Hon BILL ENGLISH (Minister of Finance) :I move, That the Appropriation (2009/10 Estimates) Bill be now read a second time.

Six months ago, this Government was elected on a platform of enterprise and growth. The National led Government is ambitious for New Zealand. We want New Zealanders to realise their aspirations through better opportunities in a prosperous, competitive and open economy.

A domestic recession, followed by the worst global recession since the 1930s, makes these ambitions challenging.

The Government is determined to address these issues honestly and responsibly. Our partners in government, ACT, the Māori Party and United Future, share our commitment to the challenge of managing through the recession. Stable government is critical in a turbulent time.

By taking firm, early and decisive action, the Government is managing the downturn to cushion the immediate impact on New Zealanders and to enhance future growth. The Government is determined that the economy will make the adjustments it needs and emerge in better shape once the recession ends.

We are particularly concerned that the economy creates new jobs. The burden of a recession falls most harshly on those who lose their jobs and on their communities. We owe them every effort to create the opportunity for a new job.

This Budget fulfils many of our pre-election commitments. These, together with the agreements made with support parties, have been given first priority on available resources.

Protecting the most vulnerable is a priority.

The Government will safeguard entitlements to income support. Low income and older New Zealanders need security when times are uncertain. That’s why this Budget maintains New Zealand Superannuation, benefits, student support, and Working for Families.

The Government will increase funding for public services. Core Crown expenditure, excluding finance costs, in the year to June 2010, is projected to rise by $3.0 billion compared with the previous year.

Within this increased funding, less effective spending is redirected to higher priority areas. This Budget sets out the first steps in the Government’s drive to deliver better, smarter public services. It will be an ongoing task as long as public needs grow and budget deficits persist.

This Budget restricts the increase in public debt to manageable levels. Treasury’s December forecasts showed a dramatic and indefinite rise in debt levels. This is unacceptable to this Government because we do not want to saddle future generations with the cost of short term policies.

And the Budget outlines the first steps on the long road to raising productivity, lifting economic performance and closing the income gap with Australia.

This Budget addresses the major economic issues facing New Zealand.

World growth is at its weakest in three generations.

Countries buying our products are in recession. The euro area countries, the United States and the United Kingdom economies are all forecast to shrink by around 3 per cent or more during 2009.

The situation in Asia is even more severe. The major Asian economies, China excepted, are expected to contract by more than 5 per cent this year.

Australia’s economy is faring relatively better. Even so, our largest market will also contract this year.

Overall, the OECD forecasts that GDP in its member countries will drop by 4.3 per cent in 2009. This is the largest, most synchronised decline since the Second World War.

These events have highlighted longer-term weaknesses in our own economy.

By the time of the election, New Zealand had been in recession for almost a year. It is likely that the economy is now experiencing its sixth successive quarter of contraction.

Imbalances in our economy have been laid bare by the global recession.

The first imbalance is in the government’s books. What appeared to be permanent surpluses have rapidly swung to large deficits. The first signs of deficit emerged in the 2008 Pre-election Economic and Fiscal Update. Now, 15 years of surpluses may be followed by a decade of deficits.

In addition, New Zealand continues to spend more than it earns and finance the difference by excessive borrowing. Household debt has increased 51 per cent since 2004. The cost to households of servicing this debt had almost doubled prior to the recent drop in interest rates.

These trends are apparent in the nation’s current account deficit. This has persisted at or near record levels of around 8 to 9 per cent of GDP over the past three years.

New Zealand’s accumulated net debt to foreigners rose from $93 billion in 2000 to $168 billion today.

Further, New Zealand’s productivity performance has been poor over the past decade. Ultimately, better productivity growth is the only way to create jobs and sustain high living standards.

The common elements to each of these imbalances are excessive growth of the domestic and consumption sectors of the economy. Meanwhile there has been insufficient growth and investment in those parts of the economy that either export or compete with foreign producers.

Between 2004 and 2008, import volumes grew at around three times the rate of export volumes. Indeed export volumes have on average grown by less than 2 per cent annually over the past five years. It has been hard being an exporter in recent times.

The economic slowdown that started in early 2008 was the product of a decade when we spent more and borrowed more while we saved less.

An adjustment in the right direction is already underway. The New Zealand dollar has fallen by around 25 per cent. Household borrowing has slowed and the saving rate has increased. House prices have eased and consumption has slowed.

The depth of the global recession means we will have to adjust faster to less borrowing and more productive investment. The adjustment will be harsher if it is forced on us by lenders reluctant to pay our bills.

So the global recession has lent more urgency to a programme to lift productivity, build business confidence and investment and create jobs.

The Government’s stimulus measures will in the short term cushion the community against greater job losses and sharper declines in consumption. But in the long term New Zealand must balance its economy in favour of more investment and jobs in internationally competitive industries.

That is the only way we will create new, sustainable and worthwhile jobs.

In this Budget we will continue to support public services and help New Zealanders through the downturn.

We will initiate a programme to lift productivity, improve competitiveness and sharpen New Zealand’s future economic performance.

We will consolidate the Government’s fiscal position, keep debt under control and ensure that Crown finances are properly managed.

The Government has been active in softening the sharp edges of this recession. The package of initiatives has been likened to a “rolling maul”.

The Government now guarantees deposits in New Zealand banks, and many building societies, credit unions and finance companies.

We have introduced temporary additional support through our ReStart Package for those worst hit by redundancy. ReStart is already helping around 1,400 families.

We have launched our Small Business Relief Package, which makes it simpler and less expensive for small businesses to manage cash flows and pay taxes.

We are fast-tracking close to $500 million of infrastructure investment in school improvements, state housing upgrades, and roading projects.

We are developing the best ideas from the Prime Minister’s Job Summit. These include the “nine-day working fortnight”, increasing education options for young people, and the national cycleway. The Job Support scheme is already helping workers keep their jobs.

Above all, we have maintained financial stability through turbulent times. This is the single most important thing that government can do to maintain existing jobs and to create new ones.

This Government came into office with a plan to lift New Zealand’s economic performance.

Our productivity initiatives fall into three broad areas: improving the business environment and removing roadblocks to growth; investment in productive infrastructure; and improving the way government works.

The business environment will be improved by a thorough review of government regulation.

We have started by streamlining and simplifying the Resource Management Act. We will also reform the Building Act. We will change the Overseas Investment Act and review telecommunications regulation.

A review of the electricity industry will begin reporting back next month.

We are reviewing a range of environmental legislation, including all aspects of water management. In each case, we will redesign the legislation to allow quick and efficient decisions for productive investment.

The process of creating regulation will be considered by the Regulatory Responsibility Taskforce overseen by Hon Rodney Hide, as Minister for Regulatory Reform.

The Government will pick up the pace of infrastructure investment in order to clear the bottlenecks that hold back a growing economy. The next three years will see extensive investment in transport, housing and electricity transmission and generation.

We have created the National Infrastructure Unit to provide a coherent framework for investment. This will be supported by an advisory board with strong private and public sector experience.

By the end of this year, we will have delivered the first national infrastructure plan. This will provide industry with some certainty about the future and assist government to prioritise its investment.

We have also set out to lift public sector productivity.

The government conducts around a quarter of all economic activity. Public services must play their part in lifting national productivity by using taxpayers’ money more effectively. Increased funding in this Budget allows public services time to plan for better performance over the next five years.

I move on to our plan to balance the Government’s books.

Shortly after taking office, this Government received an updated set of fiscal projections showing ongoing operating deficits and sharply rising debt levels.

As we indicated last December, it is appropriate that the Government bears its share of the downturn through its own finances.

However, it is clear that future deficits are far from temporary. The reason for this, alongside the recent downturn, is the fact that in recent years spending increases have got a long way out of line with growth in the economy and with growth in tax revenue. The fall in revenue caused by the global recession has made this trend obvious.

In the five years to June 2009, core Crown expenditure will have increased by 49 per cent. By contrast, the nominal economy has grown only 25 per cent and tax revenue by 25 per cent over the same period. No government, business or household can survive for long with expenditure growing at twice the rate of income.

The result is that public debt is rising rapidly. The current projections show debt would have reached 48 per cent of GDP by 2013 and 70 per cent by 2023, without any commensurate increase in Crown assets.

That level of debt would be more than all the debt raised by government since the Second World War. It equates to just over $45,000 for every New Zealander. Put another way, it would represent $180,000 of government debt for every family of four – equivalent to a second mortgage on their home.

Projected finance costs would, in time, have reached levels similar to spending on District Health Boards or on all sectors of education combined.

Allowing debt to accumulate rapidly is the surest way to put those services in jeopardy.

New Zealanders know from recent experience the costs of paying for high debt and how difficult it is to bring it down to acceptable levels.

Public debt peaked in 1987 at 76 per cent of GDP. At that point, finance costs consumed some 20 per cent of all government spending.

It required a monumental effort to reduce debt to today’s level. This required many measures government might have preferred to avoid, including often harsh spending restraint. Government finances also benefited from two decades of mostly favourable world growth. Even then, the debt reduction took 20 years.

Quite possibly, if New Zealand’s debt was to rise again to 1980s proportions it would never be restored back to today’s levels.

Clearly, we cannot allow debt to accumulate on this scale.

This Budget will begin to restore the Crown balance sheet to its previous health. A relatively strong balance sheet has helped the economy ride out this shock. It has also allowed the Government to extend loan guarantees and to make considered and quality spending decisions.

As the recession ends, the Government’s priority will be to rebuild its finances so another generation can cope with future recessions.

This Budget starts the process of changing Government spending priorities.

The first step was to carefully scrutinise existing spending. This involved considerable input from both my Cabinet colleagues and public sector chief executives. I commend both groups for their enthusiasm and integrity they have brought to this process.

Budget 2009 includes net new operating spending of $1.45 billion a year, which has been allocated first and foremost to meet the new Government’s priorities. We have also allocated funding to meet emergency pressures.

The new $1.45 billion annual spending allowance is considerably less than in recent years. New spending in the past five years has averaged around $2.8 billion a year. It would have been imprudent to continue new spending at that rate.

In addition, initial reviews of departmental spending have freed up considerable extra funding by reducing low priority spending.

These reviews have saved about $500 million annually over the next four years, which have been used for higher priority activities. Many of the initiatives included in Budget 2009 would not have been possible without this reallocation.

In December, the Government announced it would increase its allowance for new capital spending to $1.45 billion a year for the next four years.

This higher capital allowance will be targeted mainly at infrastructure spending. This is consistent with this Government’s intention to build a more productive, higher-income economy.

The Government remains strongly committed to the public health system.

The Budget provides for $750 million a year in new capital and operating spending within the health sector, or $3 billion from 2008/09 to 2012/13.

Just over $2.1 billion extra over the next four years will go directly to District Health Boards for services to their local communities. This includes $139 million for subsidised medicines, $46 million to devolve some hospital services to primary care and $90 million to improve age care facilities and respite care for those being cared for at home.

