Wednesday, 8 June 2011
Volume 673
Sitting date: 8 June 2011
Wednesday, 8 June 2011
Wednesday, 8 June 2011
Mr Speaker took the Chair at 2 p.m.
Prayers.
Visitors
Australia—Standing Committee on Rural Affairs and Transport, Senate
Mr SPEAKER: I have much pleasure in informing the House that a delegation from the Standing Committee on Rural Affairs and Transport of the Senate of Australia, led by Senator Glenn Sterle, is present in the gallery. I am sure members would wish that the delegation be welcomed.
Questions for Oral Answer
Questions to Ministers
State-owned Assets, Sales—Treasury Forecasts
1. Hon DAVID CUNLIFFE (Labour—New Lynn) to the Minister of Finance: Does he stand by all of Treasury’s forecasts for the planned sale of State-owned assets?
Hon BILL ENGLISH (Minister of Finance): As the member will know, Treasury prepares its forecasts independently; but the answer, I suppose, is yes.
Hon David Cunliffe: Why is he promoting a policy that he described today at the Finance and Expenditure Committee as “selling hydro dams to buy prisons”, when the return on those hydro dams averaged 17 percent in the last 5 years and he himself calls prisons a moral and fiscal failure?
Hon BILL ENGLISH: There seems to be some confusion about the return on State-owned enterprises. A figure of $700 million of dividends has been quoted, which is not, in fact, correct. That actually exceeds the Crown’s dividends from all sources—State-owned enterprises, Crown entities, and Crown research institutes. The true figure for dividends from State-owned enterprises is probably about $350 million, and the member might find that that changes his calculations.
Hon David Cunliffe: I raise a point of order, Mr Speaker. The Minister has not addressed the question, which was the comparison between selling hydro dams and purchasing prisons. That has nothing to do with the dividend flow—
Mr SPEAKER: If I remember the member’s question correctly, he did mention a figure of returns from State-owned enterprises, and the Minister disputed that figure, as the Minister is entitled to do.
Hon David Cunliffe: Why did he repeatedly claim at the select committee today that selling our public assets offshore will help reduce our international indebtedness, when his Budget—
Hon Dr Nick Smith: He never said that.
Hon David Cunliffe: —that Minister was not there—shows net international debt rising by over 8 percent of GDP in the next 4 years?
Hon BILL ENGLISH: Because it helps us avoid the need to borrow. So, yes, international indebtedness is going to rise. Depending on how the mixed-ownership model turns out, we will borrow less than would otherwise be the case.
Hon David Cunliffe: Why do his forecast financial statements not fully account for reduced dividends from the assets he wants to privatise, but do fully count the revenue and interest savings from those sales?
Hon BILL ENGLISH: I am not sure the member’s interpretation of the figures is correct. As I said at the select committee, the Government’s objectives in this case are not purely fiscal. However those numbers turn out, the Government wants to provide New Zealanders with an opportunity for sound investments, we want better performance from those companies, and, frankly, we would rather pay dividends to New Zealanders than pay interest to foreign lenders.
Hon David Cunliffe: Will the Minister admit that his promise to return the Crown accounts to surplus by 2014-15 is not credible, as it relies on rubber accounting of unmandated asset sales, $1 billion in cuts he has not even allocated, revenue predictions that are $4 billion more than Inland Revenue Department forecasts, and an economic growth track that nobody believes?
Hon BILL ENGLISH: No, but under almost any feasible assumptions for the Government’s Budget, we will be borrowing billions less and will have much smaller deficits than any feasible accounting of the Labour Party’s promises so far.
United Nations Commission on the Limits of the Continental Shelf—Consultation with Tāngata Whenua
2. RAHUI KATENE (Māori Party—Te Tai Tonga) to the Minister of Foreign Affairs: What engagement or consultation was undertaken with tāngata whenua in preparing the Government’s submission to the United Nations Commission on the Limits of the Continental Shelf, and what was the response from tāngata whenua on the proposal to extend New Zealand’s maritime boundaries?
Hon MURRAY McCULLY (Minister of Foreign Affairs): I am advised that New Zealand’s submission to the United Nations Commission on the Limits of the Continental Shelf in 2006 was a highly technical document presenting scientific data relating to the depth of sediment and geology of underlying rock on the seabed. Its purpose was to demonstrate how the legal definition of the continental shelf in the United Nations Convention on the Law of the Sea applied to the specific geological features of the seabed beyond 200 miles from New Zealand. For that reason, no consultation with stakeholders occurred. Now that decisions have been made by the commission, the Government will ensure that the relevant Orders in Council are passed in the coming months. At that point, responsibility for administering the rights arising will pass to a range of domestic agencies. The Government would expect them to conduct appropriate stakeholder consultations at that time.
