Hon BILL ENGLISH (Minister of Finance) : I move, That the Appropriation (2012/13 Estimates) Bill be now read a second time.

It’s a privilege to deliver the National-led Government’s fourth Budget.

This Budget is about investing in our future.

It shows the Government is responsibly managing its finances. We are on track to post an operating surplus in 2014/15, when we will start bringing debt down to prudent levels.

That is a considerable achievement given the difficulties New Zealand has faced over the past three years:

A sharp recession that started in early 2008.

The Global Financial Crisis, which is still being felt around the world.

The destructive earthquakes in Canterbury.

Good fiscal management is important because it helps us pursue the other three priorities of this Government.

The first of these is building a more productive and competitive economy. The New Zealand economy lost competitiveness and built up large imbalances during the 2000s.

Those imbalances have to be reversed if we are to achieve sustainable growth.

The Budget is another step in creating an innovative and productive economy that sells more to the world - where people have the jobs, opportunities and higher incomes to get ahead here in New Zealand.

Secondly, the Government is committed to delivering better public services.

The Budget shows we are continuing to reform public services to deliver better results, protect the vulnerable in our society, and at the same time bring down many of the longterm social costs that drive public-sector spending.

And thirdly, the Budget continues the Government’s strong commitment to rebuilding Christchurch and the surrounding areas.

Collectively, these priorities are about building a brighter future for New Zealanders from all backgrounds and walks of life.

Working constructively with the ACT, United Future and Māori Parties, we will continue to make balanced and fair decisions to support all New Zealanders through challenging times and put the economy on a more competitive footing for the longer term.

Mr Speaker,

The New Zealand economy has grown modestly but steadily, despite significant headwinds.

The efforts of all New Zealanders, supported by the Government’s policies, are delivering results in difficult circumstances.

Since the recession, the economy has expanded in nine out of the past 10 quarters.

Looking ahead, growth is forecast to rise to more than 3 per cent in 2014/2015.

Though moderate by historical standards, New Zealand’s growth outlook is stronger over the next few years than that forecast for the Euro area, the United Kingdom, Japan, the United States, and Canada. It’s similar to forecast growth in Australia.

Households and businesses have started to save and pay down debt. New Zealand’s household savings rate is positive for the first time in a decade, and is forecast to increase to almost 4 per cent by 2016.

That is a positive and encouraging sign.

Increased savings will temper economic growth a little in the short term, but over time will leave New Zealand considerably less vulnerable to economic shocks.

Job creation is picking up. Over the past two years, 60,000 more people have been employed, and the Treasury expects a net 154,000 new jobs over the next four years.

Unemployment is forecast to drop below 5 per cent by 2015.

Growth in the near term will be driven by a number of factors.

The rebuilding of Christchurch will be a key driver of domestic activity and is expected to contribute about one percentage point to annual growth in each calendar year from 2012 to 2016.

Our two largest trading partners – Australia and China – are forecast to maintain reasonable growth rates, therefore keeping up demand for our exports. We are also well placed to benefit from trade with other fast-growing economies in the Asia Pacific region.

And our terms of trade are expected to remain relatively high on the back of demand for our major export commodities.

These opportunities will be supported by Government policies to encourage businesses to invest, grow, and employ.

However, the global environment remains volatile.

In particular, the Euro area and the United Kingdom have yet to resolve the huge problems caused by a long-term reliance on debt and government spending to drive economic growth.

This global weakness and volatility means New Zealand must focus on the issues it can directly control, including getting back to surplus, reducing government and private sector debt, and improving competitiveness.

New jobs are created and incomes grow only when businesses have the confidence to invest, take risks to employ more people, and pay better wages from higher revenues.

Growth in the 2000s was built on unsustainable foundations – excessive spending, including from the Government, and high levels of household debt.

We are moving towards growth that is driven by savings, exports, and productive investment in the parts of the economy that trade with the rest of the world.

It is within this context that I present Budget 2012.

Mr Speaker,

I want to talk first about responsible financial management, before I go on to talk about the other three, equally-important, priorities of this Government.

Over the past three years, the Government has faced very considerable fiscal challenges.

In 2008, net government debt was $10 billion. Today it stands at $50 billion, and is forecast to reach more than $70 billion before we return to surplus and start paying-down debt.

That build-up in government debt has been the appropriate response to the triple shocks of a domestic recession, the Global Financial Crisis, and the Canterbury earthquakes.

The alternative would have been to dramatically slash spending or dramatically increase taxes, both of which would have brought considerable pain to households and damaged the economy at a time when the recovery was still fragile.

The Government chose to run larger deficits and absorb much of the impact of these shocks on its own balance sheet to protect vulnerable New Zealanders and enable the economy to get back on track.

But, as we made clear at the time, this could not continue indefinitely.

So the Government maintained spending, but slowed its growth significantly.

As an illustration, over its last four Budgets, from 2004 to 2008, the previous Government’s final-year spending on new discretionary operating and revenue initiatives totalled around $15 billion.

For this Government, the corresponding figure over four Budgets is about $750 million.

This Government’s discipline means New Zealand is on track to return to fiscal surplus in 2014/15, and then to start reducing debt.

The forecast fiscal surplus in 2014/15 is $197 million. This surplus is forecast to grow to $2.1 billion in 2015/16 and $4.4 billion in 2016/17.

Mr Speaker,

These surpluses will allow the Government to rebuild New Zealand’s resilience to further shocks, help lift national savings, keep interest rates lower for longer, take pressure off the exchange rate, and reduce future finance costs.

A significant surplus will also give us choices when it comes to public services which we don’t have while we’re running deficits.

This Budget takes a number of balanced decisions to ensure the Government reaches surplus in 2014/15.

These decisions include running a zero Budget again this year, where $4.4 billion of new operating spending over the four-year forecast period is matched by a combination of savings and revenue initiatives.

The Government is making significant new investment in priority areas, while at the same time keeping a tight rein on growth in spending and public debt.

In terms of savings initiatives, we are continuing to reprioritise existing spending to ensure New Zealanders receive better public services, especially in health, education, welfare, law and order, and science and innovation.

This will allow core Crown expenses to fall progressively from 33.5 per cent of GDP in 2011/12, to 30.2 per cent of GDP in 2015/16.

We are also focusing on improving the effectiveness of spending across the board.

Effective public services that get results are good for individuals and their families, and will also generate sustainable long-term savings.

In terms of revenue initiatives, the Budget continues the Government’s focus on broadening the tax base, closing tax loopholes, and improving the fairness of the tax system.

This builds on the measures introduced in Budgets 2010 and 2011.

The Inland Revenue Department will receive an extra $78.4 million to further improve its tax auditing and compliance functions. These extra compliance activities are estimated to have a net positive impact on the operating balance of $345.4 million over the four years to 2015/16.

We are also broadening the tax base by:

Tightening the rules for deducting costs of assets that are used both by their owners and rented out for income, such as holiday homes, boats, and aircraft.

Putting changes to livestock valuation rules into Budget legislation to prevent farmers who change valuation schemes receiving an unintended tax break.

Removing three tax credits that no longer fit the purpose for which they were created.

Together, these changes will save about $410 million over the next four years, and I thank the Honourable Peter Dunne for his work in this area.

Mr Speaker,

When the Budget is in sufficient surplus, the Government is committed to resuming contributions to the New Zealand Superannuation Fund. On current forecasts, this is expected to happen in 2017/18.

Furthermore, decisions will also need to be made on the rate of debt repayment, to meet the Government’s longer-term objective of reducing debt to 20 per cent of GDP by 2020.

Resuming New Zealand Superannuation Fund contributions and repaying debt will require an on-going commitment to responsibly manage surpluses.

Budget 2012 proposes changes to the fiscal responsibility provisions of the Public Finance Act to reinforce fiscal disciplines.

We are proposing additional principles for Part 2 of the Public Finance Act, which ministers will have to take into account when setting fiscal policy. These changes will bring more transparency to government spending decisions and how they affect the wider economy and future generations.

The Government is also consulting other political parties about the possible introduction of a spending limit, as set out in the National-ACT confidence and supply agreement.

I acknowledge the initiative on this issue of the Honourable John Banks.

Mr Speaker,

The new operating allowances for future Budgets remain as they were, at $800 million for Budget 2013, $1.19 billion for Budget 2014, and thereafter rising at 2 per cent each Budget.

This allows the Government to maintain some flexibility to deal with future spending and revenue pressures, while still achieving a surplus in 2014/15.

Mr Speaker,

As I said earlier, good fiscal management is important because it helps us pursue the other three priorities of this Government.

So I want to turn to the first of these – building a more productive and competitive economy.

The Budget continues to support the wide range of actions the Government is taking to raise productivity and therefore create more jobs and raise incomes.

I want to mention just a few of them.

Budget 2012 contains $385 million of new investment over four years in research, science, and innovation.

We need to support businesses and farms to innovate and stay ahead of the competition.

And we need to ensure New Zealanders have the right skills to compete in an increasingly global labour market.

Over the next four years, Budget 2012 investments include:

$166 million to redevelop an Advanced Technology Institute, which will help New Zealand’s high-tech firms grow, increase exports, and ramp up productivity.

$60 million to support a series of National Science Challenges, which will seek innovative solutions to specific questions of national significance.

$100 million additional funding for the Performance-Based Research Fund to support world-class research in New Zealand’s universities.

$59 million to boost funding for science and engineering courses. Funding rates for engineering degrees will be increased by 8.8 per cent and for science degrees by 2 per cent.

In its first three years, the Primary Growth Partnership has stimulated more than $430 million in research and development investment from government and industry. A further $270 million of investment by the Government and industry is awaiting approval of business plans or negotiating contracts.

Mr Speaker,

Budget 2012 continues the Government’s programme of investment in productive infrastructure and other major capital projects.

In particular, the Budget establishes the Future Investment Fund. This fund will receive all proceeds from the Government’s sale of up to 49 per cent of shares in four SOEs and Air New Zealand.

These proceeds are expected to be between $5 billion and $7 billion.

The Future Investment Fund will reinvest these proceeds in other public assets, such as modern schools and hospitals, over the next few Budgets. The Government will do this without having to borrow to pay for those new assets.

We have earmarked $1 billion of the fund for modernising and transforming schools as part of the Government’s 21st Century Schools programme.

This demonstrates that the partial sale of shares in the five companies does not result in any net loss of publicly owned assets, but simply changes the mix of those assets.

The Government would rather build new schools and better hospitals without having to borrow more from overseas lenders, and still retain a majority shareholding in these companies.

The share offers will provide New Zealanders with an opportunity to invest their savings in large New Zealand companies and will help to improve the transparency and accountability of the companies.

As part of the Budget, the Future Investment Fund is allocating its first $559 million. This includes:

The first $34 million of funding for 21st Century Schools.

$250 million towards KiwiRail’s Turnaround Plan.

$88 million for health sector initiatives, in particular hospital redevelopments.

$76 million for the capital costs of the new Advanced Technology Institute.

We expect to make a significantly larger contribution from the fund in Budget 2013, once the share offers are under way.

In addition, the Government is investing around $12 billion in improving state highways over the next 10 years.

We are also investing more than $500 million a year in improving and maintaining local roads, and completing the $2.1 billion upgrade of the metro rail systems in Auckland and Wellington.

Through Transpower, the Government is investing $4.6 billion in upgrading the national electricity grid over the next 10 years.

New Zealand’s size and geographic isolation from the rest of the world mean communications technology matters.

That is why this Government is investing up to $1.35 billion in the roll-out of Ultra-Fast Broadband and an extra $300 million in the Rural Broadband Initiative, currently under way.

Mr Speaker,

As part of the Government’s programme to deepen capital markets, the Budget last year made several changes to KiwiSaver.

We announced an increase in the minimum contribution from individuals and employers from 2 per cent to 3 per cent, to take effect from 1 April 2013.

About 15,000 New Zealanders a month are joining the scheme, and since March last year, total KiwiSaver funds have grown from $9 billion to more than $12 billion.

Budget 2012 further strengthens KiwiSaver.

New disclosure rules, to take effect from April 2013, will allow people in KiwiSaver to evaluate and compare the performance of different funds. Fund managers will be required to report their performance and returns, fees and costs, assets and portfolio holdings, and liquidity and liabilities.

In addition, the Government is today issuing the terms of reference for a review of KiwiSaver default-provider arrangements to ensure they are working in the best interests of investors.