The Budget also provides $70 million for up to 800 additional health professionals to increase services for New Zealanders needing elective surgery.

We will create 60 new medical training places and 50 extra places for general practitioner training, at a combined cost of $43 million.

The Budget provides an extra $103 million to meet increased maternity service needs.

Elsewhere in health, we have allocated $245 million for capital infrastructure. This will be allocated across hospital developments, including the Government’s plan to increase elective operating theatre capacity.

Education is also a priority.

Over the current year and the following four years, the Budget includes more than $1.34 billion in new operating spending and $340 million in new capital spending to deliver on the Government’s election commitments.

Schools funding will continue to increase to pay for increased teacher numbers and salaries, as well as providing for a larger operating grant.

The $523 million boost for the 21st century school building programme in this Budget will build new schools, modernise existing schools and expand capacity.

A further $36 million has been provided to support improvements in numeracy and literacy standards and $51 million has been allocated so more students can access support from the Ongoing and Reviewable Resourcing Schemes.

Early childhood education will receive nearly $70 million more over the next four years.

From July 2010, five year olds and children attending playcentres and kōhanga reo will be eligible for 20 hours per week of early childhood education.

In the year ahead the Government will begin to implement the Youth Guarantee with a particular focus on the fast growing numbers of young unemployed. Our education and welfare systems need to be adapted to ensure the next generation of workers lift their skill levels and stay connected to the world of work.

The Budget includes funding for a significant initiative to upgrade home insulation.

More than 180,000 homes built before 2000 will have access to grants for insulation and clean heating over the next four years. Most households will be eligible for grants of up to $1,800 and those with Community Cards will be eligible for additional funding.

$323 million is set aside for this, including $244 million of new spending.

In addition, the stimulus to the building industry will provide green jobs to help cushion the effects of the recession.

I particularly thank the Green Party for its role in developing this project as part of its Memorandum of Understanding with the National Government.

Budget 2009 boosts Māori Affairs funding to support families vulnerable during the recession. Whānau Social Assistance Services will receive $32 million and The Māori Economic Taskforce $10 million.

The Government is grateful to Hon Dr Pita Sharples and Hon Tariana Turia – and indeed to the broader Māori Party, for their contributions to these initiatives.

Science and technology play important roles in the Government’s vision of a better New Zealand.

The Budget includes new initiatives of $321 million for research, science and technology. This includes increased funding to the CRI Capability Fund, the Marsden Fund, Health Research and the introduction of $1 million for Prime Minister’s Prizes for Science.

This includes $190 million over the next four years for a new Primary Growth Partnership. When fully operating in 2012/13, the partnership will see the Government investing $70 million a year in primary sector innovation. It will be matched dollar for dollar by industry.

Law and order is also a priority for this Government. In a number of areas, the need for extra resourcing was becoming urgent.

The Budget provides more than $900 million in operating and capital funding over the next four years for initiatives across the justice sector.

Police will receive $183 million to provide 600 more Police by 2011. Half of them will be in Counties-Manukau, with the others spread across the rest of New Zealand.

The Budget also funds tougher anti-money laundering measures, so that New Zealand will meet its international commitments. Some funding will address more local problems, notably profits from cannabis and methamphetamine sales.

We need to address many downstream pressures within the Justice and Corrections systems. Community Probation and Psychological services will receive an additional $256 million to manage the increased number of offenders serving community sentences and improve the quality of parole and home detention management.

We also know that our prisons are under pressure. The Budget provides $3 million in 2008/09 and $385 million over the next four years for increased prison capacity and planning for further potential expansion.

This Budget significantly increases operating funding and capital investment for public services, fulfilling National’s election commitments and meeting the costs of growing demand.

However, the public sector must consider how it will adapt to tighter budgets and smaller or no increases in the future.

Public sector chief executives are already identifying how to deliver services more efficiently. Considered decisions now will avoid harsher decisions later.

I have already referred to the task of providing New Zealand with the infrastructure needed for world class performance. This Budget contains funding to back our infrastructure plans.

The Government is increasing investment in the state highway network by about $1 billion over the next three years, through changes in the National Land Transport Fund.

This is on top of the Crown investment in transport infrastructure of $142 million announced as part of the February fiscal stimulus package.

We have continued to invest in rail. Budget 2009 includes $115 million to fund Kiwirail’s purchase of 20 new locomotives and to provide it with access to working capital. In Budget 2009 we are announcing an additional $90 million of operating support for KiwiRail.

The Government’s plan to provide ultra-fast broadband to most New Zealanders is underway.

This Budget provides an initial $290 million of funding for this project – including a $200 million capital allowance, $48 million for investment in rural broadband infrastructure and $34 million to make schools broadband-ready.

The measures I have outlined will form key elements of our strategy to ensure that New Zealand emerges from the downturn stronger than it entered it.

The Government is determined that future taxpayers will not be burdened with higher debt which is unmatched by increases in productive assets.

To achieve this, the Government has made some difficult decisions.

There will be ongoing restraint on future spending increases.

The new spending allowance in future Budgets will be reduced to $1.1 billion in Budget 2010. The new spending allowances will then be adjusted to grow at 2 per cent per year in future Budgets.

This represents an appropriate balance between maintaining public services on the one hand and limiting debt on the other. We will continue scrutinising and reprioritising resources.

The Government believes that equal or better public services can be delivered from existing budgets with better management.

Future spending restraint will help keep debt manageable and contribute to renewed profitability of New Zealand’s exporters. However, it is not enough.

The Government’s commitment to maintaining New Zealand Superannuation entitlements is absolute. Entitlements will remain 66 per cent of the average wage after tax, paid from age 65. As with all public services and entitlements, sound public finances are the best, indeed the only way of ensuring future delivery.

The Government has reviewed all its substantial cash commitments and decided to suspend automatic contributions to the New Zealand Superannuation Fund.

When it was set up, the idea of the Super Fund was to invest Budget surpluses. The Government was then in surplus and expected to remain so for the foreseeable future. Those Budget surpluses have disappeared.

Had contributions continued at the previous rate, the Government would have had to borrow an additional $1.5 billion a year, rising to over $2 billion a year during the next decade. It makes little economic sense to burden future generations with debt incurred financing investments that were intended to reduce their need to borrow.

We will resume contributions when the operating balance is sufficient in terms of cash flow to meet contributions and other capital spending. On current projections this will be from 2020/21, and will continue for a decade until withdrawals from the Fund begin in around 2031.

The Government will make a contribution to the New Zealand Superannuation Fund of $250 million in 2009/10. This will assist the fund to find suitable investment opportunities in New Zealand, and will continue to support local capital markets during the downturn.

The Guardians will actively consider New Zealand-based investments as part of their role of managing the Fund prudently and commercially.

Future contributions to the Fund will be considered annually.

The Government has also examined its revenue strategy. This Government believes in reducing tax rates. High marginal tax rates are a cost to the economy. They reduce incentives to work, to save, to invest and to take risk.

However, the Government’s revenue strategy must be re-evaluated in light of the contracting economy and growing debt we have inherited.

As a result, the Government has decided to defer the second and third tranches of the planned tax cuts in 2010 and 2011 until economic conditions improve. Taxes were reduced on 1 October 2008 and this Government has enacted tax cuts from 1 April this year. Those tax cuts will be maintained.

The Government will thus have delivered tax cuts worth over $1 billion to more than 1.5 million New Zealanders since being elected.

A person on the average wage has in the past eight months benefited from tax cuts worth more than $30 a week.

The measures outlined this afternoon, the expenditure restraint shown by this Government, deferment of the tax cuts and deferment of Super Fund contributions, will keep the increase in public debt within acceptable levels.

The economic projections show that the economy will trough this year. In the current year to March 2010 output is expected to shrink by 1.7 per cent. As growth resumes the economy is expected to expand by 1.8 per cent, 2.9 per cent and 4 per cent respectively in the three years to March 2013.

While the economy picks up in the next few years, Budget deficits persist for the next nine years. The projected deficit in the year to June 2010 is $7.739 billion, or 4.4 per cent of GDP.

Government net debt will peak at around 36 per cent of GDP by 2016/17. The debt to GDP ratio will steadily decline over subsequent years. Finance costs are not projected to exceed 3 per cent of GDP at any point.

As I discussed earlier, this compares with the pre-Budget outlook that would have seen debt continuously rising, accompanied by a rising financing cost.

No increase in public debt is entirely satisfactory. In this case the world has moved very quickly from the best of times to the worst of times. It is appropriate that public finances be smoothed through these long-term cycles.

To put the deterioration in perspective, at their peak projected debt levels will be comparable to those of the mid to late 1990s.

This Budget will ensure New Zealand retains one of the lowest debt levels, and one of the strongest balance sheets, in the OECD.

This is the first Budget on the road to recovery.

The Prime Minister has made clear this Government’s aspirations for an economy that values enterprise, rewards people for effort and encourages them to get ahead. Sustained growth and new jobs are about more than just Budgets.

Sustained growth is about providing opportunities for New Zealanders to achieve their aspirations.

In the months to come, New Zealanders will be asked to make changes because the world has changed.

While these changes will be challenging the Government is confident about New Zealand’s prospects.

Our confidence in recovery is confidence in the resilience of New Zealanders – in our collective ability to make practical changes that solve the problems we face, to channel our resources and our brainpower to where they are productive and create new jobs.

Budget 2009 marks a turning point for New Zealand. Ten years of economic growth and expansive appetites for debt and Government spending have ended. Today we have outlined the challenge to rebalance the economy from debt and consumption to investment and exports.

The Budget will improve New Zealand’s international competitiveness.

It will get our debt under control and turning down.

It starts to create a government sector that provides better services and delivers better value for taxpayers.

It will help create new and sustainable jobs.

It will begin to build a platform for a much more ambitious New Zealand.

Mr Speaker, I commend this Budget to the House.

Hon PHIL GOFF (Leader of the Opposition) : I move, That the words after “that” be omitted and the following substituted: “this House have no confidence in the National Government led by John Key, because the 2009 Budget fails to provide an effective plan to address the growing number of jobs lost and the increasing numbers of New Zealanders worried about losing their livelihoods and their homes, fails to build a foundation on which New Zealand can emerge from the recession in a stronger position to take advantage of an economic upturn, and fails to deliver on the promises and personal guarantees made by John Key in the election campaign just 6 months ago.”

This is a dishonest Budget. It says one thing and it does just the opposite. In a nutshell, this is a Budget that is full of rhetoric but empty of substance and empty of any vision. The tax cuts personally guaranteed by John Key dishonestly to win an election are gone, but this Budget cannot even be honest in the words that it uses. It says “defers”. Bill English told the lock-up that the tax cuts were gone; they were gone for ever.

