Budget Debate

GERRY BROWNLEE (Deputy Leader—National) : What a terrible disappointment this Budget must be to all those Labour back-benchers charged with the job of trying to sell it to their constituents. What a terrible slap in the face this Budget is to working New Zealanders. Four out of five families in this Budget have had the boot put into them by this Government. The so-called family support package, which effects only one family in four, is an absolute disgrace. We have had our finance spokesperson, John Key, do some in-depth analysis of what this package means, and we cannot believe that the Government could have been so foolish as to allow it to progress.

Let us take a household where there are two parents, or two earners. One earns $50,000 a year—a reasonably chunky salary—and the other works for just a few hours a week earning $10,000 for the year. The effect of this package is that the family that is going the extra distance and finding the childcare to be able to get out and earn that extra $10,000 will only increase its household income by $2,850 for the year.

Simon Power: That’s hopeless! Why bother?

GERRY BROWNLEE: One has to ask oneself the question whether that part-time work is worth it. The fact is that even if it was a job that paid $10 an hour—a very modest hourly rate in today’s world—the effect of this package would be to reduce the pay for each of those hours worked to just $2.60. The question is why anybody would go to the effort of working 20 hours a week and trying to get an extra $10,000 into the family’s budget, to find out that the Government’s package structure means that each of those hours is worth only $2.60. So much for the Labour Government and its cries about the minimum wage in this country, when it is able to bring in a family support package that puts a worker in part-time work under this regime earning about a third of the current minimum wage.

That is totally unacceptable, and it is one of the reasons why, as New Zealanders take a closer look at this Budget, they will begin to sense this—not only in their pocketbooks—and emotionally disconnect from the current Government. It is not possible to go out and tell New Zealanders that they are better off with Labour, when they find on a weekly basis that they are being treated like this. Why would anybody want to better themselves or improve their responsibility levels in a job to get a bit of extra salary when the rewards will be eaten away by the current Government?

Even in a family where the gross income is $38,000 a year—and that is the new benchmark for wealth in this country; families earning $38,000 a year and above are considered by the current Government to be rich. Adding in all the extra bits that the Government might like to give that family would take its income up to $42,860 a year. Compare that with someone who has made a bigger effort to get better qualifications, to move up the job scale, to take on extra responsibility, and is earning $60,000 a year. That family’s gross income will be $45,236—in other words, only $2,376 a year more than the family that has a household income of some $22,000 gross less.

People may get bamboozled by the figures when they are put out like this, but when they go to their bank accounts and see the effect of the Government’s package, they will not be happy. There is no way that they will buy into Darren Hughes telling them that they are better off with Labour. They will find out very quickly that the problem with Labour is that it does not value work. Labour does not want to respect the dignity of work, and does not care that working New Zealanders who are making an effort should receive the rewards they are striving for. It will not happen.

Over the last three weeks of the adjournment we have got around the countryside to talk to workers in their workplaces, and they are horrified when they learn what the package is. If I go to the engineering works in my own electorate where the tradesmen on the floor are currently earning about $70,000 a year because they work hard and are well qualified, I find that they are very upset when they find that they will not be significantly better off than someone who earns $38,000 under this package.

In fact, the difference between someone earning $38,000 a year and someone earning $70,000 a year under this package is $2,856. Why would someone put him or herself through years and years of extra-qualifying and experience-gaining, only to earn $2,856 over and above someone who earns $38,000 a year? That is not a recipe for a happy workforce, and it will see the demise of the Labour Government. What that Government does not seem to understand is that this package is a boot in the aspirational desires of four out of five working families in this country.

Darren Hughes: He’s not very well prepared.

GERRY BROWNLEE: Mr Hughes over there is getting terribly excited and upset by this revelation. He is one of the back-bench members who were dragged up to Mr Maharey and Dr Cullen’s offices and convinced that this was the Budget that would save his seat. Now he is discovering it is the Budget that will confirm his early re-entry into civilian life—if one can put it that way.

The other aspect of the Government’s difficulties at the moment is the way those members are progressively alienating ordinary New Zealanders. Coming before the House next week is the Civil Union Bill. Why would any Government want to put a bill into the House that it knows at least 20 of its members will not vote for? I say to the Government that it should not try pulling the stunt of making it a conscience vote in the hope that there will be enough votes in the rest of the House to get it over the hurdle. Rather, it should make it a party vote, and see if it survives. It would simply go down, those members know it would go down, and they should not underestimate the capacity of the rest of the House to require the Government to show a little bit of fortitude by declaring it a Government vote.

We are seeing the demise—of my voice, actually—but also of the Labour Government before us. This is a Budget that New Zealanders will turn very sour on, very quickly. I ask this question: has there ever been a period in New Zealand’s history when there have been such extraordinary commodity prices and apparently magnificent economic growth, but such appallingly low growth in salaries and wages? I do not think there has been such a period. At any other time in this country’s history when there have been the same returns from the farm gates, salaries and wages have taken a significant leap in the right direction. But this time that has not happened, because Labour does not value workers or care for the dignity of work, and simply has an ideological bent to make all New Zealanders the same. This Government will be rejected for that.

Madam DEPUTY SPEAKER: Before I call the next member, the senior Government whip’s interjections were excessive in the last speech. I did not want to interrupt the member’s speech, but I would just warn you that they were excessive.

Simon Power: Why did you not warn her in question time?

Madam DEPUTY SPEAKER: I am on my feet; there should be silence.

MARK PECK (Labour—Invercargill) : Can I say two things to the member who preceded me. First of all, if Darren Hughes is facing Roger Sowry, it is no contest. Mr Sowry was twice beaten by Judy Keall and once beaten by Darren Hughes, and I can assure the member who preceded me that Darren Hughes will be here for quite some time yet, so Opposition members had better get used to it.

