Hon DAVID CUNLIFFE (Minister of Communications) : It is said that Budgets are complex matters, but in the end they are really simple. This morning, on the way to caucus, I was pleased to meet with a group from Blockhouse Bay Intermediate school. I asked them a simple question: “Do you think your parents would want cuts to health and education, or do you think they’d rather have a tax cut?”. The answer was that they want schools and hospitals. That is what New Zealand wants.

When I went around the country last week, talking about the Budget—and I have been all the way to Invercargill, and right through the Waikato and the Bay of Plenty—the answer was consistent. When people know the facts, their choice is clear. They want good Government, not cheap Government. They know three things about this Budget: one, it is good for New Zealand; two, it is good for Kiwi families; and, three, it is good for business. I will explain why. The reason this Budget is good for New Zealand is that there is no such thing as a free lunch. One can see that over 3 of the next 4 years, we will be cash-negative. There is no pot of gold.

There is no mountain of cash that Dr Cullen can simply find on the seventh floor of the Beehive and distribute around the country, to all and sundry. This graph shows that we are spending all we can responsibly afford to spend, in order to keep Kiwi families afloat. If we were to promise tax cuts or additional spending, any responsible person would ask how we could do that. Dr Brash is promising tax cuts, but he will have to borrow money to fund those cuts. Who would borrow in order to give a tax cut? A household could not be run like that.

Darren Hughes: The Tories would.

Hon DAVID CUNLIFFE: The Tories would do it; they would borrow to fund a tax cut. The second thing New Zealanders understand is that if they have a Labour Government, then under its Working for Families package they will be better off than having some fictitious tax cut under National. It is really quite simple: a family on around $38,000 with two kids will be around $120 a week better off by the time the Working for Families package has been fully brought in. Under National, how much better off will they be? About $30 or $40 a week, if they are lucky, but their mortgage will have gone up because interests rates will be higher. There is no free lunch. National should be asked what it is not going to spend money on. People should ask National what they will not get, by the time that party has another Ruth Richardson effort on the New Zealand Budget.

Families are better off with Labour. Under Labour, people will have investment in health care. The health budget has gone up by about 60 percent since Labour was elected. There is another $1 billion a year for hospitals and primary health care, which has been an extremely successful strategy that is being rolled out to all income groups. There will be 400 new teachers, as part of a half a billion dollar additional investment in education, and 1,000 new police officers as part of an additional investment in New Zealand security. So people can see that this Government is carefully and prudently balancing the needs of ordinary New Zealanders with the need to run very strong books, in order to ensure our future prosperity. That is why next year, for the first time since Vogel borrowed for the railways, the Government will be a net creditor. The assets in the superannuation fund will outweigh Government debt, and the New Zealand Government will be a net creditor for the first time in all those years.

The Opposition carps about the Government’s net worth increasing. What would the country rather have: a Government with sound Budget finances that provide a platform for the rest of the economy, or a profligate Opposition whose spending promises do not add up? Here are a few of those promises. We reckon that the cost of their tax cuts is worth about $2 billion or, conservatively, $1.75 billion.

Over 10 years that will be $17 billion. They have already made about $4.5 billion worth of promises in relation to transport over the next 10 years. They want to four-lane State Highway 1, all the way from Wellington to Auckland.

They are promising $4 billion for defence, in order to be level with Australia. For law and order they are promising nearly $1 billion. In education, I reckon the sum is about $20 million, and for the superannuation fund $2 billion is required. If that is all added up, it is about $55 billion worth of spending promises from the Opposition. Where is the money coming from? How can they do all that and still give a tax cut? The numbers do not add up—talk about voodoo economics! I do not think even George Bush would engage in voodoo economics of that kind.

The other thing I heard is that New Zealanders know that their businesses will be better off under Labour. When I went around the country last week, I found that small-business owners know that this Budget fixes a lot of the problems that have been on their minds for many years. Tax cuts of $1.8 billion are targeted for small businesses, for Kiwi businesses, and that is what matters to them. Fringe benefit tax, provisional tax, and actively managed funds’ taxation are fixed in this Budget, and savings incentives are provided. Depreciation regimes are also fixed. For Kiwis who want to save for their nest egg, for their retirement, or for their first home, under KiwiSaver there is $1,000 for each person to get them started, and up to $5,000 over 5 years for the deposit on their first house. Kiwis know that that matters to them. Kiwi families know that with that initiative, with what we have done with mortgage guarantee insurance, and with what we are doing with the Working for Families package, they will be better off under Labour. That is true both individually and as part of a country that is secure, whose books are well managed, and that can hold its head high in the company of developed countries the world over, as we sail into the new century.

Business is better off, families are better off, and the Opposition’s promises simply do not add up. If it is not enough for people to believe us, then they should believe the OECD, which stated: “Any additional fiscal stimulus beyond that already planned would put the projected soft landing at risk, and would be offset by higher interest rates in order to bring the economy back to a sustainable growth path.” For example, if taxes are cut, what happens? Interest rates go up, people with mortgages pay more, and the value of the tax cut is gone overnight. So not only—

Rodney Hide: Rubbish!

Hon DAVID CUNLIFFE: “Rubbish!”, says that bloke. The members of that bloke’s party could not add to save themselves. They reckon on a flat tax rate of 25c, which would need $5 billion to $6 billion worth of spending. Can people imagine what would happen to interest rates if Rodney Hide ever got near Treasury? Good Lord—no wonder they would not open the doors to the guy! Alan Bollard would have a hernia. He would say: “Oh, my God! Who taught this guy to add?”. We do not know whether anyone taught him to add; there is no evidence of it, so far. This Budget is good for families, good for business, and good for New Zealand. It is a good Budget.

Hon KEN SHIRLEY (ACT) : We have just heard from the poor, poor member, the St Marys Bay member for west Auckland, Mr Cunliffe. He raised a number of interesting points. Perhaps the most interesting was his statement that we are sailing into the new century. I fear he is right, but he has forgotten that we live in the age of jet travel. We are past steam, yet he and his party are still in the age of sail, it would seem.

We heard earlier about Mike Williams, the President of the Labour Party, and the big secret that was going to be in the Budget. We heard from Dr Cullen in question time today that he did not know anything about that. Clearly he did not, because if ever a Budget was a fizzer, it is this one. All around the country, all commentators have called this Budget an absolute lost opportunity, an absolute fizzer.

The clear message now resounding around the country and across the political spectrum—other than in Labour ranks—is the overwhelming justification and need for a taxation cut. Cutting taxes has been a core philosophy of the ACT party since its inception. We have seen successful economies around the world basing their success on tax cuts, but still the Neanderthal socialist Labour Government in New Zealand refuses to accept reality and to deliver a tax cut.

This week we have seen a response to the Budget. The business community anticipated that perhaps Labour would do something significant, and that community is shattered. It is stunned that the Budget was a fizzer. And what have we seen? Business confidence in New Zealand, measured this week, is the lowest it has been since immediately after the sharemarket crash in 1987. We understand what happened in 1987; there was a worldwide economic crash. But now business confidence is the lowest it has been since then, in spite of there being no justification for that sentiment other than disappointment in the lost opportunity of this Government’s Budget.

Tax cuts are now mainstream. When we hear Jim Anderton actually calling for tax cuts, as he has done this year, it is staggering that the Labour Government has not heeded the message. Across the Tasman the John Howard Government gave comprehensive tax cuts on the basis of a surplus that is 1 percent of the Australian GDP. The New Zealand Government is sitting on a 4 percent GDP surplus and saying that it cannot afford tax cuts. That is absolute baloney! The New Zealand economy will suffer as our competitiveness against the Australian economy slides further, and as opportunities for investment, jobs, and prosperity are greater across the Tasman than they are at home. We will lose people and we will certainly lose investment.

There is no virtue in having a surplus per se, just as there is no virtue in having a deficit. A deficit essentially means a Government living beyond its means, overspending, and that it is, in a way, intergenerational theft. But equally there is no virtue in having a surplus, because—other than the fact that a Government might be retiring debt—all a surplus says is that the Government is taking too much money from people. The Government is draining money from people, because they pay the tax. It is true. When we look at the surplus figures we see that we in this country have a rich Government—a very rich Government. Unfortunately, we have poor people. We have a rich Government, but poor people.

The whole philosophy of this Labour Government is just to take more and more, and to take more control of the economy. This Budget provides for an extra $2 billion of spending by the Government. We might say that it is spending the money on health, but we have been told that we are not receiving any better health outcomes. The waiting lists are not declining. In other words, the Government is squandering the money. It is wasting it. Apart from the wānangas, the hip-hop tours, and all those overtly wasteful expenditures, because of the Government’s crazy philosophical mantras, even in the core sectors it is pouring more money into wasteful structures, and we are not getting the outcomes that we should be getting.

What did the Budget actually offer in tax cuts? It offered 70c per week, to be delivered in 3 years’ time. Is it any wonder that the average Kiwi out there is a bit cynical when the Government is trying to say it has delivered a tax cut, and that tax cut is 70c in 3 years’ time? That is outrageous. We know that the tax cut will be only 0.5 percent of Government spending in 2009. If we look at it as part of business costs we find that it will be only 0.2 percent of Government spending in 2009. So the tax cut for business is infinitesimal at a time when Australia has delivered a significant cut and when successful economies around the world are basing their success on lower taxation attracting investment.

Again, we heard an incredibly confused message from Mr Cunliffe, the previous Labour speaker in this debate. He started along the lines of asking how on earth we would fund schools and hospitals if we were to cut taxes. He clearly does not understand the difference between the rate of tax and revenue. There is a big difference between the rate of tax and revenue. We know that when one cuts taxes, one gets investment. Investment creates wealth and prosperity. There is more wealth, and more people are paying GST and revenue to the Government. We can get that from the base of a lower incidence of taxation. But the Labour Government does not seem to understand that—or, if it does understand, it is certainly being duplicitous.

Jill Pettis: Some of us remember the 1990s.

Hon KEN SHIRLEY: Oh, it must be market day—the paint stripper from Whanganui is at it again. She is shouting away, as usual. She and her Labour colleagues do not understand that basic difference between taxation rates and revenue.

Then we come to the net worth of government. Today the net worth of government in this country is $35.5 billion—that is, assets less liability. In 5 years’ time, by 2010, under the projections of this Budget and this Government that figure will have risen from $35.5 billion to $63.1 billion. That is a 12.2 percent per year growth in Government spending—bigger and bigger and bigger government. That is what this Labour Government is all about. To fund that, it takes more and more money out of society and from hard-working families, who should be able to retain their own earnings and make their own choices.

Jill Pettis: On silly things like hospitals and schools, I suppose!

Hon KEN SHIRLEY: But no, says Jill Pettis, the member for Whanganui. She is defending the taking of more money. On top of that, of course, we have the new carbon tax. Let us look at how that will work. Let us look at the electricity market. If we burn a fossil fuel like coal, the tax is $15 per tonne. Huntly power station is our big coal burner; Huntly will be paying it. But how the electricity market works is that there is an auction every half-hour at 200 take-off points from the national grid, and everyone pays the top price. Because Huntly is the biggest generator, at 1,000 megawatts, it sets the price. So the State-owned hydro generators will be paying that same price. That will put up the price of electricity for all consumers.

The hydro generators, of course, will get windfall profits, because they are not burning coal but they have to charge that price. Their price will be the full rate, incorporating the carbon tax, even though they are not using carbon-based fuels. Who gets all that money? Who owns the big hydro generators—Meridian Energy, Mighty River Power, and Genesis Power? Members have guessed it—the Government does. Super profits are all paid back as a dividend to the Government.

So this is really just an underhand way of imposing extra taxation on the consumers of New Zealand through transport fuels and electricity. The money will go back into the coffers of this Government so that it can throw away $1 billion a time on wānangas, hip-hop tours, and all its chosen little social engineering programmes, and waste the money to the incredible degree that it does.

The ACT party’s message is very simple: leave that money in the pockets of hard-working New Zealanders. They will make better decisions than the bureaucrats and the politicians in Wellington. New Zealanders will create a better society and generate more wealth and prosperity than this socialist Government will.

LUAMANUVAO WINNIE LABAN (Labour—Mana) : Kia ora, talofa lava, and warm Pacific greetings to all. Some commentators have said that Budget 2005 was a boring Budget, and that no great shock or surprise was announced. We do not need surprises, shocks, or sensations when it comes to the management of New Zealand’s finances. We do not need to scare the horses or the financial markets. Steady, safe, predictable, prudent, and, yes, even a little boring, is good.

Budget 2005 continues the sound fiscal management that has been the hallmark of Michael Cullen’s capable stewardship of the economy and Helen Clark’s leadership of our Government. This Budget balances economic and social objectives—no surprises there. Fairness and equity are bedrock Labour principles, and they are reflected in this Budget. Budget 2005 is based on economic and social policies that respect individuality and diversity, and promote equality of opportunity and the right for all citizens to participate fully in the life of our nation.

Labour’s policies are aimed at ensuring that all people are able to enjoy a fair share of our nation’s wealth. The top priority of our economic policies is growing a sustainable, job-rich economy. In the last three Budget debates I spoke at length about the many successful businesses in Porirua City, Mana, and the Kapiti coast that have experienced a sustained period of economic growth and have benefited from this Government’s sound economic management. One example of such a business is Effuzi, which has just scored a $1 million project to provide stadium seating for Jade Stadium. This Budget continues that steady economic growth in Mana and throughout New Zealand.

Growth has remained broad-based and sustainable. The tax cuts for businesses announced in Budget 2005 will cost $1.42 billion. Around $720 million of that will be recycled from the carbon charge. This is a business-friendly Budget, and this is a business-friendly Government. We see that the Government has an important role to play in the marketplace: encouraging and supporting New Zealand businesses, using influence to open up markets, and using diplomacy to negotiate fair and free trade agreements.

