[Sitting date: 02 May 2012. Volume:679;Page:1863. Text is incorporated into the Bound Volume.]
Debate on Budget Policy Statement
PAUL GOLDSMITH (Deputy Chairperson of the Finance and Expenditure Committee)
: I move,
That the House take note of the report of the Finance and Expenditure Committeeon the Budget Policy Statement 2012. The Finance and Expenditure Committee considered the Budget Policy Statement in March, and I
acknowledge the work of the members of the committee under the then chair, Simon Bridges.
I want to begin by congratulating the Minister of Finance on his efforts to steer the New Zealand economy so successfully through such a challenging period. The economy may not be growing as quickly as we would like, but it is growing. It has now grown for 10 of the past 11 quarters, which is more than much of what the developed world can boast. We are expected to grow more strongly over the next 2 years than the Euro area, the United Kingdom, Japan, the United States, and Canada—
Mr SPEAKER: Order! I apologise to the honourable member. I say to other members of the House that it is noisy. I know members are leaving the House, but it is unfair to a member right at the back of the House for there to be so much noise that it makes it difficult to be heard. I just ask for a little courtesy to be extended to the member.
PAUL GOLDSMITH: —thank you, Mr Speaker—despite a number of challenges, including the ongoing European debt crisis, the Canterbury earthquake, and a high exchange rate. Let us not forget that what this Government inherited in late 2008 was an economy that had been in recession for almost a year, forecasts of never-ending deficits, and ever-rising debt. Against that we have been helped along by the fact that our terms of trade have been good and that our two largest trading partners, Australia and China, are forecast to maintain relatively high growth rates. So that bodes well for the coming years.
The Budget Policy Statement 2012 sets out the Government’s plan for Budget 2012 and future years. All members of the House will be familiar with the priorities that the Government has outlined. These are responsibly managing the Government’s finances, building a more productive and competitive economy, delivering better public services within tight financial constraints, and rebuilding Christchurch. These priorities are well known, because this Government has been consistent and steadfast in its purpose. As the Prime Minister has said, we are sticking to a plan that is working. Members should not underestimate the importance of that solidity and clarity of purpose shown by this Government. Strong and stable leadership is a rare commodity in the world at this time.
Going through the four areas, let us focus first on building a more productive and competitive economy. There is no magic here. We are not entitled to anything. This world does not owe us anything. In fact, the rest of the world does not care about us, at all. Some people are interested in the products that Kiwi men and women have on offer, thankfully, and some want to invest their money in our economy, and it is our task as a nation to keep them interested, in the face of strengthening global competition.
The Government’s main role is to set a policy framework that gives individuals and businesses the confidence to invest and to create products, new jobs, and new wealth, and the Minister of Finance has recently outlined some key initiatives to increase our productivity. We can talk about the tax package of the 2010 Budget, which increased taxes on consumption and property speculation and reduced taxes on work, companies, and savings. It is a very important measure. We can talk about changes in regulations—for example, in the Resource Management Act area, building laws, and industrial relations laws—and our multibillion-dollar investment in infrastructure through rail, roads, electricity transmission, and ultra-fast broadband. We can also talk about the focus on changing the incentives around welfare and work. Looking ahead, the Government’s business growth agenda will continue that momentum, more of which we will hear about in the Budget, no doubt.
Of course, we have heard endless criticism from the other side of the House and from some of their supporters. Their approach seems to be to say no to everything except, of course, spending more and borrowing billions of dollars more. They appear to want to
close the country to foreign investment, or at least to investment from some countries, when since 1840, if not before, this country’s economic growth has been based on foreign investment. I stand for internationalism and an outward-looking economy and society. New Zealand has nothing to gain from demonising foreigners and turning inwards.
Opposition members are opposed to a moderate proposal to sell minority stakes in our energy State-owned enterprises in order to strengthen New Zealand’s shallow capital markets and to bring the disciplines of private sector ownership to these companies, as well as to reduce our borrowing requirements. We have heard some economic nonsense there. In another committee I am on, the Local Government and Environment Committee, they are opposed to moderate legislation for New Zealand’s massive exclusive economic zone that would balance economic growth alongside environmental effects. “Don’t do anything.” is the Greens’ basic message. Well, I am sorry, we have got to make a living in this country. We cannot just dream up one new trick such as green technology and expect that it will do for us. Our prosperity requires continuous and relentless improvement in the things that we currently do well, as well as using our creative talents and brains, and it also requires looking for additional natural resources.
Although some New Zealanders may be happy with having lower living standards than those in Australia, most people are not, including the ambitious next generation coming along and hoping to make their way in the world. That is why this Government is focused on economic growth.
As for responsibly managing the Government’s finances, the Budget Policy Statement has underlined the size of the challenge in returning to surplus by 2014-15. Last year the Government’s operating deficit before gains and losses was $18 billion, or 9 percent of the gross domestic product, about half of which was devoted to the earthquakes. The Budget Policy Statement that we are debating today forecasts that our deficit will be around $12 billion in the current June year before roughly halving in each of the subsequent 2 years to return to surplus.
Last week the Minister revealed a $1 billion deterioration in the preliminary forecasts of the operating balance before gains and losses in 2014-15. This is due to such factors as the impact of lower global growth on short-term New Zealand growth forecasts and downward revisions to expected New Zealand Superannuation Fund revenue and State-owned enterprise profits. We are also expecting a rise in some finance costs and higher earthquake costs. So we have a wider gap to bridge, and, as the Budget Policy Statement says, this Government has shown that it is capable of delivering Budgets within tight fiscal parameters. The 2011 Budget introduced a new zero operating allowance in an election year, and the Prime Minister has indicated that we will run close to a zero Budget again this year.
None of this is easy. This is a massive rebalancing of the nation’s finances. It would be politically easy for the Government to find excuses to put it off for a few years and to kick the can down the road, but that is not our intention. Households and businesses up and down the country are doing it, finding savings and ways to make the same amount of money go further, and there is no reason why this Government should not also do it.
If we turn to rebuilding Christchurch, all of this has been made much more difficult by the need to rebuild Christchurch, which we remain absolutely committed to do. I spent time down there over the adjournment, and I continue to be amazed by the scale of the disaster. More than 100,000 homes, or half of the housing stock in Christchurch, are damaged; 7,000 homes are red zoned; and 3,000 to 5,000 businesses in the central business district have not been replaced.
I also want to mention the fact that the Budget Policy Statement reported on the Government’s determination to deliver better public services within tight budgets. We do not have the option of pouring more and more money in, like the Government of the previous decade did. In any case, more money does not always lead to the results expected. As the Government sector is such a large part of the economy, it is crucial that it is as focused on productivity improvement as the rest of the economy is.
In conclusion, this National Government has been taking a moderate and balanced approach to managing the Government’s finances. We have made the hard decisions to reprioritise spending towards the things that work, and we also have a firm focus on results, rather than just on inputs. We have had the guts to prepare this year to see our second zero Budget as we chart a course back to surplus. It is this combination of disciplined fiscal policy and a willingness to make trade-offs—having a plan to rebuild and strengthen the economy and sticking to it—that will give New Zealanders the confidence to invest in this country and in the brighter future that we all aspire to. Thank you.
Hon DAVID PARKER (Labour)
: I would like to start with a quote from the newspaper in New Zealand that has the widest circulation. It is not very old; in fact, it was only from Sunday. The
Sunday Star-Times on 29 April states: “The government is fast shredding its credibility as a sound manager of the economy. Each expedient deal it strikes erodes its integrity and political capital.” I am going to repeat that again: “Each expedient deal it strikes erodes its integrity and political capital.”—and I want to come back to the issue of integrity if I have time during this speech. That was from Rod Oram. Rod Oram, I think, is a pretty considered person. I know that the National Party does not agree with him, but plenty of people do.
The last time I quoted Rod Oram here I heard a cry from the other side that he was a person who was some sort of Labour Party lackey, which I am sure he would find insulting, because he is not. So I was interested to see whether there were any other commentaries that were of similar effect. The Hon Annette King passed me something from
Management magazine—management.co.nz—which in March had an opinion piece on leadership. In respect of John Key it said this: “Key seems to have a strong personal following. He could probably sell his vision if he had one and if he believed it … The fact that he doesn’t suggests a leadership strategy based more on expedience than inspiration.”
I think those two comments from the media are illustrative of the fact that the public are waking up to the fact that under this Government its economic mismanagement is responsible for the facts that the economy is failing to thrive as it should, and that the Government continually fails to meet its own projections—not just the projections of Opposition parties or other financial commentators but its own projections. Every time, it falls off them. As a consequence, in the last Budget Policy Statement we saw the Minister of Finance saying that the revenues are a billion dollars down, roughly, compared with where they were at the time of the election in the
pre-election fiscal update. As a consequence, he says we are going to get a zero Budget, or near to it. Well, a zero Budget is what you get when the economy is failing. There are no excuses now for the Government. We are 4 years into its reign—4 years. The excuse of the Canterbury earthquakes becomes less and less relevant, and, indeed, that information was largely before the Government at the time when the pre-election fiscal update was prepared.
We know that National’s economic strategy is not working, and yet we have the Prime Minister yesterday in his pre-Budget speech delivering a speech titled “Sticking to a Plan That’s Working”.
I thought that was rather an amusing statement, given how things are not going to plan. If National’s plan is working, why is it that we have got
record numbers of New Zealanders heading to Australia? It is higher than ever before, month upon month upon month. Why are they heading there? Because rather than the Government bridging the wage gap with Australia, that wage gap has grown. I know the Government likes to spin the statistics and use different measures of the wage disparity between New Zealand and Australia, so I have looked at all of them. Picking the best of them for the Government, that wage gap has grown by $19 a week since the Government was elected in 2008. That is one of the reasons why they are going to Australia.
What else is going wrong? We had a report out from the IMF. The International Monetary Fund looks at the performance of economies around the world. Its report, in April, had the forecast for different countries in the world and how they were going in the world. Are countries paying their way in the world? There was only one country worse than New Zealand in the advanced economies, and that was Greece. I think this should be of concern to New Zealanders, because it is proof that another of the Government’s promises, to rebalance the economy, has not been kept.