Rahui Katene: What consideration has been accorded to New Zealand’s compliance with Te Tiriti o Waitangi in negotiating maritime boundaries with countries with which New Zealand’s continental shelf overlaps, including Australia, Fiji, Tonga, and, potentially, France?
Hon MURRAY McCULLY: I am advised that officials have not yet commenced boundary negotiations with Fiji, Tonga, or, potentially, with France. However, a maritime boundary was successfully negotiated with Australia in 2004. Updates on that negotiation were included in the list of treaties under negotiation that is always placed on the Ministry of Foreign Affairs and Trade website and circulated in hard-copy form to affected parties, including Māori groups, every 6 months. Information was also included in regular newsletters published by Land Information New Zealand. No matters were raised with officials by interested parties during the course of those negotiations with Australia.
Rahui Katene: What are the implications of the new extended continental shelf for the customary owners of the foreshore and seabed?
Hon MURRAY McCULLY: I am advised that the process I have described will not change customary rights to the foreshore and seabed.
State-owned Assets, Sales—Shares
3. Hon CLAYTON COSGROVE (Labour—Waimakariri) to the Prime Minister: Does he stand by all his answers to oral question number 6 yesterday?
Rt Hon JOHN KEY (Prime Minister): Yes, although I want to take this opportunity to clarify one point. I said yesterday that off the top of my head the cost of the Contact Energy initial public offering as set out in the recent Official Information Act reply to the Leader of the Opposition was 1.9 percent of the total amount raised. It turns out that the cost was only 1.8 percent of the total amount raised. That compares with average initial public offering costs of 7 percent in the United States, 3 to 4 percent in Europe, and 2 to 10 percent in New Zealand. In this context the cost of the Contact Energy initial public offering was low, and my expectation is very strongly that that will also be the case under the mixed-ownership model.
Hon Clayton Cosgrove: Has the cost of advisers’ fees in relation to floating the energy companies and Air New Zealand been factored into the Crown accounts; if so, how much?
Rt Hon JOHN KEY: I cannot be 100 percent sure, but I would imagine that they were, because we have taken ultimately into the Crown Budget the expectation of capital that we would raise, and that would be net capital, I would have thought.
Hon Clayton Cosgrove: Is it not true that Treasury has advised the Government that recent floats have cost up to 9 percent of the sale price, meaning that selling State-owned energy companies and Air New Zealand could cost up to $600 million?
Rt Hon JOHN KEY: No. What it means is that the last time an initial public offering was done by a National Government it cost 1.8 percent, and it is my expectation that any other asset sales of a mixed-ownership type would be of the same magnitude.
Hon Clayton Cosgrove: I seek leave to table a memorandum of 17 May 2011 to the Minister of Finance and the Minister for State Owned Enterprises from the Crown Ownership Monitoring Unit, which states “In New Zealand large IPOs in recent years have cost around 2 to 9 percent.”
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.
Document, by leave, laid on the Table of the House.
Hon Clayton Cosgrove: Will Kiwi mums and dads on the average wage and facing steadily rising costs of living be able to buy shares in State-owned companies directly?
Rt Hon JOHN KEY: Absolutely they will. They will be buying them not only through their KiwiSaver accounts, of which there are 1.7 million, but also through many other means. One of the differences between this Government and the Government that the member was part of is that this Government is delivering real wage growth to New Zealanders, and under his Government there was no real wage growth to speak of. I know that the Leader of the Opposition is in Greece at the moment, checking out its economic policies, but I suggest—
Mr SPEAKER: The right honourable Prime Minister was fine until that point, but members do not refer to the absence of any member from the House.
Hon Trevor Mallard: Why is the Government engaging international energy capital experts, if its priority is to sell to New Zealanders?
Rt Hon JOHN KEY: I do not know which Minister is asking for that advice, but I can say that we have laid out very, very clearly what our expectations are under the mixed-ownership model. We have made it absolutely explicitly clear that we expect New Zealanders to be at the front of the queue.
Grant Robertson: How?
Rt Hon JOHN KEY: Well, I say to Mr Robertson, the good news is that Treasury is working on exactly making sure that that happens, and I am absolutely confident that the 1.7 million KiwiSaver accounts, the billions of dollars invested in the New Zealand Superannuation Fund, and the billions of dollars invested in ACC will be invested, and that the many thousands of retired New Zealanders who have extra savings, and many other New Zealanders, will invest in it. I say to those New Zealanders that here is their chance: they can invest in a good New Zealand company, or continue to look to Labour, which will deliver them a failed finance company or something to invest in.