But the biggest dishonesty is to talk about entitlements for superannuation being guaranteed at the very time that the Budget guts the funding of superannuation, not for the 2 years that people might have been expecting but for more than a decade. That means that the Government will not face up to its responsibility for the future. It means that the baby-boomers over there are bound to be bludging off generations X and Y, because by the time that generations X and Y come to retire, there will be no funding to guarantee entitlements. The biggest lie of this Budget is that guarantees are made around entitlements. Without funding of superannuation, when one in five New Zealanders retires in the next two decades there will be no superannuation. This Government has unilaterally broken the political consensus on superannuation, and it has taken away the certainty that New Zealanders rely on for their entitlement. That, more than anything, will be the legacy of Bill English when this Budget is remembered in years to come.

Talk about dishonesty! The Budget talks about closing the income gap with Australia. At the same time, the Budget is entirely premised on New Zealanders having no increase in their real wages for 5 years—no increase in real wages for 5 years. Yet the Minister of Finance comes into this House and says the Government is going to close the income gap with Australia.

Then the Budget dishonestly talks about productivity. What do we know about the keys to productivity? One of the keys to productivity is research and development. What does this Budget do? It reduces Labour’s funding for research and development, through Fast Forward, by 75 percent. It reduces the funding for productivity, through research and development, by 75 percent.

It is a Budget that is designed to help those unfortunate enough to lose their jobs—that is the biggest lie. What do we find that this Budget actually does in practice? It takes $5 million out of the employment assistance designed to assist people who have lost their jobs to move on to another job. That is what it does, in practical terms. Does it do anything for skill training? Not a thing! Does it do anything to keep young men and women in their apprenticeships? Not at all! At a time when 2,800 young apprentices in the building industry have lost their jobs and their ability to complete their skill training, this Budget does nothing to help those people, or the hundreds of other young people who will lose their jobs, lose their opportunity to acquire skills, and lose their hope. This Budget has the rhetoric; it has none of the substance.

Let us come back to what this Budget should have been about. It should have been a Budget for jobs; it is not. It is not a Budget for jobs. John Key said yesterday that his Government’s primary focus in the Budget was to avoid a ratings downgrade, and within 5 minutes his loyal deputy and finance Minister had contradicted him—for the fourth time in the last 6 months—but in this case John Key was telling the truth. This Budget is designed to placate and grovel to Standard and Poor’s. This Budget was given, in an unprecedented way, to a group of overseas people—foreigners—who work for Standard and Poor’s, 3 or 4 days before any New Zealander got to know what was in it. I say to Mr English and Mr Key that the ratings agencies are not part of the solution to the problems the world is facing; they are part of the problem. Standard and Poor’s and other rating agencies gave Enron a triple A rating right up to the weeks before it collapsed—a triple A rating. Standard and Poor’s and other agencies gave a triple A rating to the subprime mortgage agencies right up to the point that they collapsed, taking with them the American financial system. And John Key came into the House smugly yesterday and said that Standard and Poor’s think we are doing a fine job. Well, I am glad that Mr Key takes satisfaction from that.

Ordinary New Zealanders have had a real gutsful of the fact that while the fat cats, the financial institutions, and others whose poor judgment and greed are responsible for the economic crisis we are facing emerge from this crisis with their personal assets intact and their bonuses increased, ordinary New Zealanders are paying the price through the loss of their jobs and the loss of their savings. Mr Key knows that; he knows that it is New Zealanders who are paying the price for this recession, and this Budget does nothing to help those who are its primary victims.

Of course debt has to be taken seriously. Of course we have to make sure that in the longer term New Zealand lives within its means. But that does not mean that the best way of achieving that outcome is the slash-and-burn policies of this Government, which will literally throw tens of thousands of New Zealanders on the scrap heap of unemployment. Am I exaggerating about tens of thousands? Am I exaggerating?

Hon David Carter: Yes, yes.

Hon PHIL GOFF: Mr Carter is so out of touch that he does not believe that figure, so let me tell him that for the first 3 months of this year the household labour force survey reported the loss of 24,000 jobs—24,000 jobs, which was 8,000 a month, 2,000 a week, and 300 a day. What is it about those statistics that Mr Carter and his colleagues do not understand?

Yesterday in the House I raised the point that in the last week the number of New Zealanders forced on to the dole had increased by more than 1,250. Just last week 1,250 extra New Zealanders were thrown on to reliance on the unemployment benefit. The National Government and Ms Bennett have suppressed that figure. Ms Bennett can tell the House whether that figure is true. In fact, the figure is higher than 1,250. That is the biggest increase in the number of people going on to the dole in any week since the 1990s, when a National Government last oversaw a recession in this country. It is the biggest increase.

Ms Bennett can tell the House the other statistic that she will be aware of: that most of those New Zealanders going on to the dole have never been unemployed before—never been unemployed before. The document is sitting on the desk of every Government member; those members should have a look at it, because it shows that by the end of next month the number of people on the unemployment benefit in New Zealand will have doubled since National took office—doubled since National took office. How does it help to maintain our credit ratings and to make sure our debt levels come down, when tens of thousands more New Zealanders are being thrown out of productive work and on to reliance on the unemployment benefit? They are unable to pay tax; breadwinners are unable to support their families; young people have no hope; and people in the Māori and Pasifika communities, as always, are bearing the brunt of that unemployment.

The focus of this Budget should have been on jobs: on ensuring growth and ensuring we can get our exports up, and on ensuring that people are kept in productive work. That has not happened. This Budget is bereft of imagination, of vision, and of any practical way to help people into jobs. I heard the rhetoric at the Job Summit. I heard the rhetoric about the 9-day working fortnight. Yes, 143 jobs have been saved over the last 4 months—143! That is just over 10 percent of the number of people who went on the dole last week, and last week alone. So Mr English should not come into this House pretending that this is a Budget that worries about the battlers in New Zealand, that worries about the people thrown out of their jobs, and that worries about the people who have lost their lifetime savings because of the corruption of people in the financial sector—which this Budget also does nothing to address.

There were measures to get New Zealand’s economy back on track. There was KiwiSaver, because we knew we needed to save more. What did this Government do? It gutted KiwiSaver; it took $3.5 billion out of KiwiSaver. That money would have done more than anything else to ensure that New Zealand got on top of its current account deficit. National scrapped the New Zealand Skills Strategy, it gutted the New Zealand Fast Forward Fund, and it removed the tax credits for research and development. Then Mr English comes into the House pretending that he is going to do something about the New Zealand economy. This Budget is a “Standard” but “Poor” National Government Budget. That is what it is. The Government took its instructions from people who saw one dimension of the New Zealand economy. It has done nothing in this Budget to get our country back on its feet and to get our people back into employment.

I would like Mr Key, when he gets to his feet, to tell this country what the projections are for unemployment by the end of the year. Will it be up by 70,000 more? Is that the figure that has been given to him by Treasury? I think it is. Will he get up and admit that, or will he sit in his seat smirking? This Budget will not stem the dramatic increase in joblessness that is occurring. This is a Budget of missed opportunities. This is a Budget of broken promises—broken promises about tax cuts. You know, the average New Zealander will not be too upset about the scrapping of those tax cuts, because most of the money would have gone to those on higher incomes. They will not be too upset about that, but they will be angry about the absolute dishonesty and recklessness of Mr Key in making that promise in order to buy votes during the election campaign when he knew that it could not be delivered upon. That is what New Zealanders will be angry about.

They will be angry about the fact that the certainty around their superannuation has gone. They will be angry about that, because the people who are now going into retirement know that the younger people are not going to pay tax now for something that they will not get when they retire. The other big part of the dishonesty around superannuation is the claim that to invest in it would be to lose money. The New Zealand Superannuation Fund last month made $1.75 billion!

Hon Members: Oh no!

Hon PHIL GOFF: It made $1.75 billion. There is nobody in this House who does not understand that the best time to invest funds is when the market is at, or close to, the bottom. By the National Government’s theory, New Zealand homeowners should be selling their house now and buying it back when the prices have risen! That is National’s philosophy. Kiwis know that it makes no financial sense, so why cannot the Prime Minister and the Minister of Finance see that?

The other great broken promise was that jobs in the public sector would only be capped, not cut. Mr Key should explain that to the 1,470 hard-working, decent, ordinary New Zealanders who worked in the public sector that his Government has sacked. It does not stack up.

This Government inherited an economy that was in good shape. It inherited an economy where the level of net debt was zero. Mr Speaker, you might think it appropriate that those members are barracking to the point where you probably cannot hear the matter I am about to raise with you. The truth is that in the good times a Labour Government paid off the debt so that New Zealand’s net debt was zero. That gave the incoming National Government the flexibility with which it could have protected jobs. Instead of giving tax cuts to the top 3 percent, it could have given the money to the decent, ordinary working families earning less than $40,000 who got nothing. Had they got something, there would have been jobs for them in that.

The truth of the matter is that the priorities of this Government are absolutely skewed and are wrong. The truth of the matter is that this is not a Budget for Kiwi battlers; it simply makes their struggle harder. This is not a Budget for employment; the National Government has clearly given up on employment. This is a Budget of missed opportunities. This is a Budget of broken promises, and no more so than in the area of superannuation. This Government will be remembered for having gutted a superannuation scheme that gave certainty to New Zealanders, equity to New Zealanders in retirement, and equity between generations. This Government, because it knows that it will not be there to be held accountable for its actions at a later date, has absolutely gutted the prospect of superannuation being maintained into the future.

I want to finish by talking about my personal experiences last week when visiting a number of places in South Auckland to talk about how the recession was affecting people. I talked to the Salvation Army, to citizens advice bureaux, and to budget advisory services. The social cost that they reported to me from people suffering job losses was tragic. The demand for Salvation Army food parcels had risen by 44 percent in the last few months; for the Auckland City Mission, it had risen by 60 percent. The Auckland City Missioner said to Annette King and me that she had advertised a job for a cleaner; within 24 hours she had had 200 applications. This Budget does nothing to address the key issue worrying New Zealanders today.

Mr SPEAKER: Before I call the honourable Prime Minister, I remind members that this is a very robust debate, and that is healthy, but I urge members not to accuse members across the House of having done something, because that leads to disorder. I remind members of that.

Hon JOHN KEY (Prime Minister) : All I can say is that if Phil Goff thinks that this Government inherited an economy that was in good shape, he must have been asleep when the Labour members were reading the Pre-election Economic and Fiscal Update. You see, the truth is we inherited an economy that was in about as good a shape as the previous Labour Government was.

It is hard to say I learnt anything from Phil Goff’s speech, but if I learnt one thing, it was this: the Labour Party knows how to do only one thing, and that is to spend money. That is all it knows how to do. You see—

John Boscawen: I raise a point of order, Mr Speaker. I am sorry to interrupt the Prime Minister, but I would like to hear the Prime Minister. At this end of the House we cannot hear the Prime Minister, and I think we are entitled to be able to hear what he is saying.

Hon Trevor Mallard: Speaking to the point of order.

