily, net international debt, the sum total of the country’s liabilities, will actually go up—let us get the numbers right—from 78 percent of GDP to 85 percent of GDP by 2015. Does the Budget build a stronger, export-oriented economy? No. Nobody believes the figure of 177,000 new jobs that the pixies at the bottom of the garden are to create. In fact, the Budget documents show that the current account deficit will blow out again—let us get it right—from around 4 percent of GDP in 2012 to around 7 percent of GDP in 2015. There will be no more savings, no more exports, and no more jobs. There is no solution to the country’s ills. The Budget hurts, but it does not help.
What would “help” look like? What would a good Budget do? Labour has a credible, balanced plan to turn this economy round. The plan will be fully costed, and it will stand on four pillars. Firstly, we will build a strong export economy, using economic development, using innovation and skills, and changing monetary policy to lower the outrageously high exchange rate. Secondly, we will increase savings and productive investment. We will not sell our assets or our land; we would only owe more to foreigners when we paid the rent to them in future. We must own our own future. That is what Labour will help New Zealand to do. Thirdly, we will help all New Zealanders to get ahead by addressing the cost of living. We will take off the GST from fruit and vegetables, and make the first hundred dollars a week of earnings tax-free. We will lift the minimum wage to $15 an hour, and pay for it with a credible tax plan that would leave the incentives for productivity stronger, not weaker. Fourthly, we will reduce debt as fast as the Government proposes to do, over a 10-year to 15-year period. All of that
can be done within a credible and balanced plan, but that is the opposite of what is being offered by this Government in a Budget that hurts but does not help.
Hon KATE WILKINSON (Minister of Conservation)
: It is an absolute pleasure to speak in support of the 2011 Budget, which will help New Zealanders, and will help Cantabrians. This year’s Budget is about building faster economic growth around higher national savings, setting a credible path back to surplus and repaying debt, and rebuilding Christchurch and Canterbury over the next few years. In particular, I am delighted to be able to head home to Canterbury and to tell the people of Canterbury that this Government has delivered on its commitment to build their region. This Budget is significant for Canterbury, but not only is it significant for Canterbury; it is significant for New Zealand and New Zealanders. However, for me personally, it is particularly significant for Canterbury because this Budget delivers $5.5 billion for the new Canterbury Earthquake Recovery Fund.
Coincidentally, and interestingly, 5.5 was also the force of Monday morning’s aftershock in Canterbury, so 5.5 seems to be a recurring figure. The aftershocks keep coming, the nerves keep rattling, but we will keep supporting Canterbury because we are delivering $5.5 billion for Canterbury, and that is not a sum to be scoffed at. It is no small sum, because we are talking about spending on local infrastructure, spending on social services, and spending on roads, water, schools, hospitals, welfare support, and wage subsidies. There is $5.5 billion going directly into the region, and this money will bring with it employment. It will see tradesmen and support services flowing into the region, with the locals being the first to pick up the jobs they need. Christchurch will be the construction capital of the country, and this National Government is helping to build it and rebuild it. We are talking about tens of thousands of jobs, starting this year. Rebuilding Canterbury after two—and now some more—nasty earthquakes will be a long and difficult task. For many the grief remains very real and very personal, but we move on and rebuild our lives and our region, and the Government is committed to providing the resources to do that.
To break down the $5.5 billion a little bit more: $1.1 billion has already been allocated for local infrastructure, $85 million for assets such as schools and hospitals, and $521 million for welfare and emergency support, with $3.2 billion remaining in the back pocket for future decisions on issues such as land remediation and as needed for further infrastructure.
It goes without saying that everyone would prefer that we had never had to endure either the September or the February earthquake. We would love to spend a sunny autumn day walking down Cashel Mall and eating lunch in Cathedral Square—both now in the red zone—but our reality and our normality have changed, and now we get on with what needs to be done. This Budget delivers the necessary tools and resources that will see Cantabrians getting back their lives.
I repeat that $5.5 billion is allocated for the Canterbury Earthquake Recovery Fund to provide certainty for rebuilding Canterbury—no small sum. Earthquake bonds are being established to help Kiwis fund the recovery and provide investors with a new savings option, which is a win-win. The Budget provides 4,500 places for construction-related training, including 1,500 new places worth a total of $42 million, $25 million for the Canterbury Earthquake Recovery Authority over 2 years to help the authority lead the rebuild, and $10 million for social service agencies and counselling support for Cantabrians rebuilding their lives. The Canterbury Labour MPs—shame on them—will be voting against this. They will be voting against $5.5 billion going into our region, which needs it so much.
I remind the House what has already been committed and spent in respect of Canterbury: 63,000 Cantabrians and their families have been supported by our $200
million wage support and job-loss cover package, $6.8 million to help earthquake-affected Canterbury businesses get back on their feet, $4 million to help exporters reassure partners that Christchurch is open for business—and it is—and $625,000 for Christchurch and Canterbury tourism. And the Canterbury Labour MPs will vote against it.
But this Budget does much more than that. It sets the country as a whole on the path it needs to be on. We cannot keep borrowing as we have been. It is not sustainable. We know it, businesses know it, and the public know it. The only people who do not know it are sitting opposite, because under their plans we would end up spending $45 billion more in the coming years, and that would all be paid for by hitting New Zealanders with more and higher taxes. Stuart Nash even wants to introduce a tax on turnover. Well, that will work! Labour’s emissions trading scheme alone would end up costing farms about $35,000 to $40,000 per farm to operate. What would that do? It is quite simple. It would put the prices up. It would up the price of milk, butter, cheese, meat, and bread. Those prices would go up because of Labour’s plan.
What is Labour’s other plan? It is to increase the minimum wage to $15 an hour. What would that plan do? It would cost up to 6,000 jobs. On day one, up to 6,000 jobs would be gone because Labour ideologically wants to increase the minimum wage to $15 an hour, which we would all love to see, but which is not sustainable. It is pure ideology—6,000 jobs down the gurgler, just like that, if Labour had its way.
But it gets worse than that, because if Labour had its way it would also throw away the 13,000 people who were assisted into jobs by taking advantage of the 90-day trial period. That is the benefit of the 90-day trial period to date. So Labour’s plan is to get rid of 20,000 jobs—yet Labour members say they care about the working person. It is absolute rubbish. They have no plan. They do not know even how to spell the word “sustainable”, let alone what it means, because if they did they would have more sensible policies than they have.
This Government has instead produced a realistic and pragmatic Budget, which aims to have us back in surplus by 2015. That means getting spending under control, putting a curb on the “good time” policies that were putting this country’s finances under huge strain, and directing money into the areas where the public need it. Health gets $2.2 billion in new spending over the next 4 years. Just as some examples: $68 million is spent on more elective surgery—and that has to be good for the country—$54 million for maternity care, $20 million in medicines, and $18 million for 40 more places in medical schools. Education gets $1.4 billion, including $550 million to increase access to early childhood education.
This is a remarkable Budget, an absolutely remarkable Budget. It is an austere Budget, but it is what New Zealand needs to bring it back on to a sound economic footing after the devastation the previous Labour Government left us some years back. Annual inflation, when Labour left office in 2008, was 5.1 percent. It is now 4.5 percent. Our tax reforms mean that 75 percent of New Zealand taxpayers now face a top marginal rate of only 17.5 percent. Average after-tax wages have increased by 7.1 percent in the past year—faster than the rate of inflation—and in real terms by 4.5 percent. Increases in after-tax wages have flowed through to superannuation for our older people. Superannuation has increased $166 a fortnight for a married couple since September 2008, an increase of almost 20 percent. This is good, sound economic management. This is a great Budget. This is a particularly great Budget for Canterbury, and I would be ashamed if I were a Labour Canterbury MP having to vote against it.
Hon DAVID PARKER (Labour)
: I could take 10 minutes debunking some of the spurious claims made by the previous speaker, the Hon Kate Wilkinson, but I think I can do it by addressing one of them. That was the economic illiteracy shown by the
Minister when she claimed that asking farmers to pay for 10 percent of their agricultural emissions, the cost of which is currently borne by taxpayers and other sectors of the economy, would put up the price of milk. She said that increasing New Zealand costs of farmers by a small amount would put up the price of milk, when Fonterra and the Government have recently been on record saying the price of milk is set by the international price paid for milk and other commodities. One cannot have it both ways, I say to Ms Wilkinson. The reality is that, aside from some question as to whether there is monopoly pricing, New Zealand’s milk price is set by the international price for milk.
This Budget was an important Budget for this country, because it came at a time when New Zealand needed a Government to lead it, to build our nation and our economy. New Zealand really is at a crossroads. This election will provide a stark choice for electors, because they will see on the basis of this Budget that National is taking them in one direction, and Labour would take them in another. The choice is very stark. On the one hand we have an outcome from a National Government that says pretty much that the approach should be “easy go”. The Government will cut a bit of spending here, but other than that it will leave the settings of the economy pretty much unchanged, and that will do. We might have to sell a bit of the family silver, and we will end up not owning many of our productive assets. We will sell a bit more of our land and our dairy farms—the Government is not too worried about that. It will sell off half of the energy companies that are currently owned by the Government, and, similarly, it will sell Air New Zealand. National would have us believe that that approach will lead us to nirvana.
On the other hand we have the Labour Party, which is saying that it is time we accept that New Zealand needs to act differently and that we need to earn our way in the world by exporting more goods and services. That is my message today. If we want to have some hope that we will have a country that grows in prosperity in the future, we have to change the settings of our country in a way that leads to our exporting more goods and services. The reason for that is quite simply that for some decades now, we as a country have spent more than we have earned. We have run current account deficits, we have borrowed money to fund consumption, and as a consequence we are in a worse position than a lot of other countries and we are in a worse position than we should be. In order to stop that happening again, we have to change the economic settings of the country, otherwise the same thing will happen again. It is no secret. Like every other Western country in the world, New Zealand binged on consumption fuelled by rising levels of private debt. It is true that because of the prudence of the Labour Government between 2000 and 2008 we substantially reduced Government debt—very substantially. Otherwise, New Zealand would be in the position of Greece, Portugal, Spain, Great Britain, Ireland—all those countries that are in a very dire position at the moment.
For a start, let no one be fooled. The truth is that Labour was, contrary to the rhetoric of National, fiscally responsible. We always have been, as we see when we look at our history. It was National that over that period opposed every Budget surplus and called for unaffordable tax cuts that would have further fuelled inflation, asset bubbles, and debt bubbles. It is National that, since the election, has had a failed economic policy for this country that is largely based on income tax cuts, 42 percent of which have gone to the top 10 percent of the population. It is that economic prescription that has led to us as a country this year facing a $16.7 billion deficit.
It is clear that the Government has only one major plank to its economic policies, and that is tax cuts. Tax policy is important. I do not deny that tax policy is important. But economic policy has to be more than tax policy, and it certainly has to be more than tax policy with those income tax cuts weighted to those who already earn the most. It is plain that the economy has stalled, and the reason there is little good news in terms of
new export sectors, which we need in this country, is that the Government has no economic plan other than tax cuts weighted to those who already earn the most.
The Budget makes for dim and dismal reading. It projects that the current account deficit will rise to over 6 percent, and in fact close to 7 percent, over the next 4 years. The Government is trying to convince New Zealand that we are now in such a hole that we should sell the family silver—half of all of the electricity State-owned enterprises, and Air New Zealand—to fill the hole. But the reality is that changing who owns those assets that already exist does not change the output of the New Zealand economy. Again, it shows how bereft the Government is of vision.
I say that after 3 years of management—I would say mismanagement; let other people assess whether it is mismanagement—by the National Government, it is fair to ask Government members whether they are doing OK. What measures should we use? The measures they chose themselves! The first was closing the wage gap with Australia. Is that getting better? No, it is getting worse. The second was the promised aggressive recovery from recession. That has not occurred, despite record prices being paid for our mainly primary produce exports in buoyant economies in Australia and China, our major trading partners. The promised step change in the economy has not happened; in fact, it has disappeared from their language.
There is one thing I agree with the Hon Bill English on. He says that New Zealand’s total indebtedness to the rest of the world is the metric upon which we should measure our long-term success. He says it is a serious problem, and I agree. What does this Budget show? This Budget projects those figures out for another 4 years. That is, by the end of this Budget document National will have been in power, if it has its way and is re-elected—which we obviously disagree with—for 6 years. What does the Budget project? [Interruption] It projects that every year, from here on in, New Zealand’s net investment position gets worse, I say to Jacqui Dean. Every year. Currently New Zealand’s net international indebtedness—that is, everything we owe to the rest of the world, less what they owe to us—is 78.6 percent of GDP forecast for this year. [Interruption] Every year from here on in, in the forecast period, it gets worse and worse, I say to Jacqui Dean. By 2015, in the words of the member’s Government’s own Budget, New Zealand’s net international debt rises to 85.3 percent of GDP. In other words, using the Government’s own predictions, and assuming National wins the election, it gets worse from here on in. It really is fair to question the Government’s management of the economy.
The Labour Party agrees with the New Zealand Institute in its report
A goal is not a strategy. New Zealand, in order to lift its economic fortunes, has to do more than sell primary produce. Primary produce—forestry, agriculture, and aquaculture—are all very important, and will be the mainstay of New Zealand’s economy for a while yet; indeed, for ever. But New Zealand cannot get ahead on those exports alone, and that is where we need policies that will drive the breadth and value of our exports. That is the sort of economic policy that Labour is bringing forward.
Already we have more policy out there, in terms of substantial change to economic settings, than National has after 3 years in Government. Labour has proposals to change monetary policy in a number of ways that will improve the outcome for New Zealand exporters. Do members know that New Zealand’s currency is more speculated in and more traded than the Russian rouble, the Indian rupee, and the Brazilian real? Those economies are all massively bigger than New Zealand’s, yet our economy is speculated
in more, in part because of our monetary policy. Labour would change our monetary policy.
The other thing we need, to have a burgeoning new export sector, is depth in capital markets. Therefore, we need more improvement in savings to have more investment.
How can we do that if KiwiSaver is cut? We need fair tax systems, not income tax cuts weighted to those who are the wealthiest, and a number of other changes, including a research and development tax credit, which we have already announced.
Hon HEKIA PARATA (Minister for Ethnic Affairs)
: Tēnā koe, Mr Assistant Speaker Robertson. Huri noa i tō tātou Whare, tēnā tātou i tēnei ahiahi. I am pleased to take a call on Budget 2011. I am pleased because this Budget speaks to New Zealanders as smart people. New Zealanders understand that this Budget is a Budget of its time. We are still dealing with the impacts of a recession. We are still dealing with the consequences of many of the decisions that were made by Labour when in Government. We are committed to paying down debt, and this Budget is very clear about that. It is unambiguous that that is a significant target of our Government.
New Zealanders are smart people and they understand the analogy that running a Government is the same as running a household. There are only three ways that that can be tackled: find savings in the way that one operates, borrow, and make opportunities to create new wealth. This Budget addresses all three. New Zealanders know that continuing to borrow at the level we are at the moment is not sustainable for a meaningful, long-term future. This Government is about a meaningful, long-term future, and that is why in the 2½ years that National has been in Government, Labour and the country have been able to see that we are prepared to tackle the systemic and structural challenges that face us, which Labour was unable and unwilling to do when it was in office.
We understand that long-term improvement for this country and the opportunities to create wealth rely on our having a highly qualified, highly educated society. That is why we have invested so significantly in education. In this Budget we have seen a further $1.4 billion allocated to the education sector, and $550 million allocated to early childhood education. This Government understands that the first 5 years of a young person’s life are critical to the quality of the educational trajectory that they will follow in life, are critical to the opportunities they will have to contribute to the society of which they are members, and are critical for New Zealanders young and old to realise that this is an inclusive society. It is more and more successful, based on the level of educational attainment that all New Zealanders experience. A number of our community, however, are not participating at the level that will ensure or secure that success. That is why we have put aside $91.8 million to target the participation rates of Māori and Pacific Island students, and to ensure that they have the opportunity to participate in good-quality early childhood education. We have focused at the primary school level on national standards so that we can discover earlier rather than later whether a child is literate and numerate to the age that they should be. That is why we are focused on what research tells us—that the quality of a child’s education experience relies on the quality of the teacher in the classroom and the ability of that teacher to be informed by the results that national standards will provide them. We cannot have a situation where young people are arriving at high school in year 9 and we are discovering at that point that they are unable to read and write at the appropriate level for their age group. Trying at year 9 to catch up on 8 years of primary schooling is very, very difficult.
Moana Mackey: Ask your sister!
Hon HEKIA PARATA: Indeed, as Opposition members have pointed out, I come from a family of educators, and we talk all the time about what is required. We are committed—unlike Opposition members, who want to bark like hyenas—and we are prepared to take the hard decisions about what is required for young people to be successful. In fact, the member Moana Mackey, from Gisborne, is misinformed if she
thinks she understands my family’s view of education better than I do. I can speak far more authoritatively on that point any day of the week, in any forum, and I am happy to do so. We have invested a further $1.4 billion in education, with the highest-ever amount going towards funding early childhood education.
This year’s Budget is about building faster economic growth in relation to higher national savings. We are committed to seeing higher national savings, and the changes we have made to KiwiSaver respond to our need both to find higher national savings and to fund other priorities that are essential for getting this country back on to a strong growth track. We are about setting a credible path back to surplus and repaying debt. No New Zealander wants the level of debt this country has had to endure off the back of 9 years of profligacy we inherited. We are about paying down debt so that New Zealanders can look forward to the kind of growth they are entitled to. We are looking forward to the 4 percent growth forecast to occur from 2012 to 2015, during which time we expect to see 177,000 jobs created as part of this economy. Unlike the Opposition, we do not think that growth should be on the back of make-work schemes, which tend to be characteristic of the previous Labour Government’s approach to economics. Rather, we see the economy doing that, and to do that, we have to back businesses. In so doing, we have to cut red tape and reform employment law, which we have seen over the 2½ years of this John Key - led Government. We know, unlike the Opposition, that growth is built by businesses. That is why we have had the biggest tax reforms in a generation. That is why 72 percent of all income earners are now on a statutory tax rate of 17.5 percent or less. Again, it is because this Government recognises that New Zealanders are smart people, and that they can make wise decisions about the money they earn, while still contributing to the central coffers to fund public services, to fund schools, to fund hospitals, to fund roads, to fund ultra-fast broadband, to fund more policemen, to fund more nurses, and to fund more doctors. These are the real changes that New Zealanders want to see, and this Government is delivering them.
As my colleague Kate Wilkinson said previously, this Budget is also about rebuilding Christchurch over the next few years. It is critical to this country that the rebuild and the recovery of Christchurch occur, and that they occur as fast as possible. It is critical not only for the people of Christchurch and for the social well-being of those people who exist on frayed nerves, because they are being challenged every time there is a tremor in that part of the world, but also for the rest of New Zealand, because Christchurch is our second-biggest economic hub in New Zealand. The rebuild is important for all New Zealanders. New Zealanders are smart people, they have recognised that, and they understand that the $5.5 billion allocated to the rebuild in this Budget is as much an investment in Christchurch and the wider Canterbury region as it is in the rest of New Zealand.
This Budget builds a platform for savings and growth and sets a faster return to surplus, but it is also an opportunity, I think, to cast a light on what National has achieved so far. For the past 2½ years the National-led Government has provided the responsible economic management that New Zealand was in such need of after 9 years of Labour. When we took the reins of office, the financial crisis had reached its peak and New Zealand had gone into recession before anyone else. There was a big job to do, because the economy had shrunk by 3 percent in a year, topping off 5 years of historically low growth. Exports had flattened out completely, and we know—this Government knows—that we need an export-led economy. So it defies belief that the Opposition thinks that the way one gets growth is to attack the primary producing sector: the farmers who grow meat, wool, and trees, and the fisher folk who catch fish and contribute that to our economy. It defies belief that Opposition members, while saying they are committed to export-led growth, nevertheless attack the sector that is the
platform for that export-led growth. Unlike the Opposition, this Government understands that it takes a range of contributions to develop an economy, to create opportunity, and to create confidence. That is what this Budget has done. It is a Budget of its time. It speaks to New Zealanders, who are smart people. They understand that we have to pay down debt, they understand that they want better value in our public services, and they understand that we need to grow a pathway to greater opportunity for all New Zealanders. I am proud to have spoken on the 2011 Budget. Kia ora tātou.
Dr KENNEDY GRAHAM (Green)
: This year’s Budget is essentially more of the same: a traditional neoclassical Budget in a time of national austerity. Let me critique it from a Green perspective, and offer an alternative, ecological Budget in a time of global crisis.
The 49th Parliament has passed 224 Acts in 30 months. These Acts reflect the Government’s world view to make New Zealand a better place, as it sees it. What stands apart in importance for every Government and every Parliament is the annual Budget, which sets the course for a country’s macroeconomic policy.
The two overarching issues in every Budget are how large the national pie is, and how we slice it—how large the economy is, and how we share in its product. Government policy hugely influences how large the pie is, how much the country produces, how much it trades and under what conditions, how it controls debt, and the exchange rate that it maintains. We measure the size of our economy by our GDP. We compare ourselves with others through our relative GDP ranking. We are relatively well off here in Godzone, yet in our abiding provincialism we compare ourselves only with OECD countries, and harbour neurotic fears and compulsions as a result of that.
We fall about arguing over how to catch up with Australia, yet the New Zealand pie is relatively large, as humanity goes. How we slice the pie is the secondary issue for the Government—the question of social policy. This addresses taxation, employment, labour, health, education, and social welfare. If we add in law and order, we have the general picture of our society, and of how the Government sets out its strategic direction in the Budget.
Political debate among our parties traditionally reflects the left/right spectrum: large or small government, high or low taxes, more or fewer benefits, how much expenditure there should be, and how to spread it. The debate reflects whether the annual tilt is towards defence or aid, health or education, prisons or community service, youth or the elderly, research or subsidies. The annual Budget addresses these left/right issues. The two major parties, in forming successive Governments in New Zealand over the past century, revolve around the centre of the horizontal spectrum, centre-left or centre-right, and spin a helix of mild variation around the Western world view of the past two centuries. The 2011 Budget is no exception.
The centre-right Government of the day, facing economic and financial pressure, seeks to recover the good life by regenerating growth through reducing government, making welfare leaner and meaner, incentivising the private sector with lower tax and more support for entrepreneurship, and further opening the national economy to the global market.
The Budget is designed, through a rather touching faith, to retrieve material prosperity in the 21st century through the use of 20th century economic policy. The year’s topics of choice for debate are KiwiSaver, Working for Families, and student loans. Labour, for its part, critiques the Budget through polar-opposite argumentation, while retaining the identical prescriptive and analytical framework. Labour too wishes to see regeneration and growth. Labour members criticise smaller government, oppose tax cuts, and shout in anger over welfare cuts. None the less, they would concur with
having a reinvigorated private sector and an open economy plugged into the prevailing neo-liberal global economic grid.