The Government is also deferring its auto-enrolment exercise for KiwiSaver. Proceeding with auto-enrolment in 2014/15 as originally intended is now not possible without putting the updated forecast surplus at risk. Therefore, public consultation on auto-enrolment has been deferred until after 2012.

In building a more competitive economy, the Government will develop initiatives across its business growth agenda.

This will help businesses with the research, capital, ideas, skills, natural resources, and infrastructure that they need to grow, employ, and trade successfully with the rest of the world.

This is how the Government will support job growth.

Mr Speaker,

Another of the Government’s priorities is delivering better public services within tight financial constraints.

A better-performing public sector is central to the Government’s plans over the next three years. The Government wants to see better results and improved services, as well as reduced costs and more efficiency.

To assist those changes, the State Sector Act, the Public Finance Act, and the Crown Entities Act will be amended, as recommended by the Better Public Services Advisory Group.

Earlier this year, the Prime Minister announced 10 challenging results for the public sector to achieve over the next three to five years.

We can help create better communities by achieving these results, which include: reducing long-term welfare dependency; supporting vulnerable children; boosting skills and employment; reducing crime; and improving interaction with government.

We’ve already announced one of the targets – 85 per cent of 18-year-olds having NCEA level 2 or equivalent in five years, up from 68 per cent currently.

Today we are announcing two more as part of Budget 2012.

The first is reducing prisoner reoffending by 25 per cent in five years. Reaching this target would mean 18,500 fewer victims of crime every year.

The second is increasing the rate of participation in early childhood education to 98 per cent, up from 94.7 per cent currently. This will ensure that as many children as possible have a strong platform for learning when they start school.

We are still finalising our other Better Public Services targets and they will be announced by 30 June.

Progress towards achieving the results will be reported publicly, so New Zealanders can judge for themselves how well we are doing.

As we’ve said, achieving these results will be demanding – in fact, for some of them, it will be quite difficult. We make no apology for that.

Mr Speaker,

Despite tight financial constraints, this Government has made investing in better frontline health services a priority over the past three Budgets. This continues in Budget 2012.

Over the next four years, the Government is committing almost $1.5 billion extra to Vote Health, partly funded by $129 million of savings identified in 2011/12. This will:

Deliver 4,000 more elective operations a year.

Provide better service for cardiac and cancer patients.

Provide $12 million to reduce rheumatic fever.

Invest $133 million in disability support services.

In addition, the Government will provide $60 million in capital for new buildings and hospitals.

As we’ve already announced, pharmaceutical co-payments will be increased from $3 to $5, up to a maximum of 20 prescription items per family per year, after which items are free.

Prescriptions for children under six will remain free.

This is a modest increase that allows us to spend more on frontline health services than we would otherwise have been able to.

As part of its wider health policy, the Government will also continue to increase tobacco excise by 10 per cent over and above inflation each year for the next four years.

The first increase will occur on 1 January 2013, followed by annual increases on 1 January in each of the following three years.

Previous increases in the excise have reduced tobacco consumption, as smokers have given up or cut back and fewer young people begin smoking.

I acknowledge the work and support of the Māori Party and its ministers, the Honourable Tariana Turia and the Honourable Pita Sharples, in this area.

Mr Speaker,

Raising student achievement and improving the tracking of student performance is important for New Zealand and therefore a priority for this Government.

As we have confirmed, the Government is committed to the ambitious goal of 85 per cent of 18-year-olds with NCEA Level 2 or equivalent qualifications.

Reaching this goal means resources must be managed to get better results for all students.

Evidence shows the single most important thing we can do to raise achievement is to improve teaching quality. So Budget 2012 makes a significant investment in this area.

Over the next four years, the Government will commit $512 million towards new frontline education initiatives. This takes the Government’s total investment in early childhood education and schooling to $9.6 billion in 2012/13.

This Government wants to create a flexible, skilled, and professional workforce through these initiatives to support principals and teachers.

We are committing an extra $60 million to lift the quality of teaching in our schools. This is in addition to the $304 million we are spending on professional learning and development for teachers in primary and secondary education over the next four years.

Budget 2012 also sets aside further funding to support priority learners. This includes:

$83 million in school operating grants.

$51 million to continue the roll-out of ultra-fast broadband in schools.

$48 million to increase participation by vulnerable groups in early childhood education.

$19 million to support Māori-medium early childhood education providers.

The Government will provide extra parenting programmes and relationship education in secondary schools at a cost of $4 million over four years.

We will also support a variety of youth mental health initiatives with an extra $17 million over four years.

To increase investment in raising student achievement, and to manage the costs of increased primary-school-age children over the next four years, we are making small changes to current school funding ratios.

Mr Speaker,

I have already mentioned some of the new initiatives in tertiary education.

In addition, Budget 2012 invests in providing more pathways into work and further training for young people leaving school.

It provides an additional free 3,000 tertiary-based Youth Guarantee places at the cost of $37.7 million over four years.

The Government will also continue to better target student assistance to where it is most needed and ensure better value for taxpayers.

From 1 January this year, we implemented tighter income rules to ensure the student allowance is fair.

Budget 2012 confirms a number of further student loan changes from 1 April 2013, including:

Increasing student loan repayments from 10 cents in every dollar earned over the income threshold to 12 cents.

Widening the definition of income for student loan repayment purposes.

For student allowances, continuing the freeze on parental income thresholds until 31 March 2016.

Targeting allowances to first degrees only, and removing exemptions for long programmes such as postgraduate training, taking effect from 1 January 2013.

These changes are consistent with the Government’s intention to see better value for New Zealanders, ensure the longevity of the student loan scheme, and improve alignment with Working for Families and other social policy initiatives.

Mr Speaker,

It is concerning for our future that around one in eight New Zealanders aged 18 to 64 is on a benefit, and around half of them have spent at least five of the past 10 years on a benefit.

This Government has embarked on ambitious reforms focused on supporting New Zealanders out of welfare and into work.

The Budget invests $287.5 million over four years in the first phase of this programme.

This funding provides more education and training for young people. It will also focus on work availability and preparation for sole parents, widows, women alone, partners within the benefit system, and parents who have subsequent children while on a benefit.

The second phase of welfare reform will be implemented in July 2013. This will involve changes to benefit categories.

Both phases of the reforms are a shift towards a new investment approach to welfare.

The investment approach provides greater transparency over the long-term cost of welfare, and focuses government agencies on reducing this cost through employment support and training.

Mr Speaker,

Budget 2012 continues the Government’s policy of staying strong on crime.

The justice sector, including the Ministry of Justice, and the departments of Police and Corrections, is developing new ways of working together and making better use of existing resources. This includes more flexible funding arrangements and shared use of staff and assets.

This will allow the sector to focus on results – reducing total crime, violent crime and youth crime, and reducing reoffending. For example, the Policing Excellence programme helped reduce total crime by 5.6 per cent between 2010 and 2011.

As I’ve confirmed today, the Department of Corrections aims to reduce reoffending by 25 per cent by 2017.

To help achieve this, it will invest $145 million of reprioritised money from prison closures and cost reductions out to 2019/20 in rehabilitation programmes.

Modernising court services will ensure that people can access services faster and more conveniently.

Mr Speaker,

Working with non-government providers, the Government is committed to improving housing affordability and providing assistance to households in need.

Budget 2012 provides funding of $104 million for this over three years. This will be used to trial greater innovation, diversity, and scale in the social housing sector.

The Government’s housing policies will work alongside welfare reform to assist people towards independence.

We are working with the housing sector to use our $15 billion investment in state houses and almost $2 billion of annual subsidies more effectively to house people in need.

The Government will also work with councils to improve housing affordability for all New Zealanders.

Mr Speaker, the Government’s final priority is rebuilding Christchurch.

The Government remains absolutely committed to supporting the rebuilding of Christchurch, our second largest city.

The total cost of the damage is estimated at more than $20 billion, so it is without doubt the largest – and most complex – economic project in New Zealand’s history.

I want to pay tribute to the work of my colleague the Honourable Gerry Brownlee and the many public servants, community organisations, and families who have worked so hard to help each other through this disaster.

Considerable progress is being made.

Work on about three quarters of the 1,000 buildings required to be partially or fully demolished in the Christchurch CBD has been completed. Some 13,000 repair jobs are under way across greater Christchurch.

A significant number of infrastructure repair projects, worth about $820 million, have been completed, are under way or in the design stage.

And nearly 5,000 of the 7,000 property owners in the residential red zone have formally accepted the Government’s offer to purchase their properties.

About half of these owners have already settled, allowing them to move on and restart their lives.

Mr Speaker,

The Government is providing considerable resources for the Canterbury rebuild.

We set aside $5.5 billion in Budget 2011 for the Canterbury Earthquake Recovery Fund.

We established the Canterbury Earthquake Recovery Authority.

And we passed special legislation so the Government can step in where required to remove structural barriers to reconstruction.

Looking ahead, the Government is developing a blueprint for the central city to take forward the draft Central City Plan prepared by Christchurch City Council in consultation with the people of the region.

That blueprint will focus on anchor projects and precincts, and provide sufficient direction to encourage the investment needed for rebuilding.

The Government has assisted with land supply for housing by using special earthquake recovery powers to amend land-use rules to allow rezoning of residential subdivisions.

There is now a significant amount of residential land available in greater Christchurch - potentially 26,000 sections over the next five years.

About 6,600 greenfields sections are expected to be released to the market within the next two years.

The Government is determined that residents can rebuild and move into their new or repaired homes as soon as possible.

Finalising the remaining residential land zoning decisions and the settlement of outstanding insurance claims is therefore a priority.

Mr Speaker,

It is now almost four years since the collapse of Lehman Brothers, which set off the Global Financial Crisis and global recession.

Since then, we have witnessed significant disruption to economies around the world, and that is likely to continue for years to come.

The Euro area and the United Kingdom are going back into recession this year. The United States has low and uncertain growth.

By comparison, New Zealand is going through a moderate adjustment. We are avoiding the substantial cuts to public services and living standards that we are seeing in many other developed countries.

Our outlook is more positive than most. We are a food-producing economy on the doorstep of a rapidly growing middle class in the Asia-Pacific region.

Providing we stick to the Government’s balanced and ongoing economic programme over the coming years, I am confident we will grasp these opportunities.

Mr Speaker,

Budget 2012 sets out the next steps in that programme.

It’s about investing in our future.

It’s about implementing the Government’s plan to build opportunities for New Zealanders from all walks of life.

It’s about returning to surplus in 2014/15, when we can start reducing debt brought on by the recession and the earthquakes.

We are building a more productive and competitive economy, where New Zealanders have the jobs, higher incomes, and opportunities to get ahead in their own country.

We are delivering better public services within tight financial constraints. And we are firmly focused on getting better results for New Zealanders and their families.

We are helping to rebuild Christchurch and standing beside the people of Canterbury.

New Zealanders have shown great resilience through challenging times. Budget 2012 supports their aspirations for a brighter future.

Mr Speaker,

I commend this Budget to the House.

DAVID SHEARER (Leader of the Opposition) : If that does not get people flocking to the departure lounges all around New Zealand, nothing will. That is if they are still awake after that man just delivered that Budget. That man has delivered a Budget that has the worst growth in 50 years, has 50,000 people going to Australia, has delivered 50,000 more unemployed, and has 50,000 more people on benefits, costing us $1 billion. That is a zero growth Budget, a zero hope Budget, and a zero reason Budget for staying here in this country. I move, That the words after “That” be omitted and the following substituted: “this House has no confidence in this National Government led by John Key because year after year it has failed to deliver the economic growth and the growth in jobs, incomes and exports it promised, which has forced record numbers of New Zealanders to look for better opportunities in Australia, has failed to take the tough decisions needed to generate the economic growth to keep young New Zealanders at home, and, as a last resort, is selling our most valuable assets against the will of New Zealanders.”

The other day I popped into one of my local schools, and the principal was telling me that many parents at that school were coming to school with their kids who were really too sick to be at school, so that the kids could sit in the sick bay. The reason for that was that the parents themselves were too worried about taking a day off to look after their kids, and they had to go off and work. I also popped in the other day to get my car serviced and was chatting to the mechanics there. They are skilled guys, good guys. They have not had a pay increase in 4 years—4 years. GST has gone up, inflation has gone up, and their incomes effectively have gone backwards. All around the country there are people who are working hard, working longer, making the tough choices, and bringing their kids up in the best way that they possibly can. They expect a better deal—they expect a better deal. They expect the Government to keep its side of the deal.