Mr SPEAKER: No, I do not need any assistance. There will be silence while I am on my feet. The honourable member may be concerned about the robustness of the interaction, but he will remember that while the Leader of the Opposition was speaking there was very robust interjection from the Government benches. I think members have to appreciate that this debate is robust, because it is about the very heart of Government. Where provocative statements are made, there will be reaction to them. If members want there to be silence, they should not make provocative statements. I ask members to please keep the noise at a reasonable level, but, in fairness, there was plenty of robust interjection during the speech made by the Leader of the Opposition.

Hon JOHN KEY: What we learnt from the Labour Party is that it wants to spend more money. It is a credit card Opposition; that is what Labour is. Phil Goff has got a plan; it is called “Visa-nomics”—that is what Phil’s plan is. He does not want to defer tax cuts, and he does not want to chop any expense; he just wants to spend more money. Out there in New Zealand, after listening to Phil Goff, people are saying he is “Whack-it-on-the-bill-Phil”. That is what the theory is. The tragedy is that that is not going to cut it. You see, whether or not Mr Goff wants to accept the fact, the National Government has inherited the worst economic conditions since 1930. That is the truth of it. Our trading partners’ income is collapsing, unemployment is soaring around the world, our economy will earn $50 billion less in the next 3 years, the tax we are able to get will be a whole lot less, and the Government needs to do something about it. Labour may be a credit card Opposition, it may want to try to spend our way out of it, and it may believe that “Visa-nomics” is the way to do it, but unfortunately it will not cut it.

The best point in Phil Goff’s speech was when he said we should not worry about the rating agencies. That is why Labour got voted out. When the rating agency said in the newspapers on Tuesday that a National Government knows how to manage the economy, it was saying by default that it knows that a Labour Government does not know how to manage the economy. And that is what Phil Goff proved. He said to hell with the rating agencies. Well, this is what that means. The Irish who go off to the pub to have a nice Guinness are paying 1.5 percent to 2 percent more in their interest rates. That is the economic prescription of a Labour Government—1.5 percent to 2 percent more in interest rates. Treasury has done some work on that. A ratings downgrade would mean New Zealanders paying $600 million more a year in interest rates. Well, I say thank goodness we have Bill English, who knows how to get us through this. “Whack-it-on-the-bill-Phil” would have seen New Zealand running up a quarter of a trillion dollars’ worth of debt by 2023. The servicing cost of that debt would have been $13.8 billion more than the entire health spend today. That would have been the strategy under Labour. New Zealanders tonight will look at this National Government and say that it is a Government that has the right priorities.

I want to make one final point in relation to Phil Goff’s speech. It was not one of his best speeches, but I will let him off. One thing that I will say is that Michael Cullen understood the economics of superannuation. We saw from Phil Goff the worst sort of opposition. It was scaremongering opposition. Labour members know, like we know, that there will be no change to the age of eligibility for superannuation, and no change to the superannuation floor of 66 percent of the average wage—not under a National Government, anyway. You see, pre-funding of the superannuation scheme already had a formula built into it that allowed the Government to defer those payments if it wanted. Does it make sense to borrow billions of dollars on the credit card to save for tomorrow? I do not think so. “Whack-it-on-the-bill-Phil” might think that that is the way to go, but on this side of the House we do not think so.

There is no getting away from the fact that these are difficult conditions for the Government, but we had three objectives for the Budget, and I believe we have met all three of them. The first of those objectives was to get through the recession and to take the rough edges off the recession. Let us talk about the entitlements that we are borrowing to preserve. No student in New Zealand tonight has to worry: the interest on his or her loan is zero percent. No family in New Zealand that is getting Working for Families has to worry: its entitlements are fully preserved. No one in New Zealand who relies on superannuation, relies on the unemployment benefit, or relies on the widows pension has to worry: those entitlements are preserved. Let us understand that for a second. We are in the worst economic conditions since 1930 and Bill English has preserved every entitlement for every New Zealander. I say that we are lucky to have Bill English; that is what I say.

Let us turn to the issue of jobs. Phil Goff said that no jobs were created. What about the 600 police we are adding? What about the 800 professionals in the health system? What about the hundreds and hundreds of people we are hiring around the economy on the back of this Budget?

This Government knew absolutely the areas that were critical, so let us turn to a couple of those. Let us start with the health system. We are in the worst economic conditions since 1930, yet this Government is putting $3 billion into health over the next 4 years. When the previous Government had all the money in the world, all it did—

Hon David Cunliffe: Big clap for no change!

Hon JOHN KEY: Well, David, you happened to be the Minister of Health, and under your watch all you did—

Mr SPEAKER: Order!

Hon JOHN KEY: All Mr Cunliffe did when he was the Minister of Health was to wander out to the airport and wave bye-bye to the nurses, the doctors, and the midwives. I will tell members what Tony Ryall has done. Tony Ryall has introduced voluntary bonding for nurses, doctors, and midwives, and they are signing on in their hundreds. Tony Ryall has had to deal with swine flu. Well, he has not made a pig’s ear of it, which the previous Labour Government would have done. He has done something about it in the health system. While he is at it, he has put $103 million into maternity services—$103 million. A National Government, in the worst economic conditions since 1930, rocks up with money so that there is more time for young mums to stay in hospital with their babies. Labour rocked up with a food voucher. For New Zealanders who want to have elective surgery, this Government has delivered 20 new elective surgery clinics under this Budget.

Let us talk for a moment about health and social outcomes. When I became Prime Minister 7 months ago, the first thing that the Department of the Prime Minister and Cabinet said when it wrote to my office was that if I wanted to make a difference to the social and health outcomes of New Zealanders, I should heat and insulate homes. That is what the department said—that I should heat and insulate homes. The previous Labour Government waited 9 years, and did zero. It has happened in the first Budget under this National Government, thanks to the Greens.

I thank Russel Norman and Jeanette Fitzsimons from the Green Party. They have worked very hard to get a very good plan: $323 million over 4 years, and 180,000 homes heated. They have delivered $1,800 to insulate and heat the home of any New Zealander who wants it whose house was built pre-2000, and nearly double that amount for low-income New Zealanders. That will make a difference to social and health outcomes. It is a great result for New Zealand.

The Leader of the Opposition had the audacity to say that there was nothing in this Budget for Māori. Well, I want to thank the Māori Party for what it has done: standing up strongly and fighting for the rights of Māori New Zealanders—for fighting hard.

Hon David Cunliffe: Where are the Māori seats in Auckland? What are you going to do in Auckland, Mr Key? Where’s the koha for the brothers?

Hon JOHN KEY: Well, that debate is not over. I tell Mr Cunliffe that we will sort out Auckland; that is another thing that Labour sat around for 9 years and did not resolve. Tens of millions of dollars are going into whānau ora services for Māori, education for Māori New Zealanders, the extension of kōhanga reo, and early childhood education. The Māori Party has come into this House, joined in a partnership with National, and delivered for Māori New Zealanders. I thank and congratulate the Māori Party members on what they have done.

One of the big aims of this Budget was to grow productivity. What did we hear from the Minister of Finance? This Budget provides for $7.5 billion worth of additional capital in the next 4 years. That is $7.5 billion for building the productivity capacity of this economy. That is something that has been going backwards over the last 9 years.

We saw $1 billion a year allocated to State highways. The debate over the Waterview extension has brought it all to a head, has it not? [Interruption] Mr Twyford does not care much, because he was drop kicked by his leader from having a chance in the Mt Albert electorate. The people of Mt Albert understand what I am talking about, because—

Hon David Cunliffe: Melissa’s back.

Hon JOHN KEY: Well, I actually back my caucus, but that is a different story. [Interruption] Opposition members want to make a lot of noise, because they do not want anyone to hear this. If they were to quieten down for a second, we could run through it. If they want to debate the facts, I am more than happy to have that debate. Here are the facts—no imagination. Labour allocated $650 million to State highways; we have allocated $1 billion. Labour had $650 million; we have $1 billion. We will build the Waterview extension—60 percent of it underground—for $1.4 billion. Labour promised a mythical tunnel, which would have cost $3.2 billion—5 years’ worth of everything it had available for State highways.

Hon David Cunliffe: 10 years, no super!

Hon JOHN KEY: Mr Cunliffe does not understand economics, which is quite worrying for Labour, given that he is its finance spokesperson. The interesting thing is that if Labour is to be believed, it would have spent every State highway dollar for the next 5 years on the Waterview extension, and zero on every other State highway across New Zealand. There would have been no Transmission Gully road, but we do not hear anything from Darren Hughes now. There would have been nothing for the South Island, and nothing for anywhere else.

I want to thank the members of the ACT Party for what they have done. I thank them for the great work they did in helping with the line by line reviews. This Government has saved $2 billion. That has allowed us to spend on other areas of greater importance and greater productivity to the economy. And those members have played an important role in the development of Auckland. I thank ACT for what it has done.

Safety and security has always been a priority for this Government. We have delivered 600 extra police, and 300 of them will go to South Auckland. I say well done to Judith Collins for getting those extra police officers, as well as 246 probation officers, 26 psychologists, and hundreds of millions of dollars for extra beds in prisons. That is a great result.

I would be remiss if I did not mention the cycleway for a moment. So much joy for $50 million—so much joy! The Minister of Finance tried to give me $100 million, but I said I must not be greedy and $50 million would be enough. We will build that cycleway across New Zealand, and it will provide great opportunities. Tourists will flock from overseas to enjoy it, New Zealanders will bike on it, and jobs will be created. It will make New Zealand a wonderful country.

This Budget has been put together in difficult conditions. It has been put together against the backdrop of rising unemployment around the world. But when one looks at the Budget, one realises that in the worse scenario gross debt would top out at around 43 percent of GDP in about 2016 or 2017. We can compare that with the situation in the United Kingdom or in the United States, where debt will be 100 percent of GDP by 2012, or in Japan, where debt will be 220 percent of GDP. Unemployment in the United States is at 8.5 percent, and even in Australia it is at 5.7 percent. When one looks at all of those factors and considers—

Hon Trevor Mallard: What does your mate Jeremy Baker say?

Hon JOHN KEY: Gosh, it is duck-shooting season again, so someone should deal with that member; he is on the lake of despair and hope over there!

We are not in the easiest of conditions, but when I look at the billions of dollars going to health and education and to preserve entitlements, at the balancing of the Budget, and at the sending of a strong message that we are a Government that absolutely supports enterprise, ambition, and hope, all I can say is although New Zealanders will go to bed tonight knowing that the conditions are not easy, they will also be saying thank goodness for that little town of Dipton and the young man it produced all those 47 years ago, Bill English.