Secondly, can I also say to the member, who complained bitterly about workers’ wages, that I am always amazed at how the National Party becomes a job delegate for the low paid when it is in Opposition. This is not new to me. I used to be an employee of the hotel workers union and, latterly, the Service Workers Union, as it was, and I will never forget the then MP for Wallace, Derek Angus, getting off the plane and bemoaning the fact that workers were getting a very small pay increase. One of the most fascinating things is that the very first piece of action the National Government brought about in 1990 was to cut benefits and to slash wages and conditions. So when those members complain about wages not keeping track with growth, let me make one thing clear to them: their alligator tears are not believed by anybody and especially not by workers. It might sound strange, but workers actually outlast the boss. The boss normally goes before the workers go, particularly in larger businesses. As a result of that, we are most certainly not impressed by those members’ new-found interest in working people.

I have some bad news for the National Party, and it goes like this. This is a good Budget for New Zealanders. It is good for families and it is good for the economy, and there is a lot of evidence of that in the newspapers so far. Those who run the social agencies and food banks are delighted. They are looking at a situation where their services will not be required as often in the future, because this particular Budget is making the first significant redistribution of income support across low and middle income earners, amounting to $1.1 billion once it is fully introduced. That is significant for families. When one talks about having an additional $10, $15, or $20 just to pay the milk bill and buy some bread, when one talks about giving families $60, $70, $100, $130, or $150 a week at the conclusion, one realises that this is a good Budget for low and middle income earners. Let me say that, having done some door-knocking during the adjournment, I know that the sad thing for the National Party is that people actually understand that.

They also understand one other thing, which I do not think the Opposition is being terribly good about highlighting in this debate. They understand that that additional money is being provided in a way that will last forever. Let us look at that. There is a surplus. John Key goes on about the surplus of $6 billion, and how we should give everybody tax cuts. The Waihī family who were in the Sunday Star-Times some time before the Budget, complaining about the fact that the Government had given them nothing—a family with four children and whose single income-earner is a teacher on $55,000 a year—will be $150 a week better off by 1 April 2007. They will be $60 better off by 1 April 2005, and $110 better off by 1 April 2006. They will be significantly better off. What would a tax cut—Rodney Hide’s lovely 20c flat tax that he likes to talk about—have given them? It would have given them $39 a week. I am still waiting for the Waihī family to say thank you. I do not think they will, because I think we know where the information came from and I think we know who put them up to giving that particular story. So I am not expecting a thank you, at all. I tell members this much: that family will not say thank you, but they will pocket the money and they will use it for various things, I am sure—and fair enough and good on them. Who cares? They will vote for Rodney Hide anyway. We did not have their vote in the first place.

But the majority of New Zealanders actually do understand that the Budget brings significant income redistribution. I want people to consider a little more what the Minister of Finance has said since this Budget was announced. He has said that we must keep an eye on the abatement rates. He knows that the abatement rates can easily get out of kilter as the economy grows. That is the other bit of bad news for the Opposition—the economy is growing.

Hon David Cunliffe: What Opposition?

MARK PECK: The member should not ask “What Opposition?”. There is an Opposition. Its only policy is tax cuts, but I will deal with that in a minute. I want to look at the issue of the economy. Here are some numbers. There was 4.9 percent growth in gross domestic product (GDP) in the year 2000—that was the first year of this Government—then there was an additional 2.7 percent in 2001, 3.3 percent in 2002, and 4.4 percent in 2003. That accumulates to a 15.3 percent increase in our GDP since the year 2000. To put that into context, there was a $15 billion increase in economic activity in this country.

We can see it around the provinces and the cities; we can see it in people’s hopes and aspirations. What is the biggest complaint I get in Invercargill at the moment? It is the lack of skilled workers. That is the biggest complaint I get now. It was galling that Gerry Brownlee brought up the matter of the engineer on $70,000. Why is the engineer on $70,000? Because those skills are in demand at the moment. Those particular workers are in a position where they can demand a salary over and above what they would have had in the past. I find something strange about Mr Brownlee suggesting that that worker, on $70,000, would wilfully take a cut in pay in order to pick up family support. Come on! Hang on a minute! Workers are not dumb. Workers know that Governments come and Governments go. Do they trust them? No! They do not trust them, because they know that when the National Party gets back in, it will attack the wages and conditions of the very people it now claims to be interested in. I say to members on the opposite side of the Chamber that they just have to wake up and smell the coffee, and understand they will be on that side for some considerable time to come.

We do not have to believe just what I have in my notes here. Let me look at a couple of issues that are happening in my own area. Bill English will be delighted at this. Fonterra has increased its payout for the past season to $4.23 per kilo of milk solids. It was forecasting a payout of under $3.50, so that is a significant amount of extra cash in the pockets of dairy farmers at a time when the New Zealand dollar has been relatively high. Who can remember the last time it got to 70c? Now we are celebrating because it is about 62c and declining—although the crossover rate with Australia is a little bit of a burden at the present time.

At a time when the worth of the dollar is high, one would have thought that farmers would be gloomy. Well, no, there was another very interesting headline in the Southland Times, and it was along the lines that farmers’ confidence is at its highest level since 1999, when the survey started. Farmers in Southland are looking forward to an extremely good year. Let me tell members why. This newspaper is the 15 June edition of the Southland Times, which is hardly known for being a great left-wing rag, and it reports: “US domestic cow beef and New Zealand bull beef surged 10c and 8c, respectively, to both achieve their highest ever prices.” Here is the rub: “Normally at this time of the year imported lean beef is often at or near its seasonal low for the year,” because US beef is already on strength. So our beef farmers are looking forward to an incredibly good year, as commodity prices pick up. But that is not all. The report also states in relation to dairying: “The new season opened on a very bright note. In the last two weeks dairy prices have extended their winning streak and are now 25 percent higher than last year in US dollar terms.” This is at a time when there has already been an increase in Fonterra’s payout.

The farmers are happy. I have some bad news for Bill English: I was in Dipton in the weekend, and the farmers there think we are marvellous! They think we are just great, and they want to know why Paul Hutchison does not want us to have trade agreements any more. They want to know why that is.

This is a good Budget for New Zealand, and I am proud to support it.