The Opposition and the Government share the same world view on how to grow the national economic pie, differing over how to slice it domestically. Both world views are born of a bygone age. The philosophical beliefs derive from the 18th and 19th centuries, from the freedom of Smith and Paine and the equality of Rousseau and Marx, and the economic policies derive from the 20th century, from the market forces of Marshall and Friedman and the State custodianship of Keynes. This Government’s Budget and the alternative Labour version revolve around the same economic paradigm. I do not hold those beliefs to be irrelevant, but they are secondary in today’s world. The past few decades have seen the birth of a new political philosophy and new economics. We are not talking simply about the social movement known as environmentalism to be tacked on to the current political agenda; we are talking about a new political agenda, a complete change of world view, and a new age: the age of sustainability. We are not talking about smouldering resentment and a protest movement; we are proclaiming a transformational mindset and a reform ethic for governmental management. Where people once yearned for political freedoms or social equality, they yearn above all today for a healthy planet. Where movements once embraced declarations of the rights of man, they now embrace the Earth Charter.
I do not declare the left/right spectrum to be irrelevant, but it is now secondary. Superimposed over it now is a vertical spectrum of sustainability versus collapse. Without sustainability, freedom and equality are unattainable. In this new age our institutions are failing in a time of need. Governments pay lip-service to sustainability, but they do not understand its import or magnitude. Our parliamentary procedures, which are locked into 19th century tradition, fail to assist us.
Where are the Budgets that address the real problems of our time: deforestation, land deterioration, water scarcity, ocean degradation, biodiversity loss, and atmospheric pollution? Where is the global Budget that identifies the safe operating space for humanity, the nine planetary boundaries, the ecological overshoot of the planet’s resources, the global energy imbalance, the need for carbon emissions to peak by 2017, and the need to switch to a low-carbon economy by 2030? And how is our national Budget to reflect these global concerns? Where does the Minister’s statement recognise these concerns and indicate how we can participate in a coordinated response to them? Where is the Budget that begins at the beginning, with population growth and density around the world and here in New Zealand?
Does this Budget consider our national ecological footprint? Does it identify whether we have an ecological surplus or deficit, and how this might relate to the needs of the world? Does the Budget incorporate as its central objective the taming of climate change through contraction and convergence and putting a genuine price on fossil fuel? Does it embrace a world view before it asserts the national interest, or does it assert the national interest without much of a care for the rest of the world?
The world’s problems are our problems. The fate of the earth will be the fate of New Zealand. Our destiny lies not in seeking a false competitive advantage but in pursuing a genuine cooperation with other nations for our common survival. A Green Budget rests on that philosophical premise.
A Green Budget recognises first the global population growth within a lifetime from 2 billion to 9 billion, and a global population density growth from 13 people to 45 people per square kilometre. It recognises the current 50 percent global ecological overshoot, and it rejects this as a moral outrage against other species and an irrational act of human self-destruction. A Green Budget takes as its major goal the preservation of our natural resources in perpetuity. It recognises that human success lies in ensuring
that economic activity must be undertaken in harmony with nature’s bounty and must cease if it crosses certain thresholds, rather than simply patching up the damage. It estimates our national population growth and our need to account for the greater number. It identifies as its main criterion of success the index of human well-being, into which mortality and health, education, crime, and the integrity of the environment are integrated with the traditional indicators of GDP: interest rates, unemployment, the current account balance, and debt levels.
A Green Budget aspires, above all, to attain sustainability. How we measure this is not an easy task. It is a work in progress and we have only just begun, but we shall get there.
My Public Finance (Sustainable Development Indicators) Amendment Bill, which is in the ballot, would impose an obligation on the Minister of Finance to develop a Budget along those lines. It would not be content to countenance an environmental reporting Act and debate on the environment separate from the Budget. That leaves the traditional approach to macroeconomic policy supreme and environmental concerns secondary. It needs to be the other way round. This Government and this Budget is more of the same. A Green Budget would turn the ship of State round before it is too late.
TIM MACINDOE (National—Hamilton West)
: Before I focus on the 2011 Budget I will briefly echo the heartfelt condolences expressed by my friend and benchmate Peseta Sam Lotu-Iiga, the member for
Maungakiekie, to the family and friends of
Philomen Gulland, who was so tragically killed in the water-main explosion in
Onehunga on Saturday morning. I also extend my prayers and best wishes for a speedy recovery to the other Watercare Services workers who were injured in that incident. We know that the consequences were devastating for Ian Winson, who was so critically injured, and for his family. I am sure the thoughts of all members of this House are with those families at this distressing time. I certainly know that there is considerable sympathy for them all in my electorate of Hamilton West.
My constituents are conscious of the very challenging circumstances that made the preparation of this year’s Budget so difficult. Members opposite do not want to acknowledge the fact, but New Zealanders understand that a zero Budget was the only responsible option this year. The measures the Minister of Finance announced 2½ weeks ago are widely supported. Many of my constituents have told me that the Budget’s focus on building faster growth, rebuilding Christchurch, increasing national savings, reining in Government debt while continuing to protect the most vulnerable New Zealanders, and investing significantly more in health and education and in creating sustainable jobs built on savings, exports, and productive investment is exactly the right prescription for nursing the New Zealand economy back to good health.
Budget 2011 is a Budget that I will be very proud to campaign on in the run-up to our general election on 26 November. I am proud that we are on track to achieving economic growth of 4 percent in 2012, with 170,000 new jobs being created by 2015. I am proud that at a time of essential restraint we have nevertheless invested an extra $4 billion in front-line public services in areas such as health, education, and supporting our young people into jobs. Again, that is very welcome in Hamilton, where we have a large number of youth who need that assistance.
I am proud that at a time of a record deficit—some of it caused by the tragic events in Christchurch, some of it by the global recession, and much of it by the irresponsible tax and spend obsession of the previous Labour administration, which squandered the best economic conditions any Government has enjoyed for a generation—the Government’s average net weekly borrowing requirement will fall by over two-thirds to
about $100 million a week by this time next year, and that within about 3½ years the Government will start repaying the debt.
Most members of this House will have met with constituents who have suffered the distressing experience of losing hard-earned savings—in some cases essential savings required for an imminent retirement—through the spate of finance company collapses in recent times. Although we cannot overcome that heartbreak, we can, and must, provide more attractive and safer investment opportunities for New Zealanders who want to do all they can to provide a better future and a secure retirement for themselves and their families.
That is why I support the extension of the mixed-ownership model to four State-owned energy companies, which the Government has signalled, and the reduction in the Government’s majority shareholding in Air New Zealand in order to enable more of my constituents and those of other members to invest in those important companies, with the equally important proviso that the Government will retain a majority stake in all five companies and that local investors will be at the front of the queue for the shares.
Not only will this offer better investment options for our citizens but also it will free up between $5 billion and $7 billion to pay for high-priority new capital investment in future Budgets and reduce further Government borrowing. Far from disposing of State assets, as our opponents like to cry, it is an intelligent option to enable us to acquire essential new ones and fund the growth that we all desire and depend upon.
I want now to turn my attention to some important health and education initiatives that were announced by the Minister of Finance. This year’s Budget is delivering an extra $2.2 billion to public health services over the next 4 years. That is a substantial sum of money. It includes an additional $580 million worth of initiatives in the next fiscal year. In my electorate, news of the $54.5 million for maternity initiatives to improve safety and quality and for extra Well Child visits has been particularly welcomed, as we know that it is crucial to provide support for first-time mothers in particular as they learn to cope with the huge change to their lifestyle that having a baby totally dependent upon them places on them.
I want to pay a very warm tribute to the Waikato District Health Board, in my own area, which is already making great use of the extra funding that has been allocated in the previous two Budgets to tackle the huge challenge of elective surgery. The board has made a very significant gain in reducing local waiting lists. So I am really delighted that there is a further $68 million for more elective surgery in this year’s Budget, which will continue that record increase of 4,000 extra operations a year that we have seen around the country, and which will further reduce waiting times. I know that New Zealanders warmly welcome that focus. It was one of the core principles that we campaigned on in the last election, and New Zealanders are delighted that we are delivering.
For some time, I have been concerned about the growing incidence of dementia. I have been concerned about the ability of our health providers and our social service agencies, and, indeed, those who live with people with the condition, to meet the many demands that a growing incidence of dementia in our community places on them. For everybody living with the condition, dementia is a very challenging and often deeply distressing experience.
In my own area over the last 18 months I have been supporting and encouraging in every way that I can the wonderful team who have been re-establishing the Waikato branch of Alzheimer’s New Zealand. It met with considerable difficulties and, in fact, went out of existence at a time when in the fourth largest city in the country we were seeing a greatly increasing incidence of dementia and Alzheimer’s disease.
So I am absolutely delighted to report that the Waikato branch of Alzheimer’s New Zealand is back up and running. It has achieved a huge amount in very challenging circumstances and in a very short period of time. I thank the branch for that. I also thank those who have been enabling it to raise the essential funding to continue its important work.
This year’s Budget allocated an extra $44 million over 4 years to look after people living with dementia, including $40 million for residential dementia services and $4 million for additional respite care, including in-home respite care for full-time carers of people with dementia. I have had some experience of that within my own extended family, and I know that most other members will have also had some experience of it. I know that this initiative will be warmly welcomed.
The news is equally good in the field of education. Schools and early childhood education will receive an extra $1.4 billion in their operating and capital funding out to the year 2014-15, with total education spending rising to a record $12.2 billion in the next year. That is a significant sum of money, but it is in an area where we know that there will never be enough. So there is extra operating funding for schools, extra funding of $550.3 million for early childhood education, which I particularly welcome, and an extra $66.5 million to increase the number of trades academies and service academies, and more, and that is all very good news.
I close by saying that I was delighted to be able to attend the launch of the Waikato Trade Academy a couple of months ago. This is a partnership between Wintec—the Waikato Institute of Technology, in my electorate, where there are two campuses—and 12 schools throughout my region. A large number of young people are now being given an opportunity to learn a trade, to develop skills, and to further literacy and numeracy, all of which will equip them for the modern workforce. For too long we have seen too many of these young people not provided for and leaving school too early, often ill-equipped to cope with anything other than the most menial jobs, and we know that there are very few of those in the modern economy.
I salute Wintec and all the schools that have signed up to the programme, and I salute the Minister of Education, who is doing a wonderful job in providing these opportunities. The programme continues the efforts made by the Minister for Social Development and Employment over a considerable period of time to support young people into jobs, and I am pleased to report that there is another $55.2 million in the Budget for that purpose. With $15 million more now for other employment assistance programmes, the balance in this Budget is the right one. The prescription is the right one. I am proud to support this Budget, and I commend it to the House.
Hon HEATHER ROY (ACT)
: The Budget was a dire disappointment and an abject failure of nerve. Confronted with the necessity and opportunity of beginning a historic sea change away from the knee-jerk borrow-and-spend mentality that has held New Zealand back for so long, the Government opted instead for cosmetics and cowardice. Yes, the Government acknowledged that borrowing $380 million per week was unsustainable, but it failed to make any significant assault on the mind-set that says that spending beyond our means and having to borrow heavily is the solution to our problems. Economic commentator Gareth Morgan captured the essence of our economic malaise very well in his column in this morning’s
New Zealand Herald, “Bubbles on beer budget poor life choice”. He points out: “this is one of the most indebted countries in the world with a net external debt-to-GDP ratio of 90 per cent. We are still behind Ireland (130 per cent) if that’s comforting, and a smidgen short of Greece (91 per cent), but Australia isn’t as bad (77 per cent) while the US (19 per cent), UK (14 per cent) and Canada (20 per cent), make us look delinquent.” He went on to say: “we continue to live it up as though we are right up there with the world’s richest.
And of course you can only drink champagne on a beer budget by selling your assets or raising more debt. We do both.”
In our present crisis the urgent imperative on the Government is to make itself much less of a burden on the productive sector. The way to do that is to discipline itself and bring its own runaway spending under control. National’s principles commit the party to small Government, yet we have seen spending under this National-led Government explode. No, this is not because of the earthquake. Of our $17 billion deficit this year, only $6 billion is because of the earthquakes. What we needed was a major application of the brakes. Instead, the Government has merely eased back slightly on the accelerator.
One of the reasons the Government has been so timid is, no doubt, its fear of a chorus of accusations that to act more boldly would be uncaring. This Budget has left unchanged and unchallenged a number of situations that can scarcely be described as caring. Is it caring to condemn our young people to soul-destroying idleness by outlawing youth rates? ACT says no. It is sheer folly to prohibit employers from hiring young workers at rates that they can afford, just to appease the perverse sensibilities of socialists and unionists. If a young person is prepared to work for a given rate of remuneration, that should be the end to it. But then, of course, members on the Labour side are not known for their familiarity with the concept of choice.
Is it caring to continue scams like Working for Families, which snare thousands of people into the welfare dependency trap when their own money could simply have been left in their own pockets in the first place? ACT says no. ACT simply would leave people’s own money in their own pockets, while targeting welfare at those who genuinely need it. The notion that even people on MPs’ salaries can qualify for Working for Families, as I could have done in 2004, is farcical. It shows that the Government has moved from focusing its attention on those in genuine need to trying to nanny everyone.
Is it caring, to send children out of our school system illiterate? ACT says no. Our schools have been failing for decades. When the principals association criticises teachers’ literacy, something is very wrong. Our schools have been in thrall to the philosophy that says literacy does not matter. The damage this mind-set has caused is incalculable. Once again, simply increasing spending on Vote Education is not the answer. State schools, at minimum, must repair to basics and to the pursuit of excellence. Again, if the field is opened up to genuine competition, the natural demand of parents for the best for their children will give both State and private schools no option but to meet that demand.
Is it caring simply to throw more taxpayers’ money at our “die while you wait” public health system, when in Singapore, where the Government spends just 3 percent of GDP on health as opposed to our 9 percent, every measure of health success across the board is radically superior to ours—including infant mortality, child mortality, life expectancy, emergency room waiting-times, and non-urgent surgery waiting-times? ACT says no. We need to learn from places like Singapore and introduce a much greater degree of choice for patients by means of private enterprise involvement. Wherever possible, rather than the Government simply throwing more and more money, year after year, at a system that remains stubbornly inefficient, consumers should have their own money returned to them to spend on the health care of their choice, as they see fit.
To those who would have people believe that ACT is uncaring, my response is that we are the only party that truly does care and has the policies to back up our caring. Those same people would also have people believe that ACT is extreme. If by “extreme” they mean unhinged, then nothing could be further from the truth. But if by “extreme” they mean passionately and sincerely committed, then I proudly acknowledge we are extreme. We are extreme in our desire for a vibrant, full-employment economy that will afford everybody the dignity of work. We are extreme in our desire to revitalise the health system and to end waiting lists. We are extreme in our desire to transform the education system and to end a situation where one in four is functionally illiterate.
I remind the House that the Prime Minister once said he was ambitious for New Zealand. This Budget shows Mr Key’s ambition to be extremely tepid. ACT, by contrast, has no qualms in proclaiming itself to be extremely ambitious for New Zealand, and to mean it.
JACQUI DEAN (National—Waitaki)
: Why does Labour hate farmers? I ask why Labour—in all that it says, all that it does, and all the policies that it announces—says very clearly to the agricultural sector of New Zealand that it does not like the sector and will bring in measures to clobber it. I ask why that is.
I remember that when David Parker was the Minister for Land Information in the previous term of Parliament, he worked very hard against the interests of high country farmers in the South Island. He brought in measures to include the amenity value in the setting of high country pastoral rents. It meant that because the average merino standing on the lower foothills of a high country lease had the benefit of a good view—perhaps looking down at Lake Wānaka or Lake Hāwea—that factor therefore had to be reflected in the rent that the leaseholder paid to the Labour Government of the time. That type of punitive legislation brought in by the Labour Government was brought about purely to drive farmers off the land and to drive the merino industry into the ground, but conversely to open up opportunities for people to walk on that land. If that policy of the previous Labour Government was said to be good for the New Zealand economy, then I would dispute that.
It has taken this National Government less than its first term in office to put that right—to put right that travesty that was visited on high country farmers, so that now they can once again look to achieve productivity on their Crown pastoral leases and in the high country of the South Island of New Zealand. The merino industry is going from strength to strength, and farmers are diversifying their operations and becoming more productive all the time.
I ask why Labour hates farmers so much. I ask why Labour’s policy, in answer to National’s most excellent Budget, is to bring agriculture into the emissions trading scheme early in 2013. That, I contend and assert in this House, would simply be a tax on our productive sector. The impact of doing that is calculated at somewhere around $35,000 to $40,000 per annum per farm. That would have a huge impact on any business operation purely as a tax, but on a farming operation that has years of very variable income, it could be simply crippling. It would be, I suggest, a very short-sighted measure to take.
I recall that in North Otago, in some of the drought years of the late 1980s and early 1990s, sheep farmers were earning very little for their stock. They were selling off capital stock just to keep making ends meet. They were going to food banks, because they simply did not have the cash to buy groceries for their families. Please do not tell me that farmers are cash-rich and are there to be exploited by a Labour Government. They are not.
Why would Labour kill off the very sector that is leading New Zealand’s economic recovery? That policy simply does not make sense. Why is Labour blind to the costs carried by the average farmer? Why does Labour mistake turnover for profit? Why does Labour mistake turnover for profit and regard turnover as being what should be taxed? That simply shows a lack of financial and economic understanding, which is probably why the New Zealand economy was in the state it was in when the National
Government took over in 2008. That is why we needed, and we have got, the Budget that we have.
This Budget, which has been brought down by Bill English, is designed to build a stronger economy. Budget 2011 builds a strong platform for growth, and I will talk about an example of that in a moment. Budget 2011 sets out a credible path towards a surplus, and that is one of its critical aspects. It also helps to lift the level of national savings, while protecting vulnerable families. It boosts investment in health and education, and—most important, I believe, being a South Islander; there is no secret there—it rebuilds Canterbury after the earthquakes.
I will go back to agriculture for a moment and talk about a couple of initiatives in the Budget that I think will have a long-lasting and very good impact on the New Zealand economy. Budget 2011 will allocate $35 million over 5 years in what is called the Irrigation Acceleration Fund. I and many of my other rural colleagues have been pushing for that for a number of years. I am very pleased that Prime Minister John Key, agriculture Minister David Carter, and Bill English, our finance Minister, understand completely the value of not only agriculture but also irrigation to the New Zealand economy. The allocation of $35 million will be used to bring irrigation projects to the investment-ready stage. That means—and this happens a lot in my large electorate of Waitaki—one gets a group of farmers together who know that they need water. They know that they need water in order to break through the cycle of drought, low commodity prices, and all the other pressures that farmers face as a matter of doing business. They know that water is the key to breaking through and becoming more productive and prosperous. This fund of $35 million will assist those groups of farmers, who are business people themselves—forget the old Labour view of farmers being just cow cockies to be exploited; that is not true. Farmers are business people—agribusiness people. They have good heads on their shoulders. I tell members that when farmers set their minds to an irrigation project, they really get to work and do it properly. This amount of money, $35 million, will assist those groups who are determined to get an irrigation scheme up and to take it to the investment-ready stage. What is the benefit of that? It means they can then go out with a good plan in order to get third-party funding.
That is where the next part of Budget 2011’s announcement comes in, and that is the $400 million in equity funding for the construction of regional-sized irrigation schemes. That will provide a little bit extra—well, it is actually significant. It is not little; it is significant extra comfort for third-party lenders to become involved in irrigation projects. I have seen that firsthand with the North Otago irrigation scheme. The farmers needed just a little extra third-party funding—in that instance it was provided by the local authority, a very far-seeing local authority, underwriting the scheme—to enable them to go ahead with that scheme. The benefits of it to North Otago have been huge.
One cannot underestimate the benefits of irrigation to regional New Zealand. I have only mentioned two allocations in this Budget, but I can tell that the impact of those two measures, the $35 million irrigation-ready fund and then the possibility of a further $400 million investment in irrigation construction activities, will be huge now and well into the future for New Zealand.
This Budget is sensible, pragmatic, and a budget for our times. It sets out the next steps to build faster growth, to increase national savings, and to create sustainable jobs. I go back to the irrigation initiative. That will bring sustainable jobs for New Zealanders. I am very proud to stand and commend this Budget to the House.
Hon CLAYTON COSGROVE (Labour—Waimakariri)
: It is a truism about this Budget that members on both sides will take a different view as to its effectiveness and strategic positioning and its effect on our communities. If we look at this Budget we see that—and it is worth noting, as I have noted in other speeches in respect of this
Budget—despite the recasting of history, the political record, Government to Government, that this Government inherited was 9 long years of surpluses.
Government members do not like it when this is pointed out, because it is a fact. Every Budget for 9 long years under a Labour administration was in surplus. Those surpluses ranged—I do not have the figures in front of me, but I have used them previously in the House; they are in
Hansard, and they go back to 2000—from $500 million - plus in, I think, 1999, to a peak, in the mid to late years of our term, of $7 billion. In the final year, if my memory is correct, there was a surplus of about $5.5 billion. So every year there was a Budget surplus.
As I said in other contributions to this debate, I recall getting attacked by the then Opposition spokesperson on finance, Bill English, for being a mean-spirited Labour Government that refused to fritter away, throw out, and dish out the surpluses. It was a good thing that we did not, because the rainy day of the global economic meltdown came along. Mr English is again in print and in
Hansard thanks to his comments of 19 December, from memory, which have been quoted in this House. He said, in essence, that the economy he inherited on taking office was in pretty good shape to weather the storm.
I think it is important as we go through and dissect this Budget—as we are wont to do for the general public—that we set the historical context. There were 9 long years of Budget surpluses, as opposed to three hundred-and-something million dollars a week of borrowing and debt. There was today, or yesterday, an admission by this Government that it is borrowing a hundred million bucks a week more than it needs to. Mum and dad Kiwi do their housekeeping every day. They do their own budget every week, as the pay packet, shrinking though it is, is brought home and as the pile of bills grows and the cost of living increases. They sit around the table and do their own budget, and they are scratching their heads and trying to work out why this Government is borrowing a hundred million dollars a week more than it needs.
The answer is pretty simple. The Government delivered a tax cut that gave my constituent in Kaiapoi—and this was reported in the local paper; she wishes to remain anonymous—$7 a week, and gave the millionaires a thousand bucks a week. The journalists were not making it up. The journalists reported this in the
last week. A couple, one working, one struggling to look for work, on about $40,000 a year, which is the same as 72 percent of my electorate, got a $7 a week tax cut, the lady told us. The husband got $7 a week from this glorious benevolent tax cut. The Prime Minister and those millionaires got a thousand bucks a week.
So Mum and dad Kiwi, now in possession of that information, understand why this Government, by its own admission, is borrowing a hundred million bucks a week more than it has to. It is financing a tax cut for those who do not need it, to put it bluntly. They love to get it but they do not need it. If one is at the top end one receives a thousand bucks, and more, a week, as opposed to my constituent who got $7 a week. This constituent is not well served by this Budget. I had never seen, I have to say, a $36-a-month power bill. I thought it was impossible to have one. How could one get a power bill down to $36 a month? This woman and her husband had done it. How did they do it when they have a mortgage, they are desperately trying to keep their home and pay that mortgage, and they end up with a discretionary income of about $300 a fortnight to live on?