Dr RUSSEL NORMAN (Co-Leader—Green) : The Green Party remains disappointed with the lack of vision in this Budget. It is a lack of vision for moving Aotearoa New Zealand towards sustainability with fairness. The Prime Minister likes to compare himself to US President Barack Obama, but this is not an Obama Budget; this is an “Oh, bummer” Budget. As so many other countries take seriously the need to grapple with our economic and environmental crises at the same time, this Budget will go down in history as not even standard and mostly just poor. This is, in fact, the “standard is poor” Budget. The Government got this Budget signed off by Standard and Poor’s before it presented it to Parliament and the people of New Zealand. What have we come to when the Government of the day goes grovelling for approval to a failed international rating agency like Standard and Poor’s before it comes to the people of New Zealand? Let us remember that Standard and Poor’s is the agency that helped to cause the current global financial meltdown by giving triple A ratings to dodgy subprime mortgages. It gave Enron a triple A rating a few weeks before that corrupt corporation collapsed. It is shameful to watch the Minister of Finance grovel before the failed “standard is poor” rating agency.

The standard of this Budget is poor also because there is no real strategy to get us out of debt—debt that means the Minister has to kowtow to an international rating agency. This Budget locks in our dependence on imported oil, which added nearly $8 billion to our overseas debt last year. This Budget does not do enough to invest in the innovation and research that would see us climbing out of debt. This Budget does nothing to protect New Zealand companies from foreign ownership that results in billions of dollars in dividends flowing to overseas owners every year; in fact, this Budget will make it worse by weakening the Overseas Investment Act. This Budget does nothing to change the tax incentives around investment properties. Those incentives encourage New Zealanders to borrow money from overseas to buy property for capital gains.

Mr SPEAKER: I apologise to the honourable member for interrupting his speech. Although I do not mind interjections that relate to a speech where provocative statements might be made, I object to the rudeness to this House of members standing up and conducting loud conversations all around the Chamber. If members want to have conversations that do not relate to the speech that is being made, they should go out into the lobbies to do so. It is most discourteous to the member who is speaking. I apologise to Dr Norman for interrupting his speech and for the noise being so loud when he was speaking.

Dr RUSSEL NORMAN: Thank you, Mr Speaker. The Minister of Finance talked more about creating new prisons than he did about protecting our precious natural assets or lifting our children out of poverty. His focus is on reforming environmental law to make it easier for developers to further exploit our already overallocated natural resources.

A Government’s first Budget is a time to show the nation what its vision looks like in action. As New Zealand faces a recession, this Budget was an opportunity for the National Government to show the people of Aotearoa what values it stands for when times are tough. Do Government members stand up for those who are hit the hardest, insisting that we all tighten our belts a little to help our neighbours? Or will some continue to see the good times roll while others go hungry? Does the Government uphold every Kiwi kid’s right to a fair go? Does it uphold every Kiwi’s right to decent health care, a warm home, a good school, a clean river, and a safe climate? Or does it leave our most vulnerable citizens to slip through the ever-widening holes in what was once a cradle-to-grave safety net?

The benchmark for a Budget delivered in hard times is the first Budget of Michael Joseph Savage, who came into office when times were tougher for New Zealanders than they are now. Savage was elected in the middle of the Great Depression, when there was very high unemployment and great pressure on the Government’s accounts. At its first meeting, his Cabinet agreed to pay a Christmas bonus to the unemployed, and a week later it approved 7 days’ annual holiday for relief workers. The first Budget of the Savage Government raised allowances for the unemployed and increased the wages of young workers. It began the construction of State housing, regulated mortgages for farmers, and much more. In the middle of the Great Depression, Savage’s Government put the people first. It was a Government that said that all New Zealanders are worthy of dignity and respect, and it put its money where its heart was.

In our current times an equivalent Budget to that of Savage’s means rolling back the 1991 benefit cuts introduced by National and never overturned during 9 long years of a Labour Government. That is what a truly responsible Government would do. A caring Government certainly would not axe the pay and employment gender equity commitments to women working in the Public Service. In current times a Michael Joseph Savage Budget would extend the Working for Families tax credit to beneficiaries. Labour introduced Working for Families with the express purpose of discriminating against those who were out of work, something that many Kiwi families are just discovering as they lose their jobs and their Working for Families tax credits at the same time. Labour’s scheme left the poorest families in our society the worst off, and a truly caring Government would overturn that discriminatory policy and give a break to those who are falling out of work in this recession.

Will this Government show its heart and live up to the Savage standard? The times are different from Savage’s era in at least one very important respect: our awareness of the ecological crisis we face. We have to deal with both the economic and the ecological crises at the same time. This year we in the Green Party put our heads together and devised our own green stimulus package. We figured out how many jobs we could create by growing parts of the economy that need to grow—jobs doing desperately needed work. The Minister of Finance has failed to say how many jobs his Budget will create. Our package of initiatives is a first step towards what we and others call a green new deal. It aims to save the economy and the environment at the same time. Lots of countries around the world are busy adopting green new deal plans.

Our billion-dollar stimulus package includes “shovel-ready” projects that create jobs and stimulate the economy in a way that responds to pressing environmental problems, including climate change. The proposed package covers energy efficiency, transport efficiency, protecting waterways, building more homes, and community sector initiatives. The stimulus spending over the next 3 years amounts to just over $1 billion per year—approximately the same amount the National-led Government has spent to combat the recession so far, and less than most other countries have spent. Our Green MPs have been on a listening tour, taking our ideas around the country and adding to them the ideas of hundreds of New Zealanders, because we think building a sustainable and fair economy is a topic on which every Kiwi deserves to have a say. New Zealanders have plenty of ideas. They know that the country has finite space and resources, and we cannot have infinite growth in resource use.

So how does this Government’s first Budget measure up? Is it a Budget to protect those who are hardest hit, or a Budget to protect the balance sheets of the wealthy? Is it a Budget for those who have the reins of power now, or is it a Budget for the future and for those born today and tomorrow who will one day sit in this House and wonder how we could have left them with such an almighty mess? It is time to build an economy as if we were still going to be here in 2015, or maybe even 2050. Can this Government budget for the future?

There is at least one point of light for which the Government deserves credit and congratulations. In last year’s Budget the Green Party negotiated enough money to insulate all State homes. A little later, we negotiated a billion-dollar fund to help get private homes insulated via the emissions trading scheme. Although the Government has put that scheme on hold, it has worked with my colleague Jeanette Fitzsimons on a fund to make private homes warm, healthy, and safer for the climate. In what may be some kind of parliamentary record, the Green Party has successfully negotiated with two separate Governments in less than 1 year to provide a massive funding increase to improve Kiwi homes. The Greens have campaigned for this over many years, and it is good to see that we have multiparty support and money committed to making it happen. Warm, dry, and healthy homes make sense economically, socially, and environmentally. I thank the National-led Government for embracing this sensible solution.

The Greens estimate that the $323 million of new money for insulation in this Budget can create 2,700 new jobs and preserve the jobs that already exist within the EnergyWise home insulation scheme. This is great for our economy during a time of economic crisis, and it will continue to pay us back for generations. It will also help us to tackle the environmental crisis. This is what a green new deal looks like in action. The Greens expect to continue working closely with the Government to ensure that the insulation programme runs smoothly and effectively. It is important to remember that almost 900,000 Kiwi families live in damp, cold, and unhealthy homes, and it will take time to make that right. Critics may argue that there is enough money in the Budget for only the first 4 years of the scheme, but that is how the Budget process works. Members will see that out-years beyond year 4 are specifically referred to in the Appropriation (2009/10 Estimates) Bill. The Greens have an expectation that this programme will continue regardless of who is sitting on the Treasury benches, and we will push to ensure that further years are funded. We will not rest until every one of those 900,000 Kiwi homes is warm and healthy; it is not good enough for kids in this country to get sick from their own homes. I am proud that the Greens have been able to do something about that.

Beyond this bright spot, things get a little grim. The Green Party believes that a strong Public Service is essential for providing a fair deal for all New Zealanders. All Kiwis are entitled to a good education, high-quality health care, and employment opportunities. The Budget does not provide enough of this. It does not provide opportunity or fairness for everyday New Zealanders. In these dark times, it does not offer hope. The National Government has not kept its promise to just cap the Public Service; it has cut into the Public Service, and this will inevitably lead to cuts in the services that Kiwis receive. Already we have seen an estimated 1,400 jobs lost, and an effective wage freeze in the public sector. This is not a cap; it is a sinking lid. The wide-ranging cuts we are seeing across the public sector—in the Ministry of Justice, the Ministry of Social Development, the Department of Labour, the Accident Compensation Corporation, the Ministry for the Environment, and the Tertiary Education Commission—will keep coming.

We see no evidence of the Government’s rhetoric of moving office staff to the front line—perhaps it has discovered that the person booking the surgical appointment is not always qualified to operate the scalpel. The Government is straight-out cutting jobs; it is not moving them. Cutting the number of backroom staff sounds good in theory, but in practice it means there will be no staff in hospitals to make sure records are kept current—so who will do this work? Do we want it to be pushed on to doctors and nurses? Do we want doctors filling out forms, or do we want them treating patients?

I am worried about how this Budget will affect the most vulnerable. The statistics for Māori in terms of wealth and health give a clear message that the articles of Te Tiriti o Waitangi are yet to be honoured by the Government, and this Budget’s failure to fully address that is truly a shame. The measure of a society is how it provides support and opportunity for those in danger of being left behind. That is the measure. This is even truer in a recession, and I fail to see how this Budget will help those who need help the most. We have already seen staffing cuts at the Ministry of Social Development and the undermining of non-governmental organisation funding for those who work with the needy, and we look destined to return to the failed competitive tendering models of the past.

The economy is not the only thing in recession. Our environment is also groaning under the weight of human pressure. We are taking resources at a rate beyond what can be replenished, pumping out pollution and waste at a rate that the planet cannot absorb, and losing the wild and natural places and species that we Kiwis love so dearly. National recognised our deteriorating environment in its blue-green policy, but I ask members whether the Government has backed it up with action in this Budget. Sadly, just as this Budget fails to address the economic recession, it also fails to assist the environment. In fact, it worsens a dire situation by cutting funding to our two key environmental agencies, the Ministry for the Environment and the Department of Conservation. Conservation funding has been slashed by 6 percent, with the Department of Conservation’s budget cut by 9 percent. Fifty-four million dollars that were desperately needed to keep our iconic kiwi from extinction have been stolen from our natural heritage. The Bluegreens of the National Party will be hanging their heads in shame. Vote Environment has also been shaved to the scalp. Despite an additional $4.4 million to implement the Greens’ Waste Minimisation Act and develop policy to protect our lakes and streams, the Ministry for the Environment’s operational budget has been cut, and despite the fact that our global climate crisis is only getting worse, the climate change operational budget is down.