Over the last months in my role as parliamentary private secretary to the Minister for Trade Negotiations, I have been working with the private sector and New Zealand businesses to establish and develop the New Zealand Pacific Business Council. The council is now up and running. It is made up of people from the private sector who are keen to expand two-way trade with Pacific nations. There is tremendous potential for two-way trade in the Pacific, and this Government is promoting trade with the Pacific, and the importance of a win-win for all nations in our region.

Last year I led a trade delegation to Fiji with Jim Sutton, and then went on to Papua New Guinea, and then Guam. Recently, as part of Phil Goff’s Pacific trip, I led another trade delegation to New Caledonia and French Polynesia. Both these missions returned to New Zealand with millions of dollars in orders. New Zealand does $1 billion of trade in goods and services with our Pacific neighbours. They are very important markets for us, and we can only grow the potential for markets there. Of course, beyond the Pacific we look forward to celebrating the benefits that the New Zealand - Thailand Closer Economic Partnership Agreement, which Minister Sutton has recently negotiated, will bring to our businesses and our economy. The Government is investing in trade, and Budget 2005 continues that investment with a number of export initiatives: $31 million dollars over 4 years for international trade negotiations; $9 million to promote New Zealand as a tourist destination; and $3 million to promote relations with Asia. As well as export initiatives, Budget 2005 provided $204 million for research, science, and technology, $100 million over 3 years for land transport, and another $10 million to build management and business capability, bringing to around $250 million a year the Government’s investment in regional support.

Economic growth is only part of the equation for Labour. Social policy is on the other side of the ledger. Income and social support should expand, in Labour’s view, only when there is the capacity to sustain them. Dr Cullen’s careful fiscal management has allowed Labour to deliver a Budget that allows more New Zealand families to share the benefits of economic growth. Over the next 4 years there will be $4,000 million for Vote Health; $1,430 million for education; $134 million to build more State houses; and $149 million to advance the social development agenda. This year’s Budget invests responsibly in the health, education, and the safety of the people of Mana and all New Zealanders.

Our economy has done well under this Government, enabling us all to benefit from improved public services. The record continues with new funding this year for health care, early childhood education, schools, and the police. The health funding will rise by an unprecedented $4 billion over the next 4 years. This includes money to extend low-cost primary health care, establish a Cancer Control Council, offer free breast-screening for more women, phase out asset testing for older people in rest homes, pay nurses more, and fund more hip and major joint operations.

Investment in education is focused on improving quality from early childhood care to the tertiary sector. Childcare centres are getting more funding to pay for better qualified staff. Schools are being funded to employ more teachers, increase their operating budgets, and invest in new technology. New funding for higher education is targeted at better-quality teaching in vital subjects including science, trades, information technology, technical subjects, agriculture, and horticulture. There is also more money for Modern Apprenticeships and industry training, while tertiary students will benefit from new scholarships and changes to allowances.

Increased funding for the police will ensure that the force has the resources necessary to keep on top of crime rates, which are the lowest in decades. New money in the Budget will pay for an estimated 245 more police nationwide in the coming year. I am really proud of New Zealand’s police force. It does a great job. The Royal New Zealand Police College is in my electorate, and I am impressed with the young and mature recruits I see about town. The police have a difficult job to do, and I am sick of those who criticise the police to score cheap political points in election year.

Budget 2005 creates new opportunities for people to improve their financial security, with the introduction of the KiwiSaver workplace savings scheme. This will help Kiwis to save for their retirement, with a $1,000 kick-start from our Government. People struggling to save for their first home will also be able to take advantage of KiwiSaver. Many will be helped with an extra contribution towards their deposit.

While delivering better services, the Government continues to take a responsible approach to public spending. Forecasts show that Budget surpluses will continue to cover the contributions to the New Zealand Superannuation Fund, keep the national debt down, and enable investment in essential infrastructure like roading. But we know we need to do more. When driving through Mana one sees the investment made in improving safety and reducing congestion on State Highway 1. Of course there is more to do, but we are making progress.

This is the story of Budget 2005: living within our means and making steady progress. There is more to do in the future. We cannot have it all today; we must build a sustainable economy for the future. Budget 2005 provides substantial tax relief for business, and the changes made to personal income tax thresholds will protect people’s income against inflation. Altogether it is a balanced investment in the nation’s social and economic future. The Labour-led Budget continues our Kiwi values of maintaining a strong and credible fiscal stance, being fair and inclusive, and helping Kiwis build a stake in the country.

JOHN KEY (National—Helensville) : There was a deep, dark secret in the Budget. It was buried in there, pretty deep, and this was it. Budget 2005 was a loser, an absolute loser, for this Government. It will go down in history as the longest resignation note from a Minister of Finance. If it were a movie, it would be catalogued in the horror section. It does not get any better than that.

I noticed something very interesting on Budget day. When I looked across to the Labour front-bench members, I saw them nodding off to sleep. That reminded me of something I saw when I was leaving the lock-up to come into the Chamber. The junior Government whip, Darren Hughes, was giving out No Doze tablets, so that back-benchers would not fall asleep. Unfortunately, the front-bench members snuck in from the side and did not get their top-up. They had to rely on the coffee they had at lunchtime.

Budget 2005 was a shocker. Even Michael Cullen looked bored when reading the thing out. That is how bad it was. If he was bored when reading the Budget—and we will assume he was bored when putting it together, because there was not a helluva lot in it of interest—he sure as earth was not bored when he read the reaction in the newspapers in the past 12 days post-Budget. It is fair to say that Dr Cullen is under a fair bit of pressure at the moment. He was under a lot of pressure around that Budget. We all know the story: the Prime Minister picked up the poll results—she does her polling every couple of days—and went down to the seventh floor, pulled up a chair, and said: “Michael, we’ve got a problem. The Nats are absolutely taking us to the cleaners over taxation. You’ve got to do something, Michael. Help me! I want a third term. It will mean so much to me. Please Michael, show me the money.”

So Michael Cullen thought: “No, no. I like spending. Boy, can I spend! I’ve spent $50 billion worth of additional taxes in the last 5 years.” Helen Clark looked at him with that steely-eyed gaze and said: “Michael, make it happen. I’m off to the Amway salesman—the President of the Labour Party, Mike Williams—to tell him the good news that you have found some cash.” And so it was. Mike Williams went out there, in his dark glasses and coat, and rang the journalists, saying in a quiet voice: “It’s Mike Williams here, from the Labour Party. There’s a deep, dark Tory secret buried deep in the Budget. Ha, ha, ha! Wait till it all comes out.”

We had seen Dr Cullen in the House, not answering any questions about tax cuts, not saying anything. We watched him day after day as we asked him whether there would be tax cuts in the Budget. He said: “I can’t answer that. The member will have to wait until Thursday.” Well, what came on Thursday was an absolute shocker. I could not believe it. I must admit, I plead guilty. The press gallery wrote that I looked a bit too happy after I had read the Budget. I plead guilty. I could not believe it when I picked up the Dominion Post on Friday morning and saw the headline: “Is that it?”. Six years of good economic weather under Labour, and is that it—67c? It would not have paid for the that morning, and people have to wait for 3 years—until 2008. It was a shocker.

John Armstrong is one of the finest political journalists in the country. He is a man who calls it the way he sees it. When one gets it right, he says so. When one gets it wrong, he says so. When I picked up my New Zealand Herald in Auckland on the Saturday morning after the Budget I was greeted with the words: “To the catalogue of great disasters—the Titanic, the Hindenburg, Michael Jackson’s marriage to Lisa-Marie Presley—can be added the words ‘Michael Cullen’s sixth Budget’.” John Armstrong went on to say that Michael Cullen “has done the seemingly impossible: turning wine into water.” He said also that his Budget is an election-year flop. No wonder—

Lindsay Tisch: Who said that?

JOHN KEY: John Armstrong. No wonder the rumour mill is absolutely rife that Mike Munro is on the way out. He has had a complete stoush with the Prime Minister, with Michael Cullen, and with Mike Williams. They are all fighting amongst each other, because they know a shocker when they see one. They are sitting around with their hands over their heads, saying: “How on earth did we get it so terribly wrong?”. Then they realised that the New Zealand Herald put those words into the mouth of Mike Williams. The Prime Minister was in a really snarly mood at her press conference on the Monday. She also made a personal attack on me and I took umbrage, but anyway let us not worry about that. I am bigger than that, and I will move on. But she said to Ruth Berry of the : “You put those words into Mike Williams’ mouth.” I will not repeat what Ruth said, but she pointed out that she had not done that and asked that the Prime Minister play the tape. The tape would say there is a deep, dark secret in the Budget and we are going to smash the Tories with our 67c tax cut! It was an absolute shocker.

The great tragedy, though, about the whole opportunity in Budget 2005 was that it was not that dissimilar to Budget 2004. It was a sensational opportunity to be a game-changer for New Zealand. We had a $7.4 billion operating surplus, an unbelievable position to fix two of the major problems in New Zealand—that is, a low-wage economy and a brain drain. We should be worried. Michael Cullen should have come into the House on that Thursday afternoon and said to the people of New Zealand: “I’m not happy that 600 of you are leaving this week to go to Australia.”

I see the Minister of Immigration walking into the Chamber. He will be the “Minister of Emigration” soon, because more people are leaving than are arriving. That is the truth of it. More people want out. He will be the only “Minister of Emigration” in the world. People will have to go to the “Minister of Emigration” to get their air ticket to get on the plane. He will be leading the charge. He is not a bad Minister of Immigration, so maybe he can become the “Minister of Emigration”, because that is the way it is going to work.

Lindsay Tisch: He will be the tour leader!

JOHN KEY: The tour leader! That is right; a sort of “Damien Dazzler” to South Australia. Last week 600 people left New Zealand for Australia. The day after the Budget more of them lined up at the Travelex office to get their ticket out of here. Not one thing changed after the Budget. Michael Cullen had $7.5 billion available to fix that situation, and he did not care. What he cares about, more than anything else, is having a whole lot of money to give away and try to buy some votes in election 2005. But the people of New Zealand have said: “We know when enough is enough.” They are thinking: “We gave him a chance in 2003, we gave him a bigger chance in 2004, but, by crikey, in 2005 show us something.”

It was an election year lolly-scramble, with the Minister of Finance throwing the lollies so far away that the kids are still looking for them. He threw them as far away as 2008—so far that people cannot see them. In an ownership society, what on earth will people buy for $5,000 in 2012? One will not be able to get a pup tent. I am sorry, but people have to hear it. They will not be able to get a pup tent to put up somewhere. It was an absolute shocker.

Then there were the changes—and I will quote from John Shewan of PricewaterhouseCoopers, who said: “If ever there was a time when tax cuts could have been offered, it was now.” Can members imagine the look on the faces of United Future members? They now believe everything John Tamihere told them, because there it was, a one-word change—2005 to 2008. I guess it is a number, really. But from that 2005 opportunity they went their way. United Future must have done an unbelievable job of negotiating with the Government, because on Saturday it rolled out its tax plan, and it was $3 billion. The Government gave it $360 million in 3 years’ time, and it came out with its tax plan of $3 billion. It was an absolute shocker.

This morning when I picked up the New Zealand Herald I did not expect to see good news—because there is never good news for this Government; it is just one bad day after another—and, sure enough, there it was, the business confidence survey showed we have slumped to a 17-year low. The member opposite, Jill Pettis, may shake her head, but there it was—a 17-year low. We have not seen it as bad as this since the 1987 stock market crash, and there had been an amazing opportunity.

If anyone is under any illusion whatsoever about this Government’s agenda when it comes to taxes, it surely is not to reduce them, because, low and behold, buried in the Budget was the carbon tax. To add insult to injury, those poor people who are getting 67c a week will have to pay their carbon tax a year earlier. National, when it assumes the Treasury benches in a few months’ time, will do so much better.

Hon ANNETTE KING (Minister of Health) : All I can say about that speech from the National spokesperson on finance is “Baloney!”. It is no wonder he attracted the grand audience of one of his colleagues to listen to it. New Zealanders should look out, because a scythe held by Dr Brash hangs over our public health systems should his party ever be elected back to Government. National’s policy of borrowing to give tax cuts, then cutting public services, will have a devastating impact on the health sector of New Zealand. We are just starting to get somewhere in the fight-back after the destruction of the health system in the 1990s. Now those members opposite want to take us back to the bad old days. They want to slash $1.6 billion from the health budget. New Zealanders know there is no such thing as a free tax cut. The previous National Government in its last Budget in 1999—and I want New Zealanders to remember this—legislated for a tax cut. At the same time as it legislated for a tax cut, it cut superannuation. That is National’s record. There is no such thing as a free tax cut.

This Government has spent almost 6 years rebuilding the staffing and infrastructure that was undermined by National when it took a market approach to our health system—an approach that was hated and ridiculed up and down New Zealand and that saw the National Government change its Minister of Health five times in that period. By the end of the 1990s hospitals had been closed, were under threat of closure, or were crumbling. Communities were forced to join hands around buildings to protect their hospitals. Let us name just a few of them: Masterton, Kaitāia, Thames, Wairau—and many others. We are not closing them; we are rebuilding every one of them. We are investing in the infrastructure of hospitals.

Hon Ken Shirley: What about Murchison?

Hon ANNETTE KING: Murchison will get a new hospital. I thank the member, who was the member for Tasman before he was tossed out. Yes, Murchison will have a new hospital under this Government.

By the end of the 1990s doctors and nurses were heading overseas as fast as they could find jobs, because New Zealand’s health system, under National’s heartless and ruthless approach to health services, was recognised by health professionals as being no place for them to work. One of the most ruthless things the National Government did was in the provision of cancer services. It was an example to hundreds of New Zealanders. In 1996 the National Government was told there was a looming crisis in cancer services unless it increased the number of trained personnel and the number of linear accelerators. It ignored that advice.