How did they get the $36 power bill? Well, they turn on the hot water cylinder for a couple of hours a day. The lady said that they buy candles, they turn off all the lights, they go to bed early, and they do not turn on the heater. I met this woman with Annette King 2 weeks ago in Kaiapoi, which is in my electorate. I asked her: “When was the last time you and your husband had a night out on the town just to get away from it all?”,
because they are in the belly of the beast that is Kaiapoi, the earthquake zone. She said that they did so a couple of months ago. I asked them what a night out for them was. She said it was a jug of beer between her and her husband—that is one jug, luxury though it is—once a month down at the workingmen’s club. That is the luxury they impose upon themselves.
They have a telephone bill that is as low as it can be. I asked her how many times they ate meat a week. She said it was twice if they were lucky, as long as sausages were on special. The husband has a decent feed of cereal every morning for breakfast, does not have lunch, and comes home and carbs it up on the rice or whatever is in the cupboards and has a decent feed at night. So as those Government speakers get up and laud this Budget and say it is wonderful and it sets a course for people all over the country, I say to them that I know of a couple, with no kids, where mum is desperately looking for work and will do anything to add to the money coming into the house. Dad is earning about 40 grand and does all the overtime he can, if it exists. They have no kids, admittedly, so there is no added expenditure there—I accept that—and they end up with about 300 bucks a fortnight to pay for the lot.
Maybe this woman should be the Minister of Finance, because, amazingly, she manages. God knows how. When Annette King and I looked through her books, her power bill, her phone bill, and her expenses she said to us: “I buy bras from the Salvation Army shop at 50c a pop, second-hand, and it was a bit rough because they went up to $2 and $3.”—and that is a fact. When one sits with that woman, who is a hero, she ain’t saying this Budget has done a lot for her. She is scratching her head, back home, thinking: “Why is it that those earning the most get the most?”.
The Government feels so benevolent and puffs itself up, saying: “Well, she got a $7 a week tax cut.”, which immediately got eaten up by the GST rise that the Government imposed—the increase that John Key said he never would impose—and all the other charges, like petrol, etc, etc. I can say that the woman is a decent person. I do not actually know what her politics are, to be honest. I did not ask, and was not told—and one should not ask. But I say this: she and her husband know that they get absolutely squat out of this Budget. They are going backwards, and they are a productive couple, with a mortgage, who are trying to make it. They are an average Kiwi couple—72 percent of people in my electorate earn $40,000 or less—and they get $7 a week tax cut.
Jo Goodhew: We have the lowest mortgage interest rates in 40 years, thanks to this Government.
Hon CLAYTON COSGROVE: Oh, the lowest mortgage interest rates in 40 years! I will return to that constituent in Kaiapoi and say: “You should feel lucky, because you’re getting seven bucks a week in a tax cut! You’re 50 or 60 bucks worse off, and you can’t afford to have more than two meals a day, but you should feel grateful to that member for the lowest mortgage interest rates in 40 years.” That shows how out of touch that member is. I invite that member, if she is so staunch about this Budget, to answer this question. Will she come with me and explain how benevolent the Government is? If the constituent will agree, I will take that member to Kaiapoi and she can sit across the kitchen table, as Annette King and I did, and she can tell that woman how grateful she should be to the member and her Government. Will she accept? [Interruption] Oh, no, she will not accept. She will sit there, of course, and interject but she will not front up.
I will do it for her. I will revisit that woman and her husband and say they should be grateful. I will tell that couple they should be grateful to the member opposite, because they have low interest rates, and they should be grateful because they get a miserly $7 a week, whereas the Prime Minister gets a thousand. They should be grateful to the
member. I invite her, if she really wants to put her money where her mouth is, to join me, get out of this Chamber, whip down to Kaiapoi, and front up. But, no, she will not.
I say to those members opposite that they should look at the real world. They should go out and talk to some constituents, and talk to this couple, who are a battling Kiwi family, and ask them whether they should feel grateful to this Government for its benevolence. I say they will not feel grateful, and that woman and her husband are heroes. That is one very practical reason why we oppose this Budget.
ALLAN PEACHEY (National—Tāmaki)
: This afternoon we have heard three of the so-called heavy hitters of the Labour Party front bench on today’s Budget. What has been particularly troubling to the country is that two of those so-called heavy Hitlers—heavy hitters, sorry; that was a Freudian slip—two of those so-called heavy hitters are considered contenders for the leadership.
Hon Members: No!
ALLAN PEACHEY: Two of them are considered contenders for the leadership, and it will not have gone unnoticed how poorly they debated the economic issues facing this country this afternoon. I will make one prediction now: the pair of them—Messrs Cunliffe and Parker, along with the yet-to-arrive and may-not-even-make-it-here Mr Little—will each have their turn at leadership in the next 3 years, and the only debate really is going to be in which order they will be anointed, and how quickly they will fall over. What is becoming increasingly apparent in this debate is how jolly difficult it must be to be a socialist at the moment, and how extraordinarily difficult it must be to be a member of the Labour Opposition. The problem that the Labour party has is that it cannot live down its past. However hard it tries, it cannot live down its past. It cannot escape the fact that this Government has been in office for less than 3 years. It cannot escape the fact that in that time the economy of this country has been transformed. It cannot escape the fact that the incoming Labour Government in 1999 inherited the best of times, and squandered them.
In 2004—and I invite the next Labour speaker to get up and deny this—New Zealand entered an export-led recession. That previous Government covered it up. It covered it up with continued excessive spending. It cannot hide from the fact that in 2000, for no reason but the fact that the Labour Party is a big-tax policy party, unnecessarily increased income tax and took money that New Zealanders were better able to spend for themselves. What is coming out of this debate is that they want to do it all over again. What this Budget debate is demonstrating in spades is the failure of leadership of Mr Goff.
Mr Goff needs to explain to this House how it can be that in 2011, removing GST from fruit and vegetables can be a good thing. How can it be that in the late 1980s, when he sat in the Cabinet that introduced GST, he accepted all of the arguments that GST in order to be fully effective had to apply across the board? I ask Mr Goff the question: what has changed? What has changed between those years in the late 1980s and 2011 that suddenly it is good taxation practice to begin excluding those products from GST? Mr Goff needs to explain that to this House. What has changed?
In all humility I could perhaps offer my explanation as to what has changed. What has changed is we have a Labour Party leader under immense pressure from young, new backbenchers who are economically illiterate, who have no ideas as to how business operates, who are desperately in fear that they will lose their seats in November, and will be forgotten very quickly as one-term MPs. They are putting enormous pressure on Mr Goff to make what are basically inconsistent statements, and ones that he knows he cannot stand by.
The other thing Mr Goff has been unable to do, of course, is explain how he will replace the $250 million in Government income that would be lost with the removal of
GST from those products. That is the other dilemma that the socialists have. They want to spend, but they do not want to tell us where the money is coming from. I invite the next Labour speaker to get on his or her feet and tell this House how the $250 million will be compensated for. Or will Mr Goff just borrow it? Thank heavens we will never know, because Mr Goff will never have the opportunity to deal with that problem. Thank heavens we will never know whether Mr Cunliffe’s four pillars that he referred to today—I am trying to think what they were; I do not recall them as being particularly economically profound—work, as he will never get the opportunity to find out. You see, New Zealanders have figured it out. This Budget debate has confirmed in their minds that the Labour Party has no future in determining the way this country will develop economically—no future at all. It is devoid of ideas, it is devoid of sound economics, and it is devoid of common sense.
Amy Adams: Devoid of leadership.
ALLAN PEACHEY: As my wise colleague says, it is totally devoid of leadership—totally devoid of leadership. This Government has delivered to the people of New Zealand three Budgets in sequence, each of which dealt with the particular economic circumstances of the time, each of which was well accepted by the people of New Zealand, and each of which—and above all else I stress this point—amounted to sound economics. That is the bit that the Labour members do not get. They do not get sound economics, just as they cannot figure out why in areas like Glen Innes—in the electorate of Tāmaki, which I represent in this House—which they consider to be their strongholds, the people are turning against them.
Let me tell the House why the people of communities like Glen Innes have given up on the Labour Party, and why they do not see the Labour Party as holding the key to their future. It comes down to one word: aspiration. This Government delivers Budgets that aspire to better for all New Zealanders, regardless of their circumstances—for all New Zealanders. Labour MPs opposite will discover that the people in what they used to think were their strongholds have found them out. Nine years of failure were followed by 3 years of good economics. The future of this country rests on good economics. Thank you.
Hon LIANNE DALZIEL (Labour—Christchurch East)
: That speaker, Allan Peachey, provides the evidence, if we needed any, that this Government has completely lost its way. It has completely lost touch with the reality of ordinary lives. I am absolutely surprised that the member opposite dedicated his entire speech to the Labour Opposition, and actually highlighted why we will be the next Government. At the very last breath he gets to the word “aspiration”—aspiration! It is unbelievable that that man would devote his entire Budget speech to talking about the Labour Opposition rather than defending his Government’s Budget, which he cannot do, because it is indefensible. Budget 2011 should have been the Budget that delivered what was promised by John Key back in the 2008 election. I do not know whether anyone remembers what John Key said back then. Does anyone remember? I think he said he was ambitious for New Zealand. Do members remember that? He said he was ambitious for New Zealand. I am afraid I cannot see anything in this Budget that measures up to somebody who was ambitious for New Zealand.
As a Christchurch MP I have to say and put on the record of this House that I am deeply concerned that we in Christchurch will be used as an excuse to do the sorts of things that this Government is signalling—and, indeed, delivering—in this Budget. The unpalatable aspects of the Budget, I think, are perfectly plain: the attack on KiwiSaver, the sale of our country’s assets, cuts to Working for Families, cuts to student loans, and borrowing as if there were no tomorrow. The Government pretends it has to borrow because of the work that has to be done in Christchurch. That is not the case. We know
that it has to borrow because of the unsustainability of the tax cuts it gave to the highest earners in this country. We are not talking about tax cuts that were evenly spread—a tax switch. It certainly was not a tax switch for a lot of the people I have been talking to over recent days, who tell me that the increase in GST as well as the increase in the cost of living has had a major impact on how much they have at the end of the week. Many people are, in fact, struggling to make ends meet, and that is why I think the Prime Minister has proved just how out of touch he is with the everyday reality that so many constituents now face.
I have been looking at something called disaster recovery since the beginning of the year, for obvious reasons. In Christchurch we have serious issues to confront. But unlike members of the Government’s Cabinet committee on Canterbury earthquake recovery, I have actually read our local civil defence and emergency management recovery plan. People in this House would be gobsmacked to know that actually we have one. In, fact every part of this country has a civil defence and emergency management plan. They are required to have it under very good legislation that is in place, and we have an excellent process in place to ensure we are prepared. The problem is that there is no translation between what is written on paper and an understanding of the preparedness for recovery. Our response effort is brilliant—absolutely brilliant—when it comes to the defence of people’s lives. Obviously, what happened in the central business district on the days following 22 February was nothing less than extraordinary. But I have to say that what happened in the eastern suburbs did not meet the mark as far as response goes. And as far as recovery efforts go, this Government has failed lesson No. 1. Rule No. 1 of all recovery planning processes is not to re-entrench pre-existing vulnerabilities when one is involved in the recovery.
What was our economy’s pre-existing vulnerability leading up to this Budget? What do members think the biggest issue was? I think I have read somewhere that it was our savings record as a country. Yes, savings have a major impact in terms of where our country is able to go. So what would a Government do if it was faced with a national crisis in savings? Would it do something about enhancing our KiwiSaver, or do members think it would knock it back a little bit? Would a Government have a crack at it? Would a Government actually have an idea about what it might do? I have to say that this Budget represents the second time that National has tinkered with this scheme. Cutting KiwiSaver was one of its first acts in office in 2008. The problem I have is that this continual tinkering with the scheme moves the goalposts on New Zealanders, creates uncertainty, and reduces confidence in the country’s pivotal savings vehicle. Why would we do this if we are serious about addressing the recession we have been confronted with as a nation? Why on earth would we use this Budget to attack one of the fundamental ways we can address our savings problem? KiwiSaver has proven to be incredibly successful in meeting the objective of ensuring that people have the mechanism for saving. Government incentives for KiwiSavers are now relegated to the “nice-to-have” category, which is simply not good enough.
I am actually disappointed that National has decided to turn its back on the sort of cross-party buy-in we see across the Tasman. If anyone wants to look at how a country can actually address these matters, then they should just look at the Australians and what they have had with their Australian workplace savings scheme. Yet we in New Zealand are confronted with a Government that is so short-sighted it is attacking one of the absolute fundamentals for getting our economy right. Without a savings culture in New Zealand, Government debt levels may have been low when Labour left office—we left a very good record for this Government to pick up on—but household debt was already through the roof. That is something we need to address.
I am deeply concerned about where National is going with all of this, because I think this Budget signals to the people of New Zealand that this election is a referendum on asset sales. That is what this country is up for. I can go back to the previous time when National was faced with a situation similar to this: the financial meltdown post the stock market crash in the 1980s. I was here on the day when Ruth Richardson read the Budget out to the House, and what was the particular approach that that Government, the National Government, took? It said we should sell assets. We should deregulate the labour market, we should reduce welfare, and we should introduce market rents for State housing. We should sell assets. We should corporatise the public health and education systems and outsource major components to the private sector as well as to the voluntary and community sector. We should sell assets. We should cut Government spending, we should pare back the Public Service, devolving more to the community, and then—the triumph of theory over practice—we should introduce policy operations and funder-provider splits in the name of Government efficiency and get the community sector into a competitive market for commercial contracts.
What is the Government doing now? It is doing exactly the same thing. As someone once said, famously, it is déjà vu all over again. That is exactly what it is. This Government is falling back, reverting to type, and doing exactly what it has done before. My point is that all of these measures are short-term, opportunistic interventions that fail both tests. They are not sustainable, and they do not build resilience. But we have to build resilience as a result of what has happened to our country; we have to make sure we are able to withstand the shocks that will continue to come. Let us not condemn ourselves to repeat the histories that recent history has warned us about. We need, actually, to learn another disaster-recovery lesson, which is that if we are to get our economy back on track, we need a Government that is prepared to co-opt all of us into the same pathway, and to co-opt all of the resources available to us. That means we need more than a Government-controlled agenda at a talkfest called a Job Summit that produced a few predetermined results like a national cycleway. We need a Prime Minister who can do better than that. He promised to turbocharge the economy, but he has done nothing more than kick the tyres.
Hon PHIL HEATLEY (Minister of Fisheries and Aquaculture)
: It is true that the National Party, as Lianne Dalziel refers to, is reverting to type. That is true. We are reverting to type: we are managing the economy well. That is what National does. If you wandered up and down Queen Street—or, more famously, Cameron Street in Whangarei—and you talked to Green Party voters—
Mr DEPUTY SPEAKER: Order!
Hon PHIL HEATLEY: Lindsay Tisch, the Deputy Speaker, could talk to Green Party voters, Labour Party voters, or National Party voters and say: “On balance, we appreciate that you do not necessarily vote for the National Party. On looking at the polls you probably do at the moment, but no matter if you don’t.” I am using the collective “you”, Mr Deputy Speaker, so it is not so much referring to you. We could be speaking to a person; we will call him Thomas to make it easier. We appreciate that Thomas would not necessarily vote for the National Party, but he probably does, looking at the polls at the moment. Even if he did not vote for the National Party, we could ask him which party he thought managed the economy well. We would find that most people would come back and say National. On balance, National is a better economic manager.
It is the same if we said to Thomas that we appreciated he might not be a Labour voter, a National voter, or a Green Party voter, but if he had to say what party was involved in social engineering—was really, really good at social engineering—what party would it be? Most people would say that the Labour Party was better at social
engineering, and the National Party was better at managing the economy. So, yes, we have returned to type.
We can see quite clearly at the moment that we have a Budget that says we are now going to return the country to surplus in about 2014-15, which is a year sooner than was forecast even last December. In fact, 2 or 3 years ago the country would not have believed that we would be able to return the country’s books to surplus so much sooner, let alone by the year 2014-15.
Basically, New Zealanders are out there with all sorts of voting preferences, and they understand two things. Firstly, the Nats manage the economy better, on balance, and always have. We agree with Lianne Dalziel that National has returned to type and is managing the economy better. Secondly—it is a huge surprise and I guess the country is filled with a bit of hope on seeing it—we will return the books to surplus in 2014-15.
There has also been heartfelt concern for the people of Canterbury. People are very, very pleased to see the Budget deliver $5.5 billion in the Canterbury Earthquake Recovery Fund over the period of the next few years. Most New Zealanders support that. They understand the need for it, and they think the National Government has got it about right. Those are the two messages, the broad messages, that this Government has sent, and that the general public has received, regardless of voting preferences: National is managing the economy well and we are supporting Christchurch.
I will spend some time on one issue that the member Clayton Cosgrove talked about: his mocking receipt of the news that we are keeping mortgage interest rates currently at about 5.5 percent. He said: “Big deal!”, and was very, very proud to say that when Labour was in Government it was able to manage mortgage interest rates at about 8, 9, or 10 percent. He felt that that did not affect households. But I say to Labour members that the best thing we can do for a first-home buyer, for a family paying off a mortgage, or for those coming up to retirement who would love to see their mortgage written off is to keep interest rates under control. We currently have a Government that is managing the economy such that mortgage interest rates are about 5 or 6 percent. When in Government, Labour managed an economy in which mortgage rates were 9 or 10 percent.
If we quickly do the maths, we see that it shows the difference between Labour managing an economy with interest rates at 10 percent and us managing an economy with interest rates at 5 or 6 percent. The final difference is about 5 percent in mortgage interest rates. If families have a mortgage of about $200,000, that difference of about 5 percent means they are looking at not having to pay $10,000 interest a year under the National Government. That is about $200 a week. We are saying that under John Key the management of the economy is saving people roughly $10,000 a year, or $200 a week, but the Labour Party thinks that does not matter. The Labour Party thinks $200 a week does not matter. I would like to see the Labour policy to write a cheque of $10,000 to every householder with a $200,000 mortgage. I do not see that policy. I see John Key managing an economy in a way that saves every $200,000 mortgage-holder $10,000 a year. That should be celebrated; it is the best thing we can do for a first-home buyer.
It was appropriate that through its Budgets the Government ran larger deficits over the last few years to protect New Zealanders and to support jobs during the recession. If ACT had been in charge, we might have seen some slash and burn, and we would have seen the most vulnerable families come under pressure. If Labour had been in charge, we would have seen cash flying here, there, and everywhere: cash for this, cash for that, and cash for every rinky-dink scheme it could possibly think of. But National has run that very fine line of not being too hard on those welfare recipients during the recession, but also understanding that we cannot throw cash at everything.
This is the election dilemma for the Labour Party: it is going into an election where it cannot use cash for votes. No one will expect the normal routine of the Labour Party and Phil Goff of a lolly scramble. No New Zealander—not a Green voter or even a Labour voter—will believe that Phil Goff can just write out cheques for every idea that comes through the post or to his door. He cannot throw cash at this, that, and every rinky-dink scheme, like he normally would, because no one accepts under the current environment that that is possible.
That is why I agree with Lianne Dalziel: the National Party is returning to type. We are managing the economy well. The Labour Party is in a difficult dilemma, because it cannot return to type. It cannot promise this election to throw cash at every problem, because no one will believe it. It cannot return to type, because it cannot promise the way it normally would, and has in every previous election. I must say that managing the country through this recession has been difficult, but it is nothing like the difficult job that the Labour Party has this election, when it will not have New Zealand’s hard-earned dollar to spend on votes. I feel sorry for it.
DAVID SHEARER (Labour—Mt Albert)
: That was an extraordinary speech by Phil Heatley, who thinks that this Government has been responsible for bringing down interest rates as part of its policy. It probably has a little more to do with the world economic situation at the moment, I say to Mr Heatley, and the fact that interest rates in the United States are around 0.5 to 1 percent, which is one of the reasons why our interest rates are so low, not because of the policies of his Government. However, his speech does show one thing. It underscores for me the degree of this Government’s understanding of the New Zealand economy and the way it is functioning at the moment.
I remind people what was being said about this Budget in January or February of this year. This was touted as the innovation and savings Budget, and Bill English has on record a number of speeches and comments, which we can get off the web, talking about exactly that. I listened to a number of different speeches by Wayne Mapp. He talked up Denmark as the great hope for New Zealand, in the way it invested in research and development, and the way it was progressing. Prime Minister John Key talked about the type of technology being developed in Taiwan. The only thing is that those examples have nothing to do with, and no resemblance to, the New Zealand economy. There is no resemblance, no strategy, and no plan that would allow us to think that the New Zealand economy is moving towards the sort of situation in places like Denmark, Taiwan, or Israel, where Wayne Mapp is at the moment with the Prime Minister’s science advisor, Peter Gluckman.
National talked about boldness and step change. What have we seen in this Budget that allows us to talk about boldness and step change? I tell members what we have in the research and development sector. This is the front-page headline: “Reprioritising $36 million over 4 years”. Now, that is bold! That will get us to where Denmark, Taiwan, Singapore, and Israel are at the moment, will it not! That is an overall drop in funding for research and development of $12 million, so overall we are going backwards, and that is exactly where this Government is going right now.
We need a plan, a strategy, and a growth strategy to move our economy forward. We are not moving forward; we are going backwards. We have not seen any bold thinking. We have a $16 billion deficit. We were $5 billion in surplus just 3 years ago, and we are going backwards. If we want to know what “bold” looks like, let us take a look at some of the other countries around the world that we should be emulating, and to which Dr Mapp looks to for inspiration, although not much more than that.
Let us look at Finland. In 1991 Finland had an inflation rate of 10 percent, an unemployment rate of 20 percent, and its sharemarket had halved. What did it do? It
made some tough decisions, but most importantly it increased its research and development spending by 70 percent, putting it into the high-tech growth industries. Where is Finland today? Finland today is where we want to be and aspire to be, but without a plan we will not get there. Finland also recognised that it needed to have a consensus on what was broken in the economy, and its people understood that they needed to find the answers to their economic malaise and to promote economic growth. They also understood that their real resource was their brains and their smart, innovative thinking.
This is what they did: they increased their research and development spending by 70 percent, and they charged ahead. We have gone backwards by $12 million in this Budget. We have gone backwards in the sense that our research and development spending as a proportion of GDP was 1.2 percent, whereas Finland spends 3.5 percent, and the model that Dr Wayne Mapp talks about, Denmark, spends more than 3.3 percent. This is where Finland, Denmark, and those other smart countries are going, and where we should be going.