Nine million dollars have been set aside for the reform of the Resource Management Act. The purpose of this reform, as the Minister of Finance told us, is to enable business to make more money. This Government cares so little about our natural heritage that even the environment budget has been pilfered to benefit developers. Fisheries compliance, including observer programmes, has been cut by 6 percent, and biosecurity surveillance has been cut by 11 percent. That is outrageous. Those services are essential to protect our ecosystems and export economy from exploitation and contamination. Biosecurity is fundamental to the New Zealand economy. By contrast, a green new deal Budget would invest in protecting our waterways, whereby a $600 million investment over 3 years would create 4,500 jobs, restoring our lakes and streams in order to allow swimming, and protecting our all-important “clean, green” brand. The premium value of that brand to our dairy and tourism industries has been calculated at over $1 billion per year in export earnings. There are good economic and environmental reasons for the Government to invest in protecting our land, water, and wildlife, yet this Budget cuts protection to those areas. It is environmental and economic illiteracy to ignore the environmental recession, and to make investment decisions and funding cuts that deepen it.

In health, an ounce of prevention is ignored by the current Government in favour of a pound of sugar. Money to fight child obesity has been canned, while earlier this year junk food was let back into schools. Is it politically expedient to sacrifice kids’ health? When kids develop type 2 diabetes and their teeth are rotting, will this be a great win for the politically incorrect out there? Who will foot the bill for the extra dialysis machines, the extra medication, and the extra doctors and nurses we will need to keep an unhealthy population alive? It will be, of course, the taxpayer. This is the ultimate in short-sighted thinking. Today’s Budget initiatives to retain doctors and train new ones will be essential, given that this Government has launched an attack on illness prevention. Members should make no mistake: these are ideological cuts from an ideological administration. Canning the Obesity Action Coalition’s funding will not lead to economic prosperity. It is not the vision of hope New Zealand needs; it is just petty.

Nowhere is the distinction between our current economic trajectory and a more sustainable one more obvious than in transport. The amount we collectively spend on transport is at least $10 billion for the term of this Government. Most of that $10 billion is spent on roads, and the Government is actually very proud of that. In fact, for every dollar spent on sustainable modes of transport—buses, trains, walking, and cycling—National will spend $7 on roads. Why do we place all of our bets on roads, when we are vulnerable to the price of oil? Why would this Government place all its bets on roads, when the carbon dioxide produced by traffic destroys our climate? Why would we place all our bets on roads as a measure to relieve congestion, when all the local and international experience shows that it does not work? I cannot tell members why, because we do not yet understand the mind of the problem gambler. When the Minister of Transport announced earlier this year his intention to build seven roads of national significance, he did so without any kind of economic analysis as to the benefits or costs of his proposal. It is a case of build first, justify later.

Our recommendation for transport in our Green stimulus package is fiscally neutral. In the short term, we would shift $1 billion of State highway spending into more sustainable, more productive, higher-quality alternatives, taking pressure off existing roads. Our measures would create 40 percent more jobs and, at the same time, would make our transport network more resilient to the inevitable oil price shocks. That is a real jobs package, and that is what a green new deal looks like.

As far as education is concerned, this Budget is like a bad student party where the theme is retro. I ask Mr English, if he is going to take us back in time, to please avoid the 1990s. The majority of those who put this Budget together got the very best the New Zealand education system had to offer, but they are happy to leave the current crop of tertiary, secondary, primary, and preschool students with a little, empty chip packet. Many of us in this House went to university when the concept of a loan was likely to involve the university library, rather than tens of thousands of dollars of debt. This Budget wages an intergenerational war on those who want an education now and in the future. It takes money away from early childhood education. How can that make sense? It is good that in education the Government is concentrating on infrastructure, but if this comes at the expense of teachers, then it is a false economy.

On the matter of housing, we see that the number of building consents is sinking rapidly and builders are laying off staff. Surely, there could be no better way to support the building sector than building new housing stock. One of the central ideas of the green new deal package is investing in thousands more State houses over the next few years, to keep people in jobs, to keep roofs over people’s heads, and to keep the economy moving. Building 6,000 State houses would only begin to meet the need out there, and it would make more sense than demolishing hundreds of homes so that we can spend $1 billion to plough a motorway through the Mount Albert area. Will people be living out on the streets this winter because of this kind of thinking? Last year Mr Heatley railed against Labour over the disgraceful situation of those who are poor, sick, and unwell living in rat-infested boarding houses. Mr Heatley pointed out, quite rightly, that this situation was the result of a housing supply shortage. It seems that this Budget has an ideas shortage. We have an ideas deficit over how to solve the housing crisis and create work for our building sector. The Green Party does not want people to sleep rough, we do not want Kiwi families living in squalid boarding houses, and we are very happy to help the Government with ideas.

In conclusion, I say that although we are pleased that we are on the way to getting all New Zealand families into warm, dry, healthy homes, overall this Budget worries me. I am worried for the families who will suffer because of a stingy, ideologically blinkered Government. I am worried for the children who will grow up without a fair go.

Hon Sir ROGER DOUGLAS (ACT) : This is a Budget of deficits: a deficit of spending, a deficit of current account, a deficit of courage, and, most important, a deficit of imagination. Why do I say a deficit of imagination? Because the Prime Minister and the Minister of Finance have taken the soft option: they have decided to borrow and hope.

The best thing I can say about this Budget is that it is as good as any of the nine Budgets Labour’s Michael Cullen delivered. Then again, that is hardly the standard one should hold oneself to. After all, during Cullen’s time as Minister of Finance, total Government spending increased in real terms by $5,500 per person—that is $22,000 per annum for a family of four, or over $400 per week. I ask the Labour members to consider what the lives of those families would be like if they still had that $400. What did families get from Cullen’s spending? Much of it was wasted on the bureaucratic empires of health, education, and welfare, without any increase in productivity. This Budget continues that trend. Some of the money was taken from us and then used to turn most New Zealand families into welfare beneficiaries under Working for Families.

In these circumstances, what happened to the Government’s line-by-line review, which was meant to cut waste? The Government managed to find $301 million. Let us put that in context.: it is 0.4 percent of Government spending. Really? Was that seriously all it was able to find after Cullen had increased Government spending by $18 billion over and above inflation? In my view, National has missed the opportunity to cut Government waste by scrapping some Government functions and Government departments.

What was Labour’s response in this House to those modest cut-backs? It was outrage. To Labour, every area of Government is underfunded. Having spent up large for 9 years, it believes it can always find new projects to waste money on. I worry that Labour might be right. When it says it will not cut spending, it is really saying that it wants to have higher taxes. Over 9 years Labour tried to tax this nation to prosperity. The only effect was to slash productivity growth, helping us to slip further down the OECD ladder. Our productivity under Labour was one-third of what it was between 1984 and 2000. The difference to average New Zealanders is that today they receive 25 percent lower wages than they would have received if productivity growth had been maintained.

After 9 years of tax abuse, is National much better? The reality is that National did not have to go down the debt path. In fact, National had choices. One choice was to do what National has always done—that is, to take all Labour’s policies as a given, tinker with them around the edges, and hope to manage the system somewhat better. It could be the conservative party it always—with the possible exception of the National Government of 1991 and 1992—has been.

The other choice was to look to the future. The party that looks to the future always sets the real political agenda. When Labour looks to the future, it sees a large State, higher taxes, and more control for meddling politicians in Wellington, and that is what we have ended up with. When National looks to the future, it sees administering Labour’s programme more efficiently. It is, by this Budget, bereft of vision. National suffers from a deficit of courage and imagination. If National wanted a vision, it could have looked towards a future of low taxes, personal responsibility, personal freedom, and prosperity. Instead, it has chosen high taxes, expenditure as a percentage of GDP going up by 4 percent over the 5 years to 2013, Government ownership and delivery of social services, and more power for politicians and bureaucrats.

National has continued the trend for Governments since 1993 to take soft options, deciding once again to borrow and hope. National promised that it would not touch health, education, and welfare, but those areas make up 66 percent of the Government Budget. Saying it will not even look at ways to open these areas up to competition and other reforms is to give up on fiscal prudence and to sentence New Zealand to low productivity growth. We cannot have 66 percent of the Budget—30 percent of GDP—in areas that just take more and more money. In this Budget, when underlying inflation is at 1 percent, we are increasing health care costs by 6 percent. Cullen had 5 percent underlying inflation and increased health care costs by 10 percent. It is simply madness.

Making cuts to Government spending does not mean denying anyone access to health, education, and welfare; all it does is change the way we go about offering help to those who need it. One way to help is to shovel money into the bureaucracy, as Labour and National do, and hope like hell that it will eventually reach people in the form of decent education, quality health care, and welfare that helps rather than harms the poor. But, as we have seen through Labour’s health spending, not all the money goes to those who need it. There has been a 15 percent decline in doctor productivity and an 11 percent decline in nurse productivity. That will continue. In fact, the only increase in hospital productivity has been for orderlies and cleaning staff, who have been outsourced to the private sector. I wonder why there was an increase there?

The other way to help is to give money back to those who earned it, and encourage them to purchase their own education, their own health coverage, and their own insurance against risks like job loss, accident, and sickness. The most obvious difference between the two systems is who has the power. In the status quo run by Labour and National, the bureaucrat is all-powerful. The bureaucracy decides where our children get educated, it decides whether our medical treatment will go ahead, and it decides what level of income assistance is required. The recipients of handouts—be they parents, patients, or welfare recipients—are treated like children, to be managed by a bureaucrat who knows very little about them and cares even less.

Is it surprising in these circumstances that within this environment more money does not deliver better outcomes? The only way yet discovered of improving outcomes while keeping costs down is to restore control to the individual. Ultimately, for all of us—unfortunately, for all of us—in terms of this Budget, National is soft. It suffers from the tyranny of the status quo. The only thing National seems to know is how to spend. If spending means borrowing, then National, unfortunately, will borrow and hope.

Hon TARIANA TURIA (Co-Leader—Māori Party) : Tēnā koe, Mr Speaker. Tēnā tātou katoa. This is a significant day for the Māori Party, as we consider the opportunities for tangata w’enua that emerge from this Budget. None of us were under any illusion that the economic and fiscal outlook would sustain a generous spending programme to meet every need. All of the forecasts warn us that we are heading into a deeper and more prolonged slow-down, with unemployment likely to peak in the middle of next year.

The reality of recession is felt particularly by Māori w’ānau. Frankly, I mihi to their resilience, their ability to be collective, and the way in which they support each other. In its most basic form, although the Māori employment participation rate increased in the last year, the rise in employment was similar to the overall employment growth, and we are talking about growth of between 0.5 percent and 0.7 percent. But for unemployment, the contrast is stark. We are currently sitting on unemployment rates for Māori of 9.2 percent, which is over twice the annual rate for all persons of 4.5 percent. We are particularly alert to the needs of our young Māori people aged between 18 and 24 years—a group that has suffered disproportionately and consistently, not just in this year 2009, but in the 10 years leading up to it. These are grim times, and we must prepare for the certainty that the pressure on households will intensify. We are talking about families who have already had to adjust to a 70 percent increase in electricity costs over the last 10 years and, even more staggering, a 91 percent increase in petrol costs.