We have had to spend 5 years trying to sort out that debacle, because it takes years to train personnel, and years to build the infrastructure. The latest report on cancer service waiting times shows that we have finally reached a point within the guidelines. It is fragile; anything could go wrong at any time. That is how long it has taken. It takes 3 years to train one radiation therapist. Radiotherapists were not trained under the National Government. National was told it should train them, and it did not. I have no doubt that the same approach would be taken by the National Party if it were to come into Government again. Radiation therapists would have to say goodbye to the excellent wages and conditions we have built up for them since 2000. We pay them to train, and that would be one of the first things to disappear. That would go. So would the linear accelerator, and so would the investment in this vital part of our health services.

No wonder New Zealanders were disillusioned at the end of the 1990s. A National Business Review survey published last week showed that 12.2 percent of New Zealanders thought that health was the most important problem facing them. In the DigiPoll last week 18.8 percent thought that health was the top issue. Let us put those figures into perspective. Let us compare that with a TV3 poll in the mid-1990s. [] The member who is interjecting might want to listen to this. Of course, he will not want to believe these figures; he wants to believe only his own. Seventy-five percent of respondents thought health services had deteriorated under a Tory party health policy. Three years later, in 1999, 54 percent of New Zealanders wanted more money put into health. Well, those bad old days are well and truly over. I am pleased to say that we have invested in the health sector of New Zealand. If members opposite get the chance, they will be back slashing and burning health once again.

I say to the member from ACT who was interjecting that I feel sorry for ACT’s poor old health spokesperson. She often gets things terribly wrong. I felt sorry for her this week when she complained about the deficits. She was forecasting a rise in the deficit to $100 million. In reality, our deficits have been falling. It is not so long ago that National presided over deficits totalling almost $300 million. Even if she was right about the $100 million, how does $100 million as a percentage of almost $10 billion in Vote Health compare with a $300 million deficit as a percentage of a $6 billion vote? Deficits reached 5 percent of total Vote Health under National; now they are around 1 percent. That is real progress.

Where has the $4 billion that we have put into health gone? Let us look at operations first—although they tell only part of the story, because we have put a lot of investment into primary health care. The total number of medical and surgical casemix discharges increased by 7.6 percent in the 5 years from 1999. There are now 44,000 more procedures a year. That is only part of the story. From 1998-99 to 2003-04 the number of day procedures increased by 19.5 percent. That is an extra 27,500 cases a year. In the past, before technological improvements, many of these cases would not have been performed as day procedures. But that is not all, either. There has also been a steady increase in the number of outpatient procedures since 1999. In one area alone, in publicly funded accident and emergency events, the number of procedures increased from 740,000 then to 844,000 in 2003-04—an increase of 14 percent.

All this is on top of the success stories of projects such as the orthopaedic project and the cataract project—all receiving sustainable funding. Money has gone in year in and year out. It has not been one-off money as we saw throughout the 1990s. But that is only part of the story. The efficiency of our public hospital system is demonstrated by the average length of stay of patients. The average length of stay in December 2001 was almost 3.5 days. It is now 3.1 days. No wonder we are doing better in terms of total medical and surgical case-weighted discharges.

Patients like what we are providing; patient satisfaction ratings in all the surveys that are carried out across the district health boards show that 88 percent of patients are very happy with the services they receive. It is going in the right direction. It is also clear that our health workforce is happier than it was in the 1990s. We are training more health workers. We are paying them more. Nurses have had their biggest pay increase ever, doctors are paid more, radiation therapists are paid more, and medical radiation technologists are paid more—all aimed at keeping them here in New Zealand. [Interruption] The member may not like this, but staff turnover has been steadily declining in the health sector. Staff turnover in the health sector is now less than 4 percent—much, much lower than in the National Party caucus.

There has been a worldwide shortage of health professionals, but we are holding on to them and increasing the number of doctors and nurses in our health system. I would like the National spokesperson to hear this: since Labour came into Government the number of doctors in New Zealand has increased by almost 1,000, and the number of nurses by over 3,000. That is what has increased in New Zealand. When that member takes his $1.6 billion out of the health sector, it will be doctors and nurses—

John Key: 20,000 bureaucrats!

Hon ANNETTE KING: I will take the smirk off the member’s face when it comes to bureaucrats. If that is where he is going to save money, the health sector will get a piddling amount of money under a National Government. I am proud of what we have done with this Budget. It is a continuation of our good work.

JEANETTE FITZSIMONS (Co-Leader—Green) : In this Budget, Labour has taken the first tentative steps towards ecological tax reform—an approach the Greens have been advocating since well before any of us came to Parliament. The principle is that for a given revenue, tax is shifted off the things we want to encourage, like work, incomes, innovation, and enterprise, and on to the things that are harmful, like waste, pollution, and overuse of scarce resources. In short, we need to tax the bad things more and the good things less. The Government has begun this shift with a carbon charge on the carbon content of fossil fuels.

Burning coal, oil, and gas is primarily responsible for the human-induced climate change that we are already experiencing, and which is the greatest threat to our economy and our way of life. That is without mentioning the lives of many other species that may become extinct as their habitat changes with the climate. The Government’s intention is to make it more expensive to burn fossil fuels, and correspondingly cheaper to invest in renewables and energy efficiency. We applaud the charge, but not its delay until 2007, by which time New Zealand’s contribution to climate change will have grown even further.

Like the Greens, the Government says it wants the carbon charge to be revenue neutral, but the way it is going about this is very different from our policy. First, we need to look at who is going to pay. The highest carbon emissions per unit of energy are from coal, so coal-burning power stations, the steel industry, and the dairy industry with its coal-fired processing plants, will have the greatest incentive to change. The big incentives here are for power generators to shift to wind and other renewables, and the dairy industry and other industrial users to investigate waste-wood cogeneration, as a number of industries have already done.

Oil, with the next highest emissions per unit energy, is used mostly in transport. The incentives here are to buy a more efficient car or truck, send more freight by coastal shipping or rail, and use the bike or one’s feet to go down to the corner store. Gas, with the lowest emissions, is used in power stations and industry and homes, but it is a higher value fuel and the tax on it will be relatively low.

So far, so good. But where we differ from the Government is in how the revenue should be recycled. We are told the average household will pay another $4 a week for its power and fuel. The Government proposes no revenue recycling for them, unless we believe that the carbon charge is paying for the change in tax thresholds in 3 years’ time. The Greens propose that a package of eco-taxes, including the carbon charge, should be offset by removing tax altogether from the first $5,000 of personal income. The carbon charge itself would not be enough, but would be part of a package that could include taxes on other waste and pollution.

Removing tax from the bottom band of income treats all taxpayers the same. It gives them all the same rebate, but they will feel it differently. One dollar to someone on $9,000 a year is more valuable than $1 to someone on $100,000 a year, but it is still $1. What the Government and United Future have done instead, is make the gap between the haves and have-nots even wider. They have given people on the lowest incomes 67c a week, and themselves, on their MP salaries, $10 a week. Yet, it is often those on the lowest incomes who drive the old cars, live furthest from town, and have old, poorly insulated homes. As the Council of Trade Unions has commented, removing tax from the bottom $5,000 of income is a fairer system than these changes in thresholds, which increase the gap.

There are some, of course, who will be exempt altogether from the carbon tax. Very large energy users like the refinery, mining companies, and eventually steel and cement companies, are able to negotiate an exemption if they would be made uncompetitive by the tax, as long as they move to industry best practice over the period. This is not a silly idea. It may lead to substantial savings in greenhouse emissions if the firms have to meet high standards in terms of world-best energy efficiency and use of renewables. But it is not a transparent process. We are not told how much greenhouse gases will be reduced by these companies, so we cannot work out how much per tonne of carbon saved the rest of us are paying in order to exempt them from the tax. It may be that we are getting a bargain with major carbon savings for little cost, or it may be that they are and that they have to do very little in order to be exempted from a tax that the rest of us have to pay. We just do not know.

Householders, of course, could easily save $4 a week by keeping their cars better tuned, keeping the tyres inflated, walking or cycling occasionally instead of using the car, turning their computers off when they are finished for the day, and a host of other measures that save energy very easily. If power prices rise, this will increase the savings from energy-efficiency investments. One of these is the obvious opportunity of using the heat of the sun to heat their water.

Last Wednesday the Greens launched a comprehensive energy policy showing how we could move much faster to a sustainable energy future, based on energy efficiency and renewable forms of energy. One of our initiatives is a competitive tender to supply and install half a million solar water heating panels over 5 years. This would use the market to bring the price down by at least a third, with economies of scale and competition, and that would be passed on directly to householders. It would build the industry sustainably and provide security of quality and of work for newly trained installers. The very next day the Minister of Energy launched his policy on solar water heating. Trevor Mallard announced that two peanuts were to become four peanuts. He announced that funding for the solar water heating loans scheme would be increased from $200,000 to $400,000—basically, from almost nothing to twice almost nothing.

This is when we learnt of this Government’s deep commitment to recycling. Bereft of new ideas, it has dredged up Pete Hodgson’s release of 23 May last year when the budget for solar water heating was doubled from $200,000 to $400,000. We can only guess at what has happened in between. What has actually been spent of last year’s budget? Has it been underspent, or does this year’s announcement amount to saying that this year there will be no change in this pitiful commitment to the energy of the future? It is the most extraordinary recycling of a Budget statement from one year to the next that I have ever seen.

Last year I criticised the Government for getting it so wrong on oil price predictions. It was rather an embarrassment, really.There was a prediction of $19 a barrel by late 2004 and remaining stable at that level in the long term. It was already way out of date by the time the Budget went to press, and by the time it was finally passed, the price was actually $57. This time, at least they have understood that the several-fold price rises of the last year and a half are not a flash in the pan, but an indication either of a new permanent state, or, more likely, of a period of constantly escalating price as we reach the peak of oil production and begin the decline.

This year the Budget forecast that prices will rise back to $56 in the third quarter, then drop to $47 and remain at around that level. There is a recognition though that uncertainty around oil prices is a risk to inflation and to our terms of trade. It is quite heartening to see that after a year of the Greens making statements about the closeness of peak oil, and after those statements being borne out in the reality of the price increases that went steadily right through last year, Government is now admitting that the days of oil costing $19 a barrel are gone forever, and that we have to adjust to a new state. However, there is still no analysis of the effect of permanently higher oil prices on the New Zealand economy or on our trading partners. It is still assumed that they will be able to buy our current exports, and that we will be able to continue to afford to ship them. There is no plan to reduce our vulnerability, or to help us weather the shock. There is no investigation of which sectors of the New Zealand economy will prosper under this new scenario, which sectors will lose, and what Government ought to do to assist with an adaptation. That, it seems, must wait for the Greens to enter Government, and if that is what the voters decide this year, we are ready.

Hon DAMIEN O’CONNOR (Associate Minister of Health) : This year New Zealanders will have a clear choice: whether they want to continue with the prosperity, growth, vision, energy, and innovation of this coalition Government—Labour, United Future, and Progressive—or whether they want to go back to the failed policies of the 1990s under the National Party. I tell members that every New Zealander appreciates what we have done in the last 5 and a bit years. I do not think that they want to go back to the failed policies. But they have been offered a wonderful tax cut—a big benefit for them, so they are told by Don Brash, because we have had a Budget surplus. It is true that we have had a surplus, and I applaud Michael Cullen’s management of this economy over the past 5½ years. It has been absolutely outstanding. He has not bowed to the pressure of every economic group in the country that comes to this Government saying it needs more money. We have spent money where we have deemed it necessary—in health, education, infrastructure, and police. But Michael Cullen has managed this year to budget for a surplus.

For those National Party members who fail to understand it, the analogy is that if a household is getting $500 a week and it costs $400 a week to live, to continue to pay for the kids—that is what a lot of our constituents have to live on—and there is $100 left over, the $100 is not a surplus to be squandered around the place. It is usually allocated to things like putting new tyres on the car, painting the house, concreting the driveway, and doing the kinds of things that every sensible New Zealander does to protect the assets they hold dear to their hearts. They want to move into the future through sound management. So the surplus on paper that Dr Cullen has accumulated is there to spend for the future—to invest in superannuation, to put into roading and health, and to drive this country forward with certainty and security.

When Labour came into office in 1999 we saw clear examples of lack of vision and lack of planning and foresight, because the previous National Government thought—and the National Party still does—that the markets would deliver to everyone, that the trickledown theory worked. I do not know whether what we have now from Dr Brash is a promise. Frankly, we are not quite sure what he is saying, because he does so many flip-flops. He is saying that he will offer tax cuts—that we will have a mini-Budget before the end of the year with benefits for everyone. But hold on—John has tapped him on the shoulder and asked whether he realises that that might fuel inflation. Don Brash says that that is a very good point. John Key now says that perhaps they had better stagger the tax cuts. Whoop-de-doo!

Don Brash should wake up. If he wants to find out something about managing the economy, he should take a leaf out of Michael Cullen’s book. He should not promise what he cannot deliver, he should be fiscally responsible, and he should plan for the future. That is exactly what this Budget does. The so-called surplus is nothing more than the money left over from a household budget that needs to be put towards tyres for the car, school fees for the kids—[Interruption] That is right; we have a free education system, we hope. That money needs to go towards painting the house, saving for the future, and all of those sensible things. I think New Zealanders understand that. They have not been hoodwinked by Don Brash’s promises. They also understand that if we are to invest in the future, we must ask how Don Brash will fuel and fund his tax cuts. It is quite easy. Will he take the $1.6 billion from health? Where from health will it come? It is all very easy to say that it can be taken from the bureaucrats. The reality is that we have increased spending on the health system from $6 billion to almost $10 billion.

Dr Paul Hutchison: Squandered!