What do they expect? Well, they expect to be able to send their kids to school and not have them sit in bigger classes. Class sizes have gone up—they have gone up. If your kids are in year 1, you might have a class size of 15. But if they are in year 2, well, those class sizes can go up to about 28. So if your children just happen to miss out on a very special, important element of learning, they will not be able to have the same opportunity to catch up as they did before. I do not understand why this Government has brought out this policy, because Bill English when he was spokesperson for education said small class sizes would lead to “better relationships between families, teachers and students which research shows is really important for achievement, particularly disadvantaged kids.” But Hekia Parata—and she must be the teacher’s pet; maybe she has got some sort of a thing with Mr English—is saying “Oh, Mr English, I know! I can raise class sizes for you. That will save a bit of money.” That will save a bit of money! Well, that does not give our kids the best start in life. I am talking about all parents across New Zealand, and I am talking about my kids as well. I am a parent; they are going to be influenced by this change, as well.

This is where the rubber hits the road. This is where the rubber hits the road for New Zealanders. The high-flying economics of a Budget goes over the heads of most people. But I tell you what they do pick up on. They pick up on the fact that their kids are going to have less of an opportunity now in schools than they did before.

That is not where the front-line cuts start and stop. And that is a front-line cut of our future—our future. That is a front-line cut of our future. But look at the other ones, such as the police: $400 million is going to be slashed out of the police budget. It is going to come off the back room, of course—the back room. But the problem with that is that the police have to go into the back room to do the job of the people who were once doing the backroom jobs. That is what is going to happen, and it means that fewer police are going to be on the streets looking after you and me. As for the Ministry of Foreign Affairs and Trade, what a debacle that has been. What an absolute and utter debacle that has been. Murray McCully, who has insisted on cuts to the foreign affairs ministry has managed to cut the very future of our trade relations with the rest of the world. In South America, for example, the number of our diplomats has been halved. That is the place where we are trying to negotiate a new trade agreement. It is the same with India. All over the world our future prosperity is being cut on the front line. Another front-line cut is in biosecurity. This is the very protection that keeps things like the Queensland fruit fly out of New Zealand. Fifty-four staff have been cut, $3 million has been slashed from that budget, and now we have a fruit fly infestation in New Zealand that has the potential to wreck our agricultural economy. This Government knows the cost of everything and the value of absolutely nothing.

We have heard the various projections from the Minister of Finance, but do we really believe them? This is the fourth Budget we have listened to from this Minister of Finance. This Minister of Finance promised in 2009 to deliver real GDP growth of 1.5 percent over the last 3 years; he delivered 0.6 percent. In 2010 National projected real GDP growth of 3.1 percent a year, and it delivered 1.3 percent. In 2011 National projected real GDP growth would rise to 4 percent per year, and it delivered just 1.1 percent. So why today would we want to listen to Mr English telling us that somehow this projection is going to be better in the future? After three times—after four times—you get sick of listening to these projections that never actually work out.

Today exports are down 17 percent—$800 million down. That is the record of this Government. But do not worry about that. Do not worry about that because it can still talk it up. In 2011 this is what Mr English said. He said the economy “has in prospect the strongest growth for a decade.” He said later on that New Zealand’s growth was accelerating. It was not; it was slowing right down. “Growth is expected to accelerate in the second half of 2011 and through 2012.” It is nowhere near it. “A recovery in activity is now expected from mid-2011, with economic growth rising … and peaking at 4.0% …”. It achieved, as I say, 1.1 percent. In Budget 2012, this year, here he is again: “The Budget documents will show we are likely to experience reasonably robust levels of growth.” “Reasonably”—what does “reasonably” mean? “Reasonably robust”—how do you have “reasonably robust” growth? Now he is saying that there is going to be a “moderate adjustment”. We have gone from “reasonably robust” down to “moderate adjustment”. At least Mr English is coming a little closer to the mark. The real mark is utter failure.

This Government in its term in office has delivered the worst growth in 50 years. Take a look at this graph. Here are the various administrations since 1957. Here is this Government’s growth record. Those people at the back are unlikely to see it. Yes, it is just above the line—just above the line. That is disgraceful. It is the worst growth in 50 years. Fifty thousand people are going to Australia, 50,000 more people are unemployed, and 50,000 more people are on benefits. Rather than the Government confronting the big issues that this country needs to focus on, on looking through this Budget you see can that what it is trying to do is nickel-and-dime New Zealanders. One of its big announcements is that the tax credit that it once gave to paper boys and paper girls is being cut. That is being cut. That is what we are shooting for. It has just cut that tax credit, but it is only if you earn $45 or less. That is the tax credit that has been cut. But the good news is—well, actually, there is a little more bad news about that, because it is going to be done retrospectively. I guess these people—these paper boys and paper girls—do not vote. I hope they remember who cut their tax credit. We are picking the pockets of our paper boys and paper girls around the countryside. But the really good news is babysitters will be exempt. So the Government does have a heart after all. Mr Australia—Mr Speaker—

Hon Members: Oh!

DAVID SHEARER: Wait for it. We could call—[Interruption] Thank you, Mr Speaker. I appreciate that. Perhaps Mr Key should be called “Mr Australia”. Fifty-three thousand people are going to Australia. That is a record. In New Zealand’s history, we have never had as many going to Australia as we have now. We have never had a bigger number. But listen to this. Who said this: “We’re here today in Westpac Stadium. It holds nearly 35,000 people. And believe it or not, the equivalent of this entire stadium—and more—leaves every year to live permanently in Australia … I’m convinced we can give them a reason, and a purpose, to stay in New Zealand. And that’s why I want to be New Zealand’s next Prime Minister.”

Hon Members: Who said that?

DAVID SHEARER: “Mr Australia”. That is who said it. Well, I can tell you that when it comes to 2014—and I let the Prime Minister in on a little secret—I have booked Eden Park for him, because he will not be able to fit everybody into Westpac Stadium this time round. I had a special word to the groundsman and he is going to roll out some spare seats, because even in 2 years’ time there is going to be more, particularly after a Budget like that. This is a zero Budget, and there is zero reason for anybody to stay here in New Zealand. I can tell you that one of the reasons the unemployment rate is so low is that we lose 53,000 people a year. The Budget will bring our unemployment rate right down, so congratulations to the Government on bringing that down.

National used to be a party of aspiration. I have not heard that word in a long, long time—aspiration. This was the party that was saying we have to be aspirational for New Zealand. It is actually shooting down to the floor now—shooting down to the floor—looking at Greece and saying “Thank God we’re not down there with Greece.” It is a little bit like my daughter coming home and saying: “Dad, I didn’t get bottom of my class, and I happened to beat the Greek kid in the corner as well.” That is not what I would expect from my kids and it is not what I would expect from a Government here in New Zealand, either. A party of aspiration? No longer. This is a party that is shooting for the lowest possible bar.

But it has got a 120-point plan. Anybody who ever worked for Merrill Lynch would call it a laundry list. It is the sort of list that you put on your fridge with a magnet, and you go through the list: “Sell off State assets—tick. Sell off pokie machines—tick. I must remember to put economic growth on there; I just have not got round to that yet.” But here are some of the Government’s growth ideas: “We can effect things like labour laws and if you look at the jobs creation that we have been promoting: the Skycity convention centre, more mining and exploration, Australian companies coming back … they will create jobs.” That is it? That is pretty desperate. A 120-point plan and that is all it is going to come up with—the Skycity convention centre, which is actually funded from the pockets of problem gamblers? That is it? That is the economic plan for our future? Australian companies coming here? That is great, but they tend to be ones that are coming here for our low wages. So we have got some call centres and we have got tobacco-packing plants. We will take the jobs, but what we are really shooting for is high-skilled, high-value jobs, not the sorts of jobs that this Government is prepared to allow Australian companies in for.

The worst thing about the economic plan of this Government is the sell-off of its assets, against the will of most New Zealanders. It says that mums and dads all over the country—“mums and dads”; is that not that a cutesy little saying—will be “at the front of the queue”. Which mums and dads? Which queue? Is that the queue of people waiting to get jobs at the local supermarket? No, it is not—no, it is not. Mums and dads will not be at the front of the queue, because there is nothing in the legislation that will actually guarantee that mums and dads are going to be at the front of that queue.

Yet, despite that zero Budget, there is no shortage of excuses—lots and lots of excuses. So we have the global financial crisis. Of course, that is being trucked out as the reason we are not doing so well.

Hon Annette King: I thought it was over.

DAVID SHEARER: That is a good question. The financial crisis seems to be trucking along nicely for this Government, despite the fact that Australia has upped us 6:1, Canada and the US 2.5:1, and outside Europe we are second from the bottom—second from the bottom—in terms of our economic growth. Of course, the other excuse is the tragedy that happened in Christchurch—and it is a tragedy. But you cannot have it both ways. You cannot blame our economic situation on Christchurch and at the same time say that our economic growth is dependent, somehow, on the recovery of Christchurch. This Government has rolled out the excuses. Yesterday we had the same old, tired excuse of this Government having inherited it from the Labour Government. The Labour Government actually left it a surplus—9 years of surplus—which it quickly ran into deficit.

This country needs smart, innovative companies, and I will congratulate the Government on its beginnings in terms of putting more money into science and innovation. That is welcome. But it cut it last year. Last year there was a $14 million cut. When you look at what Labour brought in in 2008, and at what the Government cut, we are still at less than half of what Labour brought in at the end of its time, even with what the Government is bringing in today. Half!

So we are not going to grow this country in the way that we should, with innovative, smart, high-value jobs. We are not going to get that sort of progress, where people can have the right education that they deserve. Out there, I know that parents are worried about their kids going to schools where they have to be in bigger classes. This Budget is more about what is missing than about what is in it—like monetary policy that makes sense. Superannuation is something that John Key puts his fingers in his ears and whistles Dixie about, but I tell you what: in 3 years’ time the entire superannuation budget will be larger than the education budget in this country. Then we will start seeing the difference between what the young people today have in terms of an education, or whether we have funding for our superannuation. This Budget is a zero Budget. It is a zero growth Budget. It is a zero hope Budget. And there is zero reason for people to stay on in this country. What they want to do is continue living here, working in high-value jobs, earning decent incomes, and leading decent lives.

Rt Hon JOHN KEY (Prime Minister) : That speech from David Shearer went about as well as the Facebook float did. All I can say is that that was a zero response to a zero Budget—not one single idea. The kindest thing I can say about that speech is it is 20 minutes of my life I am never getting back. Do not worry, one person liked it: David Cunliffe. He was licking his chops like Scar from The Lion King; trust me, he is ready to pounce on Simba over there. Seeing as it is a zero Budget and there is not a lot of money to spread around, let me give some free advice to David Shearer: when David Cunliffe has a shave, be worried, because he is coming after you. This is all very interesting because according to—[Interruption] Well, they were barking about that loudly out of the Skycity tent at the Rugby World Cup final. But do not worry, they will keep; we will come back to them.

According to David Shearer, New Zealand is not doing very well on a relative basis. That is his proposition. Well, the trouble is that to believe that, you have to live on “Planet Labour”. You see, this is the way it goes. On “Planet Labour” New Zealand was not in recession in 2008. We did not have an overpriced housing market that was getting out of control; we did not have an export sector that had been in recession for 5 years. On “Planet Labour” the previous Labour Government did not go to the 2008 election campaign and promise a deposit guarantee scheme that ended up costing taxpayers of New Zealand billions of dollars. On “Planet Labour” the global financial crisis never happened. You see, according to them on “Planet Labour”, Greece is this happy little place where ruins are the sorts of things you visit, rather than an apt description of its banking system. On “Planet Labour” the Christchurch earthquakes never happened—never happened. On “Planet Labour” trillions of dollars were never wiped off the global stock exchange. And on “Planet Labour” 24 is the number of people that the Skycity box can host for the Rugby World Cup final, not the unemployment rate in Spain. That is what it is like on “Planet Labour”.

The trouble is that that will not wash with anyone, because back in the real world New Zealanders actually know what is going on. They know there is a global economic crisis, and in their own homes they are doing exactly what this Government is doing. They are saving. They are paying off their debt. They are being conservative with what they do. In the real world New Zealanders in their homes know that you have to earn your way in the world. The only response they have on “Planet Labour” is to spend money that comes from someone else. You do not earn it; you just borrow it and spend it. In the end, when you spend more money than you earn, it is called Greece and you go broke.