New Zealanders are leaving for Australia in greater numbers than before, and those left behind are getting sick of the short-term unprincipled fixes that do not fix the economic malaise that we are suffering under. Labour would not sell our assets. The Budget Policy Statement for the first time laid bare the consequences of that on the Government deficit. I have been critical before of Treasury being the lapdog of the Government on this, and I will say it happily again in this House—not happily; I will say it in the House because I think it is an outrage that Treasury let the Government book the proceeds of sales from the State-owned enterprises but did not show the drop in income in the books, which is a consequence of no longer getting the full dividends and profits from those companies. We had a lack of transparency on that during the election, but the Budget Policy Statement makes that clear for the first time. If the sale of the State-owned assets proceeds despite the overwhelming opposition from the vast majority of New Zealanders, if the Government still proceeds with those sales, what happens? The Government deficit gets worse. By how much? Treasury says that in 2016 the Government deficit will be worse by $94 million per annum. That is but one of the decisions that this Government is making that make the economic outlook of this country worse than it would otherwise be.
We have had prices going up, since National was elected, four times as fast as wages. After we had our last zero Budget, what happened? We had a credit downgrade, and that credit downgrade leads me to another issue. The Government had said that it was going to avoid credit downgrades, but the other issue there, which for me showed a lack of principle in the Government, is that the Prime Minister misrepresented the comments of the rating agencies in respect of Opposition parties. He tried to say—until he was caught out by the rating agencies speaking up and saying it was not true what he was saying—that the downgrade would have been worse under Opposition parties’ policies. In fact, they said that was not the case. They also emphasised that it is not Government debt that is the primary problem in New Zealand; it is total New Zealand debt, our net international liabilities, which continues to get worse.
You do not have to be a brain surgeon to follow the trend in the deficit. It was $18 billion last year, it is $13 billion this year, in the forthcoming year it will be about $9 billion, the year after that it will be half of that $9 billion, and in the next year it will be overcome. The Government is trying to set up New Zealanders to think that that is economic success, and that if it achieves a balancing of the Budget, as we would have in the 2014-15 year—as we would have—that somehow is economic success. It is not, because every year into the future New Zealand is getting poorer, New Zealanders’
incomes are not rising, and they cannot meet their bills in the way that they ought to be able to, because the underlying economy is not thriving.
That lack of principle that showed up in respect of misrepresentation of the credit downgrades of New Zealand has had a number of sequels of unprincipled behaviour. We had the tea tapes, where the Prime Minister called in the police against the media during the election, and at the end of it, when he was not willing to go to court and have his position exposed under cross-examination, he deemed Mr Ambrose guilty—
Hon Anne Tolley: No, he didn’t. The police did.
Hon DAVID PARKER: He did. Those were his words. Oh, the Minister of the Police says it was the police. Goodness, the Minister of Police thinks it is fair for her and the Prime Minister to deem people guilty. It is a pity National members do not apply the same standards to John Banks. What a double standard. It is a pity they do not apply the same standards to the disreputable conduct of the Prime Minister in appointing Mr McElrea to the Broadcasting Commission, also known as New Zealand On Air. It is a pity they do not apply the same standards to themselves for insider deals for the likes of more pokie machines at the casino. It is a pity they do not stand up and do what they said they would do on the Crafar farms, where they said they were going to tighten up the law, and, notwithstanding the fact that the Overseas Investment Office says there would be no increase in exports and no increase in production, they are pushing that sale through in a joint venture with the Government, through Landcorp. What a lack of principle.
This Budget Policy Statement shows that the economic performance of the Government is lacking. People are starting to wake up to that. The lack of a plan for the economy is hurting people. Asset sales, land sales, and shonky deals on pokie machines are no substitute for a plan to grow the economy. Changing who owns what already exists, be it power companies or land, does not improve the output of our economy. The Labour Party agenda, which is for education, science, more savings, growth, and tax reform, is the Budget that New Zealand needs, not what we have got currently.
Hon BILL ENGLISH (Minister of Finance)
: It is good to have the opportunity to talk about the Budget Policy Statement, which confirmed the Government’s agenda as laid out by the Prime Minister early in the year around the Government’s four main priorities. They are to responsibly manage Government finances, to push for a more competitive and rebalanced economy and better public services—even if there is a bit less money for it—and, of course, to rebuild Christchurch. The Budget Policy Statement confirms that, consistent with policies put in place in the Government’s first term of office, we are essentially on track, which is not a bad effort given the global uncertainty that continues.
We are looking forward to moderate growth over the next few years, and by international standards it is pretty good growth. So over the next 12 months the New Zealand economy will grow faster than Europe, certainly faster than the UK, which has just gone back into recession, likely as fast as the United States, and at a similar growth rate to Australia.
What that amounts to is the creation of more jobs. It amounts to meeting the expectation that New Zealanders have for higher incomes. The quarterly employment survey figures that came out yesterday indicate that incomes are growing faster than inflation—in fact, almost twice as fast—and that means that where in many countries around the developed world people face desperate job insecurity and large-scale unemployment, New Zealanders, on average, have the benefit of real growth in incomes.
Much of the Government policy is focused on supporting those who can ensure that growth in jobs and incomes. As has been explained here in the House, that growth will
not include the Government. The Government is not going to be growing. The Government had a strong period of growth through the first decade of this century. Its spending grew dramatically. But that turned out to be unsustainable, particularly in the light of both the New Zealand recession and then the global recession, and growth in the future will not come from borrowing more, or more Government spending. In fact, the world is not going to lend us the money to keep pretending we are getting wealthier by running up a larger overdraft, either privately or publicly. New Zealand households do have very high levels of debt. They have got the message. That debt has stopped rising and is now falling for the first time in 20 or 30 years.
Growth in the future will have to come from different sources and there are not too many choices for that. It will have to be from selling more goods and services at higher value to more people outside of New Zealand who want to buy them. It is about as simple as that. So Government policy is focused on helping businesses and people who provide employment to make the decision to invest a bit more, take the risks that go with that, and employ another person, therefore creating another job. This will help them with the value of their goods and services so that they can afford to pay higher wages.
Unlike the Opposition, we and most of New Zealand know that you do not get higher incomes by wishing for them. You have to get them from real economic value and employees getting their share of that increase in real economic value. The good news is that despite the headwinds and the global situation, New Zealanders are currently enjoying the benefits of moderate real growth in their incomes. We do not claim that it is stronger than that, but it is moderate real growth in their incomes.
I think their expectations about what can be achieved are not unreasonable. They are in a very pragmatic mood, and keen to see the Government promote more jobs, growth, and incomes, and that is what we will continue to do.
Hon David Cunliffe: God help not.
Hon BILL ENGLISH: Well, picking up on that member’s comment, the Labour Party has probably got a bit of work to do among its four economic spokesmen, who are regularly outpointed by the one economic spokesman in the Greens, who takes up more space giving more considered contributions to public debate. One of their economic spokesmen said—I am told this, and I will have to check this out because I thought it was unlikely, but apparently it is true—that economic policy in New Zealand for the last 30 years has been wrong. So that means that we are going back to the late 1970s, is it—
Paul Goldsmith: I think Muldoon was the last one of that mind, apparently.
Hon BILL ENGLISH: Muldoon? Well, maybe that is where they are going to go, because if it was all a mistake for the last 30 years, you have to go right back to before that. No doubt there are elements of the Labour Party leadership race where that resonates, and I guess we will find out. It is a bit unfortunate that the other spokespeople are advocating those tragically wrong economic policies that were put up in the last 30 years. The research and development tax credit, I think, is the one, and that has got them dancing in the streets—the research and development tax credit.
The bit that Labour has not learnt—and this is directly relevant to the Budget Policy Statement—is that saying you are committed to skills and innovation is one thing, and saying you have spent lots of money on it is another thing, but neither of those mean that it actually made any difference. The Minister on the front bench here, Anne Tolley, indicated that with her response today to questions about trade training and qualifications in prison. So Labour is committed, I am sure, to rehabilitating prisoners—
Hon Anne Tolley: But they didn’t do it when they were here.
Hon BILL ENGLISH: —but it did not do a thing about it except drive up the prison population. There was no cohesive sense of what it was trying to do about qualifications
for prisoners, let alone for the broader public. I mean, for the broader public it just threw lots of money at it, including at the people who had died, the people who had long since left the trades, and the phantom applicants who never showed up for any trade training, but there were 150,000 places or something. Most of it was exposed as meaningless spin, spending lots of money that was not working.
One of the jobs this Government has committed itself to has been undoing a lot of that damage, particularly across our public services, and restoring a sense that a motivated Public Service can actually make a difference to the way the world is, not just talk about it.
Grant Robertson: How motivated is Foreign Affairs?
Hon BILL ENGLISH: Well, that is another thing: the Labour Party gets this stuff all out of proportion. New Zealanders actually want better health services, a safer community, and decent education, and, actually, they are not obsessed with that member’s gossipy little Wellington circuit.
Hon Member: Yeah, the beltway.
Hon BILL ENGLISH: The beltway and “Mr Beltway” himself, the next leader of the Labour Party. When it has finished with Mr Shearer it is going to have “Mr Beltway”, and that will not work. That will not work either and Mr Cunliffe is waiting, waiting, waiting, because he knows he can afford to see off Mr Shearer and “Mr Beltway”, because “Mr Beltway” will not get any more resonance than Mr Shearer, and then it will be Mr Cunliffe’s turn. I agree with Mr Cunliffe. I think the patient strategy is the right one to take—and I am an expert on these things. Mr Cunliffe should take his time.
The Government is not going to be distracted by what is going on in the Labour Party. We are sticking to our four priorities for the economy. We are pleased to be supporting so many New Zealand families and businesses who have changed the way they see the world. They have increased their savings, changed their skills, become more innovative, made their struggling businesses viable, and turned their families’ finances round. We are right behind those people because they are who are changing this economy for the better.