Hon Trevor Mallard: In light of his acceptance yesterday that some of the shares will be sold offshore, are Chinese or Australian investors his priority?
Rt Hon JOHN KEY: That is not what I said yesterday, and the member should go back to Hansard. I refer the member to, actually, Treasury’s advice to the Government that widespread and substantial New Zealand ownership of assets is achievable.
Hon Trevor Mallard: I raise a point of order, Mr Speaker. No, I will leave it, Mr Speaker, but I will remind you of our discussion yesterday—
Mr SPEAKER: I will listen to the member’s point of order, but it needs to be a point of order.
Hon Trevor Mallard: Can I request that you refer to the Standing Orders Committee that answer of the Prime Minister, with reference to finding a midpoint between a breach of privilege, which involves deliberately misleading—
Mr SPEAKER: I am not happy with that at all, because that was a technical way of alleging that the Prime Minister, in the member’s view, misled the House, and that is unacceptable. It is not the way to handle that matter. The only conclusion I can draw is that the member was attempting to score a political point through doing that. The point of order process should not be used for that purpose. When the member asked his question, the Prime Minister claimed that his Hansard would show that he did not say what the member alleged in his question. The Prime Minister is entitled to do that, so I think that is where the matter should end.
Hon David Cunliffe: I seek leave to table a statement of specific fiscal risk from the Budget Economic and Financial Update—
Mr SPEAKER: Is that a document members already have, from the Budget documentation?
Hon David Cunliffe: They may or may not, but it relates—
Mr SPEAKER: We are not going to seek leave to table it, then. The member will resume his seat.
Hon David Cunliffe: I seek leave to table a compilation of data from the company accounts of Meridian Energy, Mighty River Power, Genesis Energy, and Solid Energy, which shows they—
Mr SPEAKER: What is the source of this document?
Hon David Cunliffe: The source is the annual company reports pulled together in a composite document.
Mr SPEAKER: Leave is sought to table that document.
Hon Members: Who by?
Mr SPEAKER: I must ascertain who brought the information together. Members deserve to know.
Hon David Cunliffe: The Labour research unit.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.
Hon David Cunliffe: I seek leave to table a table of dividends, supplied by the Parliamentary Library, taken from the annual statements of accounts of State-owned enterprises from 1993 to 2010, which shows that the combined dividends of the State-owned enterprises tagged for sale were over $700 million last year.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.
Document, by leave, laid on the Table of the House.
Budget 2011—Economic Growth
4. PESETA SAM LOTU-IIGA (National—Maungakiekie) to the Minister of Finance: What steps did the Budget take last month to achieve faster economic growth based on higher savings, exports, and productive investment?
Hon BILL ENGLISH (Minister of Finance): The Budget set out several more balanced steps. In the Government’s programme we tilted the economy towards exports, savings, and investment. In particular, the Budget mapped out a faster path to a healthy Budget surplus by 2014-15, while continuing to protect the most vulnerable New Zealanders but encouraging the shift of people and capital from the domestic sector and the Government-funded sector to the export sector.
Peseta Sam Lotu-Iiga: How will Budget measures that reduce future Government borrowing help to support jobs and faster growth?
Hon BILL ENGLISH: The Government has been willing to grow its borrowing through the recession to help protect New Zealanders from the sharpest edges of that recession and maintain consistent investment in infrastructure and public services. However, too much debt can be a bad thing. In the future, reducing the need for Government borrowing will support jobs and growth by keeping interest rates lower for longer. For instance, floating mortgage interest rates are at their lowest levels for more than four decades. This has put hundreds of dollars a month extra into the pockets of hard-working New Zealanders. Of course, in the economic cycle interest rates are likely to rise, but good Government fiscal policy could keep them lower for longer.
Peseta Sam Lotu-Iiga: Following the Budget, what reasons are there to be optimistic about the outlook for the New Zealand economy?
Hon BILL ENGLISH: There are many reasons to be optimistic, in addition to the achievements of the Government. Our terms of trade are at 50-year highs. Our exchange rate with Australia is at a 20-year low. Households are increasing their savings. Because of significant tax reform, we now have a highly competitive taxation system. We have been promoting a continuous improvement in our regulatory systems. The public sector is becoming more efficient. We have almost completed the reregulation of our financial system, so that investors can have confidence in it. All of those factors will help to underpin a growing economy.
Peseta Sam Lotu-Iiga: What reports has he seen that support the Budget’s direction?