Hon DAMIEN O’CONNOR: Dr Hutchison says that we have squandered it. I say that we have put money into the pockets of nurses, we have built hospitals, and we have put money into the pockets of physiotherapists and radiologists. Do members know why? We know that we depend on those people. They deserve a fair wage, and we are in a very competitive international market. If we do not increase their wages and salaries, then they will pack their bags and go. From where within the health system will Don Brash take $1.6 billion? I can tell members that the cuts to services will be very, very acute.

He will cut superannuation. He, along with Dr Hutchison and John Key—all those fairly well-heeled people—believes that people should look after themselves. He believes that he can simply cut the rate of superannuation. The fact is that many, many New Zealanders have invested their lives in growing this country. They assumed that they would get reasonable care in their retirement years, and we are committed to delivering that—not to cutting it, as the National Party will, along with its ACT mates, to deliver tax cuts on the old, disproved theory that trickle down will deliver to everyone. One can guarantee that the tax cuts will do all right for Dr Hutchison, Mr Key, and Don Brash. But what will they do for the people at the bottom? If we look at what happened through the 1990s we see that the disparity, the gap, between the rich and the poor in this country became a huge chasm.

Hon Annette King: And it did in health, as well.

Hon DAMIEN O’CONNOR: It did. It was all right for those who could afford medical insurance, like most of the National Party, but for those who rely on the public health system there was only one option. That is why we fund it properly and will continue to do so into the future. How else might Dr Brash fund his tax cuts? He will sell assets. If he had picked up the papers about 2 months ago he would have read that 82 percent of New Zealanders are sick and tired—have had a gutsful—of the sale of State assets. They do not want that. I tell Don Brash and Dr Hutchison to read the papers. New Zealanders do not want it. If the National Party wants to sell off State assets—and we have a whole list of them—New Zealanders will absolutely reject that.

The other thing the National Party will do—and this is taking a leaf out of Mr Muldoon’s book—is borrow the money. It will borrow, and load up every New Zealander with a debt so that it can provide tax cuts for its wealthy mates. Well, I do not think New Zealanders will buy into that. They are not that stupid. Mr Muldoon did it. Lindsay Tisch should know Mr Muldoon—he was a good friend, I am sure. Mr Muldoon promised tax cuts and huge benefits, and destroyed what would have been the best superannuation scheme we ever had.

Just when this Government is getting New Zealand to the point of moving ahead, with funding for innovation, growth, capital infrastructure, health, and security, the National Party is putting up a bribe to this country that it will deliver tax cuts. When? Initially they were to be delivered by Christmas; now, of course, they are to be staggered. The people of New Zealand will not be fooled. They should ask every National Party candidate on the hustings up and down this country how National will pay for tax cuts and when it will deliver them. The truth is that National will not deliver tax cuts to each and every New Zealander; it will deliver them, as it always has, to its mates. It will deliver them to the privileged few who are earning over $100,000—and some of us here are among them. But what will it deliver to a struggling family on $36,000 a year? Through Working for Families, Labour will deliver to those families well over $100 in direct payment as a thankyou for their commitment to this country.

Dr PAUL HUTCHISON (National—Port Waikato) : It is somewhat dismal to hear the Labour Party fearmongering once again, when in health over the last 5 years it has overtly failed. [Interruption] There is an unmitigated cacophony coming from the back benches, and the Minister, Annette King, is not even in her own seat. In this year’s appropriations an extra $824 million—or 9.3 percent—over last year’s amount is going into health. At a superficial glance, one may indeed think that that is good. It probably would be good, if this Labour Government did not have the dismal record of pouring $3.3 billion extra into health, with no measurable improved outcomes. The public of New Zealand showed what they thought about health spending in yesterday’s . A survey showed that 73.8 percent of New Zealanders believe that hospitals are offering the same or worse services than when Labour came into office in 1999. Despite $3.3 billion more being spent on health, 38.3 percent of respondents considered the health services in New Zealand to be worse than ever before. That was reported just yesterday.

Hon Annette King: Baloney!

Dr PAUL HUTCHISON: The Minister says: “Baloney!”. Labour and the Minister of Health have presided over massive bureaucracy, gross inefficiency, and unfulfilled expectations in the area of health. As I said before, Labour’s record is of massive spending but of no measurable improvement in outcomes.

Let us look at that record. What have we had over the last 5 years? There has been a 40 percent increase in sickness and invalids beneficiaries. Now let us look at this statistic: infant mortality has plateaued over the last 5 years. I think the Minister should listen to this: infant mortality, which normally has a downward trend, has actually plateaued over the last 5 years. That is very, very serious. That information has just been published by Statistics New Zealand. Not one chief executive officer of a district health board has been able to tell me in the Health Committee, when I have asked, whether he or she could measure or demonstrate any improved outcomes in health under Labour—not one. Labour promised the earth in health while in Opposition during the 1990s, and during its 5-year term in Government it has just failed to deliver improved outcomes in health. What has Labour done? It has increased the bureaucracy.

What has happened this week? We heard at the weekend that breast-screening patients aged 45 to 50, who were promised by Mrs King that they would have breast screening, are waiting 2 to 3 years before the screening occurs. Last week the hospital benchmark information report showed that 14 out of 21 district health boards failed to see seriously ill patients within the recommended time. Those are patients who “have a potential, or imminent, threat to ‘life or limb’”. Those are patients with suspected heart attacks, massive bleeding, and serious head injuries. Fourteen out of 21 district health boards failed to achieve the triage times expected of them, and that is how it has been for the last 3 years. [Interruption] We hear again that cacophony of unmitigated warbling from the Minister of Health. She is not willing to accept the fact that 14 out of the 21 district health boards failed to achieve satisfactory triage times.

All the money that Dr Michael Cullen, Mrs King, and Miss Clark—the grand designer of the Labour system—have poured into health has been sucked up by Mrs King’s bureaucracy. [Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): I refer members to Speakers’ ruling 56/1.

Dr PAUL HUTCHISON: In 2001 Mrs King said that when funding was devolved to the 21 district health boards from the Ministry of Health, the ministry would reduce in size by 25 percent. What is the reality? It has increased in size by 25 percent—from 900 to 1,100 employees. I ask Mrs King what improved health outcome has come from the massive bureaucracy she has created.

Hon Annette King: There were 500 people in the Health Funding Authority.

Dr PAUL HUTCHISON: That is absolutely right. Mrs King has answered a parliamentary question for me and admitted that in the last 5 years the number of employees in the Ministry of Health has increased from 900 to 1,100 - plus, and not one improved health outcome has come from that.

Let us now look at the 76 primary health organisations. Yesterday a report was released about those organisations. That report, from the health services research centre at Victoria University, showed that there has been not one improved health outcome. Despite the complex bureaucracy and the millions put in, no improved outcome has been shown. Let us take a look at what the research found: “Concerns were also raised by some informants about the targeting of increased funding, with claims that it had been imprecise and that money had been ‘wasted’ on those who could afford to pay, while affordable care was not as available for some groups who did not meet increased funding criteria.” That is the legacy of the first research on Mrs King’s 76 primary health organisations.

Hon Annette King: Read the rest of it!

Dr PAUL HUTCHISON: Well, here is another point: “Some were concerned about the moves towards greater perceived control of general practice by government and about the long-term financial implications for themselves and their practices.” For 5 years the Labour Government has bleated that the problems in the health sector were not its fault. It has put in $3.3 billion, yet it is perceived by the New Zealand public, and it is the reality, that the New Zealand health services are worse than they were before Mrs King came into power.

How have the general practitioners reacted to Mrs King? They have sent her a red letter, because she and her ministry have broken good-faith bargaining by cajoling them and by deciding that she would control their prices. That is why she has the red letter. She has let down the primary health care sector that is so important to us. Mrs King and the ministry have broken good faith with general practitioners in the negotiating round. The Labour Government is not prepared to admit the reality of the costs in the primary health care sector. There has been a 20 to 30 percent increase in the award to the nurses. That is absolutely great, but then Mrs King has screwed down the general practitioners. She does not realise that in the land of primary health organisations there is a reality of cost. The nurses will have to be paid by the organisations. What does Mrs King do? She screws down their charges. There is no doubt that the agenda of Prime Minister Helen Clark and Annette King is to create a system in New Zealand that is similar to the British National Health Service—one of the most inefficient health services in the world, which is characterised by the queuing that we know that Mrs King has chopped.

I will finish on the topic of waiting lists, which has been one of the worst deceptions in the history of New Zealand’s health services. Mrs King was so embarrassed by how bad the waiting lists were in New Zealand in 2003 that she took 25,000 patients off the lists and sent them into the community, with no certainty that they would ever be treated.

Hon MITA RIRINUI (Minister of State) : I sat listening for a few minutes to the previous speaker as he made his contribution to the Budget debate. I can tell when I am listening to a party that does not have a policy, because it does everything it possibly can to find something that is going wrong in the world, but does not come up with one solution—not one solution.

Dr Paul Hutchison: What do you know?

Hon MITA RIRINUI: I raise a point of order, Mr Speaker. I am not sure whether you picked up that the member Dr Paul Hutchison said “What do you know?”. I am sure you know quite a lot, Mr Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you. I remind members that they must not bring the Speaker into the debate.

Hon MITA RIRINUI: I am sure he would not do that deliberately. Once again, this is another brilliant Budget from Dr Michael Cullen. It is his sixth Budget and is again focused on New Zealand families. New Zealand families are the backbone of this country—something that some people tend to forget from time to time.

I wonder whether the previous speaker would be aware that today is World Smokefree Day. He did not make one mention of it. I happened to be at a celebration in my electorate, in Tauranga, this morning at the Bay of Plenty Polytechnic. Young people were celebrating what they called Mana Māori.

Their definition of Mana Māori is being in control of one’s circumstances. They are taking control—not looking at the Government for every solution and criticising anyone, including the Government or the Opposition, when they do not find it. They go out looking for solutions for themselves. At the occasion this morning, a lot of young people were uptown and upbeat. They were celebrating with singing, and entertaining anyone who came to the event to listen to what they had to say about being in control of their circumstances. Certainly, they do not need habits like smoking.

Throughout this Budget debate all the Ministers have touched specifically on their portfolio areas, so I will not go into every area of this brilliant Budget of Dr Michael Cullen. But I will spend some time looking at an area in which I am very, very interested for obvious reasons—the area of treaty settlements, for which I am the Associate Minister. Settling historical grievances is one way of accelerating Māori development. We have seen that in the past with Tainui in the Waikato, with Ngāi Tahu, and with a number of iwi around the country who have gone through this arduous but necessary process. We have seen that with their achievements—the economic initiatives they have put in place since they received those settlements. I will recap on a few things that have happened in the last year, and also look forward to the 2005-06—

Darren Hughes: All those good Māori health initiatives, too.

Hon MITA RIRINUI: Yes, I will get to that. I do not want to brag about the brilliant things that this Government is doing. I do not want to go over the top. There are so many brilliant things, and there is so little time to talk about them. I will talk about the three main issues that revolve around treaty negotiations: firstly, what has been achieved in the past financial year; secondly, the money that has been sought through the estimates, and how it is intended to be used over the next year; and, thirdly, the achievements that we anticipate in the coming year.

I congratulate the Office of Treaty Settlements on the brilliant work it did in 2004. Not only did it meet its targets for the last financial year but it exceeded them, because it worked very well with this Government. I am confident that the office can keep up this work in the future. There have been a few settlement milestones that I will touch on. The Office of Treaty Settlements was expected to have two settlement bills ready for introduction to Parliament in the last year. Two bills have been passed—regarding Ngāti Awa and Ngāti Tūwharetoa Bay of Plenty—and a third was introduced regarding Ngā Rauru Kītahi. So the office is, as I said, exceeding all expectations. Two deeds of settlement have been initialled to date—Ngāti Mutunga and the Te Arawa lakes. The Te Arawa lakes group that we met over the weekend has had its claim ratified by the claimant group and signed. We were fortunate enough to join with them in celebration earlier this year.

Of course, in the far north the deed for Te Roroa, part of the Muriwhenua claim, is also very close to being ratified. Two agreements in principle have also been signed with Te Aupōuri and Te Roroa. Although I would have hoped for a third, the two that we do have are major breakthroughs in negotiations. We have been working with these groups for some time and will continue to do that.

The Crown has signed terms of agreement with four groups, bringing the number of groups negotiating towards an agreement in principle to a total of 10. Fifty-five percent of the vote, or $15.5 million, will be spent on the purchase, management, and depreciation on improvements on properties held in the Office of Treaty Settlements land bank, which I will talk about a bit more later on. The remaining 5 percent will go towards interest on the Ngā Rauru Kītahi, Te Arawa lakes, and Ngāti Mutunga settlements, and advance payment on notionally accrued interest. These are technical aspects of any claim, but it is important to highlight those matters in the House so that members get a better appreciation of the process.

In 2005-06, the next financial year, we will be concentrating strongly on policy advice and negotiations. Settlement and implementation is measured by a number of factors, as members will appreciate. They are set out on pages 54 and 55 of the statement of intent, which I advise members to read as it is an enlightening document that we all need to be aware of. The achievement of a specified number of settlement milestones is a major and tangible factor, as I am sure members will appreciate.

In the coming year the Office of Treaty Settlements aims to recognise three deeds of mandate. The office is already in pre-negotiation discussions in Tauranga with my people and with Ngāti Toa in Wellington and at the top of the South Island, and we are looking to achieve quite considerable milestones with those groups. Those groups, whose mandates were recognised in the past year, will be preparing themselves for negotiations. The Office of Treaty Settlements aims to sign three terms of negotiations with them.