Dr PAUL HUTCHISON (National—Port Waikato) : I can be sure that no one is any the wiser for that sequence of unconglomerated verbiage! If ever there was a Budget where the Government giveth and the Government taketh away, it has to be Michael Cullen’s Budget of 2004. After all, on the one hand he has given billions of dollars as election bribes, and on the other hand he has caused thousands of people to be locked into dependency. I would like to congratulate my colleague John Key on the excellent work he has done in showing up the sheer cynicism of this 2004 Budget that the Labour Government has perpetrated on New Zealand, which will have the consequence of putting New Zealand back years.

Let us just look again at those two-parent families with two young children, living in Wellington, one on $38,000 a year and the other on $60,000. By the time we have allowed for Dr Cullen’s so-called initiatives, what has happened? The family originally earning $38,000 has an income of $42,860, and the income of the family earning $60,000 has come down to $45,000. But the real questions are where is the recognition of incentives for work, where is the recognition of extra qualifications, and where is the recognition that some jobs are more difficult than others. Under this Labour Government we see absolutely no recognition of any of those absolutely basic incentives that are likely to drive our economy. When we go to the more extreme example of one-income, two-parent families with three young children, living in central Auckland, one grossing $70,000 and the other grossing $38,000, we see that after Michael Cullen’s Budget the difference between them in terms of net income is a mere $2,800, and we realise the full significance and cynicism of this Labour Budget.

What is just outstanding is that this is undoubtedly a Budget that locks many New Zealanders into dependence. It is not a Budget that shows any, any semblance of being aspiring. The fact that we know that every Australian man, woman, and child is $175 per week better off than his or her counterparts across the Tasman should drive any responsible Government to ensure that economic growth, and sustained economic growth, are at the forefront of its policies. Yet in this 2004 Budget we see the very opposite. It is quite incredible that when we go back to Helen Clark’s Speech from the Throne in 1999, we read that she stated: “My Government … is committed to maintaining tight fiscal discipline and has begun with itself. Extravagance in the public sector will not be tolerated.” Yet we see in this Budget that billions of dollars will be put out over the next few years in order, clearly, to bribe those in the electorate whom the Labour Government knows it can bribe and who are susceptible to bribery. We see billions of dollars being put out to lock many thousands of New Zealanders into welfare dependency, while at the same time only one in five households is being helped.

I want to talk for a moment about the area of health. Vote Health now receives $9.9 billion per year—an increase this year of $332 million. Yet yesterday we heard the news that the Auckland District Health Board is considering firing up to 1,400 employees because of its $48 million deficit. For over a year that hospital board has been under intensive monitoring, and for over a year it has spent in the order of 13.8 percent of its total revenue on management and administration, when the national average is about 25 percent lower, at 10 percent. The Minister of Health must have known about that, yet yesterday we reached this crisis where 1,400 employees are likely to lose their jobs because of the total disregard for good management within the health service. Here is a Minister who knew about the crisis—the board has been under intensive monitoring for a year—but she has just let it evolve without doing anything about it.

There is no doubt that this Labour Government is responsible for introducing one of the most complex health bureaucracies ever perpetrated on personkind. It is inefficient, ineffective, and layered with bureaucracies. That is one of the reasons why the Auckland District Health Board is in such difficulty as we meet here today. It is déjà vu from 1989 when the Minister of Health at the time, Helen Clark, fired her own dysfunctional health board, of which her husband was a member. They cannot learn. This Labour Government is destined to drag New Zealand down into a mire of welfare dependency and poor economic growth.

But it is actually worse than that, because despite the Government injecting a massive amount of money into health—the total this year is $9.9 billion—we get less. We know that the number of major joint replacements in 1999 was in the order of 5,200; the number came down in 4 years to 4,481. There is more money, and fewer services.

It gets even worse than that, as we see in a letter from the Minister of Finance, Michael Cullen, to Annette King in which he said: “Dear Annette, Analysis of Ministry of Health data suggests that despite significant revenue increases, volumes in the sector are static, if not declining.” If ever there was an absolute indictment on a Government, it is this. There is an absolute lack of effectiveness, efficiency, or quality in the area of health spending, which is so important to the Government. What did the Minister of Finance say? He said, in a letter to the Minister of Health: “Analysis of Ministry of Health data suggests that despite significant revenue increases, volumes in the sector are static, if not declining.” This is a very, very serious indictment on this Labour Government.

I go back to what the Prime Minister said 4 years ago: “My Government … is committed to maintaining tight fiscal discipline and has begun with itself. Extravagance in the public sector will not be tolerated.” Government members are certainly getting very, very comfortable with their LTDs. Only 2 weeks after this Budget, we heard that the Accident Compensation Corporation celebrated its monopolistic existence with a party costing $800,000. That money could have been used for hip replacements and other very necessary health interventions. Instead, the corporation flagrantly spent the money on an $800,000 party.

This Budget, which has designated billions of dollars of taxpayers’ money for redistribution from one group to another, has, at the same time, just locked many thousands of New Zealanders into dependency. It is not a Budget of aspiration. It is a Budget of desperation.

STEPHEN FRANKS (ACT) : I have a proposal to save the Government $6 million next year, and literally hundreds of millions of dollars in the years after. An amount of $6 million has been set aside to run the Parole Board, and $6 million happens to be what the typical serious offender costs this community over a lifetime. The Department of Corrections statement of intent shows that the average chronic offender costs the community half a million dollars in crime costs in the 5 years after he or she is released.

Members should do the calculation, but before they do I want to talk about an experience I had on Monday of this week. I went before the Parole Board with Mrs Belinda Reaney. Mrs Reaney’s 7-year-old son was slaughtered in his bed by a naked man chanting “Kill a Pākehā.” It was not very long ago—in her mind it seems like yesterday. Yet in 2002 she had to front up to the Parole Board to try to persuade it that a sentence of 10 years was not enough for Anthony Roma. She and her husband failed.

Their good friend Graham Pedler wrote a short letter to the Parole Board, explaining that the board’s conditions of abstaining from drugs and alcohol, and having family support, were fanciful. He said: “I wish to put you on notice that I believe Anthony Roma will reoffend while on parole.” He was out of prison for only a few months when he sexually attacked someone in a park.