David Shearer said there was not much to feel good about in terms of the New Zealand economy. Apparently, it is all bad at the moment. So let us have a look. According to a range of economists, over the next 3 years New Zealand will grow faster than the United States, the United Kingdom, the entire eurozone, Canada, and Japan. In fact, the—[Interruption] That is right. In fact—Mr Speaker, you were educated in Australia. You were not Mr Australia, although I am sure you would look good against the other contestants—

Hon Member: He would have won.

Rt Hon JOHN KEY: You would have won. In fact, we will be growing at the same rate as the minerally very wealthy Australia over the next 3 years. But David Shearer says that that is not good enough—that is not good enough.

Let us have a look at unemployment. Yes, the unemployment rate in New Zealand is higher than we would like, at 6.7 percent. Let us acknowledge that. But let us also acknowledge the following: more people have jobs in New Zealand than ever before in our history—more people have jobs. That is right. They are the facts. Over the last 2 years 60,000 jobs have been created in this economy—60,000—and 154,000 will be created in the next 4 years. More people are employed as a percentage of the population in New Zealand than in Australia—more people are employed. And thanks to the Minister for Social Development, there are a touch over 50,000 people on the unemployment benefit in New Zealand at the moment, which is 14,000 fewer than 18 months ago. Apparently, all that is not good enough!

So let us have a look at the unemployment rate just for a moment. New Zealand’s unemployment rate is lower than that of just a few countries. In fact, it is lower than that of Chile, the Czech Republic, Belgium, Canada, Finland—remarkably—Sweden, Denmark, all of Britain, America—[Interruption] It is true. It is also lower than that of Slovakia, Italy, France, Poland, Hungary, Estonia, the Slovak Republic, Ireland, Portugal, Greece, and Spain. And that is only including the OECD. They are all countries that have a higher unemployment rate than New Zealand.

The National-led Government has been very ably supported by our friends in ACT, United Future, and the Māori Party, and we thank them for their support and contribution to this Budget. They are sensible people who are committed to growth, jobs, and economic stability. So anyway, apparently—if I did pick anything up from David Shearer’s speech—on “Planet Labour” it is easy to create jobs, apparently pretty easy. So let us do a little test shall we? OK. So let us go through all the pro-growth initiatives and let us just see for a moment which ones the inhabitants of “Planet Labour” are in favour of. OK, so starting off, let me give you a small tip: it is longer than Letterman’s top 10, but we will come back to that in a moment. So, No. 1, do they support future intensification and development of our agricultural sector?

Hon Members: No.

Rt Hon JOHN KEY: No, they do not. No, they wanted to put it out of business last time. Do they want more mining or more oil and gas exploration?

Hon Members: No.

Rt Hon JOHN KEY: No, OK. Do they even want Australian companies moving jobs to New Zealand?

Hon Members: No.

Rt Hon JOHN KEY: No. Do they want welfare reform and mutual obligation?

Hon Members: No.

Rt Hon JOHN KEY: No. Did they support the 90-day probation period?

Hon Members: No.

Rt Hon JOHN KEY: Did they support any of our labour-market reforms?

Hon Members: No.

Rt Hon JOHN KEY: Did they support the $1.5 billion we put into ultra-fast broadband?

Hon Members: No.

Rt Hon JOHN KEY: OK. Do they support foreign investment in New Zealand?

Hon Members: No.

Rt Hon JOHN KEY: No. Did they support the 3,000 jobs that came off making the two Hobbit movies?

Hon Members: No.

Rt Hon JOHN KEY: No, they are Hobbit haters, as I said last year. Do they support the national convention centre?

Hon Members: No.

Rt Hon JOHN KEY: I tell you what, though, they will go to the opening, I reckon. Probably they will go to the opening. Well, that is assuming David Shearer actually knows that there is an opening, because apparently he did not know we were building a convention centre, which we announced in June with Skycity, and he went off to the world cup that was in October—apparently, anyway. Do they support public sector reform?

Hon Members: No.

Rt Hon JOHN KEY: No. Do they want a less onerous emissions trading scheme?

Hon Members: No.

Rt Hon JOHN KEY: No. Do they support the irrigation of the South Island or parts of the North Island?

Hon Members: No.

Rt Hon JOHN KEY: Do they support roads of national significance?

Hon Members: No.

Rt Hon JOHN KEY: No. Do they support—

Hon Members: No.

Rt Hon JOHN KEY: No, they do not. Exactly—they do not. Do they support reform of local government?

Hon Members: No.

Rt Hon JOHN KEY: No. And do they support the $5 billion to $7 billion coming out of the mixed-ownership model going into 21st century schools?

Hon Members: No.

Rt Hon JOHN KEY: That is right. They have agreed. They have passed the test. They do not agree with any pro-growth initiatives at all, not one of them. That is right. And David Shearer did not have one pro-growth initiative in his speech, but on “Planet Labour”—where the three Davids like each other and Grant Robertson is not really auditioning to be the next leader—money grows on trees and jobs are easy to create. I give up on them, because that is what the rest of New Zealand has done. It ain’t like that in the real world.

Let us go on to the Budget for a moment. It was a very sensible Budget for uncertain times, a very sensible Budget. Let us have a look at what it delivers. In health, over the next 4 years $1.5 billion will go into health—$1.5 billion. There will be more New Zealanders getting elective surgery—4,000 extra elective surgical operations. More money is going into cancer care. There is more money to support the people of New Zealand, following a Government whose first action was to fully pay for Herceptin for women in New Zealand who have breast cancer. Free half-hour doctors’ visits for under-sixes, more money for maternity care, more money for dementia care, and more money to eradicate a Third World disease like rheumatic fever—that is what comes in Budget 2012. And all of that new expenditure comes because this Government knows how to manage the economy. It does not just borrow money from other people; it makes savings.

Let us go to education—$512 million more over the next 4 years. That is a spend of just under $10 billion. Those members talk tough over there, but this is the party that is actually putting more money into early childhood education for vulnerable Māori and Pacific kids. That is what is happening. This is the party that is lifting participation rates for early childhood education. This is the party that is putting more money into school operation grants. This is the party that is putting more money into professional development, so that we can have better teaching outcomes for our kids. This is the party that is putting $1 billion into 21st century schools, and this is the party that is putting money into the youth mental health programme.

So let us talk for a moment about those class sizes. Let us have that conversation on nationwide TV, right here and right now, because this is what has happened. In the last decade the number of teachers in New Zealand has gone up by 12.5 percent, so we approximately have about 50,000 teachers in this country. In the last decade it went up by 12.5 percent. At exactly the same time, the number of children went up by 2.5 percent, and the outcomes we were receiving from those schools have broadly plateaued. So here is our chance. Here is our chance to actually focus on teaching outcomes and quality teaching for all of those 52,000 teachers and kids. Just so that we understand what is happening, if your child goes to school for 13 years—and we hope they do, in every one of those years—for 4 of those years out of 13, the class sizes will rise; in 3 of them they will actually fall; and in 6 they will stay the same. David Shearer said before: “Oh, by the way, it was 1:15 and it might go to 1:28 next time.” Well, actually, the ratio was pretty similar before that, and for 90 percent of New Zealand schools across the country the change will be either plus or minus one teacher. So let us answer this question: do we want a few more teachers in this country, or do we want to pour money into lifting teacher quality and teacher outcomes? If you do not believe me, in your workplace ask your mate this: do you want your child sitting in front of a teacher who is a really good teacher, who is committed to the outcome of your kid with quality, professional development, when there are 16 kids in the class, or do you want to have a situation where there are only 15 in the class, but the teacher is no good and does not get quality, professional development? Well, I know which one I would rather have.

Let us have a look at welfare. This is a party that is prepared to tackle the fact that 12 percent of New Zealand’s working-age population is on a benefit. It has to change; it should be a lower number. They deserve better choices and better outcomes for their families. We are investing $287 million into more childhood education, more training, and more education for those people.

This is a party that believes in science and innovation, and puts its money where its mouth is: $326 million into science and education, $166 million into the advanced technological institutes, $60 million into the national science challenge, $100 million into the Performance-based Research Fund, and more funding for engineers and scientists. Yes, there will be $5 billion to $7 billion coming out of the mixed-ownership model, and yes, it will go to building 21st century schools and hospitals and advanced technological institutes. This is the truth: on the balance sheet of New Zealand, the assets New Zealanders own will be going up over the next 5 years; they will not be going down.

Let us put it like this: the world is a pretty tough place and it has been tough for the last 4 years. Yes, there has been a global financial crisis. Yes, there have been earthquakes in Christchurch. Yes, there has been a recession that we have had to inherit. But in that time this Government has got on top of the mess we inherited from these people. We have got the export sector starting to grow. We are starting to properly fund ourselves. We will be back in surplus by 2014-15. We are protecting the entitlements of the vast bulk of New Zealanders, and in years to come when they look back on this Government will they say: “Thank goodness they are there and there is not all this debt.”? Or will they say: “We wish they had those people who live on “Planet Labour”, who just want to spend money from people who live on Planet Mars or some other place, and one day will have to pay it back with interest.”? That is not leadership; that is passing the buck to a future generation of New Zealanders. They are wrong. This is a good Budget for the times. Bill English has done a great job.

Dr RUSSEL NORMAN (Co-Leader—Green) : New Zealanders are looking to their Government for hope, but this Budget, I am afraid, is a “zero hope Budget”. The National Government is slowly grinding middle and lower income earners into the ground while giving generous tax cuts to the wealthiest. National is slowly entrenching inequality and undermining a fair go in a land that should be a beacon of fairness, opportunity, and sustainability. If there is a burden to be shared, then it should be shared fairly.

Today I will be discussing a Green vision of hope for New Zealand, but first I wish to acknowledge the land, the waters, and the natural environment of Aotearoa New Zealand—the foundation of our prosperity and wealth. I acknowledge the mana whenua of our country and Te Tiriti o Waitangi, the founding document of our nation. I acknowledge the generations of New Zealanders who have come before us, whose hard work laid the foundation for us today. I acknowledge those who are yet to come, and I hope we keep their interests at the centre of our thoughts. Finally, I acknowledge the work done by the Minister of Finance and the many public servants who worked on this Budget. We have our differences with the National Government, but the Green Party believes in a society where we can still respect those with whom we strongly disagree.

When this Government took office at the end of 2008 the New Zealand economy was in trouble. It had skyrocketing overseas-funded private sector debt—most of which fuelled the housing boom—and a current account deficit of dangerous proportions. Government debt was low, but it was about to rise. When the new Minister of Finance took over he told us that it was important to rebalance the New Zealand economy away from a debt-fuelled consumption boom to an economy with more savings and a better external balance with the rest of the world. We were pleased to hear those words and we agreed with him.

Now the Government needs to be held accountable; 3½ years later it is timely to ask whether the Government has achieved its rebalancing goal. Unfortunately for all of us the answer is clearly no. The current account deficit, the key marker of whether we are living within our means, is currently running at 4 percent of GDP, and Treasury is projecting it to increase to nearly 7 percent by 2016, in the figures that were released this morning. This one simple fact is an unmistakable sign of an imbalanced economy that is becoming only more imbalanced. It is matched by worsening international debt projections. A worsening current account deficit, as the Government has projected just today, means more debt and more of our land and productive assets being sold into overseas ownership. Budget 2012 fails to deliver any fundamental changes to the structural problems facing the New Zealand economy. National has failed, in 3½ years, to rebalance our economy, and under this Budget there is zero hope of it improving.

Moving from how the Government has managed the economy to how it is managing its own Budget, it is clear that it has made a number of poor-quality decisions that are now costing ordinary New Zealanders dearly. National has made much of the difficult fiscal position and has used it to justify services cuts and new user-charges for ordinary New Zealanders. National has blamed the global financial crisis and the earthquakes for the deficit. It is true that these events have had a significant impact on the Government books, but a large part of the deficit is due to poor decisions of this Government around revenue and spending.

Another feature of the revenue and spending decisions of Budget 2012 is that they appear to be driven by political imperatives rather than economic imperatives. For example, the Government’s decision to defer automatic enrolment into KiwiSaver is bad for the economy, but it will help get it into surplus by a whisker, which is a political imperative.