I also want to look further into the future. There are other areas of Dr Cullen’s Budget this year that we also want to highlight in the House: the areas of Māori employment, Māori health, Māori tertiary education, Māori education in general, kōhanga reo, Māori television, and Māori broadcasting overall. We acknowledge the achievements of the Ministry of Māori Development, Te Puni Kōkiri, and also the hard work of the Minister of Māori Affairs, who spent some time during the adjournment travelling the length and breadth of this country, and explaining in detail what the Budget package would mean for families in the various urban and rural areas around the country.

Although I have heard considerable unfounded criticism of this Budget, it is important for the House to note that Māori unemployment is at 8 percent and falling. In the 28 years since we have been gathering this type of data, Māori unemployment has never been as low as that.

Ron Mark: They’ve all gone to Australia.

Hon MITA RIRINUI: There are more Māori in tertiary education than ever recorded in this country. The member on the other side of the House called out that they have all gone to Australia. Well, I have been to Australia and come back. Many people go to Australia to do their OE, and come back. They travel around various parts of the world, but they always come back. I know that Ron Mark has spent a considerable amount of time overseas, and he came back. So there is nothing unusual about New Zealanders travelling the world, enjoying what other countries have to offer, building on their own experiences, and bringing those experiences back to this country.

Ron Mark: They came back to fix it.

Hon MITA RIRINUI: I don’t know about fixing it, but it certainly adds to the richness of this country. A lot of positives have happened over the last 6 years of this Government. This Budget tells us that New Zealand families continue to grow stronger and stronger. Into the future, they will still grow stronger.

RON MARK (NZ First) : It is indeed a pleasure and a privilege to be able to rise as New Zealand First’s spokesman on police to speak to this Budget. My pleasure is in being able to rise and speak on behalf of New Zealand First; it is not a pleasure to speak to this Budget. I look at the press release from the Hon George Hawkins, the Minister of Police for this Government, who is the best man Labour could find to represent the fine men and women in blue. Helen Clark deemed George Hawkins to be the best man for the portfolio in the entire entourage of that overinflated Cabinet. Among a number of things, he has produced a press release that states how wonderful this Budget is. Let us look at it piece by piece.

The press release refers to an increase to the police budget of $73.6 million. That is pathetic. New Zealand First does not believe in any way, shape, or form that this Government has a hope in Hades of getting on top of serious crime of the nature that we are now witnessing under investigation in Feilding. This Government has no hope of getting on top of serious crime with a pathetic injection of $73.6 million into this Budget—that at a time when “Uncle Scrooge”, the Minister of Finance, brags to the country that he has historic record surpluses to play with. He has a surplus of $8 billion, and the best he can do to placate mums and dads, and nanas and granddads, who are worried about safety and security for themselves and their children is an extra $73 million. Let me remind the House that the same Government gave $40 million to Indonesia, to help it to run education programmes. That tells me that the Government thinks that the education of Indonesian citizens and nationals is almost as important as the safety of New Zealanders in New Zealand. That is patently wrong, and the Government will suffer the consequences of it at the polling booth. Indeed, it is already suffering the consequences in the polls that are now being run nationwide virtually every week, as it watches the support from the public plummet away from it.

The next line of the press release states: “The total over the next four financial years of new Police initiatives is $172.9 million.” That will prove to be wrong. The next 4 years will see a Government that will occupy its seats only because of New Zealand First. If Labour members think that, with the aid of New Zealand First, they will get away with putting only an extra $172.9 million into policing over the next 4 years, they can forget it—they are dreaming. New Zealand First believes that if we are to get on top of crime and deal with drugs, methamphetamines, and violence, we must put more money into policing. Let me talk about violence. The Government never talks about reducing violent crime. It has given up on that. It brags that it has got recorded crime down. It is easy to get recorded crime down, because all that needs to be done is to destroy the public’s confidence in the police, and members of the public will then stop reporting crime. Therefore, recorded crime is down. Every police officer says that that is precisely what is happening.

The area about which New Zealanders have been increasingly concerned for the past 5 years is violent crime—homicides, murders, and rapes—and what do we see from this Government? We see an extra $73.6 million going in this year, and we see that Mr Clarke has been let out of prison to do home detention—a man who kidnapped and raped a 15-year-old girl. That is the Government’s answer to violent crime. What is its answer with regard to methamphetamines? It is to pull the drug investigative squads—to not have drug squads any more—and to tell the officers not to focus on methamphetamine investigations, because the evidence cannot be processed through the Institute of Environmental Science and Research quickly enough and the police do not need to find any more. That is the Government’s answer to violent crime.

Let me give members an example of a man quite independent from New Zealand First who does understand what needs to be done: Chief of Police Bratton of the Los Angeles Police Department, formerly the Chief of Department of the New York Police Department, who implemented strategies based on the “broken windows” policy and zero tolerance. In 1 year, with the policies that New Zealand First advocates and supports, that man has reduced violent crime in Los Angeles by 23 percent, and he now says that he can reduce it by a further 43 percent. Homicides are down by 18 percent in Los Angeles. What is this Government’s answer to violent crime? It sits there and tut-tuts, as the body bags containing an elderly couple are brought out of their home and that is shown on television. The Government has no answer or strategy. It simply turns a blind eye, and tries to tell the public—who are not fooled—that crime is going down. Yeah, right! That would make a damn good Tui advertisement.

There is funding for an extra 245 police positions. Well, what a joke that is! One hundred of those positions have been earmarked to prop up and rebuild a failing 111 system. That has been deemed necessary by an independent inquiry team brought in from overseas. But no, that is to fix a problem that did not exist. It is to fix a problem that was brought to the personal attention of Mr George Hawkins 3 years ago by a police officer—a uniformed member who risked his career, his livelihood, and the security of his family by daring to write to the Minister of Police in September 2002, to tell him that the 111 system was failing: that it was understaffed, that it did not have the resources it needed, and that police officers, who were not real police officers but traffic officers, were turning their radios off. George Hawkins denied that. For 3 years he said it was not true, that the Opposition was making it up, and that it was not happening, but he had the written evidence in his desk.

Not only did George Hawkins have the information but so did the Commissioner of Police, whom this Government rewarded for his silence by extending his contract for another 2 years and giving him a $40,000 a year pay rise. Let us just remind ourselves that included in this Budget for the police is the salary being paid to the Commissioner of Police, who is now the highest-paid civil servant in this land. He oversaw the 111 system but denied that a problem existed, and the disaster in that system cost Iraena Asher her life. The question on the hustings during this election will be: why did Iraena Asher have to die, in order for the Government to finally accept that the 111 system was falling over? Why did she have to die—because dead she probably is?

This Budget is appalling. It talks about hundreds of extra police officers, but it does not tell us how many new front-line real police we will see on the streets. It talks about youth services and Youth Aid. It talks about having more of those people whom police officers call shiny bums: people who sit on their backsides, or police officers who do not staff the patrol cars, walk the beats, or make the arrests. They are the shiny bums—they got the ticks in the boxes, but they did beggar all time, actually, on front-line duty. That is the area where police numbers will increase. This Minister has failed; he has failed the people of New Zealand. This Government has failed. This Prime Minister has failed the people of New Zealand.

When New Zealand First members are on the Government benches we will not be talking about hundreds of extra police; we will be talking about thousands. We firmly believe that the police to citizen ratio in this country is so appallingly bad that the only way we will get on top of crime—serious crime, violent crime, the rampant drug industry, the methamphetamine problem, and the gangs that are earning $600 million a year through pushing drugs on to our kids—is to double the size of the uniformed police force, rather than tinker around with it. What an insult it is to our intelligence to tell us that for the first time the police ranks will be over 10,000 in number. The Minister has just lumped in all the non-sworn staff. That sort of deception will not be forgotten. It will be remembered at the polling booths, and New Zealand First will enjoy reaping the benefits of it.

STEVE CHADWICK (Labour—Rotorua) : At least the previous speaker had some policy, compared with the lack of policy announced by the National Party spokesperson. He is 23rd on the National Party list, so perhaps health is not a high priority for the Opposition—as has already been manifested.

This Budget that I will speak about is a fair, responsible, and inclusive Budget, not a “What’s in it for me?” Budget. That is the disturbing trend we find as we go around the country; we find that those who can well afford cost of living expenses are saying there is nothing in that Budget for them. They ask only what is in it for them. But when I go to my electorate and to the ordinary people I meet on an everyday basis, I find they are very happy with the increases relating to health, education, and services for their families. I have never heard them ask me: “What’s in this Budget for me?”. They know we have built on superannuation certainty; they know we are building on the Working for Families package for relief; and they know we are now turning to developing a culture of savings for the future of this country.

As a health spokesperson on the Health Committee, I am delighted with the aspects of health spending in this Budget. We will hit an unprecedented level of spending in health of $9.68 billion. That is 20 percent of Government spending, the largest sum ever, and it will deliver more services than ever. The Minister gave us item after item of services that will increase under this Government—not of cuts like those we suffered in the 1990s under that mean former National Government.

We are giving security and confidence to all New Zealanders about the quality of, and access to, the health service in New Zealand. As Dr Bengoa of the World Health Organization said, just this month, New Zealand is in the first division in primary health care. If National ever came back to office, we would be playing relegation matches in the third division. It would be worse than I could ever bear.

As a result of 6 years’ leadership in health, we have delivered huge health gains for this country. We have had one Minister of Health, not the five Ministers whom I had to work with as a health manager in children’s and women’s health. We had five Ministers in 9 years, who played with us, who tampered with us, and who told us we had to manage to the red line, all in the name of profit-driven services. They drove boards to actual despair—boards that had to return a profit on investment in the health spend, when patients were seen as relative-value units and not people in need of a health service. People were sheer commodities in an economic game of health policy. We have returned community confidence in the health service, and that confidence is showing in surveys the Minister has alluded to.

We are hearing some interesting words from the Opposition about burgeoning bureaucracy costs, and we will hear more of that.

Hon Dr Nick Smith: Absolutely!

STEVE CHADWICK: Well, it is rubbish. In the Lakes District Health Board that I know well, bureaucracy accounted for 11 percent of costs in 1999; that figure is now down to 6.4 percent. Let us look at that bureaucracy, that so-called burgeoning bureaucracy. Opposition members have forgotten about the Crown Company Monitoring Advisory Unit and about the former Health Funding Authority. Let us measure apples with apples if we are talking about bureaucracy in health.

In relation to the ability to fund those National Party tax cuts of $1.6 billion, which will have to be found from somewhere, we have to ask: what is going to go? How will those cuts be “re-prioritised” as Dr Brash referred to? “There will be just a simple little re-prioritisation of the health service.”! Well, they are cuts, and members should not forget that they are cuts. New Zealanders will not forget it. With the help of this Budget there will be 3,300 more nurses. Will those nurses be cut—and their wages with them? No? There will be 1,000 extra medical staff, 1,250 non-clinical staff helping to service patients’ needs, and 398 social workers.

If we found that $1.6 billion to fund tax cuts, the entire early childhood education budget for 2 years would have to be cut out of the Budget. That sum is the entire vote for early childhood education for 2 years. It would be gone—gone by lunchtime. Those would not be minor changes at the margin; Dr Brash said he would need a major slash-and-burn approach. There is no free tax-cut.

What else will go? I am hearing about mergers of district health boards, again. I was on a working-party when the Lakeland Health Crown health enterprise was told by the former Minister, Mr English to merge with the health provider in Whakatāne. We worked, and we spent thousands of dollars on investigating a merger, but it would not work. Why would it not work? The communities of interest were different and the merger did not stack up economically. So that demand went very, very quiet. But I am hearing the Opposition come up with—zip! Nothing! There is no reference to policy, and when we are 16 weeks from going to the polls it is a disgrace.

Lindsay Tisch: Oh, is it?

STEVE CHADWICK: Yes, it is about that much. Mergers are looming again, and they will be enforced just as they were imposed on us in the 1990s. We do not forget that, and neither do health managers or doctors and nurses in the profession. The primary health organisation structure is really strong. I was at a meeting, along with the Prime Minister, with 300 Grey Power members in Kawerau last week. She got a standing ovation with regard to the cost of going to a doctor and the cost of prescriptions. In Kawerau 300 old people will not forget. We have 77 primary health organisations, with 3.8 million New Zealanders enrolled, who love the low cost of going to a doctor. I warn Dr Brash not to take that away from them.

What else might go? The meningococcal B vaccine, which is being rolled out at present—will that be suddenly stopped, because it is not significant?

Hon Dr Nick Smith: No, we’ll do it properly.

STEVE CHADWICK: Well, we do not know; we have not heard any policy, I tell Dr Smith—another “Dr” in the slash-and-burn game. Will smoking cessation programmes go? I know how poorly the Opposition supported the Smoke-free Environments Amendment Bill, but New Zealand support for a smoke-free environment is growing rapidly now, with 42 percent of the public saying they like that legislation, and with more and more joining their ranks every day.

What about other health and wellness initiatives, such as nutrition and physical activity programmes? Will they be gone for a wee trot, or gone by Christmas? Health professionals need to think very carefully, and they need to remember the pathetic wage increases they received in 9 years and the constant stoppages in our sector from that cruel Employment Contracts Act regime. There was no such thing as fair bargaining.

What about the Hands Around Our Hospitals campaign, and the campaign to save our public health service? There was no workforce development plan, no training, and escalating student fees. There were no scholarships, and bonding for doctors. When we came into Government, there were run-down cancer services—with shortages of staff and capital—that were a disgrace.

We want to be fair, responsible, and inclusive. That includes valuing our workers in the health sector, and bringing them with us—not alienating them. We do not want to see any more of the “What’s in it for me?” syndrome that Opposition parties seem to suffer from.

I am proud about the increases in funding in this Budget for aged care, home-based services, and disability support. Young disabled who are sitting in rest homes with the elderly can now be properly supported in some dignity, which is something that is being very well received. Mental health funding, with $22 million going into increasing and escalating the implementation of the blueprint for mental health, is a very exciting initiative.