Hon BILL ENGLISH: Just more good news on that front. Probably the most impressive reports were mentioned in this House last night, when the Hon Nathan Guy read out the vox pops from the Kapiti Observer, which were without exception positive about the direction of the Budget. This backs up the business confidence surveys, which have become quite positive in the last few weeks. I have to say I am more cautious than the bounce in business confidence is, but it is promising.
Budget 2011—Increase in District Health Board Costs
5. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Health: How much did Vote Health need to increase in Budget 2011-12 over Budget 2010-11 to meet the best estimate he received for growth in costs being faced by district health boards?
Hon TONY RYALL (Minister of Health): I am advised by the ministry that its estimate for the demographic and population growth calculation—
Grant Robertson: I raise a point of order, Mr Speaker. I am sorry; I could not hear the Minister.
Mr SPEAKER: I fully understand. Are members finding the volume on the sound system low today? I think the reaction from members is that it was too loud yesterday and it is too low today. I could not hear the Minister’s answer, either. Until we get the sound adjusted correctly, I urge Ministers just speak into the microphone a little.
Hon TONY RYALL: I am advised by the ministry that its estimate for the demographic and population growth calculation for district health boards for 2011-12 was $459 million. For the total Vote Health it was estimated to be $576 million, and $585 million was made available in the Budget.
Grant Robertson: Can he confirm that of that $585 million, $165 million, in fact, comes from cuts in other parts of the health budget?
Hon TONY RYALL: I refer the member to the press statement that the Government put out at the time, which stated that $165 million has come from reprioritisation and the use of unallocated and unspent money.
Grant Robertson: What reasons, then, can he have to disagree with New Zealand Council of Trade Unions economist Bill Rosenberg that funding for the health sector fell $127 million short of what is needed to keep up with growth in health costs in the Budget overall, and $108 million short for district health boards?
Mr SPEAKER: Before I call the Minister, I must say that despite the member sitting only 6 feet from me, or a bit more, I struggled to hear the question. Did the Minister hear the question?
Hon TONY RYALL: I got the gist.
Mr SPEAKER: The Minister believes he heard the question.
Hon TONY RYALL: My response to Dr Rosenberg would be that he said the health service needed something like $570 million to match demographic and population growth, and the Budget makes $585 million available.
Dr Paul Hutchison: How much new additional resource has the Government added to Vote Health over the course of its three Budgets from 2009 to 2011?
Hon TONY RYALL: I can inform the House that despite the world’s most serious economic recession in 80 years, and the additional costs of the Christchurch earthquake, this Government has been determined to protect and grow the public health service. In these times, when many other countries have been forced to reduce health staff and budgets, this Government has invested a huge extra $1.5 billion of new money into health over those years. This has helped pay for front-line services such as the extra 500 doctors and 1,000 nurses now working in our district health boards.
Grant Robertson: Further to his answer to my earlier supplementary question, can he confirm that his media release on the day of the Budget indicated that there was $420 million worth of new spending rather than the $576 million his own ministry advised was needed to keep up with cost growth?
Hon TONY RYALL: I confirmed quite clearly that the Government has made available $585 million for the health budget. This has been an extraordinary part of the $1.5 billion extra of new money that has gone into health over 3 years. It is simply unmatched.
Hon Trevor Mallard: Was the Minister counting the $165 million of recycled money as new money?
Hon TONY RYALL: No.
Grant Robertson: Can the Minister confirm that his press release on the day of the Budget indicated that $165 million of the $585 million he is claiming was recycled money from other savings in the health sector?
Hon TONY RYALL: The health budget press release made it absolutely clear that a contribution to the funding of this year’s available budget was coming from reprioritisation and the use of underspends and unallocated money. That is the reason why we have been able to put $1.5 billion of new money into health, over 3 years, plus reprioritise low-value spending.
Hon Trevor Mallard: In light of his latest answer, does he want to correct his original answer, which indicated that there was $580 million - odd of extra money?
Hon TONY RYALL: The member needs to check the question he asked. The sum of $585 million is made available for Vote Health in this year’s Budget.
Grant Robertson: I seek the leave of the House to table the New Zealand Council of Trade Unions’ working paper on health, which shows that the Budget was an estimated $127 million short of allowing a standstill in health expenditure.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is objection.
Unemployment Beneficiaries—Number
6. CHESTER BORROWS (National—Whanganui) to the Minister for Social Development and Employment: What was the number of individuals on the unemployment benefit in May 2011?
Hon PAULA BENNETT (Minister for Social Development and Employment): The May benefit numbers show that 57,058 people were on an unemployment benefit—a fall of 1,723. Overall, there were 328,043 people on all main benefits in May; main benefit numbers decreased by 2,295. Future Focus changes and increasing business confidence are making a difference. These May figures are encouraging, but are slow and modest as well.