Hon CLAYTON COSGROVE (Labour)
: There is an interesting trend that has happened in the life of this Government in the last few months since the election. It is “third-term-itis” in the second term. But the interesting and more serious point is this: this is a Government now that is getting sidetracked and preoccupied and wallowing in scandals. The body count is going up, the mismanagement is going up, the ministerial resignations and sackings are going up, Government members are getting sidetracked into the mire of their own selfishness and their own self-indulgence, and they are leaving the management of the economy out there just in space. They are leaving New Zealanders behind because there is no plan and they are sitting there looking normally like a third-term Government but inwardly looking at their own mess-ups, their own ministerial cock-ups, like Dr Smith, of course, and others—and now we have the latest one, which is the ethical behaviour of John Banks.
We should be spending question time not trying to hold Ministers accountable for their mismanagement and unethical behaviour, because they should be behaving ethically. Question time should be about holding the Government to account for the big issues. However, all the public see from this Government is Minister after Minister getting hog-tied by their own incompetence, their own self-indulgence, and their own selfishness, and it is left to members of this Parliament on this side to hold them to account for it.
I just want to also raise this issue. You know, Mr Goldsmith was, I think, the person who kicked off this Budget Policy Statement debate. It was Mr Goldsmith, I believe,
who was John Banks’ biographer. In fact, I think he wrote two books, did he not: the authorised version and the unauthorised version. Then it will be the third in the trilogy of books. It will be on the rise and fall of John Banks, to be followed very soon by Mr Goldsmith—who I am told is a very good writer—writing John Banks’ political obituary. That is what will happen.
Paul Goldsmith: You’re just jealous I won’t write one about you.
Hon CLAYTON COSGROVE: Jealous of John Banks—hell, no! Hell, no! I do not think there is anybody alive in this Chamber who would be jealous of John Banks—no one, I think, especially those of us who value our memory and our mental faculties, and can remember our own name, where we come from, and what our job is. We know what a helicopter does. So does Anne Tolley, of course. She spent a fair bit of time flitting around universities in Auckland. He could not remember whether he was in a helicopter; he could not remember what day it was. I mean, for goodness’ sake! I put it to you that, as we debate the Budget Policy Statement—and this is a serious document—a member who cannot remember where he is or what a helicopter looks like, you have got to argue, maybe should not have a ministerial warrant. Can he remember what day it is?
But, on a serious note, that is the first in a litany of Ministers and casualties where this Government should be concentrating on the content of the Budget Policy Statement. Government members should be explaining to people why it is that unemployment has increased 43 percent to 150,000-plus people out of work over the lifetime of this Government. They should not be being self-indulgent, having to deal with that member there, Dr Nick Smith, for his behaviour, and having to deal with John Banks, Richard Worth, Pansy Wong, Mr Heatley, and the “$48,000 man” who just resumed his seat, Mr English, of course, over his little problems with his expenses. No, this is a Government that has forgotten about ordinary New Zealanders, forgotten about them, left them behind, and now it is into this self-indulgent wallowing, trying desperately to paper over the cracks of the Ministers and the members of the Government who are acting reprehensibly.
I thought, as we all did as we look at the record of this Government, that there was going to be a higher plane. Remember the brighter future? Well, is it a brighter future as we look at the figures—
Hon Anne Tolley: I raise a point of order, Mr Speaker. I have listened very carefully to the introduction to this speech and I ask you this: just referring to the fact that it is a Budget Policy Statement speech surely does not bring a mass of wallowing in ministerial actions into scope.
Chris Hipkins: That’s an out-of-order point of order.
Mr SPEAKER: Order! The member knows it is out of order to interject when a point of order is being heard. The member is asking that the speaker be brought back to the subject of the debate, which is a debate on the Budget Policy Statement. I have been indicating to the member that he was staying away from the debate for some period of time, and it does require just a little more than referring to the title of the debate. I ask the member now to come to the substance of the debate.
Hon CLAYTON COSGROVE: I thank Ms Tolley for agreeing with me and conceding that a lot of ministerial wallowing has certainly happened. So, if we are going to deal with the Budget Policy Statement and we are going to look at the record of this Government, let us look at the record of that Minister and her Government, shall we? Let us look at this: prices went up nearly four times as fast as incomes in the last 3 years. There you go—strike one. As we have said, there is a 43 percent increase in unemployment. There are 83,000 young New Zealanders out of work, not in training, wallowing on the dole, or out there in the wilderness, and they hang it all, firstly, on the global financial crisis, and, secondly, on the Canterbury earthquakes.
I put this very simple equation to Ms Tolley. I will make it very simple, very simple, because I know mathematics is not her forte. When you have 83,000 young people who are not in training, not in school, wallowing out there, and then in Christchurch you have the biggest training scheme known to man, called an earthquake, to rebuild the show, why is this Government so inept that it cannot marry those two issues together and put young people to work rebuilding our second-largest city? Oh no. There are not a lot of sounds coming out of the sort of hollow one on the front row—not at all.
Is there a plan here? The only plan seems to be asset sales. Apparently, if you flog everything off, that is going to make 83,000 young people find a job. If you flog everything off, that is going to give people a decent standard of living, and prices will not go up four times, as they have. So let us examine that proposition, because I do come back to that as we debate the Budget Policy Statement. It is a matter of priorities. A Government that is sucked down the hole of its own selfish self-indulgence cannot hope to present a Budget Policy Statement and an economic plan with any credibility when the Prime Minister and other Ministers, day after day, have to get up and defend their unethical behaviour, when they have to get up and try to paper over the cracks of their Ministers who have run amok.
The people of New Zealand look at this and say that Ministers should be spending every moment of their time in this place coming up with a plan to help our communities, rather than the selfish self-indulgence they have engaged in since the election, especially that one down the back there, who looks through his nose—down his nose—at us. I say this. If you look at the State-owned assets—
Hon Tau Henare: How can he look through his nose?
Hon CLAYTON COSGROVE: Oh, he woke up. If you look at the State-owned assets programme, here is the justification that has been put up. Here is the grand plan. We have got to sell off assets, the Government says, because we have to grow and prosper. We all want to grow and prosper. The Government says in order to do that there must be capital injected into the State-owned assets, but the Government, of course, has no money, it tells us. Then Mr Ryall, of course, admits that if the Government faces the dilution equation, in order to maintain 51 percent it will borrow, it will go into debt, it will use taxpayers’ money. To quote Mr Ryall, they will do whatever it takes to keep up the 51 percent.
The Government also promised it would not be tricky with the asset sales debate. The Government says that 51 percent ownership means it is in control, and on the face of it, you would accept that. It is a basic equation, until you look at the legislation, and you find out that the door is wide open for non-voting shares to be issued, where the Crown may take 51 percent of the control, but may have far less than 51 percent of the allocated dividends. That is a big issue, which will be examined as we go on.
There are no guarantees about Kiwis being first in the queue—no guarantees at all—and no plan in terms of that. There is no explanation, and no admission that Kiwis already own these assets, and there is no economic plan. So I say this, as they sort of wallow in this self-indulgence, as days pass and another Minister runs amok. One Minister looking after his mates—gone. Another Minister is looking after his mates—on the way out. The body bags are being measured up for the short man as we speak. Then we have a litany of Ministers who have run amok. People in New Zealand—
Hon Anne Tolley: Really?
Hon CLAYTON COSGROVE: Oh yes. You are one of them, as well. Heatley, English, and the rest—and the rest. The people of New Zealand are looking at this Government and saying: “Where is our brighter future? Where is the plan? Where is the concern for us as a community? Where are the jobs? Where are the great reforms we were promised, and where is the economic growth?”. [Interruption] Oh yes, have a
good laugh. But the people of New Zealand are not laughing, and the 83,000 young people who are on the dole are not laughing. The pensioners who cannot make ends meet because of this Government are not laughing, as prices go up three or four times.
There is no plan exhibited in this Budget Policy Statement. In fact, if you look at the record of this Budget Policy Statement, you will see that it is a shocker. This Government is an inward-looking Government, looking down the tunnel, trying to paper over the cracks of all the mistakes and incompetence its Minsters are making. It will come out as we go through. Today it is Dotcom. Tomorrow it will be something else. And the Prime Minister stands up and moves the goalposts around, talks about ethical standards, and dances on the head of a pin, when he should be standing up and articulating to the people of New Zealand that he will look after them, he will lead them, and he will provide them with the brighter future that he promised at the last election.
Dr RUSSEL NORMAN (Co-Leader—Green)
: I rise to speak on behalf of the Green Party on the Budget Policy Statement debate in this Parliament. The Green Party put forward its own economic plan in the lead-up to the election. It is a plan for a smart, green economy, and that is one where we take our national debt, particularly our current account deficit, seriously but also seek to transform our economy and deal with the fact that our export sector is in real trouble.
When this National Government came in—when it was first elected—it inherited an economy that was out of balance. There is no question about that. It had much too much debt, particularly private debt. The public sector debt was in a good position. The previous Government had actually run a surplus, but private sector debt was very much out of control and the tradable sector was in real trouble. Since then the Government was rocked by some serious external factors that had nothing to do with it, particularly the earthquakes in Christchurch, but more generally the global financial crisis and, of course, the European crisis. So in a sense you could say the Government had some real challenges. The other way to look at it is to say that it had some real opportunities to remake our economy to put it on a more sustainable footing—an economy that saves more, an economy that invests in productive enterprise more, an economy that creates jobs in the emerging cleantech sector, and an economy where Christchurch is rebuilt to be one of the most greentech and sustainable cities in the world. That was one of the many opportunities that were in front of the Government.