In the 2010 Budget National introduced income tax cuts targeted at high-income earners, and said it would cover the reduced revenue caused by the tax cuts by increasing GST—increasing the cost of living for middle and lower income earners. National’s 2010 tax cuts gave the chief executive officer of Westpac a $5,000-a-week bonus—an extra $5,000 a week—which was funded primarily by the extra GST on middle and lower income earners when they were paying for their weekly groceries. Aside from the grotesque injustice of this, the tax switch was not fiscally neutral as promised. After 18 months of operation the 2010 tax switch has cost about $2 billion. At a time of high debt, to borrow $2 billion to fund tax cuts targeted at the most wealthy is both obscene and fiscally irresponsible.

A Green-led Government would also be re-evaluating the quality of this Government’s spending. Looking at National’s spending decisions, it is hard to go past the reckless decision to spend $12 billion on new motorways, some of which did not even have a business case when National made the decision to build them. As the Minister of Finance admitted in the House yesterday, these projects have never been assessed against Treasury’s own guidelines for major capital spending; they were chosen for political reasons. Building new motorways not only is a reckless waste of precious taxes but is impeding the rebalancing of the New Zealand economy, because it locks us into oil dependence right when the IMF has predicted that the price of oil will double within the next decade. We already spend $8 billion importing oil per year. National is locking us into spending even more—money that simply flows straight out of our economy, worsening our current account deficit.

Another example of poor-quality spending is National’s decision to subsidise greenhouse emissions of intensive agriculture to the tune, in the current Budget, of about $1.1 billion over 3 years. National has put its hand in the pocket of ordinary mum and dad New Zealanders and is taking a couple of billion dollars to give to dairy corporations. By subsidising agricultural emissions we are locking our agricultural sector into old greenhouse-intensive farm technology instead of using the price mechanism to incentivise the move to low carbon pollution. This pollution subsidy is compounded by the $400 million that was set aside—which now appears to be delayed—for irrigation subsidies to intensify agriculture more heavily. Although dairy corporations are receiving billions in Government subsidies, pensioners are being asked to pay more for their prescriptions.

One of the most fiscally reckless parts of this Budget is National’s signature policy of asset sales. After driving the Government books deeper into deficit with irresponsible top-end tax cuts and poor-quality spending, John Key now tells us that we have to sell our assets to cover the fiscal hole that he created. In fact, asset sales make the Government deficit worse and the national accounts worse. As Treasury has set out in this Budget, selling assets would make the Budget deficit worse by about $100 million per year, as the lost profits far outweigh the cost of servicing Government debt. The research we commissioned from Business and Economic Research Ltd came to similar conclusions. Asset sales would also make the country’s books worse because the dividend streams flow over to the offshore buyers of the companies. As Business and Economic Research Ltd concluded, the flow of profits to foreign buyers would result in a permanent deterioration in the external deficit and the level of external debt. Privatising assets risks New Zealand’s opportunity to secure a share of the global clean-energy market, because it opens the door to those companies falling into foreign ownership. As we have seen with banking, foreign ownership turns key sectors of our economy into large capital drains rather than smart Green export platforms. The Green Party has joined with Grey Power, the Council of Trade Unions, Greenpeace, and other political parties to get over 300,000 signatures to force a citizens initiated referendum on asset sales. We will get the signatures, and we will establish clearly that the National Government has no mandate for selling the people’s assets. Most New Zealanders do not want their assets sold. It shows only how out of touch National is that it thinks mum and dad New Zealanders have loads of cash sitting around waiting to buy shares in the privatised assets. Most mum and dad New Zealanders are struggling to pay for the groceries for the kids, after John Key put up the GST to pay for tax cuts for Paratai Drive.

This Government has dug itself into a fiscal hole through poor-quality revenue and spending decisions, and now it is looking for someone else to pay the bill—that is, ordinary New Zealanders and, most important, their kids. Successive National Budgets have cumulatively resulted in a slow creep of wealth away from low and middle income New Zealanders to the well-off. First, the tax cuts targeted at the rich were part-funded by GST increases for everybody else. Now National is going back to low and middle income New Zealanders to take some more. It is going to make them pay a bit more on their student loan. It is going to cut their student allowance. It is getting rid of beneficiary mothers’ training incentive allowance. It has cut the funding for early childhood education again. People are going to be forced to pay a bit more for prescription charges. And the Government is increasing class sizes. The list goes on.

It is ordinary New Zealand families who are paying the price. Research released yesterday by the Green Party shows that an ordinary working family will be more than $11,000 a year worse off due to the cumulative Budget changes made by National, while high-income earners are better off by tens of thousands. Class sizes will not be increasing at King’s College when Hekia Parata slashes teacher numbers in public schools; it will be ordinary New Zealand families who suffer. An extra $2 for medicine might not matter to those on Paratai Drive, but for the average person on “Main Street” it can make the difference between getting the medicine they need or going without. The Government is passing the costs of its fiscal choices on to those who can afford it the least. It is not doing it in one big hit, but everyday New Zealanders are feeling the pinch and seeing whom this Government really works for.

In contrast, the Green Party is committed to reducing inequality in New Zealand and ending child poverty. We know that investment in the early years of a child’s life is absolutely crucial to reducing inequality, yet since 2008 the cost to parents of early childhood education has risen 20 percent under National. We know that many of our kids are living in temporary, unhealthy, and totally unsatisfactory homes. The Government’s own report found a shortage of 70,000 homes, with up to 20,000 households in extreme need, yet National chose to wind down its investment in social housing, leaving thousands of poor kids cold and waiting. They will be waiting a long time, after this “zero hope Budget”.

This Budget, like the others that came before it, is a threat to the environment. Our sparkling rivers and lakes are a key part of what makes New Zealand such a beautiful place to live in. Healthy rivers are essential for a healthy economy. Our “clean, green” brand underpins our agricultural and tourism exports, but our rivers and lakes are under threat, mainly from dairy intensification. Over half of our monitored rivers are unsafe for swimming, one-third of our lakes are unhealthy, and two-thirds of our native freshwater fish are at risk or threatened with extinction. National plans to make it worse by subsidising more intensification with no clean-water rules. It is not a smart way to farm for the long-term prosperity of the country. National is, effectively, mining our soils instead of farming them, and that is not all it is mining. The Government is doing everything it can to promote unsafe drilling and mining. From its pro - fossil fuel energy strategy to the bill on drilling in our exclusive economic zone and subsidies for oil corporations, it is clear that the Government’s priority is “Drill, baby, drill.” Unsafe mining is not the way to build prosperity in New Zealand. These projects will benefit very few people. Deep-sea oil will bring hardly any jobs for locals and hardly any royalties or taxes, and the profits will flow offshore, as the mining companies are mostly foreign-owned. The risks are high and they are real; the rewards will not even belong to us.

New Zealand’s future prosperity depends on investment in clean, green technology and sustainable jobs. The Green Party has a smart, Green economic plan for the New Zealand economy—a plan that takes our national debt seriously while moving our economy on to a more sustainable footing. It is great to see the announcement today that the home insulation programme that the Greens initiated will now reach over 230,000 homes. We are in Parliament because we want to look after New Zealand and all its people, and this scheme is an example of how we can work with parties across the political spectrum to achieve that. We congratulate National on doing that. It is a shame that it has chosen not to extend the scheme to another 200,000 homes over the next 3 years. Such an investment would employ 4,000 people directly, and 10,000 people if you include indirect and upstream employment effects.

There is a synergy between smart, Green economic objectives and the objectives of increasing the fiscal resilience of the Government in rebalancing the economy. When you look at our capital gains tax, for example, it enhances the fiscal resilience of the Government, but it also helps the economy rebalance by shifting capital away from the unproductive property sector. It also has the advantage of putting productive resource into the clean-technology sector, if we were to support that. A capital gains tax is also fair because it results in a decrease in inequality.

This is just one policy for a richer, greener New Zealand. There are many others: reprioritising transport spending, putting a price on the commercial use of water, boosting research and development, higher standards for fresh water, higher mining royalties and creating a reserves royalty fund with the proceeds, a real price on carbon, supporting a living wage, lowering fees on KiwiSaver accounts by offering a public option, and retaining our State-owned energy companies and refocusing them towards exporting their renewable energy expertise. I am not offering a single silver bullet but a number of practical, costed alternatives that will address our dangerously high current account deficit and get our economy on to a more resilient, sustainable, and fairer footing.

The National Government inherited a New Zealand economy seriously out of balance, living beyond its means, and then rocked by a series of earthquakes. It was a remarkable opportunity to remake our economy and put it on a more sustainable footing. It has failed to do that. When you inherit an economy that is broken, you have a unique opportunity to fix it. It is a moment when powerful vested interests are open to acting differently for the greater good of the nation. Unfortunately, John Key’s Government has done the opposite. Our economy is becoming more unbalanced, the Government is more indebted, and public assets are threatened with privatisation. The casino owners, the miners, the property speculators, the oil companies, those who pollute waterways or our atmosphere—they are all doing really well under John Key’s watch, but National has turned its back on the belief that we are all in this together. But it does not have to be that way. I believe we can have a country with a smart, Green economy that protects our natural capital, enhances our quality of life, and shares our prosperity fairly. Such a country is a place where hope returns.

Rt Hon WINSTON PETERS (Leader—NZ First) : Today the country heard the “back to the future Budget” from the National Party, as though it has been in some sort of time warp for the last 21 years. I can recall this Budget, because I have heard it before. I heard it back in 1991, when one called Ruth Richardson came here with the “mother of all Budgets”. It helped create hardship and misery, and tens of thousands of people lost their jobs, State assets were sold, and large chunks of the country were flogged off overseas.

Remember those quotes that National signed up to back then? All are repeated today, as though it has learnt nothing. Remember how National was going to solve all New Zealand’s economic woes and create a better future for all of us? This is what National said back then: “For too long we have struggled in a trap of economic stagnation and rising debt … No economic growth. Rising unemployment. And a huge overseas debt …”. Does that sound familiar? On New Zealand’s external debt, this is what it said: “We now owe more to foreigners, relative to the size of our economy, than almost any other country of our kind.” Does that sound familiar? On National’s vision back then—again repeated today—this is what it said: “A society where the disadvantaged have access to high-quality social services.” That tells you that back then National had a sense of humour, as well. It was repeated today. I will go on: “A society where workplaces are creative and dynamic; … A society that is prosperous, confident, and paying its way in the world.” Which society was it talking about? But I heard it all again today. And it went on: “to transform New Zealand from a declining, debt-ridden country into a dynamic, enterprising, and prosperous nation.” And on asset sales—this is the best of all—“These sales are designed to free the assets for more effective and competitive private sector management, … The whole economy will benefit.” Here again is the same old mantra, 21 years later. Lastly, it said on the fiscal position: “The improved fiscal position has resulted in major improvement in the outlook for public sector debt.” All repeated again today.

And from that “mother of all Budgets” came the glimmer of an idea for Ruth’s less-than-gifted colleague a young Bill English. Not only did he listen back then to that speech in the House; sadly, he actually believed it.

Hon Maurice Williamson: This member voted for it.

Rt Hon WINSTON PETERS: I can recall him and Maurice Williamson—

Hon Maurice Williamson: This member voted for it.

Rt Hon WINSTON PETERS: Well, thank heavens for Maurice Williamson. I can recall Maurice Williamson and Bill English coming out of the caucus row we had, and do you know what they said to me back then, when I said “Your economic policy’s rubbish.”? They said: “Winston, what are you going to say when it all works out?”. [Interruption] Oh yes, I remember. There is my evidence. “Winston, what are you going to say when it all works out?”. To which I said: “And what are you going to say when it doesn’t?”. And 21 years on, there he sits, representing nothing, standing for nothing, and those members have learnt precisely nothing in that time. Today, in a sincere tribute to Ruth, Bill has decided to reproduce her 1991 Budget. What an act of political courage, what vision, what insight! It shows that they have learnt nothing. We hear the same old rhetoric, the same old excuses, the same old, same old.

To be fair, though, this is a great Budget if you are not a pensioner with a big power bill. Last year 30,000 New Zealand households had their power cut off because they could not pay the power prices. To be fair, it is a great Budget if you are not an exporter trying to sell goods overseas with a dollar that is out of control, and without any Government support. It is a wonderful Budget if you do not have a student loan. It is a great Budget if you are not a mother or father with children to feed and educate. It is a great Budget for workers undecided about heading to Australia. It will certainly make up their minds. And it is a great Budget if you are not an elderly New Zealander with your grandchildren and children living overseas who knows that you are never likely to see them again apart from the odd holiday that neither you nor they can afford. It is a great Budget for those people.