Chester Borrows: How many more people were on the unemployment benefit in Canterbury in May, compared with the number before the February earthquake?
Hon PAULA BENNETT: Seven hundred and seventeen more people were on that benefit at the end of May, which is a lower figure than the many doom and gloom predictions we heard from the other side of the House. Although we anticipate that this figure may well increase as people return to Canterbury and with the Government’s wage support finishing, the job market does appear to be holding up better than was expected.
Budget 2011—Job Creation
7. JACINDA ARDERN (Labour) to the Prime Minister: Does he stand by all his answers to oral question number 12 yesterday?
Rt Hon JOHN KEY (Prime Minister): Yes.
Jacinda Ardern: Which of the three initiatives he listed yesterday as contributing to the creation of 170,000 jobs will have the biggest impact: interest rates, national standards in primary schools, or early childhood education?
Rt Hon JOHN KEY: I would not want to make a prediction as to which, but all of them will make a difference.
Hon Members: Ha, ha!
Rt Hon JOHN KEY: Well, you see, what is really, really fascinating about this is that Labour members are laughing about delivering good economic conditions for the private sector to grow jobs. That says it all, does it not? In their world the Government creates jobs; in our world the private sector does.
Jacinda Ardern: Is the job growth number of 170,000 based solely upon the job growth trend of the past 20 years, as he stated yesterday; if so, is that an acknowledgment that his Government has provided no new initiatives to support business, or anyone else, to contribute to job creation?
Rt Hon JOHN KEY: No. Treasury put together the job-growth prediction numbers. As quite a number of commentators have said, they are very much the middle of the pack, if not lower down. As I said yesterday in the House, the number is not overly unachievable, given that the 20-year trend has been an average of 35,000 per year, so it is slightly above that. But the first question from Jacinda Ardern makes it quite clear, does it not, that Labour does not care about the level of interest rates in our businesses—they do not care whether interest rates go up.
Mr SPEAKER: I think we have had equals sitting on both sides, on this occasion.
Jacinda Ardern: Does he acknowledge that despite his claim that 39,000 jobs were created last year, the number of people unemployed still increased overall by over 13,000; does not this indicate that his job-growth predictions will not necessarily provide enough jobs to bring unemployment down?
Rt Hon JOHN KEY: No. And it is a shame the member was not listening to the very informative question before this one, which pointed out, as the Minister of Social Development and Employment has today, that there are now 57,000 people on an unemployment benefit. The number is falling dramatically; 9,000 New Zealanders went off a benefit in May. This Government inherited a mess from Labour, a global financial crisis, a country that was in recession, and this Government is turning that situation round.
Jacinda Ardern: What assurance can he give New Zealanders that his bold prediction of 170,000 new jobs is more accurate than his claim that the cycleway would create 3,900 jobs when it has made only 5 percent of that?
Rt Hon JOHN KEY: Treasury advice is that we will create about 170,000. This Government will deliver interest rates that are lower than a Labour Government would produce. We are not going to continue to borrow and put the country into hock. I know that Jacinda Ardern’s message to businesses today is that she does not care about the rate of interest. We do, on this side of the House; that is why we are going to deliver lower interest rates for longer, under a National Government.
Wine Industry—Changes to Excise Tax Rules
8. COLIN KING (National—Kaikōura) to the Acting Minister for Economic Development: What steps has the Government recently taken to support New Zealand’s billion dollar - plus wine industry?
Hon DAVID CARTER (Acting Minister for Economic Development): Last week in conjunction with the Minister of Customs I was pleased to announce a significant simplification of the wine excise rules. These changes to the thresholds for payment will benefit more than half of New Zealand wineries, and they are a common-sense solution to reducing the regulatory burden on our small wine producers. This is just another example of the National Government’s support for the vital export sector.
Colin King: Why has the Government made these changes to the wine excise tax rules?
Hon DAVID CARTER: Our wine industry is a $1.1 billion export earner for New Zealand. It should not be hobbled by unnecessary red tape and regulations. These changes to the thresholds are the first in 14 years. They are not about reducing the wineries’ tax obligation; they are about aligning their excise payments with their revenue flows. It is a common-sense move that will cut administration costs and in a number of cases will enable some small wineries to actually stay in business.
Budget 2011—Changes to Department of Labour
9. DARIEN FENTON (Labour) to the Minister of Labour: Do Budget changes to the Department of Labour reflect the Government’s commitment to health and safety?
Hon STEVEN JOYCE (Minister of Transport) on behalf of the Minister of Labour: The Budget included no significant net changes to the funding for health and safety, and the Government remains firmly committed to health and safety.