We will get there. This Budget is not just about cataracts, hips, and knees—which is what the Opposition still thinks health is all about—it is about wellness of our community, and it is about having confidence that the health service that people need will be there when they need it, and that people will be given high-quality health services.

Hon Dr NICK SMITH (National—Nelson) : I have a simple message for the member for Rotorua: she should listen to what the public is saying. A poll reported on the front page of the New Zealand Herald asked people whether they believed that the services offered by their hospital had got better or worse since Labour came into Government. In that poll of 1,000 people, two to one New Zealanders said that health services in New Zealand had got worse—and they are right. When it comes to schools, what did the public think? They were asked whether they thought standards in education had got better or worse. Forty-four percent of New Zealanders said that standards had gone down the toilet and 16 percent said standards were better. That says it all. The Government has poured billions of dollars into the bureaucracy, but the standard of services for the public has deteriorated, and New Zealanders have said “Enough is enough.”

The most telling part of this Budget was the embarrassment on the faces of the Labour members. I have never seen Government members look so glum while a Minister of Finance delivered a Budget. I remember the very difficult Budget of 1991—the “mother of all Budgets”—and, yes, it was hard, yes, it was difficult, but there was enthusiasm from the National Government members. The moment that Michael Cullen said the phrase “67c a week”, the members of this Government knew that they were dead and buried. They were gone! What is so telling about the 67c a week tax cut in 3 years’ time is that Labour thinks it can spend the public’s money better than citizens can.

Opposition members are absolutely united on the point that New Zealanders need to keep more of their hard-earned money. [Interruption] The member for New Plymouth is chipping in. I know that the people of New Plymouth would think exactly the same thing as the people in this poll. When asked whose tax policy they preferred—Labour’s or National’s—80 percent of New Zealanders said that National was right. What is extraordinary is that the policy has not yet been announced, but people know that members on this side of the House are committed to doing the detail and committed to affordable tax cuts. What is even more extraordinary is that United Future members, who are the Government’s mates and friends, and who have access to the financial data, have said overwhelmingly that tax cuts are affordable. That is what Harry’s mates have said. That is what the people who are supporting the Government on confidence have said.

The ASSISTANT SPEAKER (H V Ross Robertson): The member will use the member’s full name or title.

Hon Dr NICK SMITH: I challenge Mr Duynhoven and I say that his own coalition partner, United Future, says that this country can afford tax cuts. The most remarkable thing of all is that even Jim Anderton, the former Alliance leader, supports tax cuts. Well, if the Progressives and United Future support tax cuts and believe they are affordable, why does Labour not support them?

Hon Harry Duynhoven: Just tell us what you would cut.

Hon Dr NICK SMITH: Mr Duynhoven wants to know what we might cut. Let me give him some ideas. I want to talk about my own portfolio. Do people know what this Government budgeted to spend? It budgeted $100 million to be spent on the Weathertight Homes Resolution Service—$100 million—but not one dollar was budgeted to be spent on fixing a home. That money was to be spent on bureaucracy. Do people know how much the Government has spent to date? When it set up the Weathertight Homes Resolution Service, it promised that the service would be speedy, fair, and cost-effective. Well, how cost-effective is this: on average it is costing over $100,000 per leaky home just for the bureaucratic process—the mediation and the expert reports. Not a dollar is being spent on fixing a single dwang, a single joist, or a single stud. I say to the member for New Plymouth that one of the reasons he is going down the tube is that New Zealanders have had a gutsful of that sort of wasted money. Members on this side of the House would have spent the money on fixing homes, not on the mad bureaucracy. The members opposite said that the system would be speedy. Michael Cullen said that the Government would speedily fix up this tragic problem for thousands and thousands of New Zealanders. Do people know how many homes the Government will fix? The Government has said that in the next year it will fix 120 homes. Well, at that rate, it will take 20 years.

Darren Hughes: Baloney!

Hon Dr NICK SMITH: I know that the retiring Government member for Otaki has difficulty with numeracy, but if we have 3,400 cases and we are settling 120 a year, it takes well over 20 years to settle all the cases. That is a tragedy; that is anything but speedy.

We go to the area of education and, again, I say to Mr Duynhoven and the member for Rotorua that this Budget gives more money to the education bureaucracy than it gives to schools. That is where this Government’s priorities are. It wants to look after its mates in the Public Service Association and the Ministry of Education. There is more money in the Budget for the Ministry of Education than there is for schools. That is tragic.

Darren Hughes: The member is talking baloney.

Hon Dr NICK SMITH: No, it is a fact. I will bet that member—the retiring member for Otaki, who is soon to be gone after Nathan Guy’s election—the best bottle of Nelson wine that this Budget gives more money to the Ministry of Education than it does to schools. I ask whether the member will take me on. He is very loud and chirpy. I bet a simple bottle of wine that this Budget provides more for the bureaucracy than it does for schools. That is a statement of fact, and he will not take me on. Suddenly, he is silent because he knows that I am right. He knows that Labour members think it is more important to give another $45 million to the Ministry of Education than it is to give money to schools.

Members on this side of the House have a very different point of view. Our view is that money is best spent closer to the children. It is better spent by the schools. It is better spent on the teachers. When I was the Minister of Education, I had 1,000 staff in the ministry. Do members know that that number is now over 3,000? There are over 3,000 people employed in the Ministry of Education, and we have, according to the public, the biggest drop in standards. That is one of the reasons we need a change of Government.

New Zealanders know that the economy has been growing well, but they also know that the Government has taken all the money and does not trust New Zealanders with it. Ordinary New Zealanders are saying in their thousands what they want. I have been to Otaki and met Darren Hughes’ constituents and they said that they wanted a tax cut. Yesterday I was in Taupō, and constituents there were saying that they wanted a tax cut. Up and down this country people have had a gutsful of a Government that is more interested in keeping the money in its own pocket than letting hard-working New Zealanders enjoy the fruits of their hard work. There will be a change of Government because New Zealanders do not want a nanny State. New Zealanders are strong and individualistic. They want to be able to get on with their lives without the bureaucracy and without the excessive tax that this Government is taking out of ordinary New Zealanders’ pockets.

Hon Harry Duynhoven: Excessive tax!

Hon Dr NICK SMITH: Excessive it is. I ask the member one last question. This Budget provides for a carbon tax of $400 million. How many members here believe that the carbon tax will reduce the amount of emissions? It is a joke. It is nothing more than an excuse for Dr Cullen to get his sticky little fingers into the pockets of ordinary New Zealanders.

It is time for change. New Zealand needs a fresh start. We should reject this Budget. We should provide for tax cuts because ultimately New Zealanders are far better at spending their money than any incompetent Labour Government.

Dr the Hon LOCKWOOD SMITH (National—Rodney) : I guess in my lifetime there have been some memorable Budgets. I remember as a little kid listening on the wireless with mum and dad—or mum and dad were listening on the wireless, I was probably not taking a great deal of notice—and I remember it so well: Nordy’s “black” Budget. Some in this House, like the retiring member for Otaki, are not old enough to remember Nordy’s ‘black” Budget—

Lindsay Tisch: 1957.

Dr the Hon LOCKWOOD SMITH: 1957, indeed! I was in this Parliament when Ruth Richardson delivered the “mother of all Budgets”. But what about this Budget? What will this one be remembered as? Will it be, as some in the media have suggested, “Cullen’s crumbs”? Some have suggested, maybe, “Cullen’s damp squib”. I think this Budget should be remembered as one of those really memorable Budgets, as “Cullen’s deep, dark secret”. Because the question is, why on earth did he do it? Why on earth come to this House and read out a Budget that offers working New Zealanders 67c a week in tax cuts? Why would one do it? Why on earth would one insult working New Zealanders like that?

The new Labour member, Lesley Soper, is so embarrassed by what Michael Cullen did in this Parliament that she missed her call in this debate. It is most unusual for two National members to speak one after the other to reinforce how disgraceful this Labour Budget is. Labour members are so embarrassed. Do members blame them for being embarrassed? That was the 21st Budget, at least, that I have heard read to this Parliament, and I do not think I have ever heard a finance Minister’s Budget greeted with such derision by the Parliament.

When Dr Cullen read out the 67c a week tax cut, there was just derision from this side of the House. What I guess was derisory about it was not the fact that it was just 67c—and I do not think it does buy a decent packet of chewing gum—but hard-working New Zealanders will have to wait 3 years for it. Does one blame people for treating that with derision? That is why I suggest that this Budget could be remembered as “Cullen’s deep, dark secret”, because I suspect that he wants out; I suspect that Labour wants out.

The Government has had a great economic tailwind this last 3 years. When Labour came to office there was such a loss of investor confidence in New Zealand that $3 billion fled the country just like that. The exchange rate dropped to 39c in a matter of days, and members will well remember it. Sure, that gave our export sector a huge boost, and that started to filter through the economy. but just as the exchange rate started to come up again, what happened? It was 9/11! Some crazed Arabs flew passenger jets into the World Trade Center. It created a massive wave of immigration back to New Zealand, and gave our domestic economy a huge boost. I am picking that Labour does not claim that it did that! I am sure it does not claim to have engineered the disgraceful, outrageous attack on the World Trade Center.

Then, just as immigration started to fall off in the last couple of years, our commodity prices rose to world record highs for the last 20 years. I guess Labour cannot claim credit for that. Helen Clark tries to control most things, but she sure cannot claim that she controls world commodity prices.

All of that is now changing. The projections are that growth will fall from a 3.8 percent average over recent years, down to what? Half of that! I suspect that the deep, dark secret is that Michael Cullen wants out. He knows that the massive increase in spending—the amount this Government is spending—is almost 50 percent more than when National left office just 6 years ago. That is an extraordinary increase in Government spending. I suspect that Dr Cullen knows that if economic growth halves he cannot keep up that huge increase in spending. I suspect that the deep, dark secret is that Dr Cullen and the Labour Party members actually want out. That is why they insulted New Zealand workers so much with that absolutely insulting tax policy in this Budget.

Some in Labour have claimed that this Government has been fiscally prudent, and that there is no room for tax cuts. That is garbage. Because, as I said a moment ago, I do not recollect a Government that has increased spending by as much as this Labour Government has done—almost 50 percent in 6 years. What have we seen for that increase in spending? My colleague Nick Smith pointed out the massive increase in spending on health—no more operations, and the massive increase in spending on education. I see the member for Otaki shaking his head. There have been no more operations delivered in our hospitals despite the billions more dollars spent on health. As my colleague Nick Smith pointed out, in this year’s Budget there is more money for the Ministry of Education in percentage increase terms than for schools’ operating grants. Those are this Government priorities.

The quality of this spending is breathtaking. In education the Government funds programmes such as COOL IT. It funds homeopathy for pets. There has been a massive increase in wānanga funding. I have never seen such fiscal largesse, and it has to stop. I think Dr Cullen knows that the deep, dark secret is that Labour cannot continue what it has been doing.

I think this Budget, more than any other, defines the difference between National and Labour, and that difference is this. Labour believes that it knows best how New Zealanders should spend money. Labour believes that it knows best how New Zealanders should run their lives, and National does not. National believes that decent New Zealand people deserve the right to stand on their own feet. They deserve the right to keep more of their hard-earned wages. That is why National believes that the Government should take less of the hard-earned wages of the New Zealand people.

Today Dr Cullen said: “Ah, but the Working for Families package is so important. Working for Families will deliver for hard-working New Zealand families.” I want to tell this House and those Labour members opposite, like the retiring member for Otaki and the new member, Lesley Soper, who is too embarrassed to take a call, what Working for Families will really do to our hard-working families. [Interruption] Darren Hughes should listen. If an ordinary working family—a traditional family of, say, mum, dad, and three children, with dad working, and earning $30,000, living in Auckland and receiving the accommodation supplement—wants to earn another $1,000 to try to do something for their children, then under Working for Families they will get to keep only $228. This Labour Government will take the rest.

A middle-income family on $40,000 would keep only $108 of that extra $1,000. [Interruption] Lesley Soper should listen. If that family is on $65,000, does that new member know how much they get to keep, if they earn another $1,000, under Dr Cullen’s Working for Families package? They get to keep $48! If by hard work that family earns another $1,000 to do something for their children, under Working for Families they keep $48. It is not $480, but $48. These figures were provided by the Inland Revenue Department in respect of parliamentary questions. That is why the people of New Zealand want to see this Labour Government gone.

LESLEY SOPER (Labour) : This Budget is one of the reasons that I am proud to stand here as a Labour member of Parliament. It is a strong and credible fiscal document. It is about fairness and inclusiveness, about helping Kiwis to build a stake in this country, and about securing the future for all New Zealanders. Securing the future actually means improving the long-term economic and social health of New Zealand. That is something this Labour Government can do, because our careful financial management has meant we can afford to invest in health, in education, and in the social services.

I contrast that achievement with that of the so-called Opposition, which cannot come up with any policies for the present, let alone the future. It has no new ideas, but just promises that do not add up. National’s employment policy, and its education and social welfare policies, are all just a rehash of its failed policies of the 1990s. The previous speaker—a former Minister—broke every promise he made in the 1990s. Where is there any health policy at all from the National Party? We have not seen even a rehash of the bed-night charges and “CHEs” for supper. No, but among the mithering and baloney we do have a host of promises about Government spending and tax cuts that simply do not add up. There is no such thing as a free tax cut. From National there are only indications of slash and burn. What would a National Government cut first? Would it be the 3,300 extra nurses, the 950 extra medical staff, the 1,250 extra non-clinical staff, the 398 extra social workers, the 820 extra prisoner officers, or the more than 1,000 extra police—or perhaps superannuation, as we saw last time?