So the Parole Board was quite respectful to us on Monday. Its members were not looking very smug as they admitted that they had no idea what was meant by “undue risk to the safety of the community”, when we asked what “undue” was. The board members were not supercilious like Minister of Justice Phil Goff, and the Labour members opposite, when they admitted that they did not know what “the rights of the victims” meant where that is referred to in the Act. They are troubled by the jurisdiction they have. They know that it is an awesome responsibility. They know that the risks they impose on the community are simple gambles, simple guesses. They were at pains to say they have no alternative but to guess.

So the board also acknowledged what we have known for 2 years, and what Minister Goff has known since he first made sure it was in the Parole Act, that they are not even allowed to take account of the purposes of sentencing. This is a group of well-meaning people, appointed at a cost of $6 million, to let offenders out before their sentences end, knowing that that will cost many millions more, and they cannot even interpret their own Act.

I suggested to them, and I will suggest it again, that they take a steer from the Minister of Justice on what “undue risk” might be. The Minister, in this House on Tuesday, told us what he thinks “undue risk” is. When he scoffed at the idea of allowing a nuclear-propelled ship into our ports, the Minister said that an undue risk was any risk, however negligible. No one has been hurt at any port in New Zealand, or in the world, by a nuclear-propelled ship, but that was too much risk for the Minister of Justice, Phil Goff, wearing his foreign affairs hat. I ask Mr Goff why there is any early release whatsoever, if that is the test. If yesterday it was too much of a risk to New Zealanders to allow nuclear propulsion, which has never hurt anyone, why should the Parole Board not apply that test when Mrs Reaney comes before it and asks: “Why are you considering Anthony Roma for release again?”. Why would anyone consider Anthony Roma for parole, when he has never explained why he murdered a 7-year-old boy in his bed, whom he had never met, and why he then thought he should be entitled to be released into the community to do it again?

Hon David Cunliffe: Sob stories are no substitute for substance.

STEPHEN FRANKS: Mr Cunliffe says that it is a sob story, and I see smirks from a number of members. I see Mr Cosgrove smirking as well. We do not think it is a smirking matter. When Mr Goff went into his vein-throbbing act on the risks from nuclear propulsion, he pretended that no risk was worth running, yet he imposes the risk that more than 1,000 parolees, two out of three, will hurt or steal from other New Zealanders within 2 years. We know it, and they know it, and he asks the Parole Board to release them.

Hon JUDITH TIZARD (Minister of Consumer Affairs) : That was a desperate, bankrupt speech from a party that has nothing to offer New Zealanders, except nastiness, bitterness, envy, and division. It was absolutely astonishing to hear the carping, whingeing, sneering, and division from the Opposition. This Budget is the best Budget that New Zealand has had for a generation. It addresses the needs of all New Zealanders, whether they be workers, families, children, businesses, health services, public health of this country, education, particularly early childhood education, communities, and housing. The list goes on and on.

This Budget is the best Budget for a generation. It addresses the deficits left by the bankrupt policies of a National Government over the 1990s—and the social, financial, environmental, and cultural deficit. It was not just Te Papa, the New Zealand Symphony Orchestra, and the Royal New Zealand Ballet that were left short of money. It was our schools, kindergartens, and childcare centres, universities, hospitals, general practitioners struggling in the communities to fix New Zealanders’ well-being and health, primary health services, mental health services, and public services across New Zealand, and we all paid for that. We paid huge prices for that.

This Government has said that it will not follow the mean, divisive, savage, sour policies of the conservative National and ACT parties. We know the cost of the services used by New Zealanders. But we also know the cost of not providing decent services. We know the cost, and the cost to people. We have worked really hard, and this Budget is a triumph for all New Zealanders. It has a new approach. We are offering leadership and good public services across the board. We are offering partnership with business, the community, and local government across the board, and we are seeing the results. We are looking for growth and innovation to grow the cake, and now the time has come to pay back the New Zealanders who have worked their guts out for the last 10 or 15 years and seen no return to their families and communities in the services they need to raise the capacity of their families and communities.

We are seeing more money go into science and research and supporting export and business. One big business in Auckland Central said to me: “We’ve looked at our results, and we always do well under a Labour Government. We support you, because what you’ve done in this Budget is put money in the pocket of small businesses, working people, and communities.”

Stephen Franks: Name it.

Hon JUDITH TIZARD: I will happily name it. Colin Giltrap. [Interruption] I do not accuse my constituents of being liars and hypocrites. I see the way that that member treats his supporters. I do not treat the people who support me, like that. This Budget is about opportunity for all. It is about fairness and security. It is all very well for the ACT party to go on about people being safe in their homes. What did ACT do? It saw a National Government hack into police, community services, housing, community groups, local government, and all the basic services that New Zealanders need for growth in our community, country, and businesses.

This is the best Budget for a generation. In particular, I want to talk about Auckland. I am the Minister with responsibility for Auckland Issues and I am very proud of what this Government has done. I will be delighted to tell members across the House what we have done. We have grown the New Zealand economy so that Transfund now has nearly $400 million a year more to spend on New Zealand transport. We have gone from a total budget of less than $900 million to over $1.3 billion a year. We have grown the Auckland share of that from the pathetic average of less than 22 percent that that Government allowed, to over 32 percent. For the first time ever in history, Auckland is getting its fair share of the transport spend across New Zealand.

We have taken the National Government’s stupid anti-environmental and anti-business capping off public transport. We are allowing for the growth of public transport, because that is good, efficient, and makes sense. We have spent more than three times what the National Government spent on public transport in Auckland. We have brought back the rail corridor that Ruth Richardson flogged off with no protection and no requirement for investment, for $1. We have taken it back. We are doing things like double tracking the western line, so that we can put good passenger services alongside freight services.

This is an excellent Government that has set new targets for Auckland to work in partnership. Auckland is New Zealand’s main international city, our main export and import centre, the main service centre for the whole of New Zealand, and we want Auckland to get working. We are not giving Auckland anything that we are not doing for the rest of the country. For the first time we are giving Auckland its fair share.