Darien Fenton: Can she rule out cuts to the Department of Labour health and safety inspector and front-line positions in the next 12 months; if not, how does she plan to protect New Zealand workers from unsafe work practices and accidents like the two that have tragically claimed lives in the last week?
Hon STEVEN JOYCE: Yes. There are currently 142 health and safety inspector positions, and there is no plan for those to change. The department is currently undertaking a review of the labour group management and support positions, which may be affected by the outcome of that, but the 142 health and safety front-line inspector positions will not change.
Darien Fenton: Is she concerned that the number of workers completing health and safety representative training has dropped by two-thirds in the last 2 years, and what effect does she think this will have on workplace safety?
Hon STEVEN JOYCE: I do not have that information to hand. What I can do is to confirm once again that the budget remains unchanged and the number of inspector positions remains unchanged. If the member would like to put that question in writing to the Minister, I am sure it will be answered.
Darien Fenton: How will the cuts to the funding for workplace health and safety training, a 40 percent cut in this year’s Budget to the Employment Relations Education Contestable Fund, and the scrapping of $39 million worth of worker health and safety education through the industry training organisations help to prevent more tragic workplace accidents, like the 85 accidents that have occurred in the last 12 months?
Hon STEVEN JOYCE: I reject two of the subparts of that question, including the suggestion that the health and safety training in industry training organisations is not taking place. I think it is important to point out that in the industry training area it is devoted to obtaining qualifications and skills for workers, and that is an important refocusing that the Government has undertaken.
United Nations Special Rapporteur’s Report—Termination of Internet Access
10. GARETH HUGHES (Green) to the Minister of Commerce: What is his response to the United Nations special rapporteur’s report that criticises terminating people’s internet access because it is a violation of human rights?
Hon SIMON POWER (Minister of Commerce): It was an interesting read. The Government does not have a response to the report, because at no point that I could see does it mention New Zealand. That may be because New Zealand’s law does not currently permit internet service providers to suspend or terminate internet access for repeated copyright infringements.
Gareth Hughes: Given that the report talks about internet termination, which is on our law book currently in New Zealand, and given that the Copyright (Infringing File Sharing) Amendment Act 2011 violates the International Covenant on Civil and Political Rights, to which New Zealand is a signatory, will the Minister now heed the call of the special rapporteur for all States to repeal or amend existing copyright laws that permit users to be disconnected from internet access?
Hon SIMON POWER: I am not sure that I agree with the assertion in terms of the breach of the international covenant the member refers to, but putting that to one side for a moment, I do not have any intention of revisiting an issue that has taken the best part of maybe 3 years, if we include the last Government’s attempt at it. No, I do not intend to look at it again at this point.
Gareth Hughes: Given the United Nations special rapporteur’s objection, can the Minister explain to the House how our copyright law is compliant with international human rights?
Hon SIMON POWER: It would not be appropriate for me to give a legal opinion as to whether those particular international covenants are complied with in the way the member seeks, but what I can say is that my reading of the rapporteur’s report indicated primarily that his concern was around termination. I accept there were other matters in the report, but of course the legislation as it currently exists does not have those provisions in an operational state, although they remain on the books, to be brought in by Order in Council if other matters contained in that legislation are not fully utilised for the benefit of rights-holders.
Gareth Hughes: On what basis would the Minister enact internet termination, a power he has under Order in Council with the law recently passed under urgency?
Hon SIMON POWER: As I have repeatedly made clear, the Government will not bring the Order in Council into effect unless the notice process and remedies in the Copyright Tribunal are ineffective. Officials are keeping in close contact, and will continue to keep in close contact, with internet service providers and rights-holders to determine whether a further deterrent is needed, but at this stage the Government has no intention of bringing that provision into operation.
Gareth Hughes: Will the Minister consider the International Covenant on Civil and Political Rights as a criterion before deciding to enact internet termination?
Hon SIMON POWER: What I can say from my reading of the rapporteur’s report today is that it was quite a wide interpretation, in my opinion, of the provisions relating to article 19. I am yet to be persuaded that the assertion in that report, that because of that provision this is a human right, is actually the case. I have to say I would take some convincing, is the answer to the member’s question.
Gareth Hughes: Is the Minister aware of recent research from Germany, in Europe, which shows that making content available online is more effective at combating internet piracy without infringing basic rights, and what is the Minister doing to encourage increasing content online?
Hon SIMON POWER: No.
Gareth Hughes: When will the Minister comply with the International Covenant on Civil and Political Rights and remove—or terminate—internet termination from our law books, given that it is disproportionate, there is no evidence it works, and it takes away a fundamental modern human right?