New Zealand is living through its biggest economic crisis, as we know, since the Great Depression, and, as with last year and the year before, this Budget will simply make the situation worse. This crisis was created by financial manipulators in the United States. This financial crisis was the result of enormous greed—right out of power and out of control—in the States, and we all know who they were, and one of their former employees is supposed to be running New Zealand, but he is running New Zealand into the ground. This Budget is the latest example of New Zealand stumbling like a punch-drunk boxer from one panacea to the next. The reason why National has brought in this Budget is it simply has no ideas about how to deal with the situation. Its only answer is to privatise, sell, cut back, and hope.

The very rich will not be hurt by this Budget today.

Hon Maurice Williamson: Great Budget.

Rt Hon WINSTON PETERS: The National Party knows how to look after its mates. As Maurice Williamson just said, it is a great Budget, but he did not add “for his mates”. Remember how National was going to make New Zealand the financial capital of the world back then? Remember, Mr Williamson, how it was going to make New Zealand the financial capital of the world? And then just 3 years ago John Key gave that idea a rerun. What happened? He could not even get the cycleway sorted out. It is still not complete. Every now and then, you know, a light bulb goes off in the brains of the neo-liberal Neanderthals in the National Cabinet. If the country’s children acted like this, we would put them all on Ritalin.

Did you notice today that the cling-ons on the starboard bow—all along here—never got up to clap? Not one rose to clap. Even though they were extolled and lauded for their help for the National Government, not one of those members rose to salute John Key—or anybody else for that matter. Did you witness National’s backbench clapping today? You know, hands clapping up here; knees knocking down there. Let me have the list, please. First of all, this member, Paula Bennett, because of this Budget, is going to be gone. Remember her? The Kate Moss lookalike. She is definitely gone. Next election, because of this Budget, she is out of here. Then there is somebody you have never seen before—“Miss Invisible”, Nicky Wagner, from Christchurch. She is going to be gone—out of here. Then you have got “I work for the bosses.”—this woman. Remember that? You ask me which one; I do not know. But this one here, Kate Wilkinson, she is gone. Then you have got this one, who had a brief political flutter—the one from Auckland Central. Most definitely, because of this Budget she is going to be gone—out of here.

Then you have got “goodbye limousines” himself, Pita Sharples. He is going to be gone, as we all know. Goodnight the good life—all gone, out the door. Then you have got “Mr Somersault Whatever He Can”—Peter Dunne. He is gone. He is definitely out of here. I want you to see it because it is important. I hope it is on national TV, so you get to know what is going to happen here shortly. Then you have got “My life is tough at the bottom”, Te Ururoa Flavell—he is going to be gone. There is no way the Māori people are going to suck up to that Budget and let him get away with it. He is definitely going to be out of there. Then we have got the possum caught in the headlights, John Banks—he is definitely gone. He is definitely on his way out.

And this one is going to be very sad because this one is all about paradise lost—he will be gone. Sam Lotu-Iiga is going to be out of the way. I like you, Sam, but your party let you down and you should have paid more attention at Budget time.

Then you have got “I’ve had enough of this already.”—Tariana Turia. She is gone. She will not be able to take any more of this, because this is embarrassing. It is embarrassing to be seen to be signing up to that sort of economic rubbish and hoping to win an election.

But that is not all; you have got these ones here. These are on the list. This one here, Melissa Lee, is No. 34—hello Pyongyang. No more National Party now. Then you have got Kanwaljit Singh Bakshi. Is there another corner dairy available? He will be on his way. There is no way he can last—not with a Budget like that. Then you have got Jian Yang. I hope there is a Chinese restaurant in Dominion Road still not taken up yet. But he is going be gone as well. Nice men, but they are going to be gone. Then you have got Alfred Ngaro. No more “kia orana”. The man from the Cook Islands, he is gone, because that is what happens when you are careless about a Budget. Then you have got—if you have seen YouTube lately—“Miss South Carolina”, Katrina Shanks. Have you seen the YouTube interview? She is gone. And then “Uncle Tom”—Tau Henare—needs a new job. He is definitely going to be gone. And the man with the unfortunate name—nice guy—from the West Coast called Chris Auchinvole. A very unfortunate name, that. I will not say any more than that. And the last one is the ventriloquist’s dummy—Paul Goldsmith. He definitely is going to be gone. This man is definitely going to be gone.

You see, the point is they have not been paying attention. National is spending tens of millions of dollars dragging us into free-trade agreements that make New Zealand look like some sort of international knock shop. And in the meantime the exporters, the manufacturers, the provincial engine rooms of the economy, are totally forgotten. Look, today in the paper this is what this man said. He is hardly a New Zealand First or Labour supporter, I do not think. The Chief Executive of the New Zealand Manufacturers and Exporters Association, John Walley, said he did not have high hopes. “Will it do much for growth, no, because the Government has resiled from changes to monetary and fiscal policy … We will see much more of the same, widening current account deficits, more borrowing and more pressure on the currency [and] lower returns to exporters.” All there in a nutshell. My advice to him is wake up and smell the coffee, and go and vote New Zealand First. He has a chance here.

Every month we lose a bit more of our manufacturing base. Every month another plant closes and more workers lose their jobs. This happens because our currency is way overvalued. It suits the speculators and currency traders—the sorts of John Keys of this world. He made his money in that sort of exploitative, greedy, corrupt environment, and we all know it, because Merrill Lynch had to be bailed out by the American taxpayer—as did the financiers and the overseas banks. This Government drools over mining in our conservation estate, and it gets excited about fracking for oil or drilling in a pristine ocean setting, but it will do nothing to keep one factory open or help one exporter earn one more dollar or keep one more job. Tough times are ahead. Dairy prices are falling. We are staring down the barrel of really hard times. The real people in heartland New Zealand did not create these problems, but this Government is going to make them pay for it.

You know, advanced economies like Singapore, Sweden, Germany, and Norway have two things in common. First of all, they have high savings—far greater than 10 percent of their GDP. Also they also have great manufacturing bases—far greater than 25 percent of GDP. And we in New Zealand were once like that, when we were one of the greatest countries on Earth. We had savings well above 14 percent. Today they are negative. We had manufacturing as a percentage of GDP at 30 percent. Today it has now dropped to 13 percent. There sits Bill English, and the National Party front bench, and John Key, and they have got no idea what they are going to do about it. I mean, you do not have to be a rocket scientist, but I heard not one word about how they are going to redress these two critical factors to make us like those great countries. Once we were greater than all those countries.

We will never get rich again without tax policies that encourage high savings, research and development, and investment in productive plant assets that create high-margin exports and jobs. We will never get rich when we flog off our timber in its most raw state, without any added value. We will never get rich with a fishing industry part-owned by the Japanese, or using foreign rust buckets with poorly cared for kamikaze crews. We will never get rich with the great Marlborough wine industry, like all the others, up to 50 percent foreign-owned, and getting worse. We will never get rich with a political party, with its cling-ons, who has learnt nothing from this disastrous experience. We will never get rich if we ignore the need for new Kiwi IT industries to bloom and grow in a sympathetic tax environment that keeps them here, that also starts up the industry yet gives them reasons to stay.

To be fair, though, this Government does one thing really well. The millions it spends on public relations, spin-doctors, consultants, media manipulators, and navel-gazers creates an appearance of normality where chaos prevails. It is spending $120 million just on selling these assets—$120 million just on selling these assets. I am looking at the press up in the gallery. There is not one person there who could not do the job for free. Make an application, because, I tell you, this is exploitation of the very worst sort. And do you know what the $120 million is going to? In some cases to Aussie banks to give us independent advice about how we should sell the assets. We are going to give Aussie banks all these millions to give us independent advice about how to sell the assets.

This is a rotten Budget. It contains all the putrid elements of 20 years of failure. It did not work in 1991-92, and it will not work 20 years later, in 2012. But there was one great benefit from the 1991-92 Budget, and do you know what it was? Well, we booted the legs out of first past the post, and we got MMP. There was one great benefit. We saw these people sell the party down the line—as Maurice and them all did. They could not wait to sell the party out, and down the tubes they went. They went from the biggest victory ever in 1990 to 3 years later a hung Parliament and MMP. So there will be some good coming out of this, and do you know what it is going to be? An early election. For 21 years the Minister of Finance has come to Parliament at great expense to the long-suffering people of Dipton, and the rest of the taxpayers, and guess what he has learnt? He has learnt absolutely nothing in all those years since Ruth gave that stupid Budget.

But, of course, who else is in charge of this? Well, “Mr Spray and Walk Away” himself. Someone who was headhunted by, of all people, Michelle Boag, who was found to have tried to corrupt a commission of inquiry in this country. Well that did not stop her from going on to be the National Party president. She was caught red-handed trying to corrupt the wine-box inquiry, and she headhunted him. How appropriate. He is a man who trained in principles and ethics and sharp business practice at Merrill Lynch, an outfit engaging in every shonky business practice that almost collapsed the Western society and economies back in 2007-08. That is his background. I know that there are people in this country who think: “Well, he’s wealthy; he must be good.” But how did he get his wealth? If you are one who salutes Merrill Lynch, then, frankly, you have no idea how damaging it has been to Western society and to ordinary people’s lives, to people who in the main have lost, in many cases, everything they ever had, because of this greed. That is the fact of the matter. He is a man whose time is well up, and an early exit now awaits him and his incompetent party, because, frankly, this country wants leadership, not someone who does this in this photo—minces and simpers around the country. He will not miss a photo opportunity for anything. He goes to the opening of an envelope. But when it comes to the tough issues, he is never there. He is a man who has actually put on All Blacks gear and modelled it, but then he got confused as to who had just won the Rugby World Cup, so he ended up shaking hands with both the president and the captain at the same time.

I say that their time is up, because they have proven in their fourth Budget that they have not got any ideas to be of benefit to their people, and the sooner they go—and I believe that it will be long before 2014, when this term of 3 years is up—the better for everyone concerned.

Hon Dr PITA SHARPLES (Co-Leader—Māori Party) : Tēnā koe, Mr Assistant Speaker. Tū atu au ki te kōrero ki te Tahua Pūtea nei mō te Pāti Māori. Tuatahi, kua oti kē tā mātau mōhio ki te take he tahua pūtea korekore ai i tēnei wā. Nā reira, kāre mātau e ngau tuarā ki te rū whenua ki Ōtautahi, ā, ki te hekenga o te ōhanga o te ao, me te whakapaunga o ngā pūtea e ngā iwi o Aotearoa ki te hoko whare, me ērā atu āhuatanga. Nā reira, nā tēnā kei te mōhio mātau he tahua pūtea korekore tēnei, nā reira, kei te kimi mātau i ētahi hua mō tō tātau iwi.

Engari tuatahi, hari koa mātau i whawhai kia pupuri tonu kia pupuri tonu ki te kotahi rau, ono tekau mā whā miriona taara mō te Whānau Ora nā te mea, ko te Whānau Ora he kaupapa matua, ehara mō te Pāti Māori anakē, ēngari mō Aotearoa. Nā reira, tēnā te mea nui ki ahau i tēnei wā ahakoa, he tahua pūtea korekore kua mau tonu ki tēnā pūtea.

Te take i tae mai te Pāti Māori ki te Pāremata, kia noho mātau i te tēpū, ahakoa ko wai te kāwana. Nā te aha? Kia riro mai ētahi hua mō tō tātau iwi, me te manaaki, tiaki i te hunga i kiia nei, ko te hunga rawakore. Nā reira, koinā tāku e kī atu ki a koe, kei te noho tata mātau me te Kāwanatanga i tēnei wā ki te whiwhi i ēnei taonga mō tō tātau iwi.

[Thank you, Mr Assistant Speaker. I rise to speak to this Budget on behalf of the Māori Party. Firstly, we knew beforehand why this was going to be a zero Budget at this point in time. As a consequence we will not be doing any backbiting about the Christchurch earthquake, the global recession, or how the people of New Zealand spent money purchasing houses and other things. And because of that, we knew that this would be a zero Budget and we looked for ways that would create benefits for our people.

But, first of all, we were pleased that we fought to hang on to the $164 million for Whānau Ora because it is a major initiative, not just for the Māori Party but for New Zealand. That is the most important thing for me at this moment, even though this is a zero Budget. We have retained that funding.