We are looking at roading projects, looking at linking up the northern motorway with the western motorway, and finishing State Highways 20, 16, and 18. We are looking at the connections with the airport. We have done them all. Later I will table a chart from Transit New Zealand that shows where Auckland’s projects are. I will show what that bankrupt National Government—which had no plans, no funding, no partnerships, and did not care about New Zealand—has done, which was very little of anything. We now have major projects that are being finished, like the Grafton Gully project, the Puhinui interchangeand all of those major investments in New Zealand. The National Party left office in 1999 with the Albany to Pūhoi realignment built, but nothing else. There were no plans, no funding, no consents, and National did not care.

We now have Dr Brash saying that he will fix Auckland’s transport problems by lunchtime. But what do we have? We have the member for Epsom saying: “But the eastern corridor’s not going through my electorate. It won’t happen.” Dr Brash has said that after he gets into power the eastern corridor will be built in 10 years. That is as good as National’s other promises. It will come to nothing.

However, it is all right, we are safe, because New Zealanders know that what the National Party offers is despair, envy, and division. The National Party will sell Kiwibank, privatise accident compensation, scrap the nuclear-free policy, and cut health, housing, and education. We will go back to the politics of envy and division. National would send troops to Iraq or anywhere else that America or Australia told it to. Every time there is a war National will just say: “Let’s jump. Let’s see how high.”

Some very good comments have been made about this Budget. Who said that it is a landmark redistribution from the rich to the low paid and critically the not so low paid? John Armstrong said that in the New Zealand Herald. Who said: “I felt he”—Steve Maharey—“really got what I was saying. I went down there not pro-Labour but I came back pro-Labour. He explained to me the big picture that there were phases of implementing policy from the poorest up and I understood it.” The Waihī family who starred in the Sunday Star-Times said that. Who said: “The package is a welcome signal. The government is saying to the country that it values people who want to work and it’s prepared to provide rewards and incentives to back it up.”? Who said that? The National Business Review stated that.

When we have papers like that stating that this is the best Budget for a generation, I can only say that I agree with them. This is the best Budget for a generation. This Budget is a real commitment from this Government to all New Zealanders that we will work with all New Zealanders to make this economy, this society, our communities, and our nation a place where we will be proud to grow old because our grandchildren will have opportunity. They will have training, hope, and an opportunity to make a difference.

Hon MATT ROBSON (Deputy Leader—Progressive) : When listening to some of the speakers on our Government side of the House I have often wondered what the “led party” is when they talk of the “Labour-led Government”. I checked with the Parliamentary Library and the coalition Government was formed between the Labour Party and the Progressive party. There was no “led party” as part of that, and United Future has given its support for confidence and supply. Perhaps there is a “swinging the lead party”, which would probably go as an accolade to New Zealand First, but I am pleased to announce that there is no “led party”. I am also pleased to report that a number of my Labour colleagues have stopped talking about the “led party”, because I know it does not exist.

I know they have stopped, because I have been getting some odd mail. I got an odd letter in my mailbox the other day outlining the virtues of the Labour Budget. The Parliamentary Service - funded document asked me what financial gains were available to my family in Labour’s Budget. I did the calculations and discovered there is no financial gain for my family in this Budget. Therefore, I could not be voting Labour at the next election, whenever that may be, but I will vote for the continuation of the Labour-Progressive coalition Government because that Budget says to me that I have a very good reason to vote for that coalition.

I want to outline why I am pleased to support the Labour-Progressive Budget that is being discussed here today. It is the most forward-looking or progressive Budget of the five Budgets delivered by the minority coalition Government since we came to office 5 years ago. Budget 2004 includes a significant amount of investment in programmes designed to promote the transformation and strengthening of the economy, because this progressive coalition Government knows that ongoing social and economic progress go hand in hand.

The key to understanding the Labour-Progressive Budget is to appreciate that its value lies in the work it permits in propelling the transformation of the base of the New Zealand economy on to a higher level. Budget 2004 takes a comprehensive approach to economic development. It is focused on strengthening and deepening New Zealand’s connections with the world economy. In other words, it helps us to do a better job of selling to the rest of the world high-value, high-skilled products that customers overseas want to buy.

There is $500 million over 4 years in this Budget—that is, half a billion dollars—to help to unleash New Zealanders’ creativity and talent. We are in a position to start to invest more in the financial welfare of our nation’s children and in our families because we are investing adequately in our people’s talents, creativity, and enterprise. In other words, we are playing a constructive part as a Government in helping New Zealanders build the foundations for a stronger economy to sustain future social investment in our people. The social dividend is important.

Our broad approach is not limited to the economic development portfolio. It is across the board: commerce, small business, finance, education, science and technology, immigration, and a number of related portfolios. In this heated atmosphere on immigration it would be worthwhile for members to pause and to think of the contribution of migrants in so many ways to our economy, and to remember that just because the leader of New Zealand First discovers a set of allegations, unproven and untested, he therefore says that there is an economic crisis. One swallow does not a summer make, nor allegations, often unfounded, by the notorious leader of New Zealand First against the immigrant population of New Zealand.

This Labour-Progressive Government is investing in science, and in the education sector. This Budget signals another dramatic improvement in early childhood education and another $54 million in the war on drug pedlars. We are investing to make tertiary education more affordable. It is a Budget to be proud of. The Labour-Progressive Government holds 53 seats in this House. I therefore acknowledge with respect the vote of confidence from United Future’s eight members. From what I know of the manifesto of the Green Party, it should consider voting for this Budget.

METIRIA TUREI (Green) : The Greens support the Government’s additional spending on education, particularly in early childhood. The plan for 3 and 4-year-olds to, eventually, get 20 hours’ free childcare at community-based centres is a very good thing, but that is 3 whole years away and covers only this age group. We need the support now, urgently.

Some funding for special-needs children in early childhood is equally needed, and gratefully received by parents. Much of this good work is risked when these children reach primary and secondary school, where they will be subject to a public education system that is grossly underfunded.