So what is this Government planning to do? Last year it increased our research and development spending by $55 million a year. On the face of it, that looks good, but it spent it in the form of grants and vouchers. When we are an innovative company, and we really want to expand and do more in the research and development sector, we have to come along to a Government bureaucrat for more money, so that we might be able to get a grant or a voucher. Do members know what happens? Sixty percent of companies that do that get turned down. They are not successful in getting those research and development grants and vouchers. They fail. So they go back and struggle along by themselves. What does that do to increase the amount of research and development by New Zealand businesses? We have a woeful spend within our businesses on research and development. What does it do? Well, it actually does zero. Those companies are coming to the Government for money. They are not reorganising themselves and doing more research and development. They are asking for a handout from the Government. As a result, in comparison with these other places, we are going backwards, not forwards. That is why, straight after the delivery of the Budget 2 weeks ago, the Labour Party announced its research and development tax policy for the coming election. It is 12.5 percent, in terms of tax credits. Why did we do that? I will tell members why. It was because that increases the research and development spend amongst the companies that most need it. So instead of going for a handout, they simply write it off the bottom line. It incentivises them to look at research and development within their company in a more strategic way.
We know that research and development increases innovation, and we know that innovation is the very thing that increases our economic wealth. Treasury itself says that every dollar spent through a tax credit will generate $1 extra in research and development spend by those companies. We are likely to see New Zealand starting to climb to the very place where we want to be, where Dr Mapp would like us to be, and where John Key says he would like to be, as well. That is why it is Labour’s policy to increase our research and development. That is why two-thirds of OECD countries have tax credit policies. That is why Australia right now has almost the exact carbon copy of Labour’s research and development tax credit policy sitting in front of its Senate, about to be passed into law. The Australians came over here and took our tax credit policy back to Australia, and are about to put it into practice.
We want an innovative, clean, green society where smart, innovative thinking is the way to go, promoting our economy and increasing our ability to grow rich. It is not a choice between agriculture and high-tech. It is not an “or”; it is an “and”. We need the agriculture, but we need to develop this type of growth within New Zealand. This is
$280,000 per job, and tax credits are a start on the path to that point. We have to look for a clean, green, clever, and innovative society, a place that Paul Callaghan calls the place where talent wants to come and live. That is what we aspire to—
Mr DEPUTY SPEAKER: Give the speaker a fair go. There is too much noise, with too many interjections. If members want to have conversations they should go to the lobbies.
DAVID SHEARER: That is the sort of economy and the sort of society that I want to see here in New Zealand—a clean, green, clever, smart, and innovative country where people want to come and live.
Can I just say in closing a special farewell to John Carter. We always have our differences, but we have enjoyed having him in the House and I have learnt a lot from him.
Hon NATHAN GUY (Minister of Internal Affairs)
: I wish to take a call on the Appropriation (2011/12 Estimates) Bill, which covers the recent Budget. Before I do, this is the appropriate time for me to acknowledge my colleague the Hon John Carter, who will be giving his valedictory this evening. He is a Minister, a former Government whip, and, indeed, a good bloke. We wish him well in his new chosen career in the Cook Islands.
We will miss his humour around this place. We have heard plenty of stories. We will miss his wisdom. When I came into Parliament in 2005 he shared an office close to mine in the old parliamentary building. He taught me a few tricks. We now share the same level in Bowen House. I know that the Parliamentary Rugby Team will sorely miss the prowess of the Hon John Carter in the scrum, on the side of the scrum, at half back, or wherever he chooses to play in the future. I have no doubt that he will be opening up invitations to the Cook Islands, and we wish him all the very best.
I also acknowledge today Craig Foss, whom the Prime Minister has announced as the new Minister to take over from Minister Carter. We wish him well. Mr Foss came in and stole the Tukituki seat from the Labour Party in Hawke’s Bay. He has worked tremendously well with his parliamentary colleague Chris Tremain, the senior Government whip, in backing the Bay. He is a proven performer in the Finance and Expenditure Committee, and he will make a huge contribution in his new role. We wish him all the very best. The House should know also that Mr Foss’ parents are fine constituents of the Ōtaki electorate. I welcome him to level 6 of Bowen House.
More important, John Carter has sat in this House for 24 years—almost a quarter of a century—and he has never seen such a woeful Opposition. He has been in Opposition, but it has never been as woeful as the current Opposition. This Opposition is more focused on the size, length, and style of carpet in Premier House and how many pails of paint are being used on that historic building. This Opposition is more focused on Helen Clark’s purchase of the BMWs and more on the air transportation that the fine Rt Hon John Key chooses to get around in, in his important role as Prime Minister of this country.
Su’a William Sio: Talk about the Budget.
Hon NATHAN GUY: I will talk about the Budget in a moment, but it is important that I lead into Labour’s woeful performance in this House. We talk about Labour and Phil Goff still struggling to connect with New Zealanders. It is no wonder when we hear him every day on the stumps talking about things that are not at all relevant to getting the economy moving. We look forward to the Labour Party no doubt running more on the texts from New York. I wonder whether Phil Goff will receive texts from Chris Carter; he may choose not to.
We know that Labour is in disarray. We have heard in Labour members’ speeches—I have sat here for a couple of hours this afternoon—that their focus is more on spend and
hope. They have no plan. They are talking about releasing their Budget in due course, and we wait with bated breath. All we hear from members on that side of the House is that we should spend more. In fact, it is very hard for the Labour Opposition to criticise this Budget.
Coming into the election campaign, Labour is likely to look to tax businesses on revenue and not on profit. We know that Stuart Nash is focused on that. We have also heard in recent times, in response to the Budget, that Labour members are very keen to bring agriculture into the emissions trading scheme.
Hon Member: Early.
Hon NATHAN GUY: Indeed—bring agriculture in early. We have worked out that that will cost every farmer in New Zealand—every cocky in this country—about $35,000 to $40,000. Of course, right now we know that we are relying heavily on the rural sector of New Zealand. Why on earth would Labour want to bring agriculture into the emissions trading scheme early, when we know that the price of milk will go up? Those members are complaining about that now. We know that the price of bread, the price of eggs, and the price of meat will go up because Labour wants to bring agriculture into the emissions trading scheme early. It makes no sense at this point in time.
We have also heard from Labour members that they want the first $5,000 of earnings to be tax-free. That policy would not be targeted; everyone would get it—everyone. It would not be targeted, at all. It would be about 10 bucks, on average, per week. When our Government chooses to increase the minimum wage to 13 bucks an hour—which is, on average, an increase of about 10 bucks a week—we hear from the other side of the House that no way is that enough. No way was that increase enough, we heard from the Labour Opposition. Yet it is fine for them to roll out a stupid policy that is not targeted, which would make the first 5,000 bucks a year tax-free for those hard-working New Zealanders.
We have also heard recently that Labour wants to increase the minimum wage to 15 bucks an hour. Of course, we all want to head in that direction over time, but it will take us on this side of the House a bit of time to turn round the economy. Why on earth would Labour come out right now and say it will increase the minimum wage to 15 bucks an hour when we would see, from every Work and Income New Zealand office up and down the country, a total of 6,000 extra unemployed in 2011 from this daft policy?
Let us focus on some positive things we have done in this Budget. I acknowledge the fine work of our Minister of Finance, Bill English. He has worked tirelessly with Treasury and his Cabinet colleagues to deliver a pragmatic Budget. I also acknowledge the fine work of our Prime Minister up and down the country. He is out there selling this Budget to hard-working New Zealanders. This is a solid and pragmatic Budget that will turn this economy round. It is not a spend and hope wish, such as we see from the other side of the House. This Budget is focused on turning this economy round. It will get us into surplus quicker by about 12 months. It will reduce debt. It is focused on rebuilding Christchurch; it put $5.5 billion extra into Christchurch. There will be 170,000 new jobs created over the next 4 years as a result of this Budget. There will be 4 percent economic growth in the next 12 months as a result of this Budget.
Everyone agrees that the changes at the top end to Working for Families needed to be made. The changes to KiwiSaver will get us on to sure footing for the future. It makes no sense for this Government to borrow to save at this point in time. In terms of the mixed-ownership model, mums and dads will be at the front of the queue. There will be savings across the State sector of close to $1 billion over the next 3 years. The tax
reform means that 73 percent of hard-working New Zealanders now pay 17.5 percent tax. Is that not fantastic for hard-working New Zealanders?
It is interesting that this Budget has been so well received. When I looked at the
Kapiti Observer, I saw that its reporters went out into Coastlands, which is a fine shopping place for anyone who wants to come and spend money in my electorate on the weekend. The reporters did a little vox pop in Coastlands. One lady, Bev Coxon, said: “I feel that they haven’t gone quite far enough with slashing some things”. Leon McDonald is a worker; he said: “something has to be done” and that Christchurch needs some help in its rebuild. Paulen St John thought that the Government tackled the right areas: “I reckon John Key is doing a good job”. Caroline Kinvig said: “I think something’s got to be done. We can’t keep borrowing money without putting something back. That’s just ordinary economics.” Finally, David Nokes said: “In general I think it’s a good idea, I’ve got nothing against what they have done.” That is support from the people in my electorate.
Congratulations and all the best to John Carter.
Sittings of the House
Hon SIMON POWER (Acting Leader of the House)
: I seek leave for the House to sit beyond 6 p.m., if necessary, to enable the Hon John Carter to complete his valedictory statement.
Mr SPEAKER: Is there any objection to that course of action being followed? There is none.
Hon JOHN CARTER (Minister of Civil Defence)
: Here I am, giving my valedictory. If I had known it would be this good I would have done it years ago! I must say people have been kind enough to say they are sad to see me going. I am sorry they are sad; I am as happy as all hell. Today I resign as a Minister. On 17 July I will retire as an MP. I have two or three projects to do between now and then in Northland, so you will not see a lot of me in this House between now and then.
I came into this place nearly 24 years ago—8,742 days, actually, when I retire; I have been counting each and every one of them. Since I came into this place 149 MPs have come and gone: 44 have retired; 18 have resigned for various reasons; one has died, sadly; one has been expelled; and nearly two-thirds—85 of those MPs—have been defeated. The average tenure is 6.6 years. That is interesting; this job is not as secure as some think.
When I came here, Mr Speaker, there were no security staff—we just had messengers—and we shared a secretary. There was a men’s bathroom, you will recall, down in the basement, and Muldoon and Lange were still striding around these corridors. I came in with an amazing group of people—10 including myself, then we added one to make the group 11. They have all contributed in their own way to this country and to this Parliament—a Prime Minister, a Deputy Prime Minister, Ministers, and a number of other important roles. Prime Minister, here is a question; you may well be able to answer it, because you are normally very good at that: how come I got left with Williamson and McCully?
As usual, there have been a few moments. I recall one day when I, like some of us in here have done, decided to make a contribution to the Child Cancer Foundation by having my hair shaved—it has never grown back, actually. I told everybody that I was going to have my head shaved, and that it was happening on that particular day. I came
back from Dargaville, where the event had taken place, and the House was sitting. It was about 8 o’clock in the evening. I walked in. I was the senior whip. The House was functioning, and there were about 15 or so members in the House. Of course, I expected to get some catcalls, some ribald comments about bald heads, and all sorts of things, etc. Not a beep, not any recognition, nothing at all. I was actually feeling a bit miffed. I thought somebody would have noticed. I sat down in the senior whip’s chair. Gerry Brownlee was sitting there in the junior whip’s chair, and we had a discussion about what was going on. Rick Barker was sitting across the other side of the House in his whip’s chair, and no one said anything. About 2 or 3 minutes passed by, and I looked down at Gerry. There he was, tears streaming down his face, his body shaking with laughter. I said “What the hell are you laughing at?”. He said “You’ve got more hair on the end of your ears than you have on your head.” I realised at that stage that he and Barker had jacked it up for people not to say anything.
There was another occasion. It occurred to me one day—certainly, the fairer side of this House will not know this—that the men’s toilets are enclosed, and if the lights are out it is as dark as all hell in there. I do not know why, but my humour—and this is toilet humour, folks—got the better of me, and I wondered what would happen if I went in one day when there was someone in the cubicle and on the way out I turned the lights out. So I did. I went in there one day, there was someone in the cubicle—I had no idea who it was—and I thought that here was an opportunity. So I did my business and out I went, and as I went out I switched off the lights. I heard this voice say “Oi!”, so I waited around in the corridor to see who I had caught. I waited for 3 or 4 minutes, but no one came out. I thought “Well, goodness, this person’s obviously got a problem, but I can’t help them.” So I went into my office, and I sat there, and about 10 minutes later I went into Gerry’s office to organise something for the House for the day. There was Gerry, sitting on the couch with David Farrar. They were having a conversation. I walked in to tell Gerry about very important business that was to occur in the House. He waved me over, leant over to me—he obviously did not want David to hear—and said “Would it be all right if I had about an hour off?” I said “What the hell do you want an hour off for?”. He said “I’ve had an accident. I have to buy a new suit.”! I want to put on record that actually that was not true. As it happened, I had told him about it at some time and he remembered it, and that was how the story went.
I cannot help but mention the “Hone” affair. This is the real “Hone” from the far north, by the way, folks. The only thing I want to say in that regard is that it made things rather difficult for me, because the Prime Minister, who had been waiting 10 years to meet the President of the United States, happened to be in the United States meeting the President at the time the “Hone” affair occurred. I think otherwise I might have got away with just a good boot in the proverbial. Unfortunately, what happened was the Prime Minister, who had had his photo taken shaking hands with the President, appeared on page 8 of the
New York Times andI appeared on page 1. It seriously pissed him off, I can tell you.
I cannot go without mentioning something else I did. I did not know what it was until Eric Roy told me. It was called a spoonerism. There I was—
Hon Member: Just really concentrate.
Hon JOHN CARTER: Yes, I have to concentrate on this, folks. I had been away and I walked into the House. I was senior whip and for some reason we had to keep the debate going. We were in Government, so God knows why we had to keep the debate going, but we did. I think it was because the next Minister to speak was not here, or something, so I had to take the call. I had no idea what the hell we were talking about, but that is not unusual for me. Anyway, there we were. So I got stuck into the Labour Party in Opposition and talked about all the cunning things those members were doing. I
said we were not going to put up with these cunning things and we would not have cunning stunts like this happening. It went on and on. I kept saying it, and I know that Gerry, who was sitting there, was waiting for me to bugger it up, and so was everyone else, funnily enough, even people in the gallery. I carried on about cunning stunts until I slipped up. Eric Roy was in the chair. He fell over in collapse. Ailsa Salt, who was a dear, dear lady and a very prim and proper lady, just about fell out of her chair. Gerry Brownlee collapsed in his seat. Trevor Mallard, who was sitting on the other side, got redder and redder and sort of fell back; I saw tears flooding down. Annette King, who was sitting there, said “I resemble that remark.” and slid under the chair. The worst part was that I had to keep talking while the whole place around me was bloody hosing themselves laughing. But we got through it. The thing that disappointed me was that I had thought I would be the first person ever to have that word recorded in
Hansard—the Speaker could not pull me up, because he was laughing—but when I got it I saw it had been written as “cunning tricks”.
I raise that story for a reason. There is a serious issue that we all need to consider, and it is this: we need to have humour. We need to be serious. Obviously, we need to debate issues—this place is important to the country—but we also need to be able to share humour. I have to say that I am more and more concerned—indeed, I am pleased I am retiring—that the scrutiny we are coming under, particularly from the media, who are trying to sanitise us and turn us into saints, is ridiculous. We need to have members who are real, who can laugh at themselves, share things about themselves, and be real people. If we do not, how else can we represent the people in this country who are real? I ask the people who are prone to criticise us to let us have some space and let us be real people. Occasionally, we will make mistakes, but let us be real, because that is what New Zealand is.
While I am on the point, I want to take this opportunity to table a paper about my superannuation. This is a serious issue for this Parliament. I will tell members why. So often we read about our gold-plated, taxpayer-funded superannuation. I am going to table a paper that shows that out of the salary package I have received over the 24 years, each year—the same as other members do—I contributed, after tax, $33,000 plus for the first 20 years, and then it reduced down to $29,000. The fact is that, at a modest interest rate of 5 percent accumulated, my contributions now total the sum of $1.5 million. I have contributed that amount out of my after-tax salary package. I have contributed that amount, not the taxpayer. I have contributed it. The consequence is that if that sum was now put in an investment earning 5 percent, it would earn in excess of $75,000 a year, which is more than the fund will pay me out. It is not taxpayer funded, at all; it is out of my money.
I raise a point of order, Mr Speaker. I am sorry to interrupt the member on his feet, but I seek leave to table a paper on my superannuation fund.
Mr SPEAKER: Leave is sought for that course of action. Is there an objection?
Hon Members: What’s the source?
Hon JOHN CARTER: Out of my bloody pocket.
Mr SPEAKER: I believe that the source is the Hon John Carter. Is there any objection to that document being tabled? There is no objection.
- Document, by leave, laid on the Table of the House.
Hon JOHN CARTER: I will now turn to those things that I want to focus on. I am proud of my career. I have had a wonderful career. As has been mentioned, I was one of the longest-serving whips. I have been proud to be a Minister. It has been a real honour. In that regard, I want to address my portfolios.
I will start with racing, which has been seriously frustrating, to say the least. I just want to say that the people in the racing fraternity are a wonderful group of people, but, sadly, until they realise that the changes that need to be made to the racing industry have to come from within, it will not succeed. We need to get more focus from within. Craig, I say to you good luck my friend. Every racing Minister—with one exception—has not been well liked. I also thank Michael Stiassny, who has done the best job he can in trying circumstances to get the changes that are needed. But if the racing industry does not change, in my view it is doomed.
I also want to comment on local government. I am particularly proud of the part I played in the Auckland reforms. We made an amazing change, working with the likes of Mark Ford and Brendan Boyle and so many others from the Department of Internal Affairs and local government offices. What a wonderful team we had. But, in particular, I commend Rodney Hide for the leadership he gave and for the way in which he brought together that team to put together the Auckland reforms, which are now such a success. I know there may be one or two who do not agree, but in the main it was an outstanding achievement. Rodney, thank you for your friendship and thank you for your leadership. It is a real credit to you and to those who were able to work with you in that role. Thank you very much.
The role that gave me the most pleasure was the senior citizens portfolio. It was a wonderful portfolio to have. We made some changes to the way in which we deliver services. The satisfaction ratings from both clients and staff soared right through the roof. The
Business of Ageing report we delivered is such an important paper for this nation. If people have not taken the opportunity to read it, I commend it to them. The paper is one that this Parliament and this nation need to be discussing. The recent announcement I made concerning the transfer of the
SuperGold Card, which can now be used in Australia, is something I am very proud of. I say to Peter Hughes, Sue, Natalie, the
Volunteer Community Co-ordinators, and all those people who have been involved, thank you so much. Peter, you are a wonderful, wonderful person, and thank you for the leadership you gave. To all the support people who have been with me in that regard, thank you so much.
Finally, there was the civil defence portfolio. I have to say that of all the portfolios it became rather challenging, given that I was told by John Hamilton when I started that the portfolio would not take too much time and that I would not have to put too much focus on it. I must say that is the only thing he told me that was incorrect. I must say that I am so proud of our civil defence structure in this nation. Recently I was in Geneva at the United Nations conference on civil defence. The way in which New Zealand was regarded is a real credit to us. We can be so proud of our structure. John, I thank you and your team. You are an outstanding New Zealander. Thank you for all the people and the help you have given me.
I am proud to be part of the Parliamentary Rugby Team and the sports club. Of course, I want—
Hon Member: Still?
Hon JOHN CARTER: Absolutely “still”. I am only 61; I am a young bloke in that team, I can tell you. Of course, we are the world cup holders, and I am proud of that, too. The All Blacks could take a leaf out of our book, actually. I want to say to Tony O’Brien and others thanks for all your support.
To the National Party—and I see that Peter and the board are here today—thank you for all the support that you have given me over the many, many years. It has been a real privilege to have worked with the board in the capacities I have. At this time I want to remember Judy Kirk and the difficulties she is going through at the moment. I commend her to this House.
I want to say in that regard that I am writing to the
Guinness Book of Records. We were told to capture emails, and I am going to ask them to record that I have the longest continuous email ever in the world. It started in November 2006. It has been delivered to I do not know how many thousand email addresses. Francis Till, thank you for all the help you have given me in that regard. Can I also say that I am proud that the Northland electorate has won the National Party membership cup ever since its inception. I say this to my National Party colleagues here: if you think it is going to be yours from now on, forget it; I am going to win it from the Cook Islands.
Rt Hon John Key: They all live in the Cook Islands.
Hon JOHN CARTER: Indeed. A lot of them do come from the Cook Islands—that is true. I should also say, Prime Minister, that a bloody good number come from your electorate, as well.
Hon Trevor Mallard: They know quality.
Hon JOHN CARTER: We are not fussy in the north.
I am proud to have been the longest-serving member of Parliament for the Northland electorate. Mr Speaker, I am conscious of the fact that you have served in this Parliament longer than I have, but as far as the electorate goes, I have been the longest-serving member. One of the things I am proud of is that, with the exception of 1993, with every election the majority has increased. I am really proud of that fact. It is something I am very proud of.
I want to say thanks to a number of people. There are so many people to thank. Thanks, everybody. Thanks, everybody in this complex. What a wonderful place to be. But I want to thank three guys in particular who have been special to me in my 24 years within this complex, and they are Rob Eaddy, Paul Plummer, and Wayne Eagleson. I thank the three of you so much for your support. There are many others who have been part of that team, but it has been great to have you guys—and the jokes will not stop, by the way, folks.
I also thank the electorate staff I have had over the many years: Shirley Ford, Andy and Wendy Duggan, Carole and Terry Oakley, Robyn, and, latterly, Deirdre. Thank you, Deirdre. She is here today, supported by Pat and Joy. I have been so fortunate to have staff like that.
As for my parliamentary staff, over the many years there have been too many to record, but, in regard to the last 3 years, I want to thank Rebecca particularly, and Felicity, who are here with us today. Thank you so much. Also Josie, Marika, Mere, Michelle, Tony, and Josh—what a wonderful team. I have been so lucky to have people like that. Of course, I cannot let this speech pass without mentioning Jan Miller, who was a lovely lady and who, sadly, passed away. It is lovely to see you here, Warwick. Thank you for being here tonight.
Maurice Williamson, have you taken my last page? No. It is the sort of blimmin thing he would do.
I also thank my Northland team. So many of you have come down from the north tonight to be here. I say to Sally, the longest-serving electorate chairman in New Zealand, thank you so much. To Neil and all the team who are here—there are too many to comment on and to mention—I say thanks for your support. It has been a wonderful team. In the many years, nearly 20 years, since Sally has been chair, with Neil, Grant, Peter, and Mark—it just goes on and on and on—we have never had an angry word. We have had an amazing structure in Northland, and it is reflected in the majorities we have had.
This is a funny job. Often you do not keep your friends when you come in here. I want to say to Bryce and Nigel, Peter Jackson, and Peter Carey thanks for being there for me.
I thank my family, who have come down and who are here tonight. I thank my children, if I can remember who they are. Clinton and Aaron are here, and Bridget and Kali, and their respective spouses Carolyn, Debbie, and Steven. Thank you all for being here tonight. Of course, I also acknowledge my grandchildren. I also acknowledge my mum. George, my mum is up there; you will have to meet her later on—Mum Carter. Thank you, mum, for being here. It is lovely you are here. Funnily enough, you have been with me all my life. I know that has pissed her off at times, I can tell you. And my siblings have been there in one form or another. My brother Peter and his wife, Jan, are here, and my other siblings are listening. Thank you for all your support.