As to the reason why the Māori Party came to Parliament, it was so that we could sit at the table, regardless of who the Government was. Why? To enable our people to receive benefits and to enable those without to receive care and protection. So I say to you that we are working closely with the Government at this point in time to receive these precious essentials for our people. ]

So it is with the knowledge of the state of the country’s economy that we come to speak to this Budget, and to tell you that we are pleased that we have been able to make some headway, i.e., in getting some assets for Māori at this troubled time—for example, our fight against rheumatic fever. It has taken a few years to double the amount of funding. Instead of $12 million we have got $24 million now going out, because Māori are 23 times more likely to get rheumatic fever, and Pacific Islanders are 50 times more likely, than other ethnic groups. The impacts of this disease are really serious and long term. Approximately 145 people die each year from that disease. Worse still, it is a disease of the Third World, of developing countries, so it should not even be here.

Clare Curran: Improve the housing.

Hon Dr PITA SHARPLES: Housing is a very important thing, and that is why we have supported the social housing fund.

Clare Curran: Not enough.

Hon Dr PITA SHARPLES: True; it is not enough. It is a start, at least. We have turned towards that, and we are hoping that we will have a say, or our people will have a say, in the development of housing. But not only that, there is the Warm Up New Zealand programme. We have had a significant effect on the Warm Up New Zealand programme. I know that we have now reached 150,000 houses that have been warmed up, and we have added 20,000 of those houses to that programme, the Māori Party has, so we are pretty pleased that that has happened.

Two nights ago I launched a cadetship programme whereby 50 trainees, and they are actually in work, have the desire to go on to pursue a career and a degree in the electricity supply industry. We had companies like Contact Energy, InfraTrain, Mighty River Power, Northpower, Transpower, Vector, and so on, who took on Māori trainees with a view to guiding them into the industry. That was the end result of 150 cadetships that we have launched. And today I announced another 250 Māori cadetships, for Māori to begin this training in various occupations. That will get 1,000 into those positions over 4 years. Hopefully, in a year’s time we can match that with another $10 million, to get another 1,000. These are the kinds of things that the Māori Party has been working on.

As one who has spent a lot of time on rehabilitation programmes in prisons, I am really pleased that we have been able to find $65 million to go towards rehabilitation programmes, which include drug programmes, job training, education programmes, and actually getting people into work. It is not going to be an easy programme, because when you do things behind the wire there is a prison culture, which makes it very difficult. But at least it is a big change from the path that the Government has taken in recent times of the hard line on imprisonment. So that has got to be a good thing that has happened there, for us.

I would like to talk about the tobacco measures. This work has been led by our party ever since we got into Parliament. We believe that we should have a drive to cease smoking in this country, on the grounds of what smoking contributes to ill health and the related diseases that it accentuates. We are proud to say over each of the next 4 years there is going to be an increase in tobacco prices of 10 percent. So I am telling smokers now to just get ready to pay more, and more, and more—it is cumulative. We are also proud of the $20 million that the Government has put forward for a new innovation called Pathway to Smoke-Free in 2025. This is a good thing. It is interesting that an Otago University study showed that even smokers recognise that these moves to make tobacco sales tougher, including plain packaging, which the Māori Party supports, have got to be a good move for New Zealand.

There will be $132 million for the disabilities programme. Tariana Turia is the Minister for Disability Issues. We all know that this will help with their way of life. It is quite a lot of money, but it is a need that has to be met.

There will be $7.6 million for Enviroschools. We have championed the funding of Enviroschools, Kura Taiao, right from their beginning. As far as I can tell, we are the only party that has done that until now, when the National Government has come in behind us and with us, as partners, to float this programme for another 4 years, and allow the programme to grow. What is good about Kura Taiao is that it teaches children respect for Papatūānuku and Rangi, Sky Father, and it also teaches them to grow food, whakatupu kai, and to learn about the environment and preservation. It is an excellent programme. It is a very good one.

Catherine Delahunty: Yes, it is. We started it.

Hon Dr PITA SHARPLES: Well, I have been going around the schools now for 5 years, and this is my thing. So this is it, and we launched this programme out at a kura just last week. So these are good programmes that we have launched, despite it being a zero Budget and a hard time for us.

In education there are many benefits that have come through this Budget. Although it is reorganised money, nevertheless this is what is going out for Māori: $90 million to improve Māori-medium early childhood services; for kōhanga reo and te puna reo, another $8.5 million in resources to support that learning; $50 million in equity funding, especially with te reo and tikanga Māori; and $33 million to lift Māori achievement in mainstream schools. I might just talk about that, because we have instigated a programme called Reading Together, and we trialled it in two areas. It was so good in bringing mothers and parents into the school to help their children with reading that now, with this Government, we have put it into every—and I mean every—decile 1, 2, and 3 school in New Zealand. This has got to make a major change in the reading ability, and therefore the comprehension and learning growth, of our children in schools.

There are other things, but I see you waving at me, Mr Speaker, so, thanks very much for the opportunity to talk on the Budget. Although, again, these are hard times and it is a zero Budget, there are benefits in there for people, recognising the situation that we are in. Kia ora.

HONE HARAWIRA (Leader—Mana) : Kia ora, Mr Speaker. Kia ora tātou katoa e te Whare. We have heard what National’s Budget will be for the next 12 months. But before we look forward, I suggest we take a good look at where we are right now. We have got 160,000 unemployed, and another 107,000 who cannot get enough work. We have got 500,000 people earning less than $16 an hour. We have got 200,000 kids and their families living in poverty, right here in Aotearoa. Because of all that, we have also got 52,000 Kiwis leaving for Australia every year, because the wages are higher, there are heaps more jobs, and the first $18,000 is tax-free. Māori are leaving in their droves, because they are getting a chance to show what they can do away from a deeply racist society. I say to them all “Go, with our blessings. Flourish and succeed, and then come back one day and turn this place on its head”. So that is where we are right now.

Where is it that this Government is taking us over the next 12 months? What is the nature of the Budget it proposes to help rebuild our nation? Well, Bill English calls it a zero Budget, and for once I suspect a lot of people agree with him, because it is certainly a Budget that offers zero opportunity, zero growth, zero solutions, and zero hope for the thousands of Kiwis who are asking why they bother to stay here. Yes, there is a global financial crisis, but that does not mean we have to follow the failed austerity policies from the other side of the world. The fact is that we have been conned into thinking that a zero Budget is what we need to get back into the global game, to become a player again in the global economy.

But just what is this zero Budget, and what does it mean for ordinary New Zealanders? Well, what it means is that if you want money for health, you are going to get zero; if you want money for education, you will get zero; if you want money for housing, you will get zero; if you want money for decent wages, you will get zero; and if you want money for old people, you will get zero. Of course, the Māori Party insists on being an equal coalition partner, so it got zero as well. There are zero dollars for kōhanga reo, zero dollars for kura kaupapa, zero dollars for wānanga, zero dollars for hauora Māori, and now the Māori Party can boast that it has also got zero dollars for marae development, Māori employment initiatives, Māori economic development, Mātauranga Māori, for implementing the United Nations Declaration on the Rights of Indigenous Peoples, for cultural and intellectual property rights, for the right to te reo Māori, for Māori broadcasting, and for Māori land resource development. All the Māori Party got was a squeak for its flagship programme, Whānau Ora. As for Te Puni Kōkiri, the future is even worse, because not only will it lose money but also it will lose many of its programmes and whole bunch of its staff, as well.

You see, what this whole zero Budget beat-up is about is making poor people think that they have to give up something just like everyone else, when in fact they are the only ones giving something up. The rich are giving up bugger all. In fact, with the assistance of this National Government, rich people will still be able to play the financial markets and pay no tax; finance companies can still fail, knowing that National will bail them out; and company directors can steal hundreds of millions of dollars and keep their knighthoods, while poor people steal from a dairy and go to jail. Wealthy private contractors already control much of our health sector. Now they are lining up to take over our education system, run our prisons, and take over accident compensation, as well. Rich people here pay a lower tax rate than in France, Australia, Germany, Ireland, Japan, the Netherlands, the UK, and even the USA. The Government is proposing to let big business walk away from wage negotiations, while fining workers for daring to strike. Rich people will be the only ones who can afford to buy our State assets. And, as we have seen just over the past few days, filthy rich people with filthy little minds will still be able to give the unbackable ACT Party unbelievable amounts of money to do unspeakable things to Māori, while the Race Relations Commissioner huffs and puffs and does nothing about it. Somehow this whole zero Budget thing seems to zero in on only the poor and the dispossessed.

So what does Mana think we should be doing? Simple. Ignore the demands to cripple the poor, to keep the rich afloat—that was the solution they tried in Europe, and the people over there are finally waking up to the fact that it ain’t working. Then redistribute the wealth to ensure that all New Zealanders can become positive contributors to the nation’s economy. Yesterday Bill English called on Mana to support offshore oil drilling if we really support job creation. Mana’s response is that we will not be supporting offshore oil drilling, because it is not about job creation; it is about wealth creation for overseas businesses that this Government licenses to rape our seas, leave the mess, and sail away with 94 percent of the profits. Mana’s response is to say we should tax the rich and free the poor, reverse National’s $2 billion of tax cuts to wealthy New Zealanders, lift the tax rate for the super-rich from 33 percent to 45 percent, establish a proper capital gains tax under which all income regardless of where it comes from is taxed at the personal tax rate, replace GST with a financial transaction tax which will put money straight into the hands of the poor, reduce speculation on the Kiwi dollar, increase our export earnings, commit at least 20 percent of tobacco taxes to smoking cessation programmes, make the first $27,000 a person earns tax-free so that everyone gets a decent start in life, and here is a biggie: spend whatever it takes to eliminate acute rheumatic fever.

At the moment 98 percent of those who get this disease of the super-poor are Māori and Pacific Island children. If it were Pākehā kids suffering, I guarantee it would be on the front pages of the nation’s papers today, the first item on the news tonight, a national scandal tomorrow, and by next week legislation would be passed to eliminate the problem. A measly $3 million for throat swabs just because the kids are brown is a bloody disgrace, and is an indictment on the racism that underpins the way in which health funds are spent in this country.

We should help new mums get a start in life by offering them assistance with newborns instead of contraception, and helping them with money for their kids to go to school. It is not hard; it is what they do in Australia. We should drop the lie about bigger classes being good for a child’s education. The research does not support it, teachers do not buy it, parents do not agree with it, and I bet no Government Minister is going to let their kids get put into bigger classes. If you are not going to have it for your kids, do not impose it on anyone else’s. We should make it easier for kids to go to university, by increasing access to student allowances, and extend student allowances to cover postgraduate study. We should lift the minimum wage from $13.50 an hour to $20 an hour. We should launch a programme to build 20,000 State houses over the next 2 years. This would instantly reduce unemployment and create apprenticeships in building, plumbing, and electrical work, and in painting and cabinetmaking. It would be a huge social and economic investment in the future of our nation. It would create jobs, begin to lower our startling levels of homelessness, and reduce our problems with the poor, and it can all be paid for by people renting their houses.

We should cancel prescription charge increases, because they hurt poor people and old people. Here is an email I got from a constituent just yesterday. It reads like this: “Kia ora rā. My mum is 80 this year, worked two jobs most of her working life to feed us when we were kids, and still feeds her mokopuna from her garden. She turned her hot-water cylinder off 3 years ago when her partner died, to keep the power bill down. My mokopuna went to stay with her one night and said ‘Aw, I had to have a cold bucket-bath at Nan’s.’ My mum and her peers are really stressed about the $2 hike in prescriptions. Like most elderly, she takes up to 10 pills a day.”

These are common-sense proposals, which a generation ago would have been mainstream policies to help build a decent New Zealand. We cannot go back to the past, but we can bring forward the values of previous generations to turn our future round. Tax the rich and free the poor. It might sound like a radical suggestion in this House, but it is one that is gathering strength on the streets of this country. Kia ora tātou katoa.

Hon JOHN BANKS (Leader—ACT) : Let us start with one indisputable fact and one ACT Party proposition. The indisputable fact is that 49.9 percent of every dollar spent in New Zealand was spent by the Government or an agency of the Government—50c in every dollar. Now for the proposition: ACT believes that taxpayers can spend their money better than any politician or collective group of politicians in this Parliament. We believe that hard-working New Zealanders can spend their money better than anyone in this Parliament. There are many good things in this Budget. Compared with the Budgets Labour gave us, particularly for the last 4 years of the Helen Clark Government, this Budget is a very sound and sensible document. Here is another indisputable fact: under Labour, core Crown expenditure increased from $35 billion to $64 billion from 2000 to 2009. That is a $29 billion increase over 9 years. The total expenditure under this ACT Party - supported Government has risen only $8 billion in four Budgets. Beneath that headline figure are many good stories that this Government is doing with less. This Government clearly understands that the proposition from the other side of the House today that you can borrow more, spend more, and tax more to get us out of our small corner of the world in the global recession is mistaken.