Our schools are in crisis. Ongoing resourcing scheme funding has not increased, so special-needs students in primary school still miss out. We can give teachers laptops, but they are useless without funding for professional development and technical support. asTTLe and other assessment aids need resources attached to them to alleviate the workload problems that will only lead to frustration and burnout in our teachers and the failure of those tools to achieve their aims.

In 2003 the Government recorded a $5.5 billion Budget surplus, yet the flow of funds to primary and secondary schools over recent years has not relieved any of the funding pressure on schools and teachers. This in turn means that the quality of public education is under threat, by not so much creeping as galloping user-pays.

The right to a free education has been enshrined in New Zealand law since 1877. Schools can charge mandatory fees and enforce those fees in only very limited circumstances. Other than that, donations are entirely voluntary. But because of their funding pressures, schools are not being clear about these voluntary donations, and are therefore increasing pressure on the community and parents.

One recent case was that of the boy who was banned from his school ball because his family had not paid his school fees. The family has now complained to the Human Rights Commission, and schools are justifiably nervous about the ramifications of the commission’s decision, given that they rely on the thousands of dollars that parents pay in fees to run their schools. Then there is the debt collection agency that helped 10 schools recover subject fees, despite protests from parents who believed that they contradicted the principle of free compulsory education in this country. How many schools and families are now involved in this?

The fact is that fees and donations are now seriously critical to the funding of schools, because operations funding is dismally inadequate. From 1992 to 2001 Government operations funding for each student in secondary schools rose by 30 percent, but school fund-raising—school fees, subject fees, and cake stalls—increased by a staggering 173 percent. Put another way, schools must now find 17 percent of their basic operational funding from parents and the community. Our public education institutions, schools, and universities are increasingly relying on parents and students to make up the Government’s funding shortfall.

By comparison, in the past 4 years, funding to private tertiary education providers has increased from just $17 million a year, when Labour first took office, to well over $150 million a year. This funding for private tertiary education has exploded, despite concerns over the quality, management, and accountability of many of these tertiary courses.

Then, of course, we have the Budget announcement of an extra $40 million for the marketing of international students and the provision of international scholarships, which benefit the private sector and subject the funding of public schools to the vagaries of the international education market. This is not sustainable, secure, and quality provision of education to New Zealand children. It is gambling with their education and New Zealand’s future.

So-called donations—that is, school fees—have increased rapidly over the past decade, just as tertiary education fees, along with student debt, have skyrocketed. The continued bulk funding of schools and universities is disguising the underfunding of schools, and opens the door for galloping user-pays—a user-pays philosophy that resonates much more with the elitist, conservative right wing than the apparently socially responsible Labour tradition.

Hon PHIL GOFF (Minister of Foreign Affairs and Trade) : This is a Budget we can really be proud of. It is fiscally responsible, socially responsive, and, most important, it delivers to families, to working people, and to superannuitants. It invests in the areas that I think are most important to this country. It invests in education. It invests in health. It invests in the core services, such as justice and police, and, most important, it is good for families. This Budget is so good because it gives assistance to working families at the time they most need it—when the costs are greatest as their kids are growing up, when their incomes are limited.

Who in this House would say that that is not the group that most deserves to get a lift from this Budget? That is a rhetorical question, because the National Party and the ACT party would have given it to their mates. They would have given a flat tax rate, which would have given hundreds of thousands of dollars to those who need it least, and a pittance to those working families that are struggling to give their kids a chance in life. This Budget helps more than 300,000 families, most of which are supported by wages. It gives them a significant lift in their income. It acknowledges the needs of those on the lowest incomes in our society, but, importantly, it creates a real incentive for those people who are able to work to join the workforce, because they are much better off by doing so.

For families in the $25,000 to $45,000 income bracket, this Budget will also deliver a benefit averaging about $100 a week over the first 3 years in direct family assistance. On top of that it gives help where it is needed in terms of accommodation supplements. In my area of Auckland, housing costs are high. Aucklanders will do well out of this Budget, because they need that help with the high accommodation expenses they face. It will help those people struggling to be in the workforce and provide quality childcare assistance.

Someone in my electorate of Mt Roskill with three kids, earning maybe a little bit over the medium wage of $52,000, will be better off by $100 a week by next April. The April after that, he or she will be better off by $140 a week, and by April 2007 better off by $170 a week, and getting 4 weeks’ minimum holiday a year. Unless, of course, “Uncle Scrooge”—Dr Brash—comes along and takes those things away, just as the National Government in 1990 took away the penal rates, the overtime rates, and the things that working people had worked so long for in New Zealand.

Beyond that, I think the Budget makes real advances in education. The rate of subsidy in childcare, in particular, will rise significantly. For around 28,000 families the average gain will be about $23 a week. Tertiary students are already benefiting from the fact that they are not paying interest rates on their student loans while they are still studying. They are benefiting from the fact that student fees have been frozen, and then capped. This Budget puts another $110 million into the student area by helping students from lower-income families become eligible for a student allowance, and I welcome that.

In health, there will be a great many people in my electorate, particularly the elderly people, who will benefit from this Budget. I particularly want to thank the Minister of Health for acknowledging the needs of older people in my electorate who require hip and knee replacements. The promise that this Budget makes, and will deliver on, is that we will double the number of knee and hip joint replacements. As a result of this Budget, some 9,300 older New Zealanders a year will regain their physical independence.

On 1 July this year, just 2 weeks away, all those over the age of 65 enrolled in primary health organisations will become entitled to cheaper health-care and to $3 pharmaceutical prescriptions. The older people in this country, who have worked so hard to build the nation we participate in and enjoy today, will be getting just rewards from this Labour-led Government.

I want to look briefly at the justice area, because I have a personal responsibility for it, and it will benefit greatly from the Budget. Budget 2004 commits funding of just over $1 billion to the justice system over the next 4 years, and some of that—for the braying member, Mr Franks—will go into building new prisons. Mr Franks, who has accused this Government of being soft on crime, has to acknowledge that the tougher sentencing laws in this Budget for serious and recidivist offenders mean that more people are being locked up for longer. I regret that that is necessary, but for the protection of the community there are categories of people for whom sentences must be much tougher, and are.