The thing is that when you inherit an economy that has some fundamental problems, you do have a window of opportunity to fix it. It is the one moment when powerful vested interests who have a vested interest in maintaining the status quo are open to acting differently, because the status quo is not working. Our view is that the Government has not used this opportunity well to reform the New Zealand economy in some quite fundamental aspects. Firstly, there is the question of the deficit. National’s signature economic policy was its tax cut package, which was introduced in 2010. It was a policy that was designed before the global financial crisis and before the Christchurch earthquakes, and it was a policy that was totally wrong for the time it was introduced after those events. Tax cuts failed to stimulate the economy, because they were not tax cuts to low-income earners. They primarily went to upper-income earners, and they did not stimulate the economy at the time it needed it the most. The other side of it was that it crashed the budget. Because the tax cuts were not fiscally neutral, it meant that at a time when the Government actually needed more revenue, it threw more revenue away. That, in my opinion, is not smart economic management.
The fiscal crisis the Government is currently facing is a problem that is, to a large degree, of its own making, because of the tax cut policy it pursued in the 2010 Budget—a policy that was designed before the global financial crisis and before the Christchurch earthquakes. Figures from the Crown’s year-end Financial Statements
2010-11 show that National’s 2010 tax package has cost the Government $1.1 billion in the first 9 months—it cost $1.1 billion in the first 9 months. Most of that cost is due to the reduction from 38c to 33c of the top tax rate, which benefitted the top 10 percent of New Zealand earners. The signature economic policy for the National Government, the tax cuts—tax cuts for those on high incomes, largely—has not been fiscally neutral. The cuts have crashed the Government’s revenue at a critical moment, and in my opinion that is a failure of good economic management.
National was handed a once in an economic cycle opportunity to institute a comprehensive tax on capital gains. The crisis that the Government inherited created the opportunity in which it could move the tax system to a more sustainable footing, and it failed to take advantage of that. A capital gains tax would remove the unfair tax advantages from investment in property over more productive measures. The Government did actually change some of the rules around tax and property, and I congratulate it on that, but it failed to introduce a capital gains tax that excluded the family home. The Government chose to ignore the conventional wisdom of just about all economists—the OECD, the IMF, and the Government’s own Savings Working Group—so it is no surprise that as our weak economic recovery is emerging at the moment, we are finding that it is concentrated in the housing sector, which is the very sector where we do not need another bubble. The reason it is happening is that the Government refused to change the tax incentives around investment in housing.
Our tepid economic recovery, which we are experiencing at the moment, looks nothing like the export-led recovery we actually need. We need the tradable sector to do well. Part of this is linked to the hands-off approach when it comes to the exchange rate. A recent business operations survey by Statistics New Zealand found that a high and highly volatile New Zealand dollar was the No. 1 barrier that our exporters faced. That is what it said. The same survey shows that the number of businesses exporting has remained flat under 4 years of this Government. The high kiwi dollar has been damaging our tradable sector, the lifeblood of a sustainable, resilient economy. As far back as June 2009 the Governor of the Reserve Bank was uncomfortable with the stronger currency, telling his board that the high New Zealand dollar would not deliver the rebalancing we need in the New Zealand economy. Since then, the kiwi dollar has appreciated a further 28 percent against the US dollar, while the trade-weighted index, which is an attempt to compare the kiwi against lots of other currencies based on how important they are to us as a tradable sector, is up 21 percent. So if we want our export- and our import-competing sectors to thrive to help pay our way in the world, we are going to need to address our high and highly volatile exchange rate.
Our trading partners have not taken a hands-off approach to their exchange rates. If you look at Japan, the United States, and the UK, they have all engaged a suite of measures to actively manage their currencies. The IMF recently even backed Switzerland’s most unorthodox use of quantitative easing—probably one of the most unorthodox exchange rate management policies we have seen for many decades. The IMF said that it was “appropriate” in the circumstances because the Swiss franc was getting so high that it was destroying the tradable sector of the Swiss economy. I wish our Government would take some notice of that. Other countries have introduced new domestic capital requirements on banks and controls on foreign capital to try to dampen some of the wild swings in their exchange rates. The global financial crisis has changed the world as we know it and the rules as to what is acceptable monetary policy and fiscal policy, but no one, it seems, has told the Government. Our exporting sector and our tradable sector have been left high and dry by the Government’s non-interventionist approach to economic management. It has not worked.
Many aspects of the Government’s policy, I think, we could disagree with, but selling the State-owned enterprises through the privatisation programme the Government is engaged in is bad fiscal policy as well as bad economic policy. Fiscal policy is, of course, the management of the Government’s own budget, whereas economic policy refers to the broader impact on the New Zealand economy. The way the Government has sold the privatisation, it has deliberately tried to confuse debt with deficit in order to try to confuse the argument. In the short term, selling these companies will have a negative impact on the Government’s deficit. That is a very important thing to think about. Why is it that we have a public debt problem? It is because we have a deficit problem, and we have to overcome our deficit problem. Selling the assets makes our deficit problem worse. That is because, of course, the cost to the Government of borrowing is much lower that the return on these investments. Actually, we are in a worse position.
So hanging on to these assets is not only good for the fiscal position; it is also good for the economic position of New Zealand, because fundamentally these companies—these clean, green companies, which is not what all of them are, but a significant number of them are—are part of what could be New Zealand’s economic future. There is a growing clean-energy sector globally, and if the climate change science is right—and I have got every reason to think that it is—then the cleantech sector, the clean energy sector, is only going to grow and grow. And New Zealand is, right now, in a great position to take advantage of that. But if these companies fall into overseas ownership, they will move the headquarters and the research and development overseas, and we will become a profit centre for another multinational company that owns these companies, rather than the centre of a sector that is exporting clean technology to the world.
One of the key aspects in all of this that is not getting the attention it should deserve is the current account deficit. If we do not deal with our current account deficit, we will enter a worse and worse spiral. Current projections are for the current account deficit to go towards 6.9 percent of GDP in a couple of years. That is a huge problem. The only way you service a current account deficit is to sell assets or to take on more debt. Each time you do that, you solve your current account problem for this year but you make next year’s current account deficit worse, because you then have higher debt repayments and you lose all the dividends on those assets. The fact that the Government has not addressed the current account deficit problem, I think, is a fundamental fail on the part of the Government. Until it addresses that problem, it cannot claim to be a good economic manager of New Zealand, and clearly on the fiscal side it is failing there as well. Thank you.
Hon Dr NICK SMITH (National—Nelson)
: It is a real pleasure to be speaking in this Budget Policy Statement speech, in that the real issue that is on the minds of New Zealanders is how we manage ourselves through the most challenging economic environment in a generation. These are the issues that matter, and it has been incredibly telling over the adjournment period to contrast the view that has come through from Government Ministers with the alternative economic vision that has come from Opposition parties.
You have had the Minister of Finance talking about the need to responsibly manage finances. You have heard Ministers talking about the plans this Government has for building a more competitive and more productive economy. You have had them making announcements about improving the quality of public services for New Zealanders, and you have seen significant announcements about rebuilding Christchurch. What I want to contrast that with is the announcements from Opposition parties over the adjournment
period that show they are completely out of touch with the challenges that New Zealand faces.
Hon Annette King: No, that was that member. He was totally out of touch.
Hon Dr NICK SMITH: I hear the member Annette King. What was the big announcement that we had from the Labour Party over the adjournment period? It was that it wants to have another $450 million on extending paid parental leave. The simple question I have got for the deputy leader of the Labour Party is: where is the money coming from? You see, Labour members have learnt absolutely nothing from their 9 years in Government where they spent without a care in the world and passed on to this Government a decade of deficits.
But it was not just the Labour Party that was out spending money that this country does not have. We had New Zealand First out there saying: “Hey, look! We’re going to have cheaper power costs for all older people.” What a lovely thing to have—what a lovely thing to have. But over the Budget Policy Statement period of 5 years, that policy is expected to cost $170 million. My challenge for New Zealand First is: where is the money coming from? Can it not comprehend that there is a global financial crisis in which people are losing jobs, in which countries are going broke, because of policies and reckless spending by parties like New Zealand First and the Labour Party?
Then if you look in terms of the argument for growth, I think every member of this House would say that the real future for New Zealand in getting jobs and growing incomes is to grow the economy. Yet in every single commentary over the adjournment period we heard reasons from Opposition parties as to why we should not take initiatives to grow the economy. Let me take my own electorate. A particular initiative is the growth of aquaculture in the Marlborough Sounds. That is a growth of business that is estimated to create another 300 jobs in Nelson and grow the exports of this country by over $100 million a year. And where was the Opposition on that issue over the summer? It said it was opposed.
And then we come to another initiative, the growth of agriculture. Again, over the summer we heard from Opposition parties as to why they were opposed to the growth of agriculture. We heard the debate over the convention centre, an initiative for Auckland that would create over 1,000 jobs. Again, where was the Opposition on that opportunity for New Zealand to grow tourism and grow jobs? Again, parties opposite were in the “no” camp. Take another one: there are tremendous opportunities for this country around minerals and petroleum. I was interested, again, to hear from Opposition parties as to why we cannot grow the minerals and the petroleum sector.
So I just have a very simple question for members opposite over the Budget Policy Statement. Why is it, when there is any proposition for growth, for jobs, for exports, that parties opposite say no? They cannot stand up in this House, talk about higher incomes, talk about closing the deficit and talk about more jobs, if on every single issue that comes along all they can do is promote new ideas for spending Government money we do not have and reasons why we cannot have jobs or growth.
You see, they are the issues in this Budget Policy Statement that contrast the Government with the Opposition parties. It is very easy to give waffly speeches about wanting to grow the economy, wanting to grow exports, and wanting to be able to create opportunities for New Zealanders, but every time it comes to the test and every time it comes to the debate over creating jobs and wealth, Opposition parties say no.
I just challenge members opposite, who want to close the deficit, and say “Well, OK, what are your ideas for ensuring that New Zealand gets back into the black by 2014?”. Members and Ministers on this side of the House have, in this Budget Policy Statement, sent a very important plan down for New Zealand to balance the books. I want to hear from Labour, Green, and New Zealand First—members of the Opposition—where their
plan is to deal with the question of debt. My worry is that when you scratch the surface of the policies of parties opposite, it sounds like it is in Greek. It really does. Every initiative I have heard from Labour members involves more spending, fewer jobs, and fewer opportunities. That is no recipe for New Zealand to get through this very challenging economic period.