To my darling wife, Leoni, thanks, love. We are looking forward to the Cooks. So, here we go, off to our next venture. The Cook Islands! I can hear the breeze blowing in the leaves of the palm trees as we speak. I was going to tell a little story but I will not, because time is running out.
Hon Members: Oh, please!
Hon JOHN CARTER: No, seriously, I will not; I will tell you it another time. I say to the Prime Minister and the National Party team thank you for having me, and all the very best to all of you for the election. I hope it works out well.
I will finish with this little ditty that someone sent to me. I thought it was worth reading it out, and it goes like this:
He walks, his head beneath the clouds
He strides across the North
He helps the people far and wide
He is the people’s man.
- Sitting suspended from 6.08 p.m. to 7.30 p.m.
- Debate resumed on the
Appropriation (2011/12 Estimates) Bill.
STUART NASH (Labour)
: It was with interest that I listened to the last National member, Nathan Guy, give his talk, because he spent 7½ minutes of his 10 minutes discussing the wonderful things that Labour will do when it becomes the Government after the next election. I would think that someone who is a Minister in this Government would have spent at least three-quarters of his time talking about what the National Budget was going to deliver for New Zealanders, as opposed to what Labour will do for New Zealanders. But, no, he spent about only 2½ minutes on the Budget and 7½ minutes on Labour’s manifesto. I am pleased that it has gripped him. I am pleased that he sees the wisdom of it. We will just reinforce his message that the things that a Labour Government will deliver will benefit all New Zealanders, not just the very, very few at the top.
There are only three points that I would like to make in this speech. The first one is that this Budget is based on a whole lot of assumptions that are simply not correct. The second point I will make is that there is a $4 billion difference in the revenue figures over 5 years between the Inland Revenue Department and Treasury, and that is something we should be really concerned about. The third point is that I would like to outline, after Nathan Guy did, what Labour will do to rectify the dreadful situation we have found ourselves in.
The Budget, as read last month, is of concern for a number of reasons. We have heard about cuts to KiwiSaver and Working for Families. Those are just two examples where the Government has yet again taken money from those who can least afford it.
For example, in the Hawke’s Bay region Working for Families contributes about $120 million a year to the local economy. Taking money out of the pockets and therefore out of the stores and services of the economy, which is already going backwards under this Government, is simply not a way forward for the people of Hawke’s Bay. In fact, the bay is going backwards under a National Government. This is of huge concern to me as well as to a number of constituents who have come into my office and people whom I engage with everyday.
There is no plan for growth in this Budget. There is no incentive for businesses to seek export opportunities. There are no plans for addressing the massive inequality that has crept into society over the last couple of years. In large measure, the tax cuts of $25 billion are seeing the most wealthy citizens do incredibly well, but the vast majority who have seen an increase in the cost of living receive next to nothing. They have not been adequately compensated. I think the thing that really epitomises this is that the 600 to 700 New Zealanders who earn $1 million a year received a tax cut of $1,000 a week, yet someone on the median wage got about $10 a week. The level of unfairness around that is so stark as to be obscene.
Bill English said in his speech that the Government was going to create 170,000 jobs. In fact, many of the National speakers have reiterated that figure of 170,000 jobs. No one in this House wants to see that more than me. I would love to see 170,000 jobs created. When the Minister of Finance was questioned about where those jobs would come from, he had no answer. He simply had no answer. Then he said that there had been a commodity boom, and he thought that that would create jobs.
Let me give one example. In the forestry sector international log prices have boomed. It has been great for forest owners but it has caused immeasurable concern for our local processors. The Minister of Forestry is well aware of this. What is happening is the domestic industry simply cannot afford to purchase logs at an export parity price. So, instead of jobs being created in the forestry sector, jobs are being lost. I am not saying we should subsidise this, at all. I am not saying that, at all. I am merely pointing out that a commodity boom is not creating jobs. We are not going to see 170,000 jobs created in this economy because of a commodity boom—quite the opposite.
Let us have a look at the farming sector, if we may, for a second. It has $42 billion worth of debt—$42 billion worth of debt. This is of such concern to the Governor of the Reserve Bank that he has increased the liquidity provisions around rural debt. I do not think there are going to be many jobs created in the rural sector because of the commodity boom. So the question I have is where these 170,000 jobs that Mr English said would be created out of the commodity boom are going to come from. There are not going to be any. This is a “borrow and hope” Budget. Not even the Minister of Finance himself can tell us where these jobs will come from.
My second point is around the significant difference between the revenue forecast of the Inland Revenue Department and that of Treasury. Treasury’s revenue forecast is $4 billion higher than the Inland Revenue Department’s. I have had dealings with the department over the last couple of years through the select committee process and through my spokesperson role in the revenue portfolio. I can say that I have found Inland Revenue Department officials to be very reliable, diligent, and hugely competent. When they undertake forecasting I trust their numbers, because they tend to be prudent, if not slightly conservative. We are talking about the Government’s tax collector here. It is a department that has spent literally millions of dollars over the last couple of years on new systems and it is a department that understands tax and revenue, because that is its role. Treasury officials, however, in my experience over the last 2 years, have often been far too aggressive in their forecasting, regularly overstating revenue predictions—much to the anger, no doubt, of the relevant Ministers of Revenue and Finance—and
have often got it wrong. So when the Inland Revenue Department and Treasury differ by $4 billion, we should have grave concerns. We should have absolutely grave concerns, because $4 billion is a significant amount of money. I for one cannot understand such a discrepancy and why the Government went for the outrageously high number rather than the conservative figure.
This demands a huge “please explain” from the Minister of Finance, but he refuses to justify the assumptions behind the Treasury figures. Instead, he states that there may be risks due to this discrepancy. There may be risk. That is the understatement of the decade. There is huge risk. This is very much a “borrow and hope” Budget without a plan. If this was a business plan presented to a board, it would receive a fail mark. It would be thrown back at the chief executive officer and he would be told to sort it out, because it was not good enough. I suspect that if the people of New Zealand were that Government’s board, they would say the very same thing to Mr English on 26 November.
My third point is that Labour has a plan. Labour has a plan for growth—for business growth and for social well-being—and it does not include selling State assets. That is not a plan for economic growth. What we are going to see over the next 5½ months is a series of well-costed initiatives rolled out that will create a vision and capture the imagination of the people of New Zealand. They are not going to be negative policies. They are not going to be selling State assets, they are not going to be cutting KiwiSaver, and they are not going to be taking money out of the pockets of those who can least afford it.
There are three points I have made in this speech, and three points I would like people to take out of it. The first point is that this Budget was based on assumptions that could not be quantified, and the No. 1 assumption is that 170,000 jobs will be created. We have seen absolutely no plan for where those jobs are going to come from. The second point is that there is a $4 billion discrepancy between the revenue forecast from the Inland Revenue Department and the revenue forecast from Treasury, and that is hugely worrying. The third point is that Labour has a plan; this Government does not. Labour has a plan. Thank you very much.
Hon DAVID CARTER (Minister of Agriculture)
: It is a pleasure to take part in the Budget debate, and a particular pleasure to follow the Labour member Stuart Nash, because he is the man who ran the despicable story about dairy farmers not paying enough tax. He is the man who has singlehandedly made sure that every farmer in New Zealand votes National on 26 November. That man went out there and said that dairy farmers do not pay tax. He picked 2009, the year of the drought, the year of Fonterra’s lowest payout in recent years—in fact, many of the farmers he talked about had actually been entitled to a tax refund in that year—and he compared their gross income, and stupidly, foolishly suggested that dairy farmers should pay tax on their gross income, not their profit. Well, that shows how out of touch that Labour member is. It shows how out of touch Labour is with the farmers of New Zealand.
Then Mr Goff did better than that. He had a big conference here in Wellington. Mr Nash might have gone to it, although I understand that as soon as he could he flew to Argentina to get away because he was not prepared to show his face in New Zealand. Ronnie Biggs did that. Ronnie Biggs went and lived in Buenos Aires; at least Mr Nash came back to face the music. Mr Goff then announced Labour would bring agriculture into the emissions trading scheme in 2013. Why? Because it is having trouble with its budget and it needs $800 million. That is $23,000 per farmer—and it is no problem, when one has annoyed every farmer in New Zealand by telling them they do not pay tax, to then tell them they will be expected to front up and pay $23,000 per sheep, beef farm, and dairy farm so that Labour can fund some other research and development tax
credits. That was the policy of Mr Goff. I have no doubt Mr Nash helped to put it together, because he is the spokesman on revenue.
I say to the farmers who are listening tonight because
Coronation Street is boring that they should mark my words. Labour is talking about having a capital gains tax, Labour is talking about bringing agriculture into the emissions trading scheme in 2013, at a cost of $800 million to that industry, and Labour will restore the envy tax. That is the tax where, according to Mr Nash and Phil Goff, anybody earning over $60,000 is rich and should pay a higher rate of tax. Well, I am proud of what this Government has done with tax. We now have two-thirds of taxpayers in New Zealand paying a top tax rate of 17.5 percent.
I acknowledge the valedictory speech made by John Carter before the dinner break. He has been a tremendous parliamentarian. He was the person who supported me through my by-election in 1994, and he made sure he gave me every support to get in here. We will miss John Carter for his humour, for his hard work, and for his absolute dedication to this House.
I acknowledge that Budget 2011 was a tough Budget, but it was a Budget for the time. It was a not a typical election year Budget. We did not hand out lollies, like that Government did in 2005, that this country is still paying for. [Interruption] We were fiscally responsible, something that Mr Nash and Moana Mackey would not even understand. This was a Budget for the times.
I still remember, and I will never forget for as long as I am on this earth, Michael Cullen crowing when he opened the books before the last election, saying: “It doesn’t matter who wins; 10 years of Budget deficits.” That is the mess, the legacy, that that Labour Government left to this country. Full marks to Bill English, full marks to John Key, and full marks to this National caucus, because we have got that deficit back and we are predicting Budget surpluses in 2014. That is a lot better than what the Labour Government left, and those members should be silent and ashamed of themselves.
This Budget also made a tremendous contribution to Christchurch. We are still struggling, particularly after Monday at about 10 a.m., when we got another, 5.8, aftershock. This Government has made a commitment of a total $8.8 billion booked in this Budget, with $5.5 billion associated with the rebuild of Christchurch. The Labour members of Christchurch continue to go around looking for hard luck stories and trying to criticise this Government, but I can tell Mr Nash they are on a loser. The people I am talking to respect the commitment of John Key and the National Government to Christchurch. The Budget of 2011 was about economic growth. History will show, if Labour ever wants to look at history—
Hon Shane Jones: One example of economic growth.
Hon DAVID CARTER: Shane Jones should look at history before he is history. The tradable sector of the economy went into recession in 2004. That was long before the world had heard of the global financial crisis.
Stuart Nash: Rubbish!
Hon DAVID CARTER: Mr Nash denies it. Still today he denies that the tradable sector was in recession in late 2004. Mr Nash hangs his head in shame and I do not blame him, because he should be ashamed of that performance. What we now have is an economy coming out of recession, led by the agricultural sector, which Mr Nash hates. He hates the farmers, he is full of jealousy, and he is not the only one on that side of the House. Those members all hate the farmers. It is the politics of envy, as displayed by Mr Nash recently.
What we now see is this year’s GDP growth at 2 percent—not good enough—next year’s at 4 percent, and building from there on. This Budget builds on the productive base of this country, which is the agricultural sector.
Hon Steve Chadwick: That’s fairy dust.
Hon DAVID CARTER: It was Labour, I say to Steve Chadwick, that termed agriculture a sunset industry. I ask whether Steve Chadwick remembers that. She would have finished school by then. In 1988 David Lange called agriculture a sunset industry. Well, the farmers of New Zealand have not forgotten, and I will make sure that they never forget, Labour’s commitment to agriculture.
I will talk now about one specific announcement about water that was in the Budget. It was announced a week before the Budget itself. It is this Government’s commitment to the sustainable use of water. Water is New Zealand’s greatest primary sector competitive advantage, and as a nation we have made a mess of utilising that resource for a long time. In the Budget we have tagged $35 million to encourage the development of agricultural schemes. We signalled that we will put $400 million into future investment in irrigation schemes.
Hon Member: How much?
Hon DAVID CARTER: Four hundred million dollars. But it will not be irrigation at all costs. We announced a national policy statement on water quality and quantity—something that was not done by the previous Government despite 9 long years of promises to do so. Finally, we announced an enhancement scheme. This Government, with the enhancement scheme announced in the Budget, will now commit a total of $268 million to tidying up some of the degradation of our water.
This was a Budget for the times. I am proud that we are fiscally responsible. We made changes to KiwiSaver. Mr Nash talked about us cutting KiwiSaver. Well, we have made a change to the tax credit.
Hon Steve Chadwick: You’ve decimated the scheme.
Hon DAVID CARTER: The member’s tax credit has been cut by half—from June next year, I say to Steve Chadwick. We are telling the people of New Zealand to go and vote with that information, and, if they support the National Government and its progress on a growth agenda rather than the politics of envy from the other side, to vote accordingly.
At this stage the polls suggest to me that most New Zealanders are being very fiscally responsible. They know this country has overextended. They know this country went into recession in the tradable sector in 2004 under the mismanagement of Helen Clark. They know that Helen Clark still texts members of the Labour caucus on a regular basis to give them instructions. It is no wonder that Labour is still polling at about 20 percent.
Until Labour members detach themselves from the failed policies of the past decade they have no show of delivering to this economy the economic growth that will give New Zealanders the standard of living they deserve. I am making sure, as a member of the National caucus and the National Cabinet, that this Government continues to focus on economic growth and on the standard of living of all New Zealanders.
Hon SHANE JONES (Labour)
: Kia ora anō tātou. First, I support a tiny part of what the previous speaker, David Carter, said—that is, the part about Mr John Carter, the long-suffering representative of Tai Tokerau, or I should say Northland. He has demonstrated, in my case, that the person to beat him from my side of the House is yet to be born. I say that with a fair level of affection, because John Carter has been a very diligent local MP since the 1980s, after he replaced Mr Austin in rather controversial circumstances at the time. But things all move on. Unfortunately, that is where I part company with the previous speaker. I am disappointed that the Minister of Agriculture could stand and deliver such a pigheaded and arrogant speech. I know he believes that he is the best Minister of Agriculture. He constantly derides Mr Anderton. But Mr
Anderton could call a meeting anywhere in this country and more people would show respect to Mr Anderton than to that Minister.
David Carter demonstrated why he and his colleagues, on the basis of this Budget, do not deserve to continue to govern after the election. They believe, as is evident through his superciliousness, they have a born-to-rule, manor-derived, perpetual right to enjoy power. I accept that some of the metropolitan members of Auckland who have recently declared war on Mayor Brown over his railway proposal—I will come to that in a moment—have a more balanced view than Mr David Parker. This is a man who is about to deliver, like Mr Joyce—
Hon David Carter: I agree.
Hon SHANE JONES:—Mr Carter—another subsidy, in terms of water reform, to a group. It should be made to pay. If the State is to allocate funds to develop water storage and water harvesting, the primary beneficiaries of that should be made to pay. In the context of the fisheries industry, when changes are made, the holders of those property rights pay. Why should the favoured caste of friends of the Minister of Agriculture, Mr Carter, in the South Island expect to enjoy an open cheque book?
I accept that Telecom, as a consequence of not only this Budget but also Mr Joyce’s meandering, will get an open cheque because of an ill-conceived broadband proposal. But if one is to open up water for wholesale exploitation, then those whose land values will rise remarkably, those whose production will grow significantly, ought to be made to pay their fair share. It is not acceptable that those who have the ability to pay, and who will enjoy a tax-free capital gain on their land, all of a sudden should gain access to a significant amount of the Crown’s largesse in order to create water capacity.
There was a brilliant opportunity for the Government to put into practice what it preaches about the virtues of private enterprise. There was no commitment to facilitate the use of private enterprise capital, which is what should really underline the proposal. There was absolutely no desire to deal with the property rights issue, which I can assure members will arise once the Government starts to treat water as a tradable property right with a perpetual character to it. I can see now that iwi will be the first to flee from the very timid and quite hopeless, in all honesty, water forum, which delivered something that was very quickly diluted by the Minister for the Environment, anyhow.
The Minister of Agriculture points to the Budget as being one that provides a platform from which to propel the development of agriculture. On that point it represents—unless he has misled himself or we have misconstrued what he said—a new subsidy for a group of New Zealanders who always will have us believe that they do not like subsidies. I say that if we are to extend water infrastructure into the productive base of New Zealand’s agricultural economy, we should make the water users pay for their fair share. I guarantee members that the moment that the Government moves to give a private character to water, we will be looking at the next rout of seabed and foreshore politics. It will be a rout for any Māori group that supports that Minister to further privatise water. That is very disappointing yet again, at a time when we should be talking about the issues that afflict the daily lives of Kiwis—that is, the absence of their savings, the cost of living, the absence of jobs, and no clear distillation of where the new jobs will come from for young Kiwis. They will certainly not come out of this Budget.
I turn my attention to the Minister of Transport, Steven Joyce. A certain acronym is applied to his style of politics, but for fear of joining the rather rude company of John Carter I will not elaborate on the acronym. Steven Joyce is a man who has sent hate mail to Auckland. This is a man who has said to those Aucklanders who enjoy between eight and nine million rides on the train each year that he knows better than them. I accept that a degree of confidence and a degree of robustness in politics is what we look
for, but I think that this Minister has completely overreached. He has sent a very disappointing, highly ideological, and deeply personal response to Aucklanders. Admittedly, it was directed to Mayor Brown. The reason that Steven Joyce does not like Mayor Brown is that although the Government backed the super-city, it dislikes the leader of the super-city. The leader of the super-city wishes to follow through on his vision and develop, based on a vision for the future, an Auckland that can cope with the anticipated geometric rise not only in people but in economic activity and the inevitable arrival of vehicles, involving all the challenges of transport.
Let us just see what the Minister of Transport did. In this Budget the Minister of Transport, after providing a gift—and good on them in Wellington—has stuck the ratepayers of Auckland with a $500 million bill. The exact opposite has been done by David Carter. He is seeking to distil a similar amount of money and hand it over as a gift to his friends in the South Island. That will not go unimpeded by members on this side of the House. So Mr Joyce has delivered a $500 million bill. Then he claimed all the credit for the electric trains, which were Labour policy. What did he do and say after international experts had been secured by Mayor Brown in the super-city? He said the plan could progress, in terms of statutory designations, if the people of Auckland paid for it, but the plan was one that he found distasteful, the plan was not one that fitted his vision of Auckland, and the plan would never be funded in the foreseeable future by his Government.
That is why National’s polling is telling it that Steven Joyce and a number of his other colleagues are burning electoral support in Auckland. They are not burning electoral support because those voters in “Strugglers’ Gully” have given up on them; they gave up on them a long time ago. They are now eating into the core support of those Aucklanders who, No. 1, want to have a modern city and a modern transport system that includes rail. They know that the price of gas is going up. They know that more Aucklanders need to use public transport so that they can witness an improvement in the way that goods and services are moved around the city. They want to see a city whose full potential will be realised in the next 30, 40, or 50 years. It is a tragedy that this Budget is silent on that matter; and it is conspicuous in that it stings Aucklanders with the new $500 million bill, whilst at the same time delivering an unfathomable subsidy to Telecom—the corporate friend of the Government—and to a certain narrow caste of farmers known to Mr David Carter.
For that reason the Budget, in the key area of transport infrastructure, which is a lifeline and an economic connector, fails. The sooner that more Aucklanders and more New Zealanders realise that this man, this transport Minister, has a tunnel vision of what he sees as the future, the better it will be. But woe betide any politician, or any member of the Auckland community, who might try to challenge Steven Joyce. That is why his pigheadedness, rudeness, and superciliousness are a sign of the past, and the sooner that he joins it, the better it will be.
CHESTER BORROWS (National—Whanganui)
: I rise to take a call in this Budget debate, and I want to place on record my grateful thanks for the support and encouragement of the retiring member, the Hon John Carter, for the help that he has been to me personally as a junior member of this House, previously as a candidate in several elections, and as a fellow member of the Parliamentary Rugby Team, and for being an all-round good mate. The House will be the poorer for seeing him head away from here and off to the Cook Islands in his new role as the High Commissioner to the Cook Islands. We are grateful for the legacy that he has left within the National Party, particularly within the Northland electorate. So our thoughts and our care go with him and with Leoni.
Tonight I want to speak about the recent Budget and the plight of young children in our country, especially those who are the most vulnerable. I am pleased to see that young children in care have been given some significant encouragement and some ongoing support. The Budget directs money to young kids in the care of the State, and I want to underline the huge responsibility we have as the State to care for the young who are far too vulnerable and far too at risk to leave in their own homes. As a person who has removed children from their homes, I have been witness to the agony of making the decision, as an agent of the State, to remove a child from the care of his or her parents. It is done knowing that those parents love that child as much as they know how to love, knowing that they care as much as they know how to care, and knowing that in many respects they lack the skills necessary to be able to raise a child in the manner in which he or she deserves to be raised.
When one has been confronted with the hurt and the pain, while recognising as a parent the agony of what it must be to have your children taken from you, one removes those children only as a last resort. We have about 5,000 children in the care of the State at present, and until now we have done very little to understand what their drivers, their inhibitors, and their risk factors are. This Budget provides $43 million to assess medically, mentally, and educationally the children who are in the care of the State.
Of those whom we did assessments on—and this is only those with severe enough behavioural problems that flagged the need to do that assessment, because until the provisions of this Budget assessments were not done as a matter of routine—we found some horrifying home truths. We found that 65 percent of those children had emotional and behavioural problems, 41 percent had mental disorders, 41 percent needed dental health treatment that had been withheld from them, and 37 percent could not hear properly. Even without assessment, we knew the plain, obvious, and terrible truth of those children: 50 percent had parents with drug or alcohol problems; one in four had a mother with a criminal conviction; one in five had a parent with a mental disorder; only half of children in care ate breakfast, before they were placed into the care of the State; and half of all youth suicides in this country—God’s own country—were inflicted by children in care. They are killing themselves because we, the State, have failed to offer sufficient hope for those young people to see that their crack at life has a chance of success.
It is not a surprise to look at the statistics. A child who has a parent who has been to jail has a seven-times-greater chance of growing up and going to jail. A child who has two parents who have had a custodial sentence has a 15-times-greater chance of growing up and going to jail. But a child growing up in the care of the State has a 17-times-greater chance of growing up and going to jail. The National Government does not accept failure on that scale. It rejects it, and it has provided in this Budget the ability to bother about the kids who are in care, to care enough to make those assessments, and to find out the drivers of their situation and the inhibitors to their progression.