Because of a record police budget, and record police staffing, the rate of solving crime in this country over the last 4 years has consistently improved. More criminals are being apprehended, and more are being convicted as a result. In particular, this Budget focuses on the scourge of methamphetamine, and the organised crime that is associated with it. An additional $39 million is being invested in this area with additional police clan-lab teams being formed, more staffing resources for the analysis done by Environmental Science and Research, and better interception and surveillance work.

A small but important area to me is the $9 million we are investing in the Budget to increase juror fees and assist jurors with the costs they face in parking and childcare. That is a critical investment in ensuring that ordinary New Zealanders can play their role and fulfil their civic duties in the justice system of this country.

Last, but not least, I want to come to my other portfolio responsibility, which is in the area of the Ministry of Foreign Affairs and Trade. This year we will open a new embassy in Warsaw, at the heart of a growing area—the new States that are acceding to the European Union. In 2 years’ time we will have a post for the first time in Cairo, in Egypt. The investment we are making will ensure that we can better promote our trade and therefore the prosperity of this country. But it will also enable us, as a small but fiercely independent country, to play our role in the world promoting international peace and stability, and countering the threat of terrorism.

Of course, if the National Party wants to make a saving, it will probably make it in this area, because why would one need a Ministry of Foreign Affairs and Trade in this country when the National Party is prepared to hand any decision-making over foreign policy to the capitals of other countries? My God, what did we see today! We saw Don Brash saying that he would move towards changing our nuclear-free status “if that was acceptable to the Americans.” One does not make one’s own policy in this country under a National Government. A person goes to another capital in another country, and that country will do it for them.

Then there was Simon Power. He said that National would do, when and wheresoever, whatever the political and military leaders of other countries asked of us. That is totally reneging on using our own judgment and our own values. Mr Power, Mr Brownlee, and Dr the Hon Lockwood Smith all committed themselves to participating in the invasion of Iraq, notwithstanding the fact that it was opposed by 80 percent of New Zealanders.

Last but not least we have little Dr Nick Smith. He said we would opt out of the Kyoto agreement unless the Americans and the Australians said it was OK. That would mean reneging on the leadership that our country has shown in the Pacific to our smaller neighbours, who look to New Zealand for solidarity and support in their fight to stop global warming.

This is a Budget I am proud of. This is a Budget committed to sound management, to decency and fairness, and to giving ordinary New Zealanders a fair go. I commend the Minister of Finance for the work he has done, and I commend this Budget to the country.

JOHN CARTER (National—Northland) : A number of people on the other side of the House, if not most, would probably agree that I am a relatively simple person. Indeed, a number on this side would probably say the same thing, although not necessarily to my face. But one thing I suspect a number on that side of the House, and certainly a good number on this side, will concede is that I am not a bad local member of Parliament; that I am in touch with the electorate; and that I hold a seat that, in any demographics, should actually be held by the Labour Party, but is not. I am sure the Labour Party will acknowledge that at the last election it was held by a record majority.

I wanted to open my Budget speech with those comments for this reason. A number of people on the other side must be extremely disappointed in the outcome of this Budget. One of the things that never ceases to surprise me—and it happened when we were in Government, and it is happening now with the Labour Party in Government—is that Governments seem to get out of touch with their electorates. They seem to get out of touch with what is happening in the constituencies. One of the things that I know the Labour Party and the Labour Government were hoping would be an outcome of this Budget was an increase in popularity in the polls. It must be an awful disappointment to them that wherever they look they find they are not getting the response they expected.

Let me tell members why that is occurring. The reason is that the Government is out of touch with what the people of this country are thinking. New Zealanders are concerned about the social engineering that has been going on subtly over the last 4 or 5 years. What they see in this Budget is that here again Helen Clark, with the support of Michael Cullen, is trying to manipulate the minds of the public through giving them back their own money. People are not buying it. They are not interested in Michael Cullen saying to them: “I’m going to make you feel better by giving you some of your own money back.” The people of this country want the opportunity to use their own money their own way. The public of this country have become very cynical about politicians right across the board, and right now they are extremely cynical about this Labour Party Government, which they perceive is using this Budget and their money in an endeavour to buy their votes at the next election, and people are not buying it.

I say to Michael Cullen and Helen Clark that if they think they have changed the minds of the public with this Budget, and will get support out of it between now and the election, then they are sadly mistaken. Too often we see—and I say this about the past Government as I do about this one—that it is so easy for a Government to lose touch with the sentiment of the people, because it gets so ingrained, so engrossed, and so involved in trying to manage the things that are important to it today that it forgets to look beyond and to look at what people are thinking.

When I go back to my electorate of Northland and get down to what the people are feeling—and I say again that I think it is acknowledged that I have my nose to the ground and that it is a pretty good political nose—I know that people in Northland and across the country are saying: “We are extremely disappointed in what Michael Cullen, Helen Clark, and the Labour Government have tried to deliver to us today in this Budget.”

There is so much cynicism around now, so much concern about social engineering, and so much worry about the fact that this Government is out there trying to use the public’s money to buy votes, that people just will not buy it. People are cynical about this Government, they are cynical about the Prime Minister, and they are cynical about Michael Cullen’s Budget, and, as a consequence, this Government will be disappointed in the outcome of what it thought would be a bumper crop. It will be an absolute failure. The Government will have to look elsewhere to get votes, and those votes will not be there for it when it expects them.

Hon Dr MICHAEL CULLEN (Minister of Finance) : The member for Northland claims to have his nose to the ground. The only time he does that is when he is pulling his head out of the sand.