I hear members from New Zealand First interjecting. I have a simple question: where is the $150 million coming from to fund Winston Peters’ policy of cheap power bills for the superannuitants?
I am listening. Where is the $150 million coming from? I challenge the members of the Labour Party, who over the adjournment period have promised paid parental leave. My simple question for Labour members is “Where is the money coming from?”. Where is the money coming from, Mr Cunliffe? They are silent—absolutely silent. Well, I say that if we are going to have a sensible, mature debate on the Budget Policy Statement, members opposite, who go around the country promising more spending to everybody, need to front up and say where the money is coming from. Members on this side of the House say the days of increased debt, increased spending, and borrow and hope are over. It is time this country had to earn a living. It is time we grew the productive economy. It is time we balanced the Budget. That is the right economic strategy for New Zealand. That is why this John Key Government is the right answer for the challenges this country faces.
BARBARA STEWART (NZ First)
: On behalf of New Zealand First, I rise to speak to the Budget Policy Statement. No one can believe this Budget Policy Statement. Remember the Budget last year—170,000 new jobs in 4 years? What a con! This Budget is not about creating wealth for New Zealanders. It is not even about new jobs or trading our way into a better future. In reality, this Budget is about the market, overseas banks, currency traders, speculators, financiers, and National’s rich mates buying up our assets.
Insanity is doing the same thing over and over again and expecting a totally different result. This Government is doing exactly the same as it did over 20 years ago—the same recipe. What a mess. This Government is driven by ideology and stupidity masquerading as competence. It worships the market—whatever that is. Yet it is the same financial market that caused all the problems in the first place. The Prime Minister knows this. He was very close to the people who helped manufacture this crisis by their shonky financial dealings in the United States.
John Hayes: And Winnie’s not shonky?
BARBARA STEWART: Shonky—yes, it is. There are some people who think it belongs to them and they have the divine right to get obscenely rich at the expense of everyone else. Almost anyone with some knowledge of economics knows that when Governments cut spending during a recession they reduce economic activity. That makes things much, much worse. It happened in the 1930s—last century—with devastating consequences. It was relieved in New Zealand only when one courageous politician and some smart advisers devalued the currency. They knew that New Zealand had only one opportunity: to export its way out of trouble. That was our last chance. And it worked.
The only way that we will ever restore our country to its rightful place as Godzone will be to rebalance the economy through smart exporting. That means that the Government has to help exporters, not the speculators and the foreign banks. The IMF says that the New Zealand dollar is up to 20 percent overvalued. Even the Governor of the Reserve Bank, who is besotted with inflation, says the high dollar is getting in the
way of our recovery. Can none of these people see that they are actually making things much worse?
And what about National’s commitment to senior citizens? We know, as Nick Smith said, that power prices are soaring in the lead-up to the privatisation of our rivers and our dams. Domestic consumers are getting flogged with high power prices, and they are actually subsidising the commercial and the industrial users. New Zealand First asked the Government for a small discount for senior citizens. We did all of the research. We did the costings. We even prepared the legislation. Yet not one Cabinet Minister would talk to us. Neither would the Prime Minister. They did not want to know. I know that the previous speaker, Nick Smith, might be interested, and so might Mr Hayes. We hope so. This is basically not good enough. The Government cannot treat these people this way. They have made a contribution and paid for all these State assets that our Government is now pimping right around the world. Sell it once and it is gone.
This is not a Government of the many. It is a Government of the greedy few, and they are intent on selling the rest of us down the river. The Budget Policy Statement actually reinforces that view. In 2008 John Key promised the country a brighter future, but the reality is that things are not getting any better. In fact, they have gotten worse. The economy grew by a measly 0.3 percent in the last quarter. We have got tens of thousands of young people out of work. We have got 83,000 young people who are actually unemployed. We have got more than 23,000 Kiwi kids who are living below the poverty line. That is not a good statistic.
In the meantime, the current account deficit has worsened on National’s watch. Foreign debt is soaring, and, thanks to an over-inflated dollar, our export industry is being crippled. What the Minister of Finance has not told you is that the provisional tax take is way, way down. It works like this: people who pay a high level of provisional tax are finding out that their incomes are actually dropping. So instead of paying more provisional tax they are actually claiming refunds.
Hon Member: So?
BARBARA STEWART: That is not the way it should be. The very idea that the Government’s books are going to be balanced in 2014-15 is a pipedream. Even this Budget Policy Statement says that it will be a stretch. But despite all of this, the Government should not be fixated on balancing the books. It should be fixated on stimulating the economy, creating jobs, and giving exporters a really good base to launch from.
New Zealand is not the basket case of Europe. We have resources. We have skills. Basically, we are a very resourceful people. We can trade our way out of this mess, if we reward the people instead of punishing them all the time. Governments are actually supposed to be for people.
There is great concern about child poverty in New Zealand. How does this Government respond? It holds an inquiry. Everybody knows that child poverty is family poverty, and family poverty is actually caused by unemployment. Unemployment is actually the greatest evil that is facing New Zealand, and it is time that National actually did something about it.
We are exporting more and more young people—more and more of our citizens. We educate them, we ensure that they have free health care up to the age of 6, we look after them in every way we can, and then we export them when they can actually put something back into the economy. To my way of thinking that is not smart economic management, in any way.
We had people in this country who built up this great country. They would actually be horrified to know that their descendants are flogging off the assets built up by generations of hard-working people. They were always very wary of slick salesmen and
never did they ever contemplate the thought that the country would actually be run by these people. We in New Zealand First say to the Prime Minister that he should admit his mistakes and start running the country for everybody, not the privileged few. We want economic growth, we want jobs, and we want an export-led economic plan to make this great country the country that it once was.
JOHN HAYES (National—Wairarapa)
: I find it a real tragedy that “Aunt Daisy” was believing what she was saying here in the House this afternoon.
Grant Robertson: I raise a point of order, Mr Speaker.
The ASSISTANT SPEAKER (H V Ross Robertson): And I am going to rule. That was a derogatory remark. There was no need for a personal reflection. That was a personal reflection under Standing Order 117. The member will stand and withdraw.
JOHN HAYES: I withdraw. The member was saying—
Grant Robertson: I raise a point of order, Mr Speaker. I do not want to disagree with your ruling, but when people sometimes use other names to refer to people, that is one thing, but that was quite clearly a deliberately derogatory, possibly sexist, ageist reference, and I think in addition to withdrawing, Mr Hayes should be asked to apologise.
The ASSISTANT SPEAKER (H V Ross Robertson): No, I have made my ruling. It was the first time, and if he does it again, something else will happen.
JOHN HAYES: Thank you, Mr Assistant Speaker. The speaker said that New Zealand First went to the Government and asked for a small discount on the price of power. That small discount would have required an amount of $150 million to implement. Is $150 million a small amount? I think not. I think not. The same speaker also suggested that we need to stimulate the economy. Well, that member’s party leader was a colleague of one Robert Muldoon, who went down the road to stimulate the economy through a series of Think Big projects that actually did not stimulate the economy, at all. It created a whole lot of high-priced jobs, just as the member’s leader did in the last Labour Government, when he saw millions of extra dollars put into the foreign affairs ministry to create jobs that did not exist.
When you create a job and you take money from somewhere, you are taking it from a person’s pocket. Those people live in my electorate. They are taxpayers. They removed your leader and his Government in 2008, because they were sick of the constant drain on their pockets for jobs that were unreal.
Barbara Stewart: No, no.
JOHN HAYES: Your leader’s Government left this party—the new Government—in 2008, in a situation where falling economic growth was reflected in a country in recession. It left rising unemployment. It left high inflation. It left a rising current account deficit. For every dollar a person in these manufactured jobs was earning, the Government was spending $1.02 or $1.04. We have now implemented policies that are ensuring that for every dollar someone is earning, the Government is spending only 98c.
Our Minister of Foreign Affair and our Prime Minister, John Key, have turned this economy round. We are managing the Government’s finances responsibly. We are building a more productive and competitive economy, and I see it in my Wairarapa electorate, where unemployment is dropping quickly. We are delivering better public services, and I see it in my Wairarapa electorate. I see it through health services, I see it through schools, I see it through a police system that works, and I see it through a 111 call system that works, and soon we will see it in the courts system.
Also, we have to rebuild Christchurch. That is a huge project. The Minister of Finance acknowledged that returning the books to surplus by 2014-15—which is our goal, and which my colleague in New Zealand First said was going to be difficult to do—is something that is going to be difficult to do, but we will do it. And we will do it
by putting a cap on the Public Service and stopping the creation of jobs that we cannot afford. We will do it by leaving money in people’s pockets through tax cuts, so that they can get up and engage in productive activity and work. We will do it by moving resources from back offices across a range of agencies, whether it is health, or education, or foreign affairs, or science, and bringing them forward to the front office.
I think we are going to see quite rapid progress, and I am seeing it in my electorate, where I am seeing confidence in the farming sector, where I am seeing confidence in the retail sector, and where I see that companies like JNL, which processes timber, are now back working 24 hours a day, 7 days a week. This is a very, very different economy from the one we had.
Although there have been some comments in the House this afternoon that have interested me on the question of selling, partly, the shares in some State-owned assets, the biggest shock for me, and one of the most difficult things to cope with as a constituency member of Parliament—a constituency member of Parliament—was people who had lost money in finance companies.
When I looked at what those people had done, I saw that they had invested in finance companies because they did not have a sharemarket that could guarantee stable returns. One of the big issues, and one of the reasons, and one of the really big benefits that is going to come from selling shares in some of our power companies is that that group of people can now use some of their savings to invest in stable shares that will guarantee, year after year, a reliable return. We need depth in our sharemarket, and the savers in this community are entitled to be able to buy shares that will offer a good and reliable return.