Hon SIMON POWER: As I said earlier, I am not persuaded that the assertion the member makes in terms of the applicability of article 19 carries the weight that he asserts it does.
Clare Curran: Given the findings of the United Nations special rapporteur and its criticism of the “three strikes” copyright laws, which can result in disconnection from the internet, will the Minister support a complete review of our intellectual property or copyright laws in New Zealand?
Hon SIMON POWER: My reading of the report was that the “three strikes” provisions the member referred to were created in the context of a description of the laws as they exist—I think, from memory—in the UK and France, in the particular paragraph that was referred to. The last Government in 2008 indicated that a review of copyright legislation as it related to digital matters would go ahead in 2013, from memory. The Government is continuing with that plan, and I expect copyright in respect of digital matters to be reviewed in 2013, as the member knows from when my office answered her query.
Gareth Hughes: I seek leave to table the report of the special rapporteur on the promotion and protection of the right to freedom of opinion and expression.
Mr SPEAKER: Leave is sought to table that document. Is there any objection? There is no objection.
Document, by leave, laid on the Table of the House.
Accident Compensation—Opening of Scheme to Competition
11. CHRIS HIPKINS (Labour—Rimutaka) to the Minister for ACC: Does he believe that the Government’s recent decision to introduce competition into the ACC work account will result in cost savings for employers; if so, why?
Hon Dr NICK SMITH (Minister for ACC): Yes; and that is the official advice from the Department of Labour. To quote the advice directly: “Over time, overall prices are expected to be lower in a competitive environment, due to the incentives on employers to improve workplace health and safety (thereby reducing the incidence and severity of injuries) and the incentives on both private insurers and ACC for efficient claims management (improving rehabilitation outcomes and reducing costs).” That is the official advice of the Department of Labour.
Chris Hipkins: Why does he believe that New Zealand employers will pay less for accident cover if competition is introduced, given that in Australia, where a competitive model exists, employers pay on average twice what New Zealand employers pay?
Hon Dr NICK SMITH: I am not sure where the member got those figures from. I suspect the figures are from the PricewaterhouseCoopers report commissioned by Labour in 2008. There was a fundamental problem there. ACC made a loss that year of $2.4 billion, which was not included in the analysis. There is a second difficulty with the member’s comparison with Australia, which is that motor vehicle accidents in Australia that occur when people are working are included as workplace accidents in Australia. In New Zealand those accidents are not included; they are included in the motor vehicle account. Given the number of people injured and killed on the road, that variation makes a substantive difference to the comparison.
Chris Hipkins: Can the Minister name any other country in the world that provides cover for work-related accidents as cheaply as ACC does in New Zealand and at an equivalent level; if so, could he name it?
Hon Dr NICK SMITH: Each jurisdiction is quite different, but the stocktake report led by the Hon David Caygill noted that the most common model internationally was for both State and private insurer provision alongside each other. That is the option the Government is going through.
Hon David Parker: They cost more.
Hon Dr NICK SMITH: Members interject that it will cost more. I think they underestimate. When employers have a choice of ACC or a private insurer, if members opposite are correct, why would an employer change?
Chris Hipkins: Will he guarantee that the Government will not prevent ACC from competing for the work account in the future; if not, why not?
Hon Dr NICK SMITH: The Government has made quite clear—both in the announcement last December and in the release of the discussion paper—that our policy intent is for private insurers to operate alongside ACC. We believe that will improve the performance of ACC. Given the mess we inherited from Labour of humungous losses, we as a Parliament should be focused on ensuring there is ongoing pressure on ACC to perform well.
Dr Jackie Blue: How many workplace fatalities were there in 1999 and 2000, when there was competition, and how does this compare with the numbers of deaths in the years before and after?
Hon Dr NICK SMITH: There were 52—[Interruption] Members opposite should listen to this, because it is important. There were 52 workplace fatalities in 1999 and 2000—the lowest of any period on record. The average in the years preceding the introduction of competition was 73 per year, and in the subsequent 8 years, when Labour was in Government, the average was 86 fatalities per year.
Budget 2011—Operating Balance Forecasts to 2015
12. Hon Sir ROGER DOUGLAS (ACT) to the Minister of Finance: What would the operating balance (before gains and losses) be in each of the next 4 years if real GDP growth averaged 1 percentage point less than forecast in Budget 2011 for each of those years?
Hon BILL ENGLISH (Minister of Finance): The precise amount would depend on which components of GDP were lower, but a good indication is provided by Treasury’s downside scenario set out on page 108 of the Budget. This shows that 1 percent lower GDP growth in each of the next 4 years would lower tax revenue by $3.4 billion in 2015. There will probably be additional costs through higher income entitlements. These figures are roughly symmetric—that is, a 1 percent higher growth rate would have about the same benefit.