This, then, was the setting into which the Māori Party sought to negotiate to support our people to support themselves. Our motivation was clear. We wanted to soften the hard edges of recession for Māori, to protect those who would be most vulnerable to the weakness of the global market. But we wanted also to position our strategy around the wider economic development, to prepare the ground for w’ānau to be positioned to be part of the acceleration once the economy recovers. When our kaikaranga prepare themselves to pōw’iri, they will stand strong, summoning all their wits about them for the solemn responsibility of their role. Me hangai to titiro ki te mahi. Kei w’ati!: Keep your focus firmly fixed on the job, in case you may break or become diverted from the task. This is how we have approached 2009. We were determined to hold the line: to stay strongly attuned to the hopes and aspirations of our people to do for themselves. So we are proud that we have succeeded in safeguarding some important policies and programmes, while at the same time achieving gains that will help to lay a strong foundation for the times to come.

This Budget is a careful Budget. For the Māori Party, protecting the vulnerable was an important priority in our negotiations. In the area of social services, we sought to ensure that the people would benefit from accessing their full and correct entitlements, while at the same time recognising our collective responsibility to keep the economy moving, to keep people in jobs, and to create opportunities to generate hope. We welcome the allocation of up to $40 million for community responses to the recession. In our journeys across Aotearoa we come across amazing stories about everyday entrepreneurs who are designing solutions for their own local issues. The Community Response Fund is an opportunity to support the people to devise their own answers to the needs that will inevitably flow as a result of the economic downturn. The investment in infrastructure is another open door for our people. The $7.5 billion is a create-work scheme on a massive scale. It is a scheme that will result in the construction of major projects, and in the longer term will contribute to the lifting of economic growth.

Our approach to Budget 2009 was also developed around holding the line on w’ānau ora. There is nothing of more importance than thinking of the families who inspire us to build this nation in a way that takes their well-being into account. We celebrate the Healthy Homes approach that has been achieved. We are delighted that the Warm Homes standard has been demonstrated, with $323 million allocated to insulate and heat homes built before 2000. We will ensure that our people benefit from that. We are proud of the commitments made in allocating $12 million over the next 2 years for the Rural Housing programme, as well as the investment opportunities signalled in the Housing Innovation Fund. These are two areas where Labour failed our people miserably. This morning I met with a small but devoted group of women who have pioneered the Ngāi Tai housing project alongside of the Torere and Districts Families Credit Union. Their approach was purely and simply that by working together and sharing the load, they were able to build their homes, one w’ānau at a time. Twenty-one homes later, they are now able not only to claim a shelter for their community, but to share the success stories of 18 of their families enjoying full-time employment and the pathway to further education. That is a real celebration.

This is exactly what we mean by self-determination: creating the destiny that we aspire towards. Within this Budget we are also really pleased that almost $70 million has enabled our kō’anga reo and playcentres to benefit from the expansion of the 20 hours’ free early childhood education initiative. Our policy priority has always been to boost participation in early childhood education for Māori, who have traditionally had low participation rates, so this is a big gain for us. Then we have the $20 million to extend the kotahitanga programme in schools, to ensure that teachers are equipped with the skills and strategies to ensure Māori reach their full potential. Holding the line is also about creating the best economic framework, to plan for Māori prosperity across cultural and tribal assets. We are really pleased with the additional $4.5 million that will enable w’ānau Māori every opportunity to access te reo Māori in their own homes. We are glad that there is pūtea put aside to support iwi radio in meeting its operational costs.

This Budget brings with it some $22 million devoted to speeding up the process and reducing the time it takes to settle Treaty claims. We know that streamlining the process is a clear mechanism to achieve the enduring reconciliation between iwi, hapū, and the Crown that our tūpuna believed was possible when they signed Te Tiriti o Waitangi. We acknowledge the close working relationship we have enjoyed with the Minister for Treaty of Waitangi Negotiations, and we are especially positive about the opportunities for involving independent facilitators and the support for promoting chief-to-chief negotiations—both policies that we brought into the relationship with the National Government. That relationship has been one that has been the road least travelled, but a road, nevertheless, on which we have been able to walk together in a way that has respected the concept of a mana-enhancing relationship. We have always maintained that every issue is a Māori issue. We know that if the Budget does not work for Māori, then it is not a good Budget for New Zealand; and, conversely, initiatives that may appear to promote tangata w’enua interests are also about promoting the unique and distinctive identity of Aotearoa.

So in this 2009 Budget we can see the influence of the Māori Party right across the Government, including gains achieved in our ministerial positions. The Māori affairs appropriation has managed to survive largely intact, despite the rigours of close scrutiny for savings. In my portfolios I am pleased that more than $11 million has been set aside to support those unsung heroes in our community—the informal carers—the people who support an ill, disabled, or frail aged family member. I am proud too of the support that will enable stronger engagement amongst local communities. This is what it is all about—he tangata, he tangata, he tangata.

Hon JIM ANDERTON (Leader—Progressive) : This is a Budget that has all the competence one would expect from the people responsible for Melissa Lee’s Mt Albert by-election campaign. The good news is that inflation is no longer a problem. We finally have the low-inflation economy that the National Party always said would deliver us its dream economy. However, how is that working out? National has produced a lacklustre Budget that Bill Birch would have been proud of. In troubled times when the economy is rocking on the waves of global economic storms, the Government has responded weakly, not with a vision for the future and not with the bold steps that would lead New Zealand on a developmental path, but with a weak, uncertain, sitting-on-its-hands response.

Governments around the world are investing in the future; this Government has slashed the future. This is the broken-promise Budget. The total value of primary sector science investment falls from $2 billion under the New Zealand Fast Forward programme of the last Government to as little as $1.2 billion now. The Government is cutting nearly as much out of the science and research budget in the primary sector as it is investing in infrastructure. Government spending on science and research on a like-for-like basis falls from around $1 billion in the New Zealand Fast Forward fund to $610 million in National’s replacement programme.

With matching private sector funding, the total investment in primary sector research and development actually falls by $800 million, or about 0.4 percent of GDP. In addition, the Government has not replaced a cent of the cancelled research and development tax credit. This is a huge cut in scientific research and development. It is, in fact, a disaster for the future of New Zealand’s economy.

Other developed countries are preparing themselves to come out of this recession stronger than when they went into it. New Zealand is preparing by switching from science and research to poltergeists and UFOs. The Government promised the private sector that it would spend more on scientific research and development. That is what David Carter said last week. He promised that it would spend more and that its Budget for scientific research and development would be bigger than the Labour-led Government’s. Farmers in the agricultural business community will be looking that up, and they will not find increases; they will find cuts. The Government has broken that promise as surely as it has broken its promise on personal tax cuts.

I want to turn to some other features of this disappointing Budget and to draw the House’s attention to the table on page 55 of the Fiscal Strategy Report. In that report the Government points to its expected increases in nominal average wages over the next 4 years. If we deduct these from the cost of living index, there will be no increase in real wages for 4 years. Boy, if John Key thought that people left New Zealand for Australia in droves under the Labour-led Government, he should just wait until they figure out what 4 years of no real wage increases mean for them.

This is the curious branch of economics that says the way to make New Zealand better off is to make everyone else worse off. The people who will be the worst off will be the people whom Tariana Turia represents, but what will she do about this Budget? She will vote for it. Well, over the next 2½ years I will be waiting for the outcome of that for the Māori people of New Zealand, and I will hold her accountable for that. Not since the 1980s have we had an economy that did not increase real wages for 4 consecutive years. It is hardly conducive to keeping working New Zealanders here.

There was a time when National would have said that the way to fix things is to spend on tax cuts. We have to give John Key and Bill English credit for one thing—they have now accepted that tax cuts do not always stimulate the economy. But they promised New Zealanders tax cuts. They now say they cannot afford them, and that is fair enough as, in truth, we cannot. Back then, though, when they wanted New Zealanders to vote for them they told them that they would reduce taxes. Mr Key said that National has structured this economic package to take account of the changing international climate. So National members knew what was coming and they promised tax cuts, but now they say: “Oh, shock, horror, things aren’t as good as we expected even though we did expect them to be bad, and we’re cutting taxes even though we promised we wouldn’t.”

So when the National members said their tax-cut programme would not require any additional borrowing, that was actually true because they did not intend to make any tax cuts, so they would not have to borrow any money, and that is exactly what has happened. Last year John Key said his tax policy was “appropriate for the current conditions and would require no additional borrowing”. Well, now we know what the truth of that is.

I was here in 1991 when the “mother of all Budgets” was presented. Initially there was a sort of “Shock, horror, we are in difficult times, we had better accept all of this.” reaction, but, boy, over time did that come back to haunt the National Government. National was actually down to 19 percent in the polls in that period from 1991-93. We will just wait and see how this Budget works out; I do not think it will be any different.

John Key owes New Zealand an apology for getting himself elected on a promise that he knew he could never keep. Did he know before the election that the economic situation was deteriorating, or did he find out only when Treasury told him? He is the smart money dealer; he is the smart market dealer; he knows everything about the markets, so he must have known, but he promised that there would be tax cuts. That is deceitful.

In the time that I have left I want to turn to the cuts in the Superannuation Fund. This is pretty sneaky politics. Cutting the Superannuation Fund now reduces the ability of any Government in the future to provide for superannuation at anything like existing rates or retirement age.

Paul Quinn: Rubbish!

Hon JIM ANDERTON: Someone said “Rubbish!”. The member’s mind must be rubbish if the member does not believe that. Bill English is pushing out by 10 years the hard decisions about the huge tax increases or cuts to superannuation that will be needed to make superannuation affordable. I was on the superannuation task force and I know what is required to make superannuation fundable by 2040, and that is a doubling of the equivalent tax rates for superannuation by 2040. The only way we could get there without having to do that was to put aside the funds we were putting aside. But, no, the National Government will run this economy in such a way that nothing will happen until 2021. Somehow, between then and 2040, some mug Government will have to come along and fix it. It clearly will not be that of Bill English; he knows full well that he will not be here. I would say he will not be here after the next 3 years, either, so we may have a chance of fixing it.

Bill English has delivered an enormous burden for future taxpayers. The affordability of superannuation in the future must decline, because we are no longer putting aside something now to pay for some of it in the future. In my view, that means that the age of eligibility for superannuation will be increased. When we had the superannuation task force, Treasury wanted the retirement age to be increased to 72; well, it may well get its wish under this Government if we are not very careful.

The Greens must be really pleased with the memorandum of understanding they have made with the Government, but there is not a word in that speech today about climate change—not one single word. I mean, it is the monumental problem facing the world, but we have not had one single word about it. The Greens got $244 million of new spending for their home insulation scheme, but when we look at the infrastructure spend, we can see that the Government is shifting $258 million of spending on rail on to the roads. I thought that that was what the Greens did not want. So what has happened is that the Greens have lost $14 million net, as spending has gone from the rail system to the roading system, and they have got even less than that for their insulation scheme. The Greens have actually lost money.