I am absolutely confident that the Budget’s plan is going to be really worthwhile, and I support totally the Minister of Finance’s plan not to spend any new money. It is most important that we contract the size of government so that we allow people in the private sector to get engaged in real, new investment, not in mickey mouse investment. We get people involved in government that allows people to make their own choices about whether they save, whether they buy shares, and how they create new opportunities. I think that is really important.
I would just like, while I am on my feet, to express my disgust that our foreign affairs ministry would leak Cabinet papers to Mr Goff.
Hon David Cunliffe: Who said they leaked them?
JOHN HAYES: They were tabled and brought into the House this afternoon, and he brought them here. It is quite clear to me, and to most people I speak to in the Ministry of Foreign Affairs and Trade, that change is required in that institution. I am pleased to see Mr Robertson agreeing with me. What really is objectionable is that the Ministry of Foreign Affairs and Trade has moved across a line. It was once one of our most highly respected public servants, and I for one was proud to be a part of it. But it has moved across a line into becoming an entity that is totally untrustworthy and will garner no respect anywhere in this House.
I support entirely the Secretary of Foreign Affairs and Trade and the Minister of Foreign Affairs in their plans, and their plans are being discussed. All staff are involved in their preparation. I think it is highly condemnatory that these documents should be being leaked, and I assume they are being leaked by people with particular vested interests, who want to see no change to a dinosaur that has resisted change for 70 years, since it was in existence.
Grant Robertson: They believe in their organisation, which is being undermined by that member’s Government.
JOHN HAYES: No, no. This entity needs change. John Allen is a very good person to lead it, and all of us in this House need to support him, not to undermine him,
because this undermining by Mr Goff is actually tackling the integrity of the whole Public Service. I feel that Mr Goff and the Labour Party should be really thinking very carefully about what they are doing, and what they are buying into.
Finally, I would like to say that I am seeing very, very great change in my electorate, a high degree of optimism, and a very positive and buoyant view of the future. Thank you.
Hon DAVID CUNLIFFE (Labour—New Lynn)
: A little-known fact is that there is a secret club in Parliament shared by Grant Robertson, me, and John Hayes—[Interruption]—and Tim Groser. We are all alumni of the Ministry of Foreign Affairs and Trade. So I am very, very sad to have to record in the House today that the Government’s change programme for the Ministry of Foreign Affairs and Trade, the savings from which are part of its Budget, is going to be a complete and utter disaster. If that ministry is falling apart, there is no one to blame but its disreputable Minister, Murray McCully, the Minister who is hanging his own chief executive out to dry and presiding over a change programme that will only, on today’s information, save $12 million—
John Hayes: I raise a point of order, Mr Speaker. I think it is inappropriate for that speaker to have used the words “disreputable Minister” in reference to Mr McCully, and I think he should withdraw.
The ASSISTANT SPEAKER (H V Ross Robertson): It is a debatable point, and it is up to the member or the Minister himself to raise a point of order.
Hon DAVID CUNLIFFE: It is saving $12 million but spending $9 million to do it—net $3 million—and wrecking the Foreign Service in the process. But John Hayes did say something very revealing. I am not sure that he was supposed to say it to the House, but he said the crucial thing is to contract the size of government—contract the size of government.
Hon Anne Tolley: Absolutely.
Hon DAVID CUNLIFFE: “Absolutely”, says the Minister. There is the agenda laid clear. National believes that you can cut and sell your way out of a hole—sell the assets, cut government past the bone. The Government delivers services that help the economy. A zero Budget is what you get when the economy is failing. A zero Budget is an admission by the Government that it does not have a plan that is working. National’s economic policy, if you can call it that, is simply selling assets, selling farms, crony deals, and pokies. New Zealand deserves a whole lot better than that.
Mr Key has said “sticking to a plan that is working”. Well, it is very hard to believe that. We should call that the “Yeah, right” Budget—the “Yeah, right” Budget! The plan that is working, apparently, means unemployment up by 43 percent, leaving 150,000 New Zealanders out of work. It apparently means 140,000 New Zealanders who have left the country because they cannot stand to wait for the brighter future the Government has let them down on. Over 1,000 a week are voting with their feet because they have given up hope on their own homeland. That is 1,000 a week whose children will not be living in the same country as their grandparents. Prices have gone up four times faster than wages, and real incomes are falling. New Zealand has had its first credit rating downgrade in 13 years, the first since the last time Mr English was finance Minister. It is amongst the lowest-performing economies in the OECD, under National, right down there with Greece. In fact it is 29th out of 34, just below Greece on the rankings. There are 50,000 more people on benefits, costing over $1 billion a year extra. The number of children living in benefit-dependent households has increased by over 32,000. The median income has gone down $82 a week under National—$82 a week worse off in real terms, after inflation, under National. I do not call that a brighter future. My family
would not call that a brighter future. Ordinary New Zealanders do not call that a brighter future. It is a bleaker future.
National has failed to grow the economy. The mantra that the crucial thing is to cut government reveals the fatal flaw in National’s approach. It thinks its job is to balance the Government’s books. Its job is to balance the country’s books. Its job is to help New Zealanders live better lives through a prosperous economy, decent work, and decent incomes. It is not primarily to balance the Government’s books, which, at best—although we would do it too—is a means to an end. That is why the country’s economy has grown less than 1 percent since John Key took office—less than 1 percent in nearly 4 years. In the last year we have seen the magic disappearing $2 billion. National campaigned on a $1.5 billion surplus by 2015, yet in the last week we have found out that it is going to be a $640 million deficit. That is $2 billion gone in just 6 months. The reality is that you cannot cut services or people fast enough to race down that hill as fast as that budget is disappearing, because austerity economics does not work.
Look, I was fascinated to read through
The Economist magazine and find an article on growth. “There is an alternative to austerity”,
says. When you read that in
The Economist, and you have got this Government presiding over a $2 billion Budget hole in 6 months, you know something is wrong. You know something is deeply, deeply wrong, and here is the reason it is wrong: you cannot cut and sell your way out of a hole. A zero Budget means failure, because you have got no other alternative. A zero Budget is occurring because the Government has lost $2 billion in the last 6 months.
It gets worse. Nick Smith said: “Where’s the money coming from?”. That is a fair enough question. Here is where it is not coming from. It is not coming from that $2 billion the Government just lost. It is not coming from the $200 million of ticket clippers’ fees from selling the assets our parents built up. That is where it is not coming from. It should not be coming from flogging the family silver. That is like selling your house to pay the mortgage, and then renting a more expensive one. Sell your house to pay the mortgage, and then rent for more than you were paying. Is that not brilliant? Brilliant! That is why Bill English is not Prime Minister. He got 2 percent last time. Soufflé does not rise twice for Bill English, does it?
I tell you where else it is not coming from: it does not come from selling our land. This Government thinks it can milk the cows to prosperity, but at the same time it is selling off the land the cows are milking from. Go figure—go figure. It is about value, not volume. It is about smarts, not grass. It is about the future, not the past. Of course the dairy industry is important, but—hello—dairy prices fell 2.5 percent yesterday. We have too many cows in one basket. If we want to have a vital, growing, high-value economy, we need to do what the ratings agencies have told us. Moody’s, Fitch Ratings, and Standard and Poor’s agree that New Zealand has an under-diversified economy and too much private debt. National’s answer? Reduce the diversity and increase private debt even more! Ridiculous! And why is it always the small household that pays? Why does the ordinary Kiwi pay, through fewer services and more GST, to make up the $2 billion hole National just caused and the $200 million of asset-stripping ticket clippers it is funding? I would love to see when the kickbacks are revealed from that lot. This is crony capitalism at its very worst.
The legion of dishonour is growing by the week—Banks-Dotcom, Skycity. We almost do not even need to explain, because the public understands. Look at those members looking at their feet—looking at their feet. Here is the country struggling, here are New Zealanders trying to make ends meet, and there is National doing sweet deals for the big end of town, and breaching good process. That is why that radical socialist Colin James said on TV that businesses are asking themselves whether the rules of the
road have changed. Do you have to do a private deal with John Key rather than rely on a Ministry of Economic Development Budget process? MediaWorks and Ministers doing fee remissions for companies they used to personally own. Appointing the Prime Minister’s personal electoral chairman to the board of the broadcasting funder. Selling the telecommunications law to fund a process National did not have the gumption to write for itself. The league of dishonour goes on and on.
To conclude, a zero Budget is what you get when your economy is failing. It is what you have instead of a real plan for growth and jobs.
DAVID BENNETT (National—Hamilton East)
: That was the probably the best speech we have heard from that member, David Cunliffe; it is a shame no one was listening to it. He has had his time and the Labour Party has moved on. But when he talks about a zero Budget, I think that gives you a pretty good indication of Labour economic policy. It does not want to balance the New Zealand Government’s Budget; it wants to borrow more. If you borrow more, you have to pay it back—
The ASSISTANT SPEAKER (H V Ross Robertson): Order!
DAVID BENNETT: —and if the country has to pay that money back, how are we going to do it? The Labour Party will not give its plan for repayment, apart from taxation increases. If you increase taxes, that hurts the economy more. So you are going to borrow more, then you are going to hurt economic growth by increasing taxes. That will put this economy into a free fall. It will fall down and spiral out of control, and that great economic plan that the Labour Party is now talking about will not work. It has not worked in other countries, and it will not work here. You cannot go out there and just borrow for the sake of it any more. As a country, we need to be responsible, and we need to look forward and promote a growing economy.
One of the other things Mr Cunliffe talked about is having a prosperous economy. We hear this rhetoric from the Labour Party all the time. Labour members talk about growing an economy, and having a more productive sector. When Labour was in power it did the opposite. Labour members say the right things in this House now but when they had the chance, they killed the productive economy of New Zealand. The productive economy of New Zealand knows that if it ever gave that party a chance again, it would get killed again, because the Labour Party does not even understand what a productive economy is, it does not understand how to promote a productive economy, and its rhetoric, its vision, actually hurts a productive economy. If you do not have a country that produces, then there is not that growth and there is not that Government revenue that you need.