We need to remember where Labour started from nearly 6 years ago. We had seen hospitals closing or crumbling away around us. We saw bed-night charges, Crown health enterprises, the Health Funding Authority, and doctors and nurses disappearing overseas. It was a bankrupt, market-driven health model. It has taken our Labour-led Government almost 6 years to rebuild the staffing and infrastructure in health, which had been undermined by that long-dead National Government. “Let the market rule.”, the National members said. As I said in my inaugural speech, a large part of the rebuilding in the health sector is down to a change in health philosophy. We are putting the public back in public health, by concentrating on a wellness rather than a sickness model, providing health promotion and preventive measures, and establishing primary health organisations able to offer reduced fees and better public health programmes. I went to a Southland primary health organisation’s annual meeting last week. Those people are looking at positive results, better services, and a better future. They are looking forward. There is also in our policies an increasing awareness that the disabled have rights and needs, that they can contribute, and that we should be delivering decent mental health services. So the real deal in this Budget concerns the health and social policies.

The Budget is providing $969.7 million of new spending on health and $4.09 billion over the next 4 years. That is a huge investment in fair, equitable, and sustainable public health services. Vote Health is now 20 percent of all Government spending. What does that mean? It means that from 1 July the cost of a visit to a primary health organisation will be lower, and charges will be lower on most prescriptions for 18 to 24-year-olds. The Government has already done the same for some other age groups, and there are others to come. It means that $74.4 million is allocated over the next 4 years to roll out the next stages of the Primary Health Care Strategy. There is an additional $59 million for disability support services, $18.7 million for home-based care services, additional baseline funding for care for older New Zealanders—and that is in addition to what the Government delivered for residential care for the aged in December 2004—and $36 million for the nationwide travel and accommodation policy that assists mainly rural New Zealanders to access specialist health services. We have provided new funding of $22 million for implementing the mental health blueprint, $70 million for health research, $35 million for cancer initiatives, funding for the meningococcal B vaccine programme, $17.2 billion for up to 4,000 extra cataract operations, to join the $73 million we have already put in for the doubling of orthopaedic joint operations, and new funding to improve occupational health. And we are rebuilding and upgrading hospitals around this country.

Let me tell members that I spent 4 years as an elected health board member under this Government. During that time we built a new Southland Hospital on time and on budget. Are we proud of that? Yes, we are, because what we now have is not a crumbling, badly designed facility but a state-of-the-art hospital for the 21st century, offering first-class secondary hospital facilities and services. Because of the fiscal sense shown by this Government, other hospital projects are under way, and the more than $500 million allocated in Government funding for those projects will benefit areas like Dunstan, the Wairarapa, Kaitāia, Tauranga, Counties-Manukau, and Wellington.

Speaking of buildings, I say that one of my other passions is housing. Every New Zealander has the right to a decent-quality, healthy home. After the drought years under the previous National Government, where we saw State house sales, income-related rents, and the destruction of the apprenticeship system, this Budget is doing great things for the Healthy Housing programme. It will provide $134 million over the next 4 years to build up the Housing New Zealand stock, for the continuation of the Healthy Housing programme, for a hand-up to home ownership through the brilliant Budget 2005 extension of the Mortgage Insurance Scheme, a housing deposit subsidy available through KiwiSaver, and for a home ownership education programme. That will help real New Zealanders to get into real first homes, and will help with the fulfilment of the Kiwi dream of owning one’s own home.

This Budget is a brilliant Budget, a proud Budget, a Budget for the future, and a Budget of values: Labour values, and Kiwi values. This Budget is the long, reviving, cool drink of water that New Zealand needs in 2005.

GORDON COPELAND (United Future) : I would like to begin by referring to the workplace savings scheme. In the Budget it is now called the KiwiSaver scheme. United Future welcomes this scheme. New Zealand must lift its savings level. Let us look at the figures. We have negative household saving. We have very high levels of overseas debt—in fact, 88 percent of GDP. The important thing to grasp is that all that money is owed by New Zealand households and businesses. In net terms, the Crown itself owes nothing. We have a continuing high balance of payments deficit. A price is attached to all that—not only the fact that we are so reliant on overseas investment to keep our economy going forward but also that we now have a risk premium attached to the New Zealand interest rate.

I was very, very disappointed to hear that as a result of the “Economics ‘R’ Us” policy—the “R” standing for Roger and Ruth—in the late 1980s and early 1990s, many, probably most, of New Zealand’s major corporations wound up their staff superannuation schemes. Why? The reason was some ill-conceived Chicago school, doctrinaire, economic theory that had no reference whatever to the realities of human behaviour. No thought was given to the fact that if we discourage humans from doing something, they will probably follow our lead. That is exactly what Roger Douglas and Ruth Richardson did. They adopted a highly theoretical tax / tax exempt situation, based on the approach of no jam at all on day 1 but plenty when one retires in 20, 30, or 40 years’ time. What a dopey system that is if the idea is to encourage people to save. In other words, Roger Douglas and Ruth Richardson between them set out to discourage long-term savings through diversified savings schemes. And can members guess what happened? People stopped saving. It is like night following day. If we discourage something, we get less of it.

The KiwiSaver scheme, therefore, is the beginning of a reversal of those truly disastrous policies, and it is well overdue. I wholeheartedly congratulate the Government on at least—at last—acting to reverse the trend and take some initial steps to encourage savings. Before leaving the KiwiSaver scheme, let me mention a couple of aspects of it. First of all, the Minister told United Future in his briefing—it was not in the Budget papers—that the KiwiSaver scheme will enable people to use their savings to repay mortgage debt. That is a vitally important component of the KiwiSaver scheme, because obviously people who have mortgages are way better off to repay their mortgages than to try to save money. With a mortgage interest rate of 7.5 percent, one actually needs to earn about 12.5 percent pre-tax in order to have about 7.5 percent after tax. Such returns are simply not available, so the wise thing to do is always to repay one’s mortgage. If that mechanism is put in place—and I support the Minister’s resolve in that regard—it will actually ensure that people can stay in the scheme and will be encouraged to join it.

The second aspect of the KiwiSaver scheme is the housing deposit point, initially suggested to the Government after the Harris report came out. I make the point that the Harris report was completely silent about using the KiwiSaver scheme to put a deposit on a first home. That suggestion was put to the Government by the United Future party. It has been taken up in this Budget, to the extent that a Government subsidy of up to $5,000 per saver will be granted to people who have been in the scheme for 3 years. Potentially, that is up to $10,000 for a couple to help them to buy their first house. We believe that is a very, very worthwhile and long-overdue initiative. We come back to the same point: if we encourage something, we get more of it. If we encourage people to buy their first house, they will be able to do that. Let me make this very, very clear: it is United Future’s policy to see realised the old Kiwi dream of as many New Zealand families as possible being able to have the security of owning their own home. It is the route to an ownership society; it is the route to long-term security.

There are also some other initiatives that United Future took to the Government concerning savings. First of all, we asked that the earnings on superannuation funds be taxed not at the flat 33 percent tax rate, which overtaxes 45 percent of all savers, but instead at the marginal tax rate of the saver. If we lower the tax rates, that will obviously encourage savings. I am pleased to say that the Government accepted that bid, and it is included in the Budget. The second thing we suggested to the Government—in line with Craig Stobo; we were not the only ones to suggest this—was that the capital gains tax on domestic share investments through managed funds be abolished. Again, the Government accepted that recommendation, and that is also a very, very worthwhile step forward. We not only have to save but also to ensure that our savings go into high-quality investments. It is also a problem in New Zealand that so much of our savings has gone into low-quality investments. One of the reasons is that no capital gains tax has been put on residential property investment, but a capital gains tax has been put on domestic share investments through managed funds. That is crazy. It is an anomaly, and we are very, very glad to see the back of it.

I want now to talk about the so-called deep, dark secret concerning tax bracket adjustments for the effects of inflation. As is well known in this House, I have banged on about that matter for 2½ years, including last year when I brought into the House an amendment to a tax bill providing for an adjustment to the tax bracket—a 13 percent adjustment, I might say—which I wanted to take effect from 1 April 2005. At the time the Government vetoed that, but I am glad to see that at long last—although it is too little, too late—it has acted on it. This is actually an historic moment that breaks the logjam with regard to fiscal drag. Never before has a New Zealand Minister of Finance committed to a regular adjustment to the tax brackets to offset inflation. The fundamental unfairness of fiscal drag has been pointed out by many people since the days of Rob Muldoon, when he cynically used high inflation rates to boost his coffers at the expense of taxpayers. He was caught; he was found out. Yet in all the Governments we have had since, whether they were Labour or National Governments, no adjustments to the tax brackets have ever been made, except once, and that, unfortunately, lasted for just a little time. It was when my leader, the Hon Peter Dunne, was Minister of Revenue that we last had a tax bracket adjustment. Unfortunately, however, when the National - New Zealand First coalition Government came in, it reversed that very sensible step.

United Future will adjust the tax brackets by $5,000 from 1 April 2006—from $38,000 to $43,000, and from $60,000 to $65,000. Under United Future, no tax at all will be paid on the first $3,000 earned by all taxpayers. In combination, that will lead to a saving of $11.25 per week for those on $20,000, of $16.44 a week for those on $40,000, and of $30 a week for those on $65,000. However, the jewel in the crown under the United Future tax policy is income splitting for couples with dependent children. That yields huge gains. For example, a single-income family on $45,000 will be better off by $40.67 extra per week. At $55,000—which is the income bracket of the Gilbert-McLachlan family in Waihī, who featured in the media last year—families will be better off by $66.63 a week, and at $80,000, which is about the average income for a household headed by a couple in New Zealand, the amount will be a massive $154.62 per week. Those are fundamental gains; they are very real gains for New Zealand families. It is fundamentally unfair that although self-employed people in farming and business can already income-split for taxation purposes, those people who earn salaries and wages and pay PAYE cannot do that.

Also, income splitting is the answer to the problem of high marginal tax rates, alluded to earlier by Lockwood Smith. John Key has done some tables on that. There are high marginal tax rates, but if we put income splitting into the equation, the problem disappears. So that is also the answer to the high marginal tax rate problem. Income splitting dovetails in beautifully with the Working for Families package. It starts at about the middle-income bracket and goes up. It would be a very, very positive step forward for New Zealand families. Unfortunately, United Future is the only party in this House that is yet proposing that policy.

Hon MARK BURTON (Minister of Defence) : What a pleasure it is to take a call in this 2005 Budget debate—I was going to say it was the 19th Budget of Michael Cullen—because never ever have the contrasts been so clear, and never have the alternatives been so stark, in the area of defence. This Budget is all about maintaining core Labour values. It is about maintaining a strong, long-term, credible fiscal stance, being fair, and being inclusive. It is about helping Kiwis to build a long-term stake for themselves, their children, and their grandchildren in the future of our country, and it is about putting in place, and building on, conditions for growth.

This Government is committed to securing a future for future generations of New Zealanders—and we mean all New Zealanders, not just the handful at the top of the pile who would get their hundreds of dollars a week in extra tax breaks from the likes of John Key at the expense of so many other things in the economy. I will come to a few of those things that would pay for John Key and his mates at the top of the pile to have the big tax cuts.

I am proud to be part of a Government that has continued to make the long-term investment in those things that Kiwis care about—not only for themselves, but for their neighbours and for their kids. Labour’s long-term investment in our health system is $4 billion of additional spending over the next 4 years. That will be pumped into a health system that is getting better and better in terms of the provision of services—reducing the times that people are waiting for key procedures, despite an ageing population, and giving our older people access to the joint surgery and cataract operations that are so important to their quality of life.

But as the Minister of Defence I will spend most of my contribution talking about the good news for defence in this Budget. It comes after 5 years of rebuilding from the wreckage left behind by the negligent National Government of the 1990s. That wreckage started with the “mother of all Budgets”, which, thankfully, many Kiwis have forgotten. They have blanked it out of their memories because it wreaked so much chaos and suffering on New Zealanders and New Zealand families—

Georgina Beyer: We’re talking about psychological damage here!

Hon MARK BURTON: That is right—psychological damage. Along with so many other parts of the New Zealand economy, and along with so much of the infrastructure of support to low-income families and the vulnerable, defence took the hit, too. Over $112 million in that Budget was stripped out of the defence budget, and for years afterward the decline continued—more and more was stripped out. Occasionally a promise was made that the National Government would do something, but there was never money there.

I will give members an example. Members on the other side of this House bang on about the C130 upgrade that they were going to do. I challenge any National MP to stand up and point to where the funding was ever voted or allocated for any such project. Like so much of what we have seen more recently, that was hot air—talk but no commitment. What we have seen each year since Labour became the Government is money pumped into pay increases for personnel. In 2000 we put in place, for the first time, a coherent defence policy framework. In 2001 we put in place a defence statement that defined the structure of our forces. In 2003 we put in place a 10-year development plan to rebuild, for the first time in this country, in a coordinated cross-service way, a defence policy and structure based on a rational policy framework. Then we put in place a long-term funding package built into a cross-service coordinated acquisition programme to build up the equipment across the three services that are required for a coherent defence force.

In addition to that $3 billion commitment made over the first 5 years, in this Budget there is $4.6 billion of new expenditure. With the exception of $209 million that is additional capital for the back-end of the long-term development plan for acquisitions, almost $4.4 billion dollars—$4,380 million—will go into defence over the next 10 years to increase personnel numbers, enhance training and retention, and maintain and develop the infrastructure, so much of which was neglected and run down right through the 1990s.

We are paying the price for that now. This Government has made the commitment to fix the mess left behind by the former National Government. We are increasing the stocks and reserves of equipment and ammunition. Anyone who has an interest should go back through the annual reports of the Defence Force. Some of the platitudes that we hear uttered from members on the other side of this House about some of the treasured acquisitions and capabilities that they were allegedly so committed to could not operate, year after year, because the defence force did not have the means to get in the air and did not have the ammunition to practise with. That was the legacy of the 1990s for this country. This Government set about fixing it from day one—

Georgina Beyer: As it usually has to.