Then, as I said in relation to the Māori Party, the people who will be hardest hit by this recession are Māori and Pacific Island people. National is not doing anything for new jobs; the Māori Party is voting for that. At least Pita Sharples can wave at the unemployed as he drives past them in his new car—that might make him pleased.

Hon PETER DUNNE (Leader—United Future) : This Budget was prepared against a backdrop of a most extraordinary set of circumstances. At the time of last year’s Budget, the then Minister of Finance warned that existing increases in expenditure—

Hon Tariana Turia: I raise a point of order, Mr Speaker. I would like Ruth Dyson to withdraw and apologise for calling us sell-outs.

The ASSISTANT SPEAKER (Hon Rick Barker): Well, I have to say to the member that this is a robust place for robust comments. It would be difficult to convince the Chair that calling someone a sell-out crossed the line and was offensive. But if the member feels that she wants a withdrawal and apology, she may ask for it.

Hon Tariana Turia: Thank you. I would like her to withdraw and apologise.

Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I ask you where, in any of the Speakers’ precedents about unparliamentary language, the word “sell-out” is put forward. You will know that in the last Parliament, when Labour was in Government, all sorts of extremely unparliamentary language was used regarding the Electoral Finance Bill by the now Leader of the House and others over on that side. Many of those terms were not ruled out by presiding officers; they were allowed. If we are to rule out “sell-out”, what is left?

Hon Gerry Brownlee: I think the point is that it is not the choice of words but the tone and the intention—

Hon Members: Oh!

Hon Gerry Brownlee: Is this a point of order, or not?

The ASSISTANT SPEAKER (Hon Rick Barker): I tell members that points of order will be heard in silence.

Hon Gerry Brownlee: I have listened to numerous comments from across the House to me, about me, etc., and I accept that they are just throwaway remarks, but in this case a particularly offensive remark was made. Because people exercise their political judgment in a particular way does not mean that they have sold out. “Sold out”, in the context that it was said across the House, is an exceptionally derogatory term, and I do not think that it would hurt for the remark to be withdrawn. I understand what the expression was meant to say—that this was not what the Māori Party had intended to do, or something else—but to use a term that was so derisory in the circumstance in which it was delivered is, I think, offensive.

Hon Clayton Cosgrove: I would argue that in the history of this Parliament the terms “sold out” or “sell-out” have sometimes been thrown around by members about others within their own political party, because their colleagues have chosen to vote in a different way, or because they said things before an election, then did things differently afterwards. If we are now, as the Leader of the House contends, going to rule out words based on the tone that somebody has used—and he is a baritone, perhaps—then I would argue that that is completely absurd. We had interjections throughout the Budget speeches today where people used similar language with a similar implication. I put it to you, Mr Assistant Speaker, what is next if “sell-out” or the tone used is ruled out? I cannot find a Standing Order that deals with the tone of one’s voice. I think that would be absurd.

The ASSISTANT SPEAKER (Hon Rick Barker): Thank you, members. I have heard good contributions on this. I come back to the point that one of the things that this House is about is free speech. People have to be able to say what they will. There are some constraints on it—of course there are. But there has to be a high threshold. This is a robust debating chamber. It is a debating chamber, and it is about robust debate. In my opinion, the term “sell-out”, although it might cause offence to a person, does not go beyond the line.

Te Ururoa Flavell: I raise a point of order, Mr Speaker. I ask you to consider not just the wording in this case. If a member takes offence at a particular term, whatever that term might be, and asks for the member who said it to stand and apologise, is that not the benchmark that is used to assess whether the term is in order?

The ASSISTANT SPEAKER (Hon Rick Barker): Well, if we were to take it that if a member took offence there would be an automatic requirement that the comment be withdrawn and apologised for, then the members of this House would set the tone, not the Speaker. It would be entirely up to members; if they said “I take offence at that.”, there would be a withdrawal and an apology, and gradually, piece by piece, the standard would be eroded, and this House would not be a House of robust debate. This House is a House of robust debate. People do have reputations and they do have feelings, and I acknowledge that, but this is a debating chamber, and I put my point again: it is a robust debating chamber, and it is about free speech.

Hon PETER DUNNE: As I was saying, this Budget has been prepared against an extraordinary combination of circumstances: a declining New Zealand economy during 2008, warnings from the then Minister of Finance that the current levels of expenditure increases were unlikely to be sustained in the future, and, added to that, a rapidly declining international situation during 2008. Members will recall the extraordinary week in October last year when on the Sunday—New Zealand time—the Irish Government, much to the consternation and surprise of the rest of the world, announced that it was going to guarantee bank deposits. By the end of that very week, every country of that type was doing likewise. That was how quickly things were moving. We have seen a rapidly increasing debt track in New Zealand, and we have seen a rapidly declining revenue profile as the consequences of the international slow-down have started to bite.

So when it came to putting together this Budget, the Government had a number of options. It could have reverted to slash-and-burn policies of the type we saw in the early 1990s. We still live with the social consequences of those cutbacks, so that was not an option. It could have adopted the agenda that was being promoted by the ACT members to my right a little earlier on this afternoon, but that was clearly not an option. What the Government has taken is essentially, I think, a prudent middle way. There has been a significant increase in spending—and the Minister of Finance made it clear this afternoon that that spending track will slow over the years ahead—there has been a commitment to reducing long-term debt, and the Government has taken the view that some of the things it might like to do today need to be set aside for tomorrow in order to enable it to maintain some of its core commitments.

I regret as much as anyone else the fact that tax cuts are being deferred, but when we do not have the money to pay for those cuts it is irresponsible to continue with them at this time. What that does is to give fresh urgency to the work that is under way to align our corporate tax and trust top rates, and to see how the broad based - low rate policy that has been a consistent thread of our tax policy in this country for at least the last 20 years can be enhanced and we can bring it to fruition. That will be one of the big challenges over the next little while.

Where we stand at the moment, in terms of New Zealand, is simply this. The international economy may well start to recover later this year or early next year—there are already some incipient signs of a recovery under way—but the New Zealand economy will be on a longer recovery track. The message that needs to be got through to New Zealanders is that this is not just about an international recovery; there will be some benefit to us from that, but a long, hard road lies ahead in terms of restoring our economy. The challenge that the Government faces is how to balance the need for restoration with the need to retain critical social services. I think this Budget has been a prudent balance of those often competing objectives.

There are some things in this Budget on which I think the Government could have gone further. For example, I welcome the increase in public health expenditure, but I think the day is not far off when that level of increase cannot be sustained, and we will need to look to much greater private-public partnerships for the delivery of services, particularly elective surgery services. One of the things we will need to start to think about in terms of how we encourage that shift is moving, in the first instance, to a tax rebate for those over the age of 65 who contribute to health insurance programmes, so that we encourage them to retain their health insurance programmes and therefore to stay outside the ambit of the public system, thus reducing a critical amount of the pressure on it. But that, of itself, can be only a first step. We need to take the example of our accident compensation scheme and our KiwiSaver scheme much further, and to develop a comprehensive national health insurance scheme whereby the premia paid by taxpayers are offset against their marginal tax rate so that the net effect is self-balancing, but the competitive power of the insurance fund can be used to drive down prices in both the public and the private sectors, deliver greater capacity, and ensure that New Zealanders have access to the quality health-care—particularly for surgery—that they require. That is the way that most countries of our type around the world have been forced to go in recent years, and I do not think New Zealand, at this end of the world, will be immune from that challenge in any shape or form. So we need to start now to think about the steps we have to take to get to that point.

I welcome the commitment contained in the Budget to continue a level of community engagement, and I appreciate the work of my colleague sitting to my left Tariana Turia in that regard. The community and voluntary sector in this country is, in many senses, the lifeblood of social service provision. Often those agencies do a far better job than Government agencies, because they bring a much greater level of dedication, commitment, and expertise to that role, and a much closer identification with the communities that they service. The whole purpose of the charitable donations policy that we have been implementing over the last 2 or 3 years has been both to create a greater culture of giving in New Zealand and to recognise a greater role for philanthropy in the provision of those types of services, so that we can utilise those skills far more effectively to benefit New Zealanders as a whole, and thus free up critical areas of Government spending for the more vulnerable people and situations that often escape the net at the moment in terms of the service that they require. That is the challenge that this Budget seeks to address. I think it is a step along the way, but it is a starting step none the less.

The question that has excited a lot of attention is that of the home insulation fund, and I go back to the advice that the Prime Minister referred to in his speech—to the prudent, preventive advice that if people’s homes have good heating and good insulation, the chances of their health status being improved are very high. The modest per capita investment that this scheme requires is a prudent step in the right direction, but I make this point: it is all very well to set up a scheme of that type, but its delivery and its implementation will be critical. I am not confident, based on constituency cases that I have dealt with, that the infrastructure that is there at the moment, through the Energy Efficiency and Conservation Authority and other agencies, is sufficient to ensure that people can actually have insulation fitted as quickly as they require it. I know of people who made bookings in the summertime and are still to have their insulation put in place in time for the winter that is now upon us. That is clearly absurd, and if that sort of approach is maintained, it will detract from the credibility of this policy.

A lot has been said over this Budget and previous Budgets about infrastructure investment, and this Budget specifies a couple of important strands in that regard, building on the work announced recently by the Minister of Transport in terms of the seven roads of national significance. It is important to put some of those things into perspective. Although I do not want to get involved in the Waterview project debate because I am from Wellington, not Auckland, the reality is that the Waterview project as originally proposed was so expensive that a number of projects close to my heart, like the Transmission Gully road, for instance, could have been funded three times over for the cost of it. The rebalancing that is occurring will serve the needs of the people of Mount Albert effectively, but also will free up resources for other areas of New Zealand to get their roading priorities funded by the Crown—because that is an important part of the policy announcement that was made a little while ago—and that is a welcome step and in the interests of all New Zealanders.

This Budget will excite the usual round of criticism, the usual round of people feeling they have not got what they expected from it, but in the circumstances of the times—unprecedented, according to some commentators, since 1930, and far more extensive in their scope since the entire cost of World War II—this Budget is an appropriate response for New Zealand. This Budget helps to set this country forward with confidence. It creates the circumstances for growth but it also sends out some challenges. I say to the Minister of Finance that the next two Budgets will be the critical ones, as the consequences of this Budget start to come through, the consequences of the international recovery—hopefully, it will be under way—start to come through, and the big challenges out there in terms of where this economy heads are also on the table. So balancing expectations in 2010 and 2011 will be as critical as managing the process of bringing about the transition that this Budget heralds. It is a useful step forward and it is a good start, but, as with all of these things, much more needs to be done yet.

Hon GERRY BROWNLEE (Leader of the House) : I move, That this debate be now adjourned.