Two weeks ago the Social Services Committee took its inquiry into child and youth offending to Australia as part of the committee exchange programme, and we met with several Government agencies and 16 non-governmental organisations over 5 days. Australia struggles with similar risk factors and indicators of failure that we do in New Zealand. They fail their indigenous people, especially the young, in similar ways. They are gradually waking up to the fact that the ways of the past are failing the most vulnerable in their care. In New South Wales and in the Northern Territory, 100 percent of Aboriginal children in the care of the State will go on to go to jail.
We would think that given the wealth, resources, and responsibilities of the State, a child committed to the care of the State would be better placed to succeed, to live with more hope, to have more aspiration surrounded by more care and more protection, to
have better health outcomes, and to have better socialisation than another child, because in spite of the rough start that they have had, the focus of the State agencies is concentrated upon them. But it is not. In fact, it puts them in a greater risk of danger. It places fewer protective factors around them and opens them up to even greater risk factors. I can say at this time thank goodness for a National Government. Children who are in the homes of the State can look forward, under a continuing National Government, to better care, better situations, and better prospects than what they have had until now.
National is confronting child abuse. We are encouraging New Zealand to debate how we nurture and protect our children. Our green paper on children will invite Kiwis to have their say, before forming a children’s action plan. It will help foster children to get a home for life, and support to help parents and foster children into permanent care. Last year saw the launch of the Home for Life package by our Minister for Social Development and Employment, the Hon Paula Bennett. It gives those foster parents who are prepared to commit long term to young people in their care the certainty of support from the State, and the knowledge that they will not then be cast off and left alone. The support is not only financial, but also emotional. It is ongoing, in that they are able to call back to the State at any time. It ensures that things are in place such as respite care to ensure that foster parents get the breaks they needed, so they can gather themselves and regroup, because the commitment they have made to these young people is ongoing and for ever, as far as that young life is concerned.
In health there is more maternity support with a focus on first-time mothers, and a 24-hour PlunketLine that is fully funded. We have seen PlunketLine under threat under previous Governments. We need to acknowledge this one fact: in this modern world that we live in, we can identify an at-risk foetus. We have quoted it in this House before; I have done it myself. We can recognise an at-risk foetus. We know that the mother of a young child who grows up to fail in all those areas of social policy, of a young child who grows up and goes to jail, was pregnant at a very young age. She was pregnant three times before she was 20, probably to different fathers. We knew that she left school with no qualifications, and she is either working on the lowest wage or she is on a benefit. We know that she smokes tobacco. We know that she is dependent on alcohol and probably some other substance. We know that she has no positive role models acting in the role of a parent or a mentor as far as parenting goes. We know, if we can identify dad, that he comes from the same demographic.
We know that about 3 years ago this world, with all its collective wisdom, landed a spaceship on Mars, yet it tends to do nothing about the early identification of the young people we know are most at risk. Thank God that this Government, through this Budget, is doing something about it. I am proud to be part of that Government.
MOANA MACKEY (Labour)
: Tēnā koe, Mr Assistant Speaker Robertson. Thank you very much for the call. I too put on record my congratulations to the Hon John Carter on his valedictory speech tonight and his new post in the Cook Islands. I think it is testament to the relationships he has had with people all around this House that any one of us could have added another three or four stories to the stories he told in his speech today. I wish him and Leoni all the best.
I have sat through a lot of Budgets in my life. I am not ashamed to admit that since about 1993 I think I have seen every Budget live, either up in the gallery or here in the House. I would take the afternoon off work or university and come to watch it. Without a shadow of a doubt, this was one of the worst Budgets I have ever seen in my life. It was bad on a number of levels. I will make a few comments about the speech from Chester Borrows. I do not doubt at all his sincerity. I do not doubt that at all, and I do not doubt at all his desire, as we all desire in this House, to see the terrible ramifications
of child abuse and of violence against children, mothers, and families dealt with in a way that actually delivers results. But it astonishes me for him to stand there and not realise that the changes his Government has made over the last 3 years—changes that were very much brought home in Budget 2011—have made things only harder for the very families and children he was talking about. The people he was very eloquently defending and discussing in terms of what needs to be done are the very people who are hurting the most. The problems he outlined have only got worse under this Government’s watch. So although I do not doubt the sincerity of his comments at all, I really am just astonished that there is this complete disconnect from reality with National members.
National members just cannot understand the damage that is being done in our most vulnerable families. I take one example: family violence prevention cuts. If the Government is really serious about child abuse, about the impact on children of witnessing violence, why—why—would it cut family violence prevention funding, and funding for Women’s Refuge? Women’s Refuge funding was cut. I do not know whether it is a deliberate disconnect; I do not know whether those members just do not get it. But I would love to see some kind of backing-up of the very fine words we heard from Chester Borrows—words I believe we all very, very passionately agree with, but are, I am afraid, just empty words when we look at the actions of this Government over the last 3 years.
This Government confirmed, however, that there is no plan. There really is no plan. We said last year we did not think there was a plan, we said 2 years ago we did not think there was a plan, and this Budget confirmed that there is no plan. We need judge this Government only on the benchmarks it gave itself. What was it going to do? Firstly, it was going to close the gap with Australia. Where did that benchmark go? The Government has stopped talking about it. It does not talk about closing the gap with Australia. Number two: we were going to be aggressively coming out of recession 18 months ago. No one talks about us aggressively coming out of recession any more.
Chris Tremain: Yes they do—4 percent growth.
MOANA MACKEY: “Four percent growth”, says Mr Tremain. This week—2 weeks after the Budget—Treasury has already had to say, as Labour was saying on the day of the Budget, that the Treasury figures were overly optimistic, they were fairly fluid and flexible, and, in fact, it has now had to downgrade them. Two weeks! We had the Budget only 2 weeks ago, yet Treasury already has to pull the figures back in and say what Labour was saying on Budget day, which is that those figures were absolutely untrustworthy—absolutely untrustworthy. Where will these 170,000 jobs come from? Jacinda Ardern pointed out that in last year’s Budget the Government promised 170,000 jobs—or a bit fewer than that number. Well, they did not appear in the last financial year. They are being promised again, but there is no plan. There is no plan.
Chris Tremain: They never promised 170,000 in one year. They beat the forecast, as you know, by 10,000. You don’t like that.
MOANA MACKEY: We actually have to do something if we want to create jobs, I say to Mr Tremain. We actually have to do something. Just wishing jobs up out of thin air will not do anything.
National members really love rewriting history. It absolutely kills them that they inherited from the last Labour Government an economy that had zero net debt, which the IMF and Bill English said put us in a very, very good position to weather the recession. When National took over Government and inherited low unemployment and low Government debt—because Labour had resisted National’s continuous calls for tax cuts and saved for the rainy day—what did it do? It squandered it. The legacy of this Budget is a $17 billion deficit that has grown on this Government’s watch—seven or
eight times what Treasury predicted it would be when National took over in 2008. What happens to personal responsibility? All of a sudden it is everyone else’s fault. It is not National members’ fault that they have not done anything for 2½ years—not a single thing! The Australian Government had an enormous economic stimulus package, $5 billion of which was housing. It has added 20,000 State houses to its social housing stock. It has done up 80,000 more. It kept builders in business. It kept income tax flowing from those workers. It kept GST flowing from the houses built. What did we do? Nothing. The Government brought forward by 6 months some projects that Labour had already agreed to fund.
Let us look at housing in this Budget. If we really want to see an area that shows that there is no plan and that the emperor has no clothes, we need look no further than housing in Budget 2011. The Minister of Housing, Phil Heatley, put out a press release saying that there is a $45 million contingency fund for the community housing sector. Great news. But when we actually look at the numbers we discover that, in fact, the overall housing budget has been cut. Out of that $45 million, Housing New Zealand Corporation has to carve back and suddenly find $21 million so that it can pay a higher dividend to the Government. The Government has increased the dividend from Housing New Zealand Corporation by $21 million, so that money has to be found elsewhere. We also find out that about $30 million worth of programmes have been cut, including the Housing Innovation Fund. The day before the Budget the Minister of Housing did a question to himself—a patsy question—in the House saying what a great scheme it was, all the time knowing that the next day that scheme would be gone in Budget 2011.
The Rural Housing Programme, another great Labour initiative we thought the Government supported, is gone. Then there is the Healthy Housing programme for Housing New Zealand Corporation to insulate State houses. We all remember the song and dance routines we used to get from the Minister of Housing, Phil Heatley. He used to jump up and down about what a great Minister he was and how terrible Labour was, conveniently ignoring the fact, of course, that he had hocked off 13,000 State houses when National was last in Government and had carried out no modernisation, and that Labour had spent 9 years repairing that damage. Let us just rewrite history on that front as well! The fact is that all those programmes are gone. Housing New Zealand Corporation will have to come up and find this $45 million that apparently will be given to the community housing sector. We do not actually know that. Then Minister Phil Heatley says the money will not go to some of the niche providers. They will have to find money elsewhere. I would like to know who the niche providers are. I visit a lot of housing organisations, and I would like to know. Is the Salvation Army a niche provider? Is the New Zealand Housing Foundation a niche provider? Is the Community of Refuge Trust a niche provider? Is the Nelson Tasman Housing Trust a niche provider? Is Habitat for Humanity a niche provider? Is the Queenstown Lakes Community Housing Trust a niche provider? Is Monte Cecilia Housing Trust a niche provider? If they are, these people will not get the money. The amazing thing about housing in Budget 2011 was that there was no detail. In fact, there was only a contingency fund. The money has not actually been appropriated yet, and it will be up to $45 million. The big question is what will be cut at Housing New Zealand Corporation to pay for that $45 million, because there is no new money. In fact, the money has gone backwards. I can tell the House right now that State housing, and State house tenants, will bear the brunt, once again, of this Government.
David Carter talked about the politics of envy. Apparently, when people on low incomes see a Cabinet Minister giving himself hundreds of dollars worth of tax cuts every week and say that that is not fair, Mr Carter calls that the politics of envy. He is nodding. Well, I tell the Minister that those people are not envious; they are angry.
Perhaps if the leader of National got out and visited a food bank once in a while, or went back and talked to State house tenants about just how great this Government has been for housing, then maybe Mr Carter would not make offensive statements like that. I tell Minister Carter that people are not envious; they are hurting, they are struggling to put food on the table, they are struggling to keep a roof over their heads, they are struggling to pay for the basics for their kids, and they are angry. They know that a Government that prioritises tax cuts for the very wealthiest New Zealanders, which are paid for by the very poorest, is not fair. Labour says that is not fair, and we think it is time that some of that balance was put right. We think it is time that the hard-working families in this country—the families that Chester Borrows talked about, who are struggling to raise children in difficult circumstances—get a little bit more than just nice words from this National Government. We may have a Prime Minister who is very good at the photo opportunities, and who is very good at smiling and waving, but when it comes down to it, and when we go out and talk to people who are really suffering, we find that this Budget does a lot of damage. As Phil Goff has said, this Budget does not help but it does hurt.
Hon Dr JONATHAN COLEMAN (Minister of Immigration)
: I will start by paying tribute to the Hon John Carter, who gave his valedictory speech in this House today after 24 years of fantastic service to the people of Northland and the New Zealand Parliament. I certainly wish him well in his new post as High Commissioner in the Cook Islands.
While I was listening to the previous speech I was thinking whether it was showing us where Labour is going wrong. When we listened to the member Moana Mackey we heard a very garbled, economically illiterate message, poorly crafted in a totally unsaleable way. I was thinking that if we sent that member out to my electorate of Northcote on the North Shore of Auckland, sent her down to Birkdale where people are not having the easiest of economic times but actually understand what this Government is trying to do, we would find that that member, with that message, would be met with completely blank stares. There is a fundamental disconnect between the message that that crowd on the other side of the House thinks is saleable in New Zealand and the message that the people of New Zealand are actually hearing. People have seen with this Budget that we have a Government that has a clear direction, that knows it has to balance the books, and that is predicting clear economic growth in the years ahead. If people want a simple message, it basically is that next year we are halving the deficit, we are halving it the year after, and then it will be gone. Who can argue with that?
That member was talking about families struggling, and families who are angry. Well, I tell you what—
The ASSISTANT SPEAKER (H V Ross Robertson): Order!
Hon Dr JONATHAN COLEMAN: —I tell one what—they will be pretty angry if they get a Labour-Greens Government. They will be pretty upset, because in actual fact the cost of living will go through the roof. A Labour Government would put up tax rates, and it would cripple our prime export earner, farming, with a punitive emissions trading scheme that would come in 2 years early. I tell the House that the average person in New Zealand will find it very, very difficult under a Labour Government, because Labour has absolutely no plan.
But we see under this Government and we see here in this Budget a clearly laid out manifesto for the coming election. It shows that we will be getting rid of debt and growing jobs—170,000 jobs. The Prime Minister in question time today clearly laid out where those jobs will come from. We will see more money going to the more vulnerable, growth in vital public services, and New Zealand returning to prosperity. Quite clearly, the public of New Zealand will have a choice at this election. They will
be able to choose between the sound economic management of a proven Government, with a Minister of Finance who has delivered a fantastic, sensible Budget that will get this country on the right track, and with a Prime Minister who has worked in world business, in the money markets, and who knows how economies work, and, in contrast, Phil Goff, who has promised $5 billion in unfunded spending promises, which that crowd over there, should they ever retake the Treasury benches, will be expecting the public of New Zealand to fund.
What is even worse is that Phil Goff does not understand the details of his own policy. When he announced a research and development tax credit of $800 million, he did not understand that, fundamentally, one cannot cap a tax credit, and when it is actually fully priced out we find we are talking about $1.55 billion. So why would the public of New Zealand trust the possibility of a Labour Government whose members do not understand the books, and who do not understand their figures, when they know that under National things are getting better all the time?
If members want to talk about a party rewriting history, I note that those people over there keep on saying that the tax cuts were for the rich. Well, the fact of the matter is that two-thirds of the tax cuts went to the lowest two tax bands; 75 percent of the tax cuts went to two-thirds of the population. So we can see that it is not actually as those people—[Interruption] Members opposite get so angry because they do not like to be contradicted. They think they will be able to go around the country telling what one, frankly, could generously call untruths, like that the tax cuts were for the rich, like that we are selling assets, when they know their talk is actually just a falsity.
The question that the public will have to answer is if we do not progress with the mixed-ownership model, which will raise between $5 billion and $10 billion, how will those guys over there make up the difference in revenue? How will they do it? The revenue spokesperson should get up and say. Well, the clear answer is that Labour would borrow more and more. It is not focused on the deficit, and it is not focused on reducing debt. It is focused on borrowing more money so that it can fund more election promises. That is a reckless plan for economic failure.
Moana Mackey was trying to make out that the last Labour Government left the books in a decent place. Well, if we look at the fact that it spent $1 billion to buy KiwiRail, we see that was nothing short of economically irresponsible for an asset that we would now struggle to get $100 million for. To think that the last Labour Government did anything other than fund election promises would be absolutely wrong. That is what it did all the way through. KiwiSaver had become unsustainable, Working for Families was completely unsustainable, and student loans were unsustainable. We have had to shape that back into a decent package that is sustainable and affordable for New Zealand in the long term. We can ask people in the streets; they know that we are on completely the right track.
Hon Steve Chadwick: And it’s ageist.
Hon Dr JONATHAN COLEMAN: Someone over there claimed that the student loan measures are ageist. I tell members that for every dollar lent to people over the age of 55, the State was getting back 3c. But, suddenly, because we have made a change to make the policy affordable, we are ageist! Actually, we have been completely practical about this, and I can tell the House that in the long term people will thank us.
If members want to look at how well the economy is actually doing, I tell them that last month was a record month for New Zealand exports. Exports exceeded imports by $1.1 billion, which is the biggest margin for a month in the history of New Zealand. Commodity prices are going through the roof, and that is great for the New Zealand economy.
Stuart Nash: That’s because the country is in recession.
Hon Dr JONATHAN COLEMAN: I feel sorry, actually, for really practical people like Stuart Nash, who is left over there. He knows what is going on, but he has the sad job of having to get up day after day and put up incorrect arguments to back up his failing leader, Phil Goff. He is a loyal guy, but he knows that he will go down with the sinking ship. The major danger over there at the moment—I know that Mr Assistant Speaker Robertson has a safe seat—is that half of those members will be gone.
Darien Fenton: You wish!
Hon Dr JONATHAN COLEMAN: As those polls continue to decrease, people like Darien Fenton will get more and more desperate. They will be calling for more and more left-wing, extreme socialist policies to try to shore up the base, and the harder they try, the lower they will go in the polls.
Let us look at some of the really positive spending initiatives in this Budget. Health will receive $2.2 billion over 4 years. What an amazing difference we have made in health, with 1,000 extra nurses and 500 extra doctors since this Government came to power.
Hon Steve Chadwick: People are getting sicker.
Hon Dr JONATHAN COLEMAN: That is not true. Mortality and morbidity rates have improved over time. Steve Chadwick knows that; I do not know why she would say something so ridiculous. New Zealanders no longer have to go to Australia for cancer treatment under this Government. There are 400 extra operations per week. The last Government culled people off operation waiting lists. Education will receive another $1.4 billion over 4 years. Members opposite will spread the falsehood that early childhood education funding has been cut, but, actually, it has gone up by $550 million. Kindergarten teachers are getting a pay rise.
We can see the theme: clear progress is being made, the economy is growing, and Treasury is predicting jobs to come. If members think Treasury officials are being optimistic, they should go and talk to them for a while, because they are economically some of the most pessimistic people one could ever meet. Talk to any bank economist, and their forecasts for job growth are even higher.
The crowd opposite will go around feasting on a diet of gloom and doom. They will tell New Zealanders how bad the situation is, but, ultimately, they cannot fool the people. The people know who is on the right side of the argument, and I have to say that it is the National Government.
DAVID CLENDON (Green)
: Kia ora e te Whare. I am pleased to take an opportunity to speak in this debate on the Appropriation (2011/12 Estimates) Bill. In his Budget speech the Minister of Finance informed us that the main task of this Government was to “return New Zealand to sustained prosperity.” The primary theme of this Budget as it has rolled out has been that this longed-for prosperity that we are promised will somehow be achieved by a mix of public sector cost-cutting, an assault on the most vulnerable and least well-off in our society, and an enthusiasm for a return to the extraction industries that fuelled the growth of our economy in the 19th and early 20th centuries, but at an enormous and largely irreversible environmental cost.
In amongst this propensity—this obsession, almost—with cut, cut, cut, it seems the Government has lost its way. One possibility seems to have eluded the Government—that is, rather than cutting into the provision of very necessary and important social services, we should instead seek to improve the income streams and revenue so that there is more to go around and we can improve quality of life and create a better economy. An unfortunate, albeit important, characteristic of the New Zealand economy is that it is a low productivity economy, and that is generally accepted, I think, by all shades and all political hues. We do not manage to generate a high return on our investment in capital, labour, energy, or other resources.
Although we do not share—in fact we are as far as anyone could be from sharing—this Government’s obsession with the chimera of catching up with Australia, which is apparently the solution to all ills, it is worth noting that productivity growth in the Australian economy has surpassed that of the New Zealand economy now for a number of decades, but historically New Zealand did better than Australia in productivity growth. The turning point was the massive assault on the economy and on society that followed 1984, from which our economy has never recovered. It is to everyone’s advantage that we improve the productivity of our economy, that we get more return from every unit of energy, and that we get more labour productivity so that New Zealanders can perhaps reduce their internationally and historically high average number of hours worked. We can get more value from our use of our natural capital, which ultimately underpins, and will always underpin, our financial capital.
Improving productivity is a necessary and certainly a worthwhile objective, but, sadly, nothing in this Budget will contribute to that end and help to generate the outcome of a more productive and therefore more sustainable economy. Rather than slicing budgets and cutting New Zealanders’ access to those critical and important social services, we should be looking for, and investing in, a comprehensive strategy to increase productivity, which will deliver not only economic but also social and significant environmental benefits. It is interesting that this Government’s sole contribution—or attempt at a contribution—to productivity improvement, given that the Government is pro-business and talks so much about cutting the public sector, was to establish a bureaucracy in the form of the Productivity Commission. The irony is lost on no one that the Government looked to a bureaucracy to deal with what is essentially a social and business sector opportunity. We have no need for a relatively expensive and ultimately fruitless Productivity Commission to discover what the issues on low productivity are. Anyone who engages with the business sector, reads trade and professional journals, listens to economic commentators, or, indeed, engages with the unions, academics and researchers, or small and medium enterprise owners and operators absolutely knows what most of the problems are around productivity, and we have a whole suite of solutions available to us, none of which focus initially on the affordability of houses or the movement of freight across our wharves. It is interesting to look, as I have done, for references to productivity improvements in this Budget. In the Budget speech the word appeared four times, once in the context of acknowledging that “Exports, growth and productivity have all stagnated.” So it is acknowledged that productivity is an issue, but, sadly, no solutions are offered.
Growth in itself, according to the way this Government understands growth, is problematic. We know that if growth is understood simply as increasing GDP year by year, it is a fruitless and ultimately self-defeating exercise. In a different context we have a much broader and much more sustainable macroeconomic picture of genuine sustainable growth, a steady State economy that is able to deliver goods and services to us, to our society, and to protect our environmental quality over time. As for the reference to exports, I say that yes, exports can and will be, at least in the short term, part of our recovery and part of the answer, but the whole picture is much more complex than simply desperately trying to export more and more low-cost commodities, which seems to be this Government’s only solution to building economic activity.
Again, I quote from the Budget speech: “The public sector has a wider role to play in lifting productivity and national saving.”, and I could not agree more. The public sector can demonstrate leadership. The Government spend in our economy can be targeted in such a way that it will contribute to increasing productivity and reward those companies and services that provide the mechanisms and means for improving our productivity, but, sadly, rather than letting that leadership emerge from the public sector, again we
saw this slash and burn, this destruction of the capacity of the public sector even to achieve its basic tasks, let alone leadership in the economy.
It must be said that the broadband initiative is one mechanism that can deliver productivity improvements, and one hopes it will, albeit it is a very expensive solution. It is the only content within this Budget that offers anything much in the way of allowing New Zealanders to do more with less, and improve their quality of life along the way.
We are told that the much-touted mixed-ownership model will raise productivity of the businesses involved through sharper commercial disciplines, as if the Public Service is not in itself capable of delivering decent and efficient management of those resources.
The energy sector, in itself, rather than being milked as a cash cow, if directed and modelled correctly, could ultimately produce income export through the development of new technologies.
We had a very good definition of how we can improve productivity, and I quote once more: “By investing in new capital, increasing skill levels, introducing new innovations, encouraging entrepreneurial activity and promoting natural resource management, New Zealand can achieve productivity growth, higher incomes and a better standard of living.” That came about 3 years ago from then Treasury secretary John Whitehead when speaking to The Icehouse, the entrepreneurship centre at the University of Auckland.
Increasing skill levels is a critical part of productivity. Instead, we see our tertiary sector, and, indeed, our secondary sector, struggling to maintain the capacity to educate and to train. We are losing capacity in just about all of the trades, all of the skills, all of the professions because this sector has not been sufficiently resourced. It has not been respected. Morale in the tertiary sector is as low as I have ever seen it in 15 years of a quite close relationship with it.