Hon MARK BURTON: And we have continued to do so, as—as the member says—we usually have to. Labour is always having to fix things—it is in the history of this country. Right through the last century Labour Governments have had to come in and fix up the neglect and shambles left behind, and nowhere more so than in defence. I challenge the members opposite not to whinge and whine, and not just to take cheap shots and flicks at the men and women who are our defence force when, because they push themselves and their equipment to the absolute limit of their capability, things occasionally break. Well, that is not a surprise if they push a piece of equipment so hard because they are out there doing humanitarian aid and recovery work.

When something goes wrong, what does the defence force get from the members opposite? It does not get support. Those men and women are out there putting their lives on the line, working to the absolute limit, and pushing themselves and their equipment, and they get cheap, nasty political point-scoring. No other country does it. During the tsunami crisis, every country doing airlifts as part of that humanitarian effort had planes with “unplanned maintenance issues”, as our engineers like to call them—in other words, something broke and they had to fix it. They were not sitting in a nice international airport with all the engineering kit lined up where they needed it; they were out in very difficult circumstances. Did we hear a single word of cheap political point-scoring from the US, the Australians, or the Canadians? There was not a word. Only New Zealand Tory politicians stoop to that level—they put down their country and put down the men and women who are out there actually doing the work we should be so proud of. Our defence forces are earning our country a high reputation everywhere else in the world, but back here they get “quipped” and are subject to cheap, nasty political point-scoring.

What does National offer in return? I shared the alternative with the House during question time this afternoon. National has had 5½ years of quipping and of showing all sorts of criticism of what this Government has done with billions of dollars of investment and a strategic plan for defence.

Darren Hughes: So what have they come up with?

Hon MARK BURTON: Well, Dr Brash said 4 weeks ago that no, National did not have a policy at the moment, but that it would have one before the election. Well, it does. I have to say that the National members made progress, and within 10 days they had their policy and had announced it. Dr Brash came through. His defence spokesperson announced the policy on National Radio—I was in the room at the time. He said that National will have a “Hone hui”—a bit of a talk—after the election. After nearly 6 years of planning, National will have a review. National will ask people in the defence force what they want, and it will get it for them. National does not know why, or what it will do, but it will have a “Hone hui”. That is the sum total—a review. New Zealanders can go to bed tonight feeling safe that if they vote for a National Government, they will have a review to defend them.

I say that this country deserves better. I know that it is a hackneyed phrase, but there was a once-great National Party whose members would have been shamefaced to come in here, or go to a radio station, and say that its defence policy was a “Hone hui.” Labour can do better, and we are doing better. New Zealanders deserve better, and that is why they will not have a bar of a Tory-led Government.

R DOUG WOOLERTON (NZ First) : It always saddens me to speak in the Budget debate because there is never anything for the people in this country who earn the money. I know that everybody assists our exporters, but the Government does not, and that saddens me.

I am looking at the Associate Minister of Agriculture, the Hon Damien O’Connor, who is sitting across the aisle. He is a man from the land. He is one of only two such people that the Labour Party has. He was brought up on a farm and he understands farming. He comes from a tough area of the country where dairying, in particular, is making great strides. I held out great hopes for him. I thought, thank heaven above, Damien O’Connor will surely get something for our downtrodden farmers.

But what did I see? I searched the Budget. I looked through page after page late into the night. My wife had to wake me and send me off to bed. I went through the Budget once and then through it again. Could I find anything that would assist farmers? I found nothing—not a word, not a sentence, not a paragraph, nothing. So I am deeply disappointed in Damien O’Connor. However, the one thing going for him is that he is relatively young. I would hope that we can keep working on this Minister—that is, if he stays there, of course—and hopefully he will come up with something better in the future. He knows, as I know, that it is agriculture, forestry, and all of those things that earn the money for this country. It is those things that set the standard of living for the 4 million point whatever people we have in this country.

People could be forgiven for not knowing this fact, but this Government has overseen a time of record commodity prices, record prices for dairying, record prices for wool, sheep meat, and so on and so forth. Prices are being wrecked at the present time by the high dollar and high interest charges, and I had hoped that something would be done about that in the Budget, but there was nothing to ameliorate that problem, either. Our exporters cannot compete on world markets with the dollar up around US70c-odd. We will see Fonterra with a lower price, and 25 percent of our exports are right there going through that one successful company. Right across the export sector we are seeing the dollar wrecking our exports and making them uncompetitive. What would it be like if we could turn that around and have a competitive dollar that would, admittedly, make things more expensive to import, but which would certainly help with our exports, which is what guides our standard of living?

The proof of what I am saying was in the March statement that said we now have a $9 billion trade deficit with the world. That is just staggering, and it would be bad enough, and serious enough, if it was at a time of low commodity prices, or some oil shock, or some other crisis that might be around that this country has seen over past years, but it is doubly serious when it is at a time of record commodity prices, and we will be talking about that in our campaign. One would look to the so-called “farmers’ party” of past years, the National Party, to be yelling and screaming about this, but we do not see that either, unfortunately.

We hear National members talk about tax cuts. My lasting impression from the other night was of one very dashing Mr John Key in front of a particularly handsome house with a particularly inviting swimming pool—many, many millions of dollars worth I am sure—telling the poor, average, middle-class people of this country that the answer, as far as the National Party was concerned, was tax cuts. While I am sure that for Mr John Key, with his flash house, his flash car, and all the rest of it, the answer is tax cuts as far as he is concerned, but for the farmers I am talking about, the answer is not tax cuts. First, one has to earn the income, then one can decide what to do with it, and tax cuts are a part of that. It is the dollar that is crucifying the farmers in this country at the present time and tax cuts will not fix that.

Not only are tax cuts being talked about, but our “friends” in the ACT party are running around stirring up apathy in the provinces, talking about access issues. I must say that when and if access issues come before Parliament, we will have things to say about that, too. But the bill is not even before Parliament and we have ACT rushing around, ranting and raving about access to streams, saying that it will be an election issue and that people will be running all over farms. I am sure that will not be the case. All that the members from those two parties, which profess to represent farmers in this country, can do is rave on about access issues and tax issues, when the real issue is the earning of the dollar, which is not only good for farmers, but is vital and important to the living standards of every single person in this nation. We simply cannot go on with a situation whereby the dollar, or the circumstances within a country, are making our products uncompetitive.

I know that it is tempting to talk about issues surrounding the cost of doing business, the Resource Management Act, and all of those sorts of things, and from time to time we will talk about those issues, as well—in particular, my colleague Jim Peters is attending to those issues—but first one has to earn the money, and that is what I am talking about tonight. In this Parliament we pay far too little attention to those things that earn the money for the country. We can put off the day when the chickens come home to roost, we can postpone that day, we can gloss over that day, we can borrow, and we can do all sorts of things, but at the end of the day, when we are in a situation of a deficit and we have a situation where the imports in this country are far too great in quantity and in cost, it is back to the farmers that we will go for the money to pay for not only our living standard but also to pay off past debt. What will we say to the farmers then? Will we say to them that we have appreciated them in the good times? Will we say to them that we will make things better for them? Will we say to them that we will give them a tax incentive or a tax break on their machinery? Will we increase the rate of write-down on their plant and equipment? No, we do not say any of those things in this 2005 Budget. The 2005 Budget is about expenditure; it is not about earning money for this country, and, to that degree, it is irresponsible.

TIM BARNETT (Labour—Christchurch Central) : Budgets come and Budgets go, and I judge each Budget both as a Labour member of Parliament and as the elected representative for Christchurch Central. From both of those viewpoints I am very happy indeed with the 2005 Cullen Budget. I will give just 10 reasons why, and in doing that, I will credit the National MP who said earlier that this Budget defines the difference between Labour and National. So it does, and so it should, and that is why I, as a Labour MP, like it so much.

First, this Budget is honest. That is healthy for our democracy. Budget 2005 does not pretend that x equals y, or that good public service and big tax cuts are compatible. If the Opposition combined its incessant calls for lower taxes with the other side of the coin—if it explained that tax cuts mean fewer hospital operations, worse-equipped defence forces, larger school classes—I would be the first to commend its honesty. It does not do that.

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

TIM BARNETT: It is an inspiration to stand here and see members stream into the House with appetites whetted by the first 1½ minutes of my speech and looking forward to the last 8½ minutes. I was just giving the House 10 reasons why I think this is such an excellent Budget.

The first point I was making was that the Budget is honest at its heart. It does not pretend that x equals y and that good public services and large tax cuts are compatible. I was challenging the Opposition to explain what it would cut in order to afford long term the tax cuts it is now promising. Indeed, National has made specific, costed new commitments that would mean about 12.5 percent growth—over $5 billion—in current Government spending. On top of that, National loudly and incessantly bemoans what it sees as underspending in other areas, while at the same time it promises tax cuts of something over $1 billion. It simply does not add up. It is voodoo economics, indeed.

Second, this Budget is visionary. It recognises that most of us have aspirations for our retirement from paid work that will not be met just by State superannuation. For the first time, through the KiwiSaver initiative, this Budget gives every New Zealander the right to save and the easy ability to do that. It also recognises that for many people homeownership is an unaffordable dream. It offers a way forward to the many people in my Christchurch Central electorate who are caught in that cycle of expensive, inadequate, and insecure rental property.

Third, this Budget will improve the health of my electorate. In 1999 Labour inherited a truly dreadful legacy of high-cost primary health care and free hospital care. Primary health organisations are the key tools to transform that. National started by opposing them, and now it has flipped. This Budget includes $1 billion of new money for health—$250 for every person in our nation. I was also delighted that the Minister of Finance noted that health spending here and worldwide is growing faster than wealth creation. I welcome the root and branch examination of how we as a nation will handle that.

Fourth, this Budget is good for Māori. Christchurch Central contains the highest number of Māori of any general electorate in the South Island. Māori are, on average, younger and are more likely to be parents than the general population. The plans in the Budget for early childhood education, school spending, health, economic development, and Working for Families are particularly relevant to the Māori community. This Budget is a winner for them.

Fifth, this Budget is good for the arts. My electorate contains the nation’s best collection of heritage buildings and also its premier art gallery. Our museum is more visited than that of Auckland. All of that requires public investment to match and incentivise private support. Under Labour that has happened. This Budget expands support for significant new and renovated public buildings, and also deepens the grassroots partnerships and investment, from which have emerged Canterbury winners like Scribe and Yulia.

Sixth, this Budget is good for older New Zealanders. New plans include reform of the driving test. Older people have, understandably, a real fear of losing their independence, and the current testing system does not lessen that fear. Also, Budget 2005 puts much more money into rates rebates, which is particularly helpful for older people. We should compare that with National’s Budget in 1999—a sad end to an embarrassing Government. That Budget presented a double whammy of tax cuts plus superannuation cuts. That still haunts older people in my electorate. Labour reversed the superannuation cuts in 2000, and since then the “Cullen fund” has become the guarantee for us all to have a secure future in old age. Of course, National started by opposing the fund, and now, again, it has flipped.

Seventh, this Budget is good for New Zealand families who are seeking security—not the security of a handful of dollars coming from a tax cut, but instead the security of Working for Families, which means real new income for families in need. That scheme is a perfect illustration of the difference between Labour and National. Labour puts the money where it is needed; National wants to use it as a reward for earning a lot. The security that comes with real jobs is vital to people in my electorate. In Christchurch Central the number of people on the unemployment benefit has dropped from 7,100 in March 2000 to 2,100 in March 2005. It has gone from 7,000 to 2,000 in just 5 years. The number of people on the domestic purposes benefit has dropped from 4,400 to 4,000. In the last year the number of people on the sickness benefit has also dropped, and the number on the invalids benefit has risen just a little. Overall, there has been a dramatic turn-round. Each of those falling numbers means that families are better off, they have more pride and happiness, and they are saving the Government from spending.

The other side of security is safe communities. Again, on every count Labour is winning. Recorded crime is down. The homicide and murder rates are down to half the level of the late 1980s and early 1990s, the burglary rate is down, and crime resolution rates are up. Budget 2005 lifts the police budget to over $1 billion per year. Certainly, more police resources are needed in some areas, but surely a time of falling crime is a chance to put the money into prevention, better education, and early intervention.

Eighth, this Budget is good for refugees and migrants. I well remember in my inner city electorate the stories of the 1990s of people attracted to New Zealand under false pretences and given not 1c of support. Now we offer settlement education, more understanding of the traumas of migrating across the world, and specialist health and job support. Why set people up to fail when we could—and should—set them up to win? Budget 2005 builds on our success in that area.

Ninth, this Budget is good for education and training. Since 1999 Labour has increased school funding by an average of $348 for every child—one-sixth growth in real terms. We have 2,700 more teachers than roll growth demands. Budget 2005 adds to that. In early childhood education the story is inspirational. Sixty-five new childcare centres are funded in this Budget, and from July 2007 all 3 and 4-year-olds will be eligible for 20 hours of free community-based early childhood education.

Tenth, and last, this Budget continues the good story. Why offer tax cuts in election year—the oldest trick in the political textbook—when we all know that clever Government spending can bring help to those in most need? Private sector provision of basic services, which is at the heart of National’s solution, is dreadful for many, delightful for the fortunate few, and not an answer to any question I have heard my constituents asking. Margaret Thatcher once claimed that her greatest achievement was to reform the Labour Party in order to bring it closer to her vision of the world and to move the centre of politics in her direction. Just occasionally, National shows a rare flash of common sense in supporting what Labour is doing, but, true to type, its response to this Budget shows just how hard our task is, and just how unreformed National is at heart. I commend this forward-looking Labour Budget to the people and to this House.

• Debate interrupted.