This is a very difficult time for New Zealand and the rest of the world. We have been through a major recession. It is a very fragile economic environment out there, in the modern world. On top of that, New Zealand has had to deal with an earthquake in Christchurch of a magnitude that is beyond anyone’s comprehension. Those two factors have meant that you need disciplined expenditure from the Government, you need a Government with a firm hand—
The ASSISTANT SPEAKER (H V Ross Robertson): Order! I have been very tolerant of the member’s use of the word “you”, and I would suggest that the member look at Speaker’s ruling 27/5(1) and (2). When the member uses the word “you”, he brings the Speaker into the debate.
DAVID BENNETT: We have had a firm hand with economic management but in a fair way. The horses have not been scared in New Zealand. People have known that there is strong Government backup in our community and through our social spending, but at the same time the Government has invested in the infrastructure of this country going forward. It has been a balanced approach that looks forward to economic growth in the future, delivers that certainty for people in New Zealand currently, and provides
the basis for a strong economy going forward. That is real economic leadership. It is not talking about things that may happen or could happen, or saying—through some crystal ball—it will all work out fine. It is about providing real and substantial leadership now, and that is what this Budget, and this Budget Policy Statement, is about. It is providing that real leadership.
The real leadership requires us to get back into surplus. The days of borrowing and hoping are gone. No modern economy around the world can continue down that path. If anything, we need to be making money, not borrowing money. And to get into the situation of making money you have, first, to get into a situation of breaking even—that is, where you are not spending more than you are earning. That is the challenge for New Zealand: to make sure that this Government and this country does not spend more than it earns. It is a challenge that is lost on our Opposition. Our Opposition wants to go out there and say that you can borrow for that extra expenditure and you don’t have to worry about it. Well, we do have to worry about it, because that money has to be repaid at some point in time.
So what is this Government doing to try to balance the books to make sure that New Zealand has a pathway going forward? First, we are responsibly managing the Government’s finances. We are building a more productive and competitive economy, we are delivering better public services within the constraints that we now face, and we are rebuilding Christchurch. Those are the key elements of Budget 2012. They are the key elements that New Zealanders are looking for in their Government. New Zealanders know the pain that Governments and countries around the world are going through, because they have experienced that themselves in their own personal circumstances over the last few years. Job security, their willingness to pay down the mortgage on their property investments, and the need to have some money put aside for a rainy day are the things that New Zealanders are looking for. The modern economic reality is not one based on consumption but rather on saving and investment, and you are seeing that through New Zealanders’ choices in how they use their money. New Zealanders expect that from their Government as well. They do not expect to see a Government that borrows and spends. They want to see—
Grant Robertson: That’s what this Government does.
DAVID BENNETT: —a Government that takes account of its money. The Labour Party is saying that that is what this Government is doing. That is not the case. We are getting to the stage of a zero Budget—something that the Labour Party’s past speakers said they do not want to see achieved. The Labour Party does not want that zero Budget; it is keen to just carry on borrowing to get through. There will be some borrowing this year, and there will be some borrowing next year, because we have got a major deficit because there are policies that have been set up by previous Governments that are not economic-friendly, but we have to carry on. There is also the rebuild of Christchurch and the slowing of the economy through a recession that the world has faced. But at this time New Zealand is in one of the most favoured positions for a Western country. Compare our economy with that of many of the European countries, and the real world will hit home. We do not live in an economic, academic bubble, which the Labour Party would want us to be in. We have a real world out there where there is a world recession and where there was an earthquake in Christchurch, and it needs a constructive and well-managed Government to get through.
Hon Trevor Mallard: Next page.
DAVID BENNETT: Well, it is the next page, because we have got a plan, unlike the Labour Party. When you look at the economic outlook for New Zealand going forward, the last speaker, David Cunliffe, talked about growth rates in New Zealand and said that they were small. Well, they are small, but they are better than what we inherited. When
the National Party came into Government, this country was in recession—a recession before the rest of the world, led by poor economic management from the previous administration. That state of recession in the New Zealand economy has been turned round. We have low growth rates, but we have growth rates. If you took on the Labour Party policy of borrowing more, then the growth rates would be even lower and we would be back in recession, like that previous Government made this country go into recession.
At the same time, we have managed to deliver the social spending that New Zealanders expect from their Government, and the New Zealand economy has been able to rebuild in a way in which it can take on the rest of the world. The world has changed. It is no longer an economic bubble where you can just go out there, borrow money, and think that things will be fine. There needs to be a constructive and well-managed plan—a plan that this Government is delivering—and we look forward to seeing more in the Budget coming ahead. Thank you.
The ASSISTANT SPEAKER (H V Ross Robertson): Just before I call the next member, it is a split call, so the member will get a warning bell with 1 minute to go.
Dr DAVID CLARK (Labour—Dunedin North)
: I rise to comment on a few of the things said by the previous speaker, David Bennett. He was trying to encourage us to believe that this current Government has a credible plan for growth. Well, the evidence does not really support that. Under the last Labour Government the economy grew by 25 percent in real terms. This Government has actually shrunk the economy in real terms on a per capita basis. People have less money in their pockets, and they have more that they need to spend it on. Our economy is going backwards under this Government.
The Budget Policy Statement, which we are debating, contains a statement that would maybe lead people to believe that the mixed-ownership model that the Government is proposing—otherwise known as asset sales—is a sensible way forward. Today I sat in a Finance and Expenditure Committee meeting and heard again from people who thought that was a terrible idea—simply a terrible idea. Today we heard another 20-odd people, and every last one of them thought that this was a stupid plan. Treasury’s figures suggest that the Government will go backwards by $94 million per year when these assets are sold off—$94 million per year. We as a country—us taxpayers—will be worse off from the loss of dividends, which means that we have less income as a result.
This is not a plan—this not a plan—but it is what we have come to expect from the current Government. It is desperate sweet sugar hits and quick fixes but not a long-term plan. Previous speakers have said it, and it is true: a zero Budget is what you get when your economy is failing. Mr Speaker, I do not mean you, of course. But it is what we have, and what we have to put up with when our economy is failing.
Today we heard from various people at that select committee who opposed this measure proposed in the Budget Policy Statement. We had people phoning in from Norway to express their discontent at this proposal—Kiwis overseas worried about what they will find when they come home. We had a first-time submitter with a broken arm, an elderly woman, who walked through bad weather to come and tell us how bad this proposal was that is in the Budget Policy Statement. We had the
Citizens’ Select Committee come and present to us, representing 412 people. They had not been heard by their member of Parliament, who refused to hear their submission that this asset sales proposal is a dog. They had been refused an audience by Peter Dunne to even hear their views on the asset sales proposal. The one man whom we know did not campaign for this proposal—in fact, many of the things he said would have led us to believe he stood against it—and now he is standing there, currently supporting the Government’s
proposal to sell assets. It is the very same proposal that Treasury tells us will take our economy backwards by $94 million per year.
We have also heard in the debate from Mr Hayes, who was trying to argue that one of New Zealand First’s proposals was too costly. He shed some crocodile tears. Well, this morning in the select committee he described as “petty cash” the $100 million or so that we suspect that Treasury’s mishandling of the Crown Retail Deposit Guarantee Scheme has cost. That is how we know those were crocodile tears. He described that $100 million that was potentially lost as “petty cash”.
We have heard from speakers who lack credibility, but they contrast with the members of the public whom we heard at the select committee. We heard from Mr Les Howard, representing Grey Power in
Temuka, who said: “There is no doubt in our minds; people will die from cold because of this bill.” He was worried about rising power prices as a result of these asset sales. Mr Les Howard was representing the people of Grey Power. We heard him, and we understood what he meant. The National members who sat opposite were not happy with the submissions they received on the asset sales. They look uncomfortable, they look like they are defending the indefensible, and they do not want to do it. It is in the
Budget Policy Statement. It makes no sense, and I submit that it is not the only thing in the Budget Policy Statement that will take our country backwards. Thank you.
Dr KENNEDY GRAHAM (Green)
: My colleague Russel Norman earlier dissected this Government’s Budget Policy Statement 2012 in a constructively merciless way. But
The quality of mercy is not strain’d,
It droppeth as the gentle rain from heaven
Upon the place beneath:
That place is not the Treasury benches of Her Majesty’s New Zealand Government; it is, more naturally, the voting public—they who are being denied their rightful place in the global economy. Mercy, we are told, is “twice bless’d; It blesseth him that gives and him that takes:”. I do not think it will bless a Government that takes from the poor and gives to the rich, as this Government has done with its misguided tax cuts over the next few years. Mercy, we learn
’Tis mightiest in the mightiest: it becomes
The throned monarch better than his crown;
His sceptre shows the force of temporal power,
The attribute to awe and majesty,
Wherein doth sit the dread and fear of kings;
But down here, with our feet pointing towards Stratford-upon-Avon, the electoral crown is slipping. The sceptre is falling from the executive grasp, and that is because of the absence of mercy in the budgetary policy of this Government. It is because of the lack of vision among its strategic planners, who fail to see the structural distortions in our national economy and the resulting imbalances between it and the global economy.
But mercy is above this sceptred sway,
It is enthroned in the hearts of kings,
It is an attribute to God himself,
And earthly power doth then show likest God’s
When mercy seasons justice.
If ever this Government deserves a seasoned admonition it is today, when its Budget Policy Statement is up for judgment. There have been 3 months of global developments to shade the strategic economic canvas, 3 months of continuing political ineptitude to darken the domestic stage. But it is not only a lack of economic justice and a plea for
political mercy that characterises this Government’s current misfortune. It is, above all, as I said yesterday, an ideological conviction met only by political rigidity and a cautious disposition that will bedevil our future.