In respect of new innovations, I would like any Government member to point me to where in this Budget they are encouraging and supporting innovation in industry, in business, in design, and in development. Where are the incentives for people to take the risk? Where is the support for the companies that have a very good idea? We have many of those companies. Where is the support to turn that idea into a saleable, exportable commodity, particularly in the area of weightless commodities, like intellectual property rather than product that goes out in containers? We have an extraordinary opportunity in this country to improve our performance by investing in skills, by supporting and valuing innovation, and this Budget is simply a lost opportunity to advance that. Kia ora.
PAUL QUINN (National)
: Can I join as one with other members in congratulating the Hon John Carter on his next career step, and farewelling him. Others have spoken on this, and I add my support to those comments.
We have just heard a most extraordinary speech from the member who has just sat down. It was extraordinary. About the only part I could agree with him on was his last comment when he did not quote verbatim but referred to comments made by the immediate past Secretary to the Treasury, John Whitehead, about what was required to improve productivity. I agree with those comments. The sad reality is that there was negative productivity for the whole of the previous administration. I have the figures here, I say to David.
The ASSISTANT SPEAKER (H V Ross Robertson): The member will refer to the member by his full name or his title.
PAUL QUINN: I say to David Clendon that I have the figures here, straight from Statistics New Zealand. The fact is that what this Government is doing is necessary to
achieve the exact things that the previous speaker set out in his speech. That is exactly what we are doing.
Although Opposition members like to prattle on about where the plan is, I say to them that if they want this country to wallow in the misery of people under Stalin, Khrushchev, Brezhnev, and their ilk, then they can well wallow in that misery. But let me tell them that this Government, and the people of this country, acknowledge that we are getting on with the job of building a future based on a strong economy. This Budget follows and builds on the previous two Budgets, and particularly on the last Budget, which created an environment for the change process of savings and investment, and established a coherent, sustainable, and equitable tax system.
The Government’s job is to set the strategy to create the right environment in order that our entrepreneurs and business people can get on with the task of creating jobs and increasing exports, and that is exactly what is happening. For the first time in about 8 years our tradable export sector, through our good administration and guidance of this country in allowing export people to get on with their jobs, has returned to the black. I will come back to that a bit later. The Government’s job is to allow people to pursue their dreams and their aspirations. It is not for the Government to run their lives. The Government’s job is to ensure equality of opportunity; it is not to do as the previous administration did, which was to coordinate mediocrity. The Government’s job is to empower, not prescribe. Let us remind ourselves that equality of opportunity does not guarantee equality of outcome, as Metiria Turei might have us believe. Egalitarianism is not about mediocrity; it is about equality of opportunity. The Government’s job is to provide the tools and create the aspirational pathways for people.
Let us talk about the Government’s strategy, seeing that the Opposition still does not get it. Let us just talk about some of the things. Firstly, the Government is focused on better public services, not on a bloated Public Service. We have already heard from previous Government speakers about the measures that have been taken, such as increased expenditure targeted to improve the outcomes from primary schools, from early childhood education, and from secondary schools, because that is the future. That is the future of this country, and that is where this Government is focusing its attention.
We have had comments during the debate on the taxation bill, and again in the Budget debate, about the fact that part of the Budget has requested that the chief executives of Government departments find a million dollars. It was commented that this was an extraordinary event, and that if it happened in a Cabinet that Mr Mallard was in, then there would be trouble. Well, that just confirms that Mr Mallard is the bully he is. The fact of the matter is that $650,000 of that million dollars is already targeted, through putting KiwiSaver deductions straight back to the departments. In fact, those people are paid significant salaries to run their departments. That responsibility is not the Government’s and not the Ministers’; it is the chief executive officers’. [Interruption] I know that Dr Prasad in his day probably struggled under the burden of responsibility in the Families Commission, so he probably does not understand what I am saying.
Another factor in the strategy that this Government is undertaking is to bring public debt under control by reducing public borrowing from $300 million per week today to $100 million per week in the next financial year, so that by 2014 we will be in surplus.
Dr Rajen Prasad: If you sell everything, you won’t.
PAUL QUINN: These issues have to be dealt with. If Dr Prasad does not understand them, I would be happy to take him aside and give him a lesson in economics, but other than that I cannot do much. The fact of the matter is that the issue of public debt and getting borrowing under control has all to do with maintaining interest rates at a low
level, which, of course, underscores the investment drive. Ongoing development of infrastructure is another issue.
I will talk about business in innovation and trade, and the tax credit scheme. It is fascinating. The retiring Deputy Commissioner of the Inland Revenue Department, Robin Oliver, in an article written a week or so ago, was scathing about the concept of tax credits. My colleagues have already canvassed the various issues there. I was fascinated that in terms of this research and innovation, Labour, it was reported, had Sir Paul Callaghan address their—what was it—symposium—
Aaron Gilmore: Congress.
PAUL QUINN: —congress, yes. But it seemed to me that they actually missed the most important three words that Sir Paul Callaghan said. He said we require entrepreneurial genius. That is exactly what he said. That is the most important part. That is actually the most important part, because it is entrepreneurial genius that will actually create the opportunities that Labour wants. Let us talk about the
films. There are people wanting to get on with letting entrepreneurs do their thing, with some innovation. But what did members opposite want to do? Kill them! They wanted to kill them. In fact, the fundamental issue is that we must continue what the
magazine issue calls encouraging the mind in its “Builders and Titans” category.
BRENDON BURNS (Labour—Christchurch Central)
: I now understand why Trevor Mallard, unusually, invites his opponent to public meetings when he calls them. When we hear Paul Quinn equating democratic socialism with Stalin, it suggests that I should start talking about 1930s Fascism, and equating that to National, which, of course, is a nonsense.
I will start my speech on the Appropriation (2011/12 Estimates) Bill tonight by acknowledging that Budget 2011 includes $5.5 billion for the rebuild of my city of Christchurch. I acknowledge that. It is 60 percent of the public cost of the infrastructure rebuild of my city. I think any Government would have done that but it is important to acknowledge it, because nowhere will more of that money be spent than in my electorate of Christchurch Central. Recently with other MPs I had a tour of the central business district’s inner core, the red zone, which I had not personally been into for some weeks. It reminded me somewhat of the set of a science fiction movie. There was a very eerie feeling in that city centre where a thousand buildings are to be demolished. There was no noise taking place. We had a reminder only yesterday morning at about 8.30 that we are not yet out of the woods in respect of aftershocks continuing in Christchurch.
The defining piece of the Budget for me and for Labour is the assertion that the Government wants to go down the track of selling 49 percent of State assets Meridian Energy, Genesis Energy, Mighty River Power, Solid Energy, and Air New Zealand. I put on record my opposition to those sales, and say that in the late 1990s Telecom was sold by the Government for the sum of $4.5 billion. It accrued $14.5 billion in dividends and payments back to the owners in the period before it came back on to the sharemarket and, in part, back into New Zealand ownership. That is a fundamental indication of the folly of selling State assets. When they are making returns to the taxpayer in the hundreds of millions of dollars per annum, there is absolutely no logic in selling them, other than some sort of market-driven ideology that says that is sound policy.
I acknowledge that the National MP from Christchurch Aaron Gilmore is in the House tonight. I raise again in this House this question. I ask any member opposite to take a call at some point to deny the proposition that the Canterbury Earthquake Recovery Act includes a provision that allows the sale—the forced sale, if need be—of Christchurch City Council assets and those of the two other territorial authorities
affected by the Canterbury quakes, the Selwyn District Council, which owns substantial forestry assets, and the Waimakariri District Council.
I asked the Parliamentary Library to write me an analysis of what contribution one of those Christchurch City Council assets has made to the ratepayers of Christchurch. That asset is the Orion power network, which services most of Canterbury. Since 1993 the Orion network has returned back to its majority shareholders—the Christchurch City Council, which owns 89.3 percent of it—some $875 million in dividends and other payments. In other words, it has returned nearly $1 million a week to the ratepayers of Christchurch—nearly $1 million a week.
I ask members opposite to stand up and tell my constituents there is no prospect of those assets being sold or part-sold by a new term National-ACT Government, because I think that is the agenda. The reason I think it is the agenda is that it is there in Budget 2011, which outlines the philosophy that it is absolutely acceptable to sell State assets. That rationale is laid out in National’s Budget. If reducing debt is an appropriate rationale for the sale of State assets, then again I ask Aaron Gilmore, who is sitting opposite, to take a call and deny that there is any prospect—any prospect—of Christchurch City Council assets being sold, including Orion, the majority stake in the port company, the majority stake in the airport company, Enable Network broadband, the Red Bus company, and others. What is the position? I think the people of Christchurch deserve to know explicitly, because I think the exact scenario is that there will be nothing before 26 November on this front, but that after that there will be a cough and a splutter and an announcement that we have to sell off Christchurch’s assets to fund the debt that has been generated.
I acknowledged at the start of this speech that the Government has taken on responsibility for funding 60 percent of the rebuild of the infrastructure in Christchurch. I acknowledged that. That is a responsible position. I acknowledged the Government for taking account of the need to rebuild the infrastructure of Christchurch, and for meeting 60 percent of the costs. But I want to know, on behalf of the people I represent, whether the agenda is that that cost will, at least in part, be funded by the sale of our assets. We stood against the tide in the 1990s when other councils sold off their assets. We were the “People’s Republic of Christchurch”, and proudly so. Across the political divide in Christchurch, people want to keep those assets, because they know the contribution those assets have made. I have given one indication of that contribution—nearly $1 million a week from Orion. The very facility that was being used by civil defence, and, for a short time, the Canterbury Earthquake Recovery Authority, to start the recovery process, was the Christchurch City Art Gallery. A lot of that funding came out of assets such as Orion. I would like Aaron Gilmore to take a call and give us an assertion, an assurance, that this is not in prospect in a re-elected National Government, because I think it is on the agenda. I wanted evidence of that, and it is there in black and white in Budget 2011 with the outline of why this Government believes asset sales are appropriate to reduce debt.
I will talk for a moment about the comments made by John Whitehead, the outgoing Secretary to the Treasury, on
Q+A the Sunday before last. I thought Guyon Espiner gave him a good grilling on the jobs forecasts. In the Budget 170,000 jobs are forecast, and 4 percent per annum growth is forecast for the year after next. The comment back from John Whitehead was that Treasury’s record for such predictions was second-to-none. I asked the Parliamentary Library to analyse that record. The Parliamentary Library tells me that Treasury’s growth forecasts have been wrong for 28 of the last 30 quarters. In the
Q+A interview, John Whitehead also confirmed that Treasury supported Michael Cullen in building the surpluses that were built through the time of the last Labour Government, rather than giving tax cuts, because, as he said, they stood this
country in good stead for the economic downturn that followed. So much for National’s rhetoric about Labour’s economic management. Then he talked about Treasury’s concern about the growing inequality in New Zealand. Well, I have to say, we are lagging at 26 out of 30 in the OECD. We have to ask what is in this Budget to address that inequality. What is in there? Will people be made better by asset sales? Will they be made better by KiwiSaver cuts?
Will they be made better by the cuts in training? I am astounded and appalled that in a Budget that supposedly says we need to build skills is a $90 million cut from training. I went with Phil Goff to the Christchurch Polytechnic Institute of Technology trades training campus a couple of weeks back. The Christchurch Polytechnic Institute of Technology is gearing up to build its trades training facility there, but the point is that we will see about a thousand extra trade trainees in Christchurch, and they are also going to be affected by that $90 million cut. We need tens of thousands more jobs in Christchurch. Currently, the household labour force survey estimate of unemployment in Canterbury is that 10,500 people aged 15 to 24 are unemployed. That is appallingly high. We need a plan, and this Budget does not contain one.
Dr CAM CALDER (National)
: It is a great pleasure to rise and take a call on the Appropriation (2011/12 Estimates) Bill. I take the opportunity to pay tribute to my colleague the Hon John Carter, who is a gentleman, a good man, and someone who has contributed hugely to our country. He will be sadly missed in the House. I wish him well in his retirement to the Cook Islands. I am delighted to hear from his own lips that he intends to return and take the field again for the Parliamentary Rugby Team.
During the course of this debate, we have heard a lot of comments about how the Opposition members have not really been addressing the issues facing our country in a time of unparalleled financial stress. I have to say, we have heard a lot from the Opposition about coats of paint on historic buildings and new carpet. The Leader of the Opposition did attempt to address the economic situation in his speech on the Budget a couple of weeks ago. It was a guttering candle of a speech compared with the Prime Minister’s arc light oratory. In the Hon Phil Goff’s speech he made a comment that the global financial crisis finished in 2009. It was an astonishing claim, yet, sadly, all too reminiscent of the wild flights of ersatz economic fantasy that erupt from those opposite on occasions. It was interesting to watch the Opposition benches. David Cunliffe choked, Grant Robertson’s jolly demeanour slipped for a while, and Shane Jones just grinned to himself and continued drafting a possible future leadership acceptance speech. The rest of the Opposition caucus failed to notice and remained in the ordinary state of torpor that is their default position.
A statement like that from their leader is yet another reason why Labour lacks any economic credibility with hard-working New Zealanders. These New Zealanders know, even if the Hon Phil Goff does not, that the US economy—the largest in the world, the engine room—has a horrendous Budget deficit, sky-high levels of debt, and a housing market that has seen a bigger percentage drop in value than was witnessed in the great recession of the 1930s. There is no indication yet that it has stabilised. In addition, the Federal Reserve is debating a third round of quantitative easing. That is the US, which is the engine room of the world economy.
Is there any good news across the Atlantic that Mr Goff perhaps had privileged access to? No, there is not. A few days after his speech, the European Union raised
€4.75 billion for Ireland and Portugal by a bond sale executed by the European Commission on behalf of the EU member states via the European Financial Stabilisation Mechanism. The $60 billion European Financial Stabilisation Mechanism is the lesser-known of the two bailout funds that the European Union has set up to deal with the ongoing European debt crisis. The other, the European Financial Stability
Facility, is headquartered in Luxembourg. It is essentially an independent offshore bank with
€250 billion to lend to various troubled member states. The idea behind both bailout mechanisms is to sequester the peripheral countries in trouble from the international markets, giving them time to undergo austerity measures and cut Budget deficits.
The global financial crisis is alive and well. These mechanisms may be of doubtful legality, but the European elite are prepared to sweep any such concerns under the rug. Of greater concern, because they have no control over it and because it could potentially scuttle all efforts to suppress the crisis, is the mounting populist angst in the countries doing the bailing out and the countries being bailed out. The rise of Euro-sceptic parties in Germany and other core eurozone States is leading to a lot of turmoil among the students, youth, and unions in the streets of Spain, Greece, Portugal, and other peripheral economies, which could potentially further deepen the economic storm by derailing those efforts to mitigate it. Amid the confusion, Fitch Ratings has downgraded Greece further below junk status, and Standard and Poor’s lowered Italy’s rating outlook the next day.
Unlike Mr Goff, this Government recognises that these are tough times. This is a Budget for tough times. This is a Budget of respect, and a Budget by a Government that has respect for the hard-working Kiwi families who are at the core of our society. The previous administration cynically encouraged New Zealanders to mine the fool’s gold of bountiful access to cheap international credit. This diverted attention from the Labour Government’s supervised neglect and woeful underperformance of our tradable sector, as well as the general parlous state of our economy under Labour’s watch. Fuelled by ever spiralling amounts of borrowed money, New Zealanders embarked on an unproductive spending frenzy on houses and consumer goods. Household debt rose to a peak of 159 percent of disposable income by mid-2008. Since inheriting an economy in crisis, this Government has worked constantly to cushion New Zealanders from the harshest edges of the recession, whilst at the same time working to turn the economy around in the face of the worst global financial crisis in decades—a crisis that continues to this day—and an almost apocalyptic series of natural disasters here at home.
We have made no secret of the size of the challenges we are facing. Every New Zealander knows that the Government has been borrowing $380 million per week. They understand that such large borrowing cannot continue and that it is patently unsustainable. If we keep doing what we have always done, we will get what we have always got. We believe that New Zealand can and must do better than that. New Zealand’s hard-working families agree and they understand the need for change in how New Zealand is run. Across the country, New Zealanders understand clearly why we need to get spending down, which we are doing, why we need to cut out waste, which we are doing, and why we need to make
“New Zealand Incorporated”
work more efficiently, export more, and start to pay off that burdensome debt.
What is the Opposition’s plan to grow our economy? Sadly, there appears to be no plan, just more tax, borrow, spend, and hope. It is more lazy, shotgun thinking from which the country suffered so grievously under the last administration. Labour has signalled its intention to take GST off carrots and raise the taxes paid by hard-working New Zealanders—an oddly perverse version of a carrot-and-stick policy. Under Labour, New Zealand would borrow a staggering stratospheric extra $45 billion from 2008 to 2014. It is a decision that would virtually guarantee to drive New Zealand into an economic morass and fiscal bog. If Labour’s economic flights of fancy were ever implemented, the international credit agencies would be tolling their equivalent of the Lutine Bell for another economy lost. New Zealanders know that Labour’s profligacy is
not an option. They know that we have to grow the economic cake and be prudent guardians of the public purse.
We are taking a balanced and considered approach to find our path back to surplus, protecting health, education, and income support for the most vulnerable as we do so. It was a great pleasure for me to go to Manurewa recently to visit Wiri Central School, and see the pilot of a health programme in the school to swab kiddies’ sore throats early and avoid that appalling ravage of rheumatic fever, which affects far too many in our community in New Zealand today. It is an example of more spending in areas that matter. There is more spending in health, and we have some very, very good spending in education. We are spending an extra $550 million in early childhood education, which is going to improve the participation for Māori and Pasifika children. They are the people in our society who currently miss out. Thank you.
DARIEN FENTON (Labour)
: It is a pleasure to take a call in this Appropriation (2011/12 Estimates) Bill debate on Budget 2011. I have listened to many of the speeches today from National Government members, and I believe that they know deep in their hearts that this Budget is a Budget that hurts but does not help. This Budget is a giant con on the New Zealand public. It is a recipe for more borrowing, asset sales, cuts to front-line services, and economic stagnation.
Many National members have spent more of their time talking about Labour than about National’s Budget. It is a very, very interesting phenomenon, is it not? It makes me think they are very, very worried, and it confirms for me just how out of touch they have become with Kiwis who are struggling to make ends meet. I think that, deep down, National members are quite embarrassed. I think Sam Lotu-Iiga is very embarrassed by this Budget. We can tell.
This Budget confirms what we already knew: National has no idea how to get our economy moving. It is reverting to the same old policies of past National Governments: asset sales and punishing low and middle income earners.
The truth is that the New Zealand economy is in a fragile state. It is barely emerging from a deep recession, where it has lingered much longer than it should have because of bad policy directions from the National Government. For 3 years now, John Key’s National Government has promised us that good times are just around the corner, and we are supposed to believe that from this Budget. We are supposed to believe that from the Budget’s projections for hundreds of thousands of jobs and 4 percent growth. For goodness’ sake!
Under this Budget, New Zealand will continue to go backwards. Reductions in the deficit in the future rely on the sale of our assets, and the Government—this is the cheating and the con thing about this Budget—has already banked that money, just as it has already banked the $1 billion cuts in public services, even though no one knows where they are coming from.
The Budget is a litany of broken promises from this Government. A disgraceful deception is being visited upon the people of New Zealand. Job growth—170,000 jobs in the next 4 years—is predicated on shonky figures that do not stack up. They are fairy tale figures. We have had those airy-fairy promises from John Key in the past. Do members remember the National leader’s promise that 4,000 jobs were going to be created with the cycleway? What did we get? We got 200. Somehow now we are expected to believe the magic numbers in this Budget. Even Treasury is saying that those figures are not quite right. It has seen them before in past Budgets, and they do not stack up.
Along with all of the other things we have heard from the National leader, John Key, is his promise to close the wage gap with Australia. But now the 30 percent wage gap with Australia has become a competitive advantage, according to Bill English. A couple
of weeks ago Paula Bennett declared to this House that any job is a good job. I thought that was incredibly revealing, because it shows a stark difference between John Key’s National Government and the Labour Opposition. Of course people need jobs, and the best way out of poverty is jobs, but they must be decent jobs, not jobs at any cost. They must be jobs that are paid a fair rate for a fair day’s work. That is why Labour will increase the minimum wage.
I will talk about the minimum wage and why we will increase it to $15 an hour, because we have heard denigration from the Minister of Labour and others. Let us be honest. New Zealand workers have low wages compared with other developed countries, and raising the minimum wage is just one effective part of lifting pay rates to build a solid base for a high-wage, high-skill, and high-value economy. There are other parts to that base, and other colleagues have talked about them. The truth is that New Zealand has a huge inequality gap, and the gap between low incomes and high incomes grew significantly after last year’s tax cuts for the rich.
The National Government members have consistently said they want New Zealand to catch up with Australia, but they fail to acknowledge the wage differential. Now they are saying it is a competitive advantage. The wage differential is a huge problem for New Zealand’s economy. It is not just our skilled workers who are leaving in droves for Australia; many unskilled workers are leaving too because they can earn so much more even on the minimum wage. The minimum wage went up last week in Australia. It has gone up to an equivalent of NZ$20.29. But many more Australian workers receive that. Australia has a system that recognises skill. It has a system that recognises industry. There is a whole range of minimum wages.
The Minister of Labour said today that 6,000 jobs would be cut if we increased the minimum wage to $15 an hour. There have been numerous studies on increasing the minimum wage, including increasing the minimum wage for youth—people under 18. The truth is that there are mixed views, but the ILO, the International Labour Organization, which is the United Nations body for workers’ rights and employer-employee relationships, says that increasing the minimum wage contributes to both hiring and firing and it depends on the country’s conditions and on what is happening in that particular country.
The interesting thing about this is that the counterargument that increasing the minimum wage increases unemployment implies that dropping the minimum wage increases employment. Do we have any evidence of that? We have never seen any. There is no such evidence. In fact, during the 1990s, when the youth minimum wage for workers under 20 was $4.20 an hour, we had the highest youth unemployment we have ever seen in this country.
The good thing about raising the minimum wage is that it increases demand in the economy. Low-income people spend most of what they earn. Increasing the minimum wage is a much more effective measure for the economy than tax cuts for people with already high incomes. Actions speak louder than words. In tough times we have to make choices and we have to choose priorities.
The difference between this Government and the Australian Labor Government’s Budget, which we saw a couple of weeks ago, is very stark. Despite lower unemployment in Australia than in New Zealand, there is a strong focus in its Budget on jobs and skills. Instead of focusing on job creation—and I really do not think this Government knows what that means—this Government has repeatedly cut taxes. That seems to be its only strategy. It has cut taxes. So those on personal incomes and those benefiting from company profits have had a bonanza, with a total cost of the two tax cuts since National became the Government of over $5 billion a year.
It is no wonder that we now have a National Government Budget that is trying to convince the New Zealand electorate that there is no alternative to further cuts in Government spending. The last time I heard that was from Ruth Richardson and Bill Birch.