I am very pleased to be supporting the Budget at the conclusion of this debate. What is the National Party opposing in this Budget? First, it is opposing more money for hard-working families in New Zealand. What National members are all saying—look at them sitting there, the serried ranks, with faces and minds totally blank—is: “There’s not a penny in this Budget for me so I’m voting against it.” On this side of the House we are saying: “There is a lot of money in this Budget for the people who need it; that’s why we are voting for it.” A three-child family on $40,000 a year will, by April 2007, be receiving an extra $124.77 a week, plus anything extra for childcare, plus anything extra from the accommodation supplement. That does not pay for the member’s nightly visit to the Chinese takeaway, but for ordinary people in this country it makes a huge difference to their level of family income.

National members are opposing $3 prescriptions for the over 65s. Why should they not? They charged for people to go to public hospitals when they were in Government. They introduced a new income test on the pension when they were in Government, for a brief period of time. Of course they would oppose cheaper prescriptions for the elderly. They are opposed to the business spending to support businesses in New Zealand. They are opposed to the money for training methods, which would help Shane Ardern learn how to drive a tractor properly at some point in the future, or at least to be able to tell a new tractor from a clapped-out one, which he cannot tell at the present time.

National members are opposing the new money for childcare assistance. They are opposing the new money for out-of-school care and recreation. They are opposing the new money for transport in Auckland, because that is part of what is built into this Budget.

What were the alternatives? Not surprisingly, National members had a little caucus and they asked: “What would we most like from the Budget?”. With one voice they put up their hands and said: “Tax cuts for me, please.” So the National Party’s policy is tax cuts. Well, sort of, because what is its policy on tax cuts? Two years ago Dr Brash said there should not be any tax charged once one reached a certain level of income; that the tax rate should be zero above a million dollars a year, or so—which he was approaching at that point. He was one of my employees in that respect. Then about a year ago—

Deborah Coddington: Who presented that report?

Hon Dr MICHAEL CULLEN: Goodness me, Deborah Coddington has woken up again.

Then a year ago Dr Brash was saying that the priority was to reduce the top personal tax rate. Then in March this year he said: “No, no, we didn’t mean that. We should reduce the middle tax rate first, then we will reduce the top personal tax rate.” Then he said: “Well, we will still reduce the top personal tax rate, anyway.” Why are they confused? It is because Washington is too busy to make up its mind what the National Party’s tax policy should be. Until Washington makes up its mind, National members will not know what their policy will be on tax cuts.

Then we had the true absurdity. By means of questions and speeches we reached the point where both National and ACT were arguing that people would be better off if they had less income but a lower effective marginal tax rate. They thought that people should take a $100 a week cut in income in order to have a lower effective marginal tax rate because they would feel better about that if they did. If, by some chance, somebody came along and told them they had won Lotto, and were now the Chief Executive of Telecom, and so their income had gone up from $25,000 a year to $1.5 million, they would say: “Oh good, I will be so much better off, and I will no longer have to get family support from the State to support my family and children.” The member needs to get his head out of the sand because his nose is not to the ground. People prefer more money in their pockets.

Then we had John Key’s policy. John Key is developing a new policy—at least, he thinks it is new, because he has not been around very long—to borrow lots more money and spend it so, it is hoped, the economy will grow and we can pay back the debt. It is called borrow and hope.

Hon Harry Duynhoven: I remember that.

Hon Dr MICHAEL CULLEN: Yes, 20 years ago there was a little short fellow who sat in this seat for quite a long time. He had this funny kind of laugh. His policy was borrow and hope and it turned out to be borrow and no hope. We spent something like 20 years fixing up borrow and hope from that gentleman. That is Mr Key’s policy—the wizard of international finance.

National’s health policy is to abolish the primary health organisations and to pay more for pharmaceuticals. Its policy is to lift the restrictions on Pharmac and let the drug companies charge what they want. We will pay more for pharmaceuticals and John Key will borrow more money so we can pay more for pharmaceuticals. That was another brilliant policy announced by Dr Hutchison at one point. That policy was very Washington—pay more to the pharmaceutical companies.

National’s final policy is what I call “go with a glow”. National’s answer to all our prayers is somehow to change the nuclear-free policy, because if we do that there will be a light upon the hill or somewhere, which will be a nuclear ship coming into New Zealand. By these means, miraculously, National believes we will get a free-trade agreement with the United States, and our incomes will suddenly rise to the level of those of Australia—even though Australia already has a free-trade agreement with the United States, so there is a slight problem in that respect. Nobody believes a word of it, because National’s latest policy is to go and ask the United States whether it likes it, and then National will put it to the people by way of a referendum. So the United States will be the Lower House, and the people of New Zealand will be the Upper House, in the National Party’s view of the constitution. Once a policy has been signed off by Washington and the Pentagon we are allowed to do it in New Zealand.

All National’s other spokespeople said the Government was not spending enough in their areas. They wanted more spending on early childhood education, health, tertiary education, police, courts, prisons, on absolutely everything—and less tax, and to reduce debt faster. All these miracles would be done by National in one fell swoop.

Shane Ardern: No trouble.

Hon Dr MICHAEL CULLEN: There speaks the economic genius from Taranaki. That member has finally decided that if he drives a tractor far enough up the parliamentary steps, then sooner or later enlightenment will descend upon him and he will achieve this miraculous Holy Grail—he can spend a lot more, tax a lot less, and save a lot more simultaneously. This is known as “Shane-nomics”, or something of that sort.

I think National needs to take a leaf out of ACT’s book—ACT’s solution has been to change its leader—because National’s leader has scarcely been heard of for months. He made one speech—a speech that imitated Sir Robert Muldoon in his favourite watering hole, the Ōrewa Rotary Club. He rode for a while on that speech but now the momentum is tailing off again. He cannot spend the whole of his life bashing Māori and making a political career out of that. There have to be more answers and there are not any from National. There is only one, yet again—make the rich richer, the poor poorer, and the elderly suffer. Somehow or other this is called governing in the national interest.

Mr SPEAKER: The question was that the Appropriation (2004/05 Estimates) Bill be read a second time. Since then a number of amendments have been moved. The first is in the name of Rod Donald.

Mr SPEAKER: The next amendment is in the name of the Rt Hon Winston Peters.

Mr SPEAKER: The final amendment is in the name of Dr Don Brash.