The welfare reforms for which the ACT Party has long campaigned are a welcome change. After 20 years of no inflation adjustment, raising the price of prescriptions by $2 is just common sense. It frees up taxpayers’ money and improves incentives to use medicines well. The parliamentary Opposition would say let us go to the Crown account and borrow more money each week to fund everything that everyone thinks they need. We in the ACT Party are hopeful that this Budget heralds the beginning of a new era in education, an era in which we accept that teachers can make a difference and we pay for them to make a difference. We believe that teachers can make a difference, and we want to pay teachers to make a difference.

The announcement that we will fine-tune the Public Finance Act is very good news—fine-tuning of the Public Finance Act. New Zealand has a growing tradition of better fiscal performance through better financial reporting and that goes back to the 1990 Government, when I sat over there in the 1990 Government. This Budget makes major beneficial additions to those traditions. [Interruption] I want the Opposition to listen to this because it is critical stuff. Treasury produces a triennial 40-year forecast of New Zealand’s finances. The first one in 2006 was called New Zealand’s Long-term Fiscal Position. In 2006, Treasury predicted that if we carried on business as usual—if we carried on with a Helen Clark Government and a Michael Cullen financial ministry—then by 2050 we would end up with Government debt at 106 percent of GDP. That is exactly where Greece was before the collapse.

The next report in 2009 makes more interesting reading. It is called Challenges and Choices: New Zealand’s Long-term Fiscal Statement. That report said that under spending patterns present in 2008 and 2009, we would have public debt of at least 223 percent of GDP by 2050—223 percent. Under this Budget, and this National Government supported by ACT and my other friends here in this coalition, we will well and truly have all of that structural debt repaid by then. We will not have public debt at 223 percent of GDP by 2050. This is the beginning of saving our great-grandchildren yet to be born from having to foot the bill of the interest costs of the massive debt that the Labour Party and its friends over there would ramp up on their backs.

The message is clear: if we return to the spending patterns of the previous decade of Labour Governments, then, as Jane Clifton put it, “PIGS-R-US”. That is what Treasury would be calling future forecasts if the parliamentary Opposition was on this side of the House today. Can you imagine increases in taxes, capital gains taxes, everything-that-moves taxes, more borrowing, more spending, and more handing out? We would not be the Government spending 50c in every dollar; it would go to 55c, 60c, 70c. The Russians have plenty of evidence that this has never worked.

The ACT Party believes that we can do better. Labour introduced $15 billion of completely new spending in its first four Budgets—$15 billion. As we were going into a global recession, it went out and spent more and more, borrowed more and more, and taxed more. The ACT Party has supported the coalition Government’s introduction of only $750 million in its first four Budgets. This Government has spent only an additional $750 million in its first four Budgets. We need to reduce expenditure because every dollar the Government spends is a dollar taken out of the pockets of a hard-working New Zealander. That is a dollar that could have gone towards a weekly grocery bill. It is a dollar that could go towards a kid’s school shoes. It is a dollar that could have been invested in starting up a business. It is a dollar that could have gone into savings for retirement. But these people want to take all those dollars, and they want it distributed. That is called middle-class welfare, and it does not work, and it is unfair.

Last year the Government’s financial statements recorded that 49.9 percent of the New Zealand economy was the Government. The ACT Party says that is wrong. The ACT Party says we have to reduce the size of Government, reduce the size of the State, get off the backs of the workers, and stay out of the lives of business people, who create wealth and jobs, and make sure that we give them a fair go. These people opposite believe they know best, and the bottom line is that they believe that they can spend your money much better than you can spend your money. So we say, today in this Parliament in this first Budget debate after 12 years’ interregnum, roll back the excesses of Working for Families. Roll back the election bribe given to our most able earners in the form of student loan interest write-offs. Roll back the pension age to 67, as so many of our trading partners have done, and the Retirement Commissioner believes we should do—that would save $1.6 billion a year. Roll back free doctors’ visits for millionaires and the early childhood education funding, which was almost entirely captured by families already using early childhood education.

We aspire on this side of the House to a New Zealand where people who work, save, take risks, raise their families, are good citizens, and invest are rewarded. That is what we aspire to. We aspire to hard work, savings, risk taking, investment, and hard work. Less Government spending means more private sector growth and more money left in New Zealanders’ pockets to reward their hard work. We say to the people opposite to get off the backs of the taxpayers and let them spend their money as they see fit, because they have done the hard graft to earn it. It would be a New Zealand where the tax wedge separating effort from reward would be thinner. That tax wedge from reward and effort must be thinner, and New Zealanders’ pay packets must get thicker.

I finish as I began: hard-working New Zealanders can spend their money much better than the Labour Party has ever spent their money. And remember this: any Government big enough to give you everything you want is a Government big enough to take from you everything you have. The ACT Party supports this Budget and we will keep supporting Budgets, and sensible Budgets, for the benefits of hard-working New Zealanders. This is a good start in difficult circumstances. I am glad I am on this side of the House, and those people opposite are not on this side of the House. As I have said before, imagine those ferocious and very, very greedy rabbits inside the lettuce patch of the Treasury finances on this day as we go forward. There would be more borrowing, there would be more spending, there would be more taxing, there would be no hope. They would be on the backs of the taxpayers, and New Zealanders today are glad that this Government is in charge of the finances under these difficult circumstances—

The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the member, but his time has expired.

Hon PETER DUNNE (Leader—United Future) : I want to begin this afternoon with two quotations that are relevant to the context of this year’s Budget. The first is from the OECD yesterday, and it says, in respect of New Zealand: “The government needs to adhere to its fiscal consolidation plans, given the twin vulnerabilities of rapidly rising public debt and high external debt. Delaying monetary tightening is appropriate in light of the fiscal contraction and risks to global growth, though as reconstruction accelerates, capacity pressures will bear close watching. As the government shrinks, reinvigorated structural policies are needed to channel resources into productive economic uses.” That was the OECD yesterday. The second quote is a little longer in its history—it is from President Kennedy in 1961—but it is still relevant in the context of this Budget. He said: “We sometimes chafe at the burden of our obligations, the complexity of our decisions, the agony of our choices. But there is no comfort or security for us in evasion, no solution in abdication, no relief in irresponsibility. … For it is the fate of this generation … to live with a struggle we did not start, in a world we did not make.”

In terms of New Zealand’s place in the world and the international conditions that have very much shaped the context of this Budget, it was a struggle that we did not start, and it was certainly a world that we did not make. But there is one other important point in the OECD report that goes to the heart of some of the issues in this year’s Budget. It noted that apart from falling commodity prices and the ongoing impact of the Christchurch earthquakes, one of the impediments to growth in New Zealand at present has been household deleveraging.

When you look at the Budget tables and you look at the experience over the last couple of years, one can see that since the Budget 2010 tax initiatives, there has been a significant increase in household saving rates—probably far greater than was ever envisaged at the time—and that is likely to continue to strengthen with the increase in the KiwiSaver contribution rate from April of next year. So, on the one hand, New Zealanders are relieving themselves of debt; on the other, because of that, they are not spending in consumption, which is slowing our rate of growth. I must say that one of the things that did disappoint me in the Budget was the deferral of the auto-enrolment exercise for KiwiSaver. I understand the reasons why, but I actually believe that it is time to move to make KiwiSaver a compulsory savings scheme, and then some of the costs associated with an auto-enrolment scheme could be got over, because you actually remove those incentives.

I think, when one looks at the Budget and the context of it, and at the commentators who have spoken about it and compared New Zealand’s situation with the rest of the world, the one thing you can say with absolute certainty is that the claim by the Leader of the Opposition that a zero Budget is a no-growth Budget would be one of the greatest fallacies of all time. What this Budget does, very cleverly in my view, is reprioritise just under $5 billion of spending into a much higher-quality level of spending by seeking better performance, rather than just simply throwing more money at problems. In so doing, it lays out a couple of challenges: one to the Government sector to continually up its game in terms of the quality of service and the quality of performance for the service it delivers, and the second challenge—and the bigger challenge—is to the productive sector of this economy to start to take those lessons on board now and to make a positive contribution to New Zealand’s growth moving forward. So, in other words, contrary to Mr Shearer’s assertion that the only way you can get growth in the economy is for the Government to grow, what this Budget is saying is that the Government is setting its own house in order so that the circumstances are there for the productive sector of the economy to take the lead and for it to grow, for it to create the jobs, for it to create the revenue, for it to create the opportunities for the people of our country.

Again, you have got to see this in an international context. New Zealand does have an issue with debt; the OECD acknowledged that. But high debt to GDP ratios are far stronger in Europe, in Britain, even in Japan, for instance, and in many other countries. They have higher rates than New Zealand. We are better positioned. We might not like the position we are in. We might well say that we can do better, but we are better positioned than many of those countries, and many of those countries now face much harsher choices as a consequence of their position. For instance, we are not talking here, thankfully, about cuts in Public Service salaries in the way that the Greeks or the Irish have been speaking, or even about what the new socialist Messiah, M. Hollande, has spoken of in France. In fact, cutting senior Public Service salaries was one of his first acts. That is not on New Zealand’s agenda, because we do not need to do that. Nor do we need to follow the rest of Europe in this headlong rush to a crazy, complicated, unworkable financial transactions tax, or even go down the path that some here advocate of a capital gains tax.

What we are doing here, through this Budget and through the careful and prudent reprioritisation that is occurring, is setting the scene for future growth. I think that marks a considerable difference from many of the 28 previous Budgets I have seen delivered in this House. All of them have had an understandable—for different reasons, at the time—preoccupation with the short term: the next electoral cycle, or the next immediate crisis. This Budget is brave enough to stand aside from that, and say that over a long track of 4 to 5 years—very long in our parliamentary terms—the Government is making some decisions about the future shape and structure of the New Zealand economy that will, in turn, inform the decisions that many of the key players within that economy will make. And it is starting to send some signals that, I think, are long overdue and welcome.

For years successive Governments—particularly, actually, Governments of the left—in New Zealand have talked about the need for partnerships. They have called them strategic alliances or accords—all those sorts of things. And, in fact, what this Budget does is actually start that process, because it recognises that the Government can no longer do everything. You see, the challenge used to be that people talked about partnerships, but partnerships were always led and dominated by the Government. What this Budget is really saying is the Government cannot have all the answers, but it can know where and who the most productive or most effective groups in the economy to deliver certain needs are. So what you are starting to see in terms of the Government’s relationship with business, in terms of what is going on in the health and education sectors, is a much greater focus on working with the key groups to get the best outcome for the dollars that are invested.

I will give you one very specific example. I am currently in the midst of a review of our mental health strategies. One thing that has become very obvious during that review is that the previous pattern has been that essentially mental health issues and mental health services are Government-delivered. We have a vibrant non-governmental organisation sector—highly skilled, highly capable—that actually wants to get involved, and there is no reason why it cannot get involved in doing its job best to deliver effective services for that particular group of people. That is but one example.

What we are starting to see is that the challenges that the Governments of the future will face are not going to be about that traditional distribution issue; they are going to be about the increasing demands of technology and the expectations that the public have in respect of that. Even silencing equipment might not be a bad advance in that respect. In other words, it is about the point of entry that people have into the availability of public sector services. That is why things like the Inland Revenue Department’s technology system for the future are so important and the investment in that is going to be so critical. It is why we talk about the need to protect this little ship in a very turbulent international economy. We are a country that, because of our history, relies on our ability to trade—on that big picture. But we are the one trading nation that is at the far end of the world; we are the developed country furthest away from any of our major trading partners. So we have got to be a global citizen. We cannot pretend that the world around us does not exist.

Then, finally, because it is tied up with all of this, we have got to commit to the rebuilding of Christchurch after not one but four major earthquakes in a 13-month period. I think people forget that, and think that this was just some one-off event that had minimal impact. It has had a huge impact on that city and province, and a significant impact on New Zealand, and because of its unusual, unique nature, it continues to have an impact today. One simply cannot pretend that that $20 billion impact can be ignored or that it will go away.

What this Budget is about is giving New Zealanders the opportunity and taking the chance to focus on our future and to build constructively for the needs we have as a country moving forward, not just dealing with today’s issues but taking a very positive long-term focus.

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