There are other cuts in the Budget, and if I had time to talk about them I would. For example, this Government appears to have given up on productivity and worker engagement. The Government thinks productivity comes from building more roads. It does not seem to understand that productivity changes happen in the workplace. Yes, businesses grow our economy, but who is part of business? Who helps create business? Who helps create the wealth? It really intrigues me that our Government believes that the workers who actually do the work are not part of the economy, and this Budget confirms that.
The Government has cut a number of things in the Budget. I have not got time to go into them, but I do want to mention, while I have the chance, the cuts to health and safety funding. This comes at a time when we are seeing more people dying and being hurt in our workplaces than ever before. The Department of Labour is being forced to reduce its role in health and safety. The number of people who are being trained as health and safety representatives is being cut by two-thirds. It has been proven over and over that worker engagement is a critical part of improving health and safety, but the shameful record of this Government is that it has cut health and safety funding, and, tragically, the price of that will be paid in more workplace accidents and deaths.
Hon GEORGINA TE HEUHEU (Minister for Courts)
: I am very pleased to take a call in the debate on Budget 2011. It is a great Budget, a Budget for our times, delivered in very challenging circumstances, and that is why it is a responsible and balanced Budget. I take issue with the previous speaker, Darien Fenton, who said that the Prime Minister said a couple of years ago something like “good times are just around the corner”. I doubt very much that he said that. Maybe if he indicated that we had certain plans to return things to a better footing sooner, that would have been before the Christchurch earthquake. That would have been before the two Christchurch earthquakes. I certainly take issue that he said that good times are around the corner.
The reality is that someone—and that is our Government, the National Government—has had to take a very pragmatic look at where our country is. There is no doubt that times have been challenging. When National took power in 2008 we were right on the cusp of an international global financial meltdown, and last year and earlier this year our country saw one of the worst disasters that we have seen, in the form of the Christchurch earthquakes. But those are the challenges that are thrown up for the Government of the day to confront and our Government is doing just that.
Budget 2011 is about building our future. It sets out the next steps of the Government’s programme to build faster growth, to increase national savings, which were minimal to nil, and to create sustainable jobs—jobs that are built on savings, exports, and productive investment. This is about building a platform for savings and growth, and setting a faster return to surplus. The Budget takes steps to ensure that the Government returns to surplus by 2014-15, which is a year sooner than forecast. The forecasts are for economic growth of 4 percent in 2012, with 170,000 new jobs being created by 2015.
Importantly, the Budget creates the $5.5 billion Canterbury Earthquake Recovery Fund. It commits us all as New Zealanders to rebuilding Christchurch, because the well-being of Christchurch is critical to New Zealand’s future. The fund will fund infrastructure, schools, temporary housing, trade training, welfare and business support, and demolition costs. In fact, Clayton Cosgrove, who is sitting across the Chamber,
would know a lot more than I would about what is required down there, but I am very proud that our Government has made the commitment—
Hon Rick Barker: I think my money is on you, Georgina.
Hon GEORGINA TE HEUHEU: Well, he is a Christchurch MP. We have got some here as well. I am very proud that we have made that commitment to our fellow New Zealanders in Christchurch.
The Budget invests $4 billion in front-line public services, in areas such as health, education, and supporting young people into jobs. It makes changes to KiwiSaver, to Working for Families, and to interest-free student loans to make those schemes sustainable into the future and to reduce the need for Government borrowing.
As I said, this is a Budget for our times. It takes steps to ensure that we return to surplus earlier. It puts a focus on repaying debt and raising our national savings, because that is what encourages investment and supports the creation of jobs. We want to ensure that future generations of New Zealanders—our children, our grandchildren—are not saddled with enormous amounts of debt and that taxpayers’ hard-earned taxes go to the things that matter most—teachers, police, doctors, front-line services, more surgery, more education, a better education—because that is what our children deserve. I will take just a minute to congratulate the Minister of Finance on bringing forward a responsible Budget under the leadership of John Key. It is a very sensible and a very balanced Budget.
I now turn to one or two of the areas that I have a particular interest in. At a time when the words are austerity and wise spending, I am very pleased that extra funding has gone into the justice area. As Minister for Courts I say that the extra funding going into justice to help make communities safer and to make sure that our court services are run more efficiently is very welcome. As part of making sure that communities are safer, I remind myself and others that courts are a part of the community. In our law and order policies we have delivered on promises to put public safety first, not least in the courts, and this year—2011-12—will see a further roll-out to boost court security. We will spend another $2.5 million this year, which means we have spent $6 million, with another $3 million to go in the 2012-13 year. Court security has been an ongoing focus for me since I took over as Minister for Courts. I am very proud of the fact that court security has improved. Already our court security officers in the current year to date have conducted 1,350,000 screenings and have taken into temporary custody 10,000 items such as knives, pocket knives, scissors, wooden clubs, nunchakus, and so on, which can hurt and harm court users. We have 83 court security officers and this Budget will deliver another 11, to bring a total of 94. By 2012-13 we will complete our programme with a total of 105 court security officers. I am very proud of our Government putting safety first, and our law and order policies and justice policies have seen that become very much a priority for us.
I turn now to some of the spending that will benefit, in particular, Māori and Pacific communities. I am very proud that in recent times more children are being immunised. In 2007 only 74 percent of children under 2 were fully immunised; now 88 percent get the immunisations they need. The immunisation rate for Pacific children has increased, as has the immunisation rate for Māori children. This will be an ongoing focus for us.
In education the Budget delivers an additional $550 million over 4 years for early childhood education, with a focus on increasing participation for Māori and Pasifika children, and for children from low-income families. It is estimated that within 25 years one out of every two children born will be Māori or Pacific, so it behoves all Governments to make sure that we put a real focus on the education of all New Zealand children, but, in particular, because there is lagging in Māori and Pacific communities, in those communities as well. In terms of Māori achievement, there is extra funding to
reprioritise to build new kura, there is $12 million over 4 years for lifting Māori achievement, and $9 million over 4 years to support iwi to develop school and community - based Māori language learning.
There is extra funding for trades academies and wider youth guarantee initiatives to keep 16 and 17-year-olds engaged in education and training. This clearly, again, is aimed at low-income families, Māori and Pacific, because they are the future workforce, particularly in Auckland. In terms of Pacific Island affairs, in particular, I state that $1.2 million of the $4.8 million that was appropriated last year will be available this year as well to put into education, skill development, and entrepreneurship for Pacific peoples in Auckland. As I said, this is a good budget for challenging times. It is a sensible budget. I am very pleased to have taken a call to support it.
CAROL BEAUMONT (Labour)
: I too rise to speak on Budget 2011 and to oppose it. As the Labour list MP based in the Maungakiekie electorate, before I do that I note in the House the tragedy that occurred in the Maungakiekie electorate on Saturday, 4 June. An explosion took place on a worksite in Onehunga at a Watercare project when workers were attempting to reconnect the Hunua 4 and 3 pipelines. At that time a worker on site, Philomen Gulland, was killed. I extend my condolences to her family and particularly to her children, who no longer have their mother with them. Also I extend my sincere thoughts and hopes for Ian Winson, who remains in a serious condition in hospital.
A number of other workers were also injured. My thoughts are with them, their families, and also their co-workers, who were with them at that time and experienced the tragedy. They had to see things that many of us hope never to see. Local residents also were shocked and saddened by the events on Saturday, 4 June. I also acknowledge the work of our emergency services. They did a brilliant job, as they always do. They really were fantastic.
Many questions remain to be answered in relation to this incident. I stress that fact, and acknowledge my colleague Darien Fenton, who referred to the issue of safety at work. When we go to work in the morning our family and friends expect us to return home safely at the end of the day. Sadly, for a number of workers in Onehunga on Saturday, that did not happen.
I return to the Appropriation (2011/12 Estimates) Bill and Budget 2011. I rise to oppose this Budget. I believe it is a blueprint for more borrowing, for asset sales, for service cuts, and for economic stagnation. After previous recessions we saw our economy rebound reasonably quickly; under this one the recovery is at best anaemic. We are, as many commentators say, sitting on the edge of a double-dip recession. That does not happen for no reason; it happens due to a lack of a plan and the deliberate choices of Government.
There is no plan to grow our economy, to create jobs, or to invest in our people. In fact, one of the things that always horrifies me is listening to the spin from the other side of the House. I listened to Peseta Sam Lotu-Iiga talk about the bill that brought into place the changes to KiwiSaver and Working for Families. He referred to alterations, streamlining, and modifying. They are cuts. He was talking about cuts; he was talking about cuts to KiwiSaver. In fact, the bill itself talks about reductions and lower maximums. They are cuts.
What does that look like for struggling families, for low and middle income New Zealanders? The changes to KiwiSaver mean costs. It costs more to save for retirement. It also creates uncertainty and reduces confidence in what is an important savings scheme in our country. We probably all acknowledge the importance of savings. Working for Families cuts means that over 50 percent of families currently receiving Working for Families will get less. That is a cut.
Those are some of the changes. They put pressure on families, and families are already under pressure. It costs more to buy food. Domestic violence statistics have been going up at the same time as the Government cuts funding to domestic violence prevention services. All of those things should be worrying, and the Government should be doing something about them. It should be offering a way forward. But this Government is out of touch with ordinary New Zealanders. It is out of touch with low and middle income New Zealanders. The Prime Minister talks about people having to go to a food bank because they make poor lifestyle choices. When Annette King and I visited the Salvation Army food bank in Royal Oak recently, that was certainly not what the people there told us. They have unprecedented demand from people in the workforce as well as from those who are unemployed. I tell the Prime Minister to visit a food bank and then tell us about lifestyle choices.
I look forward to telling people in the Maungakiekie electorate that changes in this Budget are not cuts; they are just alterations, modifications, and streamlining. That is typical National spin. In the speech announcing this Budget, it was heralded as being stronger and more ambitious and building our future—building our future. We will not be building anything in this country, given the skill shortages that we face, the reduced industry training numbers, the reduced numbers of apprenticeships, and the fact that this Budget makes further cuts. It cuts $90 million over 4 years out of industry training. That is just ridiculous.
Lifting the skill levels of our workforce has a number of really positive spin-offs. It provides opportunities to people to get work, progress at work, improve their wages, and get greater job satisfaction. It provides an opportunity to lift our workplace productivity, which is necessary to improve our economy and to get growth. It improves wages and conditions of work. It provides employment security, and it gives people the opportunity to change as work changes, and therefore to maintain employment. Investment in skill levels lifts levels of literacy and the education of the people in New Zealand. That impacts on families, individuals, communities, and workplaces. It impacts on our economy. This Government is cutting the money that is spent on industry training, and that is an absolute disgrace.
What is meant by a “stronger, more ambitious New Zealand.” and “building our future.”? As I said, we do not have enough skilled people to quite literally build our country. Money has been invested into Christchurch—I acknowledge that, as others have tonight—but the number of trainees in building and construction in this country has declined dramatically over the last 2 years. The number of people in industry training generally has declined over the last 2 years. The number of people in apprenticeships has declined, and that is despite the need for rebuilding in Christchurch, the need for rebuilding more houses in Auckland, and the need to deal with leaky buildings. But fewer and fewer people are training in the building and construction sector. That is a disgrace, as well. This Budget has no measures to counter that decline, and we continue down a path of no investment in skills and training. I ask how we will fill that gap.
I have to say that Budget 2009 and Budget 2010 were notable for the lack of new and significant initiatives in the skills area, and in Budget 2011 we see $90 million of cuts in that area. Business groups, unions, and the wider community recognise this fact, but there is still no plan. Phil O’Reilly from Business New Zealand, who is often very positive about this Government, has said that what the Government has announced so far is helpful with regard to Christchurch, but we have not yet seen a strategy that he could discern or could put his hands around and say: “Here it is.” and “This is what we are going to work on.” Phil O’Reilly is saying there is no plan or strategy around skills, and he is right.
As Peter Conway from the Council of Trade Unions says, the Government should say that jobs are a priority and therefore it should increase skills and investment subsidies. It should look at skills development programmes and really try to focus on getting people back into work and getting the economy moving. When I asked the Prime Minister today about the $90 million that has been cut out of industry training, and how he thought it would help the 77,000 young people who were not in school, training, or jobs, he completely failed to answer the question. There is no answer: it is an absolute shock.
Once again, National has failed New Zealand and New Zealanders. The Government is not serious about ensuring growth and jobs. It is not serious about lifting our skills and productivity. That is in stark contrast to other developed countries, including our near neighbour Australia, which in its recent Federal Budget has invested enormous amounts more, over and above the higher baselines.
RAHUI KATENE (Māori Party—Te Tai Tonga)
: In my maiden speech of 11 December 2008 I drew upon the wisdom of the late Dr Martin Luther King, who said: “Injustice anywhere is a threat to justice everywhere. We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly.”
I come to this Budget thinking again of the injustice of poverty. This is not a concept that we heard about in the Budget speech from Mr English. He talked about making changes to Working for Families to better target assistance towards lower-income families. He talked about channelling resources into key social programmes, while ensuring they are well targeted and protect the most vulnerable. He also talked frequently about the need to take a responsible longer-term approach, a prospect seriously threatened by rising debt, which leaves the Government vulnerable and less able to meet future shocks. Yet nearly 3 weeks after those statements were made, today we heard the staggering news provided by Treasury that suggests that the Government is borrowing about $100 million per week more than it needs to borrow. As Treasury pointed out, that amounts to $5 billion more than is necessary for this financial year.
Although the Government seems to have been quite relaxed about over-borrowing at substantial amounts, it appears that New Zealanders have been the ones who have taken the more conservative approach regarding expenditure. In the survey released yesterday by Sorted New Zealand, it was found that 56 percent of New Zealanders are less willing to go into debt since the recession. In fact, out of a polling group of 700, only 4 percent of those surveyed were willing to take on new debt.
I wish to place this Budget into the context of many of the constituents who call on us. According to Statistics New Zealand’s food price index, between September 2010 and April 2011 milk, cheese, and eggs have increased by 2.5 percent, fresh milk has increased by 3.4 percent, and petrol has risen by 17.1 percent. On top of that, electricity prices rose by 72 percent under Labour in 9 years—that is, by 8 percent a year—and they have then risen by 9.5 percent in the 2½ years since National took office. These are some of the bread-and-butter issues that our families are coping with day in and day out. For too many of our families, no matter how diligently they budget and no matter how much they have tightened their belts and tried to make the money last, unanticipated crisis events occur: a death in the family, a bad case of flu, the loss of school uniforms, or the loss of wallets. And all the time prices rise and rise, and the money-go-round speeds up.
The effect of some of these events, these life shocks, can be tempered in most families because they may have the benefit of a bit of give and take in the budget. But for the 240,000 children of parents who rely on income support, that flexibility simply is not there. So we come to the injustice of poverty. All of us know that a child who
grows up in poverty is three times more likely to be sick than other children. We know too that opportunities in employment, training, and education are inevitably influenced by the income levels in a household.
The Māori Party has always given priority to protecting the vulnerable. By that we mean the elderly, the young, the disabled, the disadvantaged, those who have not, and those who may live on the margins of our community. In one of the most fundamental transformations of our time, we have sought to restore whānau responsibility: to invest in collective and mutual obligations through the initiative of Whānau Ora. We were therefore delighted that Whānau Ora, through the 2011 Budget, has been supported to grow and to build on the incredible momentum it has developed. But we also were vigilant in our call for a responsible Budget that takes account of the sharp edges of recession but that also invests in our mokopuna. Our call has been to eliminate poverty. We believe that poverty reflects worse on those who have but do not share than on the have-nots. So at the end of last year I wrote to every party in the House, seeking their support to hold parliamentary cross-party talks on child poverty. I repeated that call in the very first speech I gave when the House resumed this year, and I highlighted seven simple solutions that could help us to eliminate poverty.
We know that addressing poverty will take a long-term approach. The first and most immediate response is to care for and support those who are living in poverty now. But also we must develop long-term measures that strengthen whānau and communities, so they are not living in poverty. As a result of our advocacy, the main benefit and superannuation payments were increased by 2.02 percent from 1 October 2010, to specifically take into account the rise in the rate of GST. In addition to that one-off increase, between April 2010 and April 2011 main benefit rates increased by 3.75 percent. We did our best with the minimum wage, and an increase was announced earlier this year, although it was not nearly as consequential as we had argued for.
We have developed a very successful Māra Kai programme. We have funded over 450 māra kai nationwide, to support whānau to grow their own kai and to rebuild community connections at a time when money is tight. This is about community resilience. I have consistently raised the issue of removing GST from healthy food. Fifty Kaitoko Whānau workers nationwide work with all members of a whānau to support them to access proper support, to advocate for their needs, and to ensure that as a whānau they are all moving forward together. We have invested in cadetships, trade training, and professional training, which resulted in over 1,800 training and employment outcomes: some 1,550 training placements, and 252 jobs. Under our emissions trading scheme negotiations, the Māori Party halved the petrol and power levy increase. Electricity would have increased by 10 percent; we got that reduced to 5 percent. Petrol and diesel prices would have increased by 7c per litre; we got that reduced to 3.5c per litre. That would have cost the average whānau about $165 more per year if the Māori Party had not intervened. About 1,500 low-income Māori whānau have had their homes insulated as a result of the Māori Party negotiating a 100 percent subsidy for housing insulation for those with a community services card.
I come back to the seven simple solutions to support children, whānau, and families. Our strategies are to set a deadline to eliminate child poverty by 2020; to designate an official poverty line at 60 percent of the median household disposable income after housing costs, and to set a net income to prevent poverty; to increase the minimum wage to at least $15 an hour; to raise core benefit levels, including superannuation and the veterans pension; to simplify Working for Families, including the extension of the in-work payment to all families; to investigate the reintroduction of a universal child benefit; and to establish a neighbourhood renewal fund, which may include incentives to encourage living more collectively, such as community gardens and after-school care.
I come back to my call for a cross-party parliamentary approach to addressing poverty. I am really proud that tomorrow my colleague Metiria Turei and I are holding the very first meeting of this auspicious forum. It will be a great day, indeed, when our shared ideas truly do make the difference in terms of addressing the injustice of poverty and developing a better future for all.
CLARE CURRAN (Labour—Dunedin South)
: Thanks for the opportunity to speak on the Budget. Before I start, I will join with my colleagues across the House in paying tribute to the Hon John Carter. I think it is important to acknowledge his contribution. During my 2½ years in Parliament I have enjoyed the contact I have had with the Hon John Carter. I have found him at all times to be a gentleman—
Hon Clayton Cosgrove: Struth!
CLARE CURRAN: —a gentleman, and honourable to boot. So I would like to put that on the record.
Dr Rajen Prasad: Unlike some others whom we could name.
CLARE CURRAN: That is correct.
I disagree that this is a Budget for our time, as at least one of the members across the House has said tonight. It is one of the worst Budgets that I have known in my history, not only in this Parliament but in this country. I heard one of my colleagues, Moana Mackey, talk about that earlier on tonight, and I say this Budget represents gloss. It is all about gloss—
Hon Clayton Cosgrove: Lip gloss.
CLARE CURRAN: Well, I do not know about lip gloss; it could be lip gloss. But it is gloss, papering over the cracks—pretence; whatever we want to call it. I like to call it making stuff up, because I think that is what this Government does. I have heard comments about austerity with regard to spending, and all I can think is that that is a crock.
At the heart of this Budget lies a disconnect, and the disconnect is between telling us that we all have to tighten our belts, and that we have to make the most vulnerable people in our society, particularly the ones on benefits, go out and look for jobs—and the jobs do not exist. At the same time the Government blames everybody else for the situation that we are in. It is the fault of the previous Government, of the global financial crisis, or of the earthquakes—anything other than the Government’s own policies and its own way of doing things. So we have people who cannot find jobs, and who have found themselves in circumstances where they do not have jobs, being forced to go and look for jobs. But the jobs do not exist, because this Government is not investing in them. I do not get that. There is not a plan there. Where is the logic in that? I think logic is important. There is more to life than logic, but that plan does not have any logic. These people are vulnerable. Many, many thousands of people in our country are looking for jobs, and instead we have a Budget put before this country that is about more borrowing, selling our important assets, cutting more services, and economic stagnation.
There is no credible plan, and that is the real problem behind the Budget. It is about making promises that cannot be delivered on, making claims that are not true, and making stuff up. It is also about the Government being out of touch with ordinary Kiwis who are struggling to make ends meet.
I will tell members about one of those people, because one of them came into my office the other day, and this is just the tip of the iceberg in terms of what is happening around this country. This man is in his forties. He has worked hard all his life. He has done a lot of work. He is not what we would call a skilled worker in the sense of being a tradesperson, but he does skilled work. He does not have a qualification, but he has worked hard all his life. He is what we would call a labourer, and there are lots of
labourers out there. He has a house and a mortgage, and his partner works in the kitchen of a mental health facility, which was reshuffled last year, so her hours were cut down to 16 per week. Because of that, he and his partner moved in together so that they could manage the mortgage. This man also has two children from a previous relationship, for whom he is paying child support. He is doing the right thing, but he is seriously struggling. He cannot pay his mortgage. He is getting more and more seriously behind.
So what does this man do? He goes to Work and Income day after day, looking for jobs and saying he wants to work. He asks how he can find work, and says he will do whatever it takes to find work. He says he would like to get a qualification. He has applied for more than 50 jobs, by the way, and has not had any luck, because there is so much competition in my city, as there is in every community around this country. This man is interested in training; he wants to do anything. He wanted to get a fork-lift licence, but he cannot get the fork-lift licence because he cannot afford it and Work and Income will not pay for it unless he has a job offer. That is a catch-22 situation—this guy is in a catch-22, and he cannot get out of it. He came to my office because he does not know what to do. He is desperate. He is a hard-working person with responsibilities and a mortgage. He faces losing his house and his dignity, and that is not good enough. What does this Budget do for him?
People like this man are the vulnerable people. They are not thieves. They are not rorting the system, as some do at the other end of the spectrum. This man is a good, honest, decent, hard-working bloke who is trying to make his life better, and basically just trying to get by. What does this Government do? It makes him feel guilty, it makes him feel bad, and it makes his life harder—and there are thousands, perhaps hundreds of thousands, of people who are in his situation at the moment.
Turning to the other part of “making stuff up”, I will talk briefly about the elaborate charade that this country has been put through during the last 2 ½ years by the Minister for Communications and Information Technology—or the “Minister of Miscommunications”—Steven Joyce. He has been trying to put in place a programme to provide this country with the infrastructure that will underpin the technology that we will need as we go into the future: ultra-fast broadband. A whole series of incidents involving making stuff up, obfuscating, secrecy, and not being upfront with the public has occurred. The first one was the pledge that was made in 2008 that 75 percent of New Zealand households would be connected to ultra-fast broadband within 10 years. The pledge was that 75 percent of New Zealanders, in their homes, would be connected to ultra-fast broadband, at a cost of $1.5 billion. The most interesting thing about that, and it involves the current Minister—
Hon Clayton Cosgrove: Who?
CLARE CURRAN: The Minister of—what is he—“Miscommunications”, Steven Joyce.
- The House adjourned at 10 p.m.