The Key Government endlessly repeats the mantra of innovation, creativity, and entrepreneurship, and then cuts the Budget that could underwrite these qualities for our next generation. This is manifest in its wilful blindness to the issue of macroeconomic concepts—how to measure, for example, our economic well-being. According to the Government, only by GDP. It is obsessed with economic growth, to the point of mania. From the Speech from the Throne of December 2008 to this Budget Policy Statement, we have heard that the Government’s overriding objective is economic growth so that Kiwis can have a brighter future, prosperity, jobs, education, and health, and we shall balance economic opportunity with environmental responsibility as we go. But that excludes the broader notion of societal well-being. All around the world, in Bhutan, Canada, and Norway, through the OECD and the UN, work is under way to broaden the measure of economic performance to encompass societal well-being.
In New Zealand our statistics and environment departments have been working with other countries to develop indicators of sustainable development. That was the result of some public funding back in June 2000, initiated by the Green Party. That work was professionally done. We now have a report of 2009, identifying indicators of environmental and social criteria. These would broaden the performance indicators of a country along the lines that experts have been calling for since the Earth Summit back in 1992.
I have submitted into the ballot a member’s bill that would amend the Public Finance Act to broaden the indicators required in the Budget statement beyond the traditional ones of GDP, CPI, unemployment, and current account deficit. I call upon this Government to adopt the bill and incorporate it into its governmental legislative programme. If the Government were to do so, this strict court of national legislators might accept the deeds of mercy of which I have spoken thus, and mitigate the justice of the Government’s plea towards a different sentence from what was written into the annals of English literature some 500 years ago.
MAGGIE BARRY (National—North Shore)
: National of course has a plan, and it is the right plan for these very hard economic times. We are determined to build a more competitive economy that will grow and support real jobs, provide higher incomes, and assure New Zealanders that we are paying our way in the world and holding our own. Yes, the Budget that we deliver in about 3 weeks’ time will be a zero Budget—the second that we have delivered—and we are doing that not because we have any problem with our plan but because we have the courage, determination, and tenacity to take the hard decisions, unlike Labour, of course. In all of the good financial years—
Hon Trevor Mallard: I raise a point of order, Mr Speaker. It is a long-held Speaker’s ruling that one does not question the courage of individuals or parties in the House in the way that that member just did.
The ASSISTANT SPEAKER (H V Ross Robertson): Thank you. I have to say I missed that, but if the member referred to courage, that is out of order. I call the member to order, and to continue her speech.
MAGGIE BARRY: The lack of tenacity and determination that Labour showed in its 9 years in Government is something that New Zealand could not sustain. Let us look at Labour’s failed record. Spending like sailors, the Public Service grew into morbid obesity, and we are trying to bring that back under control. Cullen spent an extra $3 billion every year for the last 5 years Labour was in office. Flogging off State assets, of course, is something Labour knows a great deal about. Some of the people who are on the Opposition benches were not around in the 1980s, but, day after day, in my former
role in the media, they came into the studios and they talked about flogging off the family silver to pay for the groceries. They had to. They sneaked in a very broad-ranging plan that New Zealanders were not in any way expecting. They sold off everything, lock, stock, and barrel.
When we look at the mixed-ownership model, which we are doing very closely now, we have learnt from Labour’s mistakes. We are looking at prudent control of these assets. We will retain the 51 percent control. We will raise enough money so that we do not need to borrow to invest to keep our health and education at the world-class standard that it is now. We will be open about it, and that is why we signalled it nearly a year out from the election. We do have a mandate. The people of New Zealand knew what we were doing, and they continue to support what we will enact.
As far as our policies and reforms are concerned, let us look at some of the things that will be coming up in the next 3 weeks. We heard today, in response to a question I asked of the Minister of Finance in the House about the intention to strengthen the Public Finance Act 1989, that it is going to be looking at limiting spending. This is something, of course, that the people on the other side of the House do not know a great deal about, but it is about a cap on spending and about transparency, so that when a Government is thinking of spending like sailors, increasing taxes, and so forth, there will be restrictions on that. We are going to move away from excessive public spending. This Government has a determination to do that.
The Opposition claims that our economy is going backwards. Let us look at this in an international context. The UK is back in recession. We had the collapse of the Dutch economy. If we followed the failed policies of the people on the other side of the House we would continue to borrow, we would continue to spiral downwards into debt, and we would continue to fund things that we really cannot afford. Paid parental leave—well, it is a pretty good sort of an idea on some levels if you are completely flush, but we are not, and it is not the sort of policy that we would ever support. We need to grow the economy. We need to also look at ways of restricting the amount of spending that we are putting on things.
The Prime Minister signalled the other day that we were going to do some fine-tuning over student loans in our Budget. We remain, of course, absolutely committed to keeping them free, but we are determined to reduce the cost of the overall loan scheme to the taxpayer. This is the prudent thing to do. The scheme is very large. Not that long ago the Government was effectively writing off some 49c of every dollar that was lent. With previous changes we have made we have brought that back down to 45c, and we intend to get it a bit closer to 40c in the future by continuing to chase the overseas borrowers, the people who have left the country and who perhaps think they have left their responsibilities behind. If we give them the benefit of the doubt, it may be that they feel that they are away and they will get to it in due course. But in the meantime the country has an enormous debt around us that needs to be addressed. So we will get it closer to the 40c, and there needs to be faster repayment of those loans. Ultimately, of course, it is so much better for the person who has borrowed the money. They are getting rid of that monkey on their back earlier than they perhaps thought they would. Younger people perhaps tend to think they can put things off for ever and a day, but that is not the case. By speeding up, for example, the process of repayment—not to an unaffordable level but to something that has more momentum than it does currently with many of the borrowers—that is going to be an excellent thing for the New Zealand economy.
This Government is about personal responsibility and about people stepping up to the plate and saying: “Yes, I borrowed. Yes, I’ll pay it back. I have an individual choice and I will exercise it, but I will deliver on what I say I will do.” There is no sense for me to
see people going overseas and not actually continuing to pay back their debts. I think that it is very important that we all take responsibility for these things—the cradle-to-grave dependency and the constant handouts that not everyone needs, actually. This Government is focused on putting the money where it needs to be focused. We target it to those in need. We give them the hand up and not the handout.
Hon Trevor Mallard: That line was tired in the 1980s. It was tired in the 1980s.
MAGGIE BARRY: These are things that are philosophically not terribly much in keeping with some of the rowdier brayers on the other side of the House, but I would have to say that we have a plan. It is the right one, and that is why we were elected and others were not, I assume. The people of New Zealand are not silly. They recognise that the failed policies of 9 years of Labour did them no good. They bear with us in the hard decisions that have to be made, because they know that we have to get back on track. Who can afford to run their houses in the way that Labour used to run the country? If you have not got the money, you do not spend it. You do not keep borrowing everything up to the max. People do not keep borrowing up to the max—not you, Mr Assistant Speaker, of course. I am sure that you are fiscally prudent in all ways, as I would wish that all New Zealanders were, because that effectively is what we are asking people to do: to be more prudent and to accept that there has been overspending and that there has been an amount of money allocated to things that actually does not need to be there. So we do need to tighten up. We are doing that in the Public Service, and we are doing that in a raft of other measures.
I think that with Budget 2012 this Government is going to signal very strongly to the voters of New Zealand that we are determined to get the books back on target and in surplus. I think a zero Budget is an act of courage. I remember back to the days when people feared the Budget. They would go out and fill up their cars and buy their beer and baccy, if they were their poisons, and they would brace themselves for a Budget that was going to sting them. Ours is going to be a Budget that will be fair but will also continue the message that we have been sending since the start of the campaign: that we actually do need to watch what we are spending.
When we look at campaigning and we look at the solutions, there has been a paucity and a scarcity of them coming from the Opposition benches. What exactly is Labour’s plan? OK, taking GST off vegetables and fruit. That will get dropped. It was not a particularly vote-winning idea. There was $5,000 tax free—the first $5,000—is that gone yet? It was never really going to fly anyway, was it? These are the sorts of things that are not going to serve anyone well. When the capital gains tax, if I recall correctly, was announced on the campaign trail, Labour’s popularity went down by about six points overnight. It was not popular with its own people. It was not something that we would have brought in.
New Zealanders, as I said, are too smart to fall for these tricks. They know that we are in trouble. They know that the world economies are in trouble, and that we do not want to end up in a situation where we are defaulting. We do not want to lose the standard of living that we have, and we do not want to see our young people leaving in droves. We need to make this a strong, focused economy that will keep our young people here, that will grow jobs, and that will use smarter measures to actually do what we need to do.
I am a member of the Bluegreens group, the National advisory group on conservation and environmental matters, and I am someone who has a lifelong passion for flora and fauna in this country. They need protecting. We have not got much money at the moment, so what do we do? Do we shelve all of our conservation projects? Indeed not. What we do is we look for smarter ways to fund important projects. A couple of days ago the new tourism conservation partnership was announced. What a fantastic idea.
Kate Wilkinson has negotiated a deal with Air New Zealand so that the two will work together to promote our flora and fauna. We will, under the Air New Zealand arrangement, be able to fly our endangered species to new breeding sites around the country and to invest directly in conservation programmes along the Great Walks. These are great things to do. Tourism and conservation, they go hand in hand.
This country, absolutely, is defined by its land and its people, but we need to look at the things that have been successful. They have not cost money. We did not borrow millions of dollars from offshore, as others have done and would continue to do. We are approaching businesses and asking them to help out with the kākāpō, for example. We have got the aluminium smelters and the Royal Forest and Bird Protection Society all involved in that. People are working collectively, in partnerships, to get the best outcome. There is the Million Dollar Mouse campaign, as it is known. We have a big-business man—Gareth Morgan—joining forces with the Department of Conservation and trying to get to the point where we are saving an endangered species. These are the sorts of initiatives, thinking smarter, that this Government is doing and is very proud to do, and I am very proud to be part of it. I am proud of the policies that we put forward, and I am looking forward to the Budget in 3 weeks’ time. Thank you.
A party vote was called for on the question,
That the House take note of the report of the Finance and Expenditure Committee on the Budget Policy Statement 2012.
||New Zealand National 59; Māori Party 3; ACT New Zealand 1; United Future 1.
||New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1.
|Motion agreed to.