Hon Sir Roger Douglas: Given that Treasury’s growth forecasts have been, on average, 1.8 percentage points higher than reality over each of the last 6 years, what confidence can New Zealanders have in the Government’s growth estimate for 2013 and 2014 when the Government’s main estimates for growth are the same as its downside estimate?
Hon BILL ENGLISH: I think most people will pay perhaps passing attention to Treasury forecasts, but they are more likely to make their own assessment of future prospects. The good news is that those assessments are increasingly positive. After all, it is the decisions that people make in their households and businesses that create economic growth, not Treasury forecast use.
Hon Sir Roger Douglas: Could the Minister explain to the House how he intends to hold expenditure on primary school education constant despite significant increases in roll numbers over the next 3 years, when in the previous 4 years roll numbers were static but he deemed it necessary to increase expenditure by over $500 million, or 20 percent?
Hon BILL ENGLISH: That is a matter that would need to be clarified by looking through different bits of the Budget. Generally, the expenditure on primary schools continues to increase from two sources. One is the increase in the operational grant, which is about $22 million or $25 million, and the other is a contingency that allows for salary increases. The Government is focused on the same issues as the member. One of the reasons we want to bring in national standards, given that we have almost doubled expenditure on primary schools in the last 10 years, is that we need to get better results for twice as much money, not just the same results for twice as much money.
Hon Sir Roger Douglas: I would like to repeat my question a slightly different way. Over the last 4 years, roll numbers in primary education remained static—in other words, they did not increase—yet the Minister saw fit to increase Government expenditure by $500 million. Over the next 3 years roll numbers will go up by 17,000, yet he will hold expenditure where it is today. How will he do that?
Hon BILL ENGLISH: I do not think that is quite what will happen. I will put the answer in a different way. We could no doubt go through the Budget with the member. Some of the increase in expenditure—in fact, most of the increase in expenditure—will be held in a contingency, because it applies to salary settlements that have not yet been negotiated.
Budget Debate
Bills
Appropriation (2011/12 Estimates) Bill
Debate resumed from 7 June on the .
CLARE CURRAN (Labour—Dunedin South): I was talking last night about the way that this Government makes up stuff in the Budget and its policies, and about the elaborate charade that this country has been put through for the last 2½ years while the “Minister for Miscommunications and Misinformation”, Steven Joyce, works out how to give almost $1.5 billion to Telecom to roll out our newest and most important network of ultra-fast broadband. Telecom, which in 2009 helped pay for a report that argued why ultra-fast broadband was not necessary, has spent much time in the last 2 years trying to delay a decision on broadband, because it believes that its existing copper network is sufficient for the country’s broadband needs. It has no incentive to get a wriggle on and deliver fibre to the doors of the people of New Zealand. It will continue to do what it has always done, which is to look after its own interests, not the interests of New Zealand.
Steven Joyce, who could not get away with handing Telecom a 10-year regulatory holiday or an exemption from the commission on oversight on price, will still shortly force through a law in this Parliament that will, amongst other things, allow the prices of our existing broadband on copper to go up while the new network is installed, and there are no guarantees that the vast majority of people will actually be connected for years to come. Take Dunedin, Invercargill, Napier, and Whanganui just for starters. When will they get broadband? “Don’t hold your breath.” is all I can say. There are gaping holes in this programme. I ask where in the Budget is the allocation of the new money that will be needed.
Hon CHRISTOPHER FINLAYSON (Attorney-General): It has been very disappointing to listen to members opposite recite what can only be described as a farrago of incoherent bullet points prepared for them by the Labour research unit. I have listened to Clare Curran, Carol Beaumont, Brendon Burns, and Darien Fenton. They have all said the same thing, all with the same lack of enthusiasm and all with the same lack of conviction. It is a pity that the Labour Party research unit minions have to waste their time writing drivel for Labour backbenchers. They would be much more constructively engaged explaining to reporters Mr Goff’s research and development policy, because he certainly cannot explain it.
This Budget continues to chart the course from recession to recovery. It is based on a number of key principles, and it is worthwhile reviewing these principles. The first one is faster economic growth. Forecast economic growth is 4 percent in 2012, with 170,000 new jobs being created by 2015. The second principle is higher national savings. Changes to KiwiSaver will increase private savings, reduce Government borrowing for subsidies, and lift national savings. The next principle is getting back to surplus. We will return the Budget to surplus in 2014-15—a year sooner than was forecast in December. The next principle is repaying debt. Average net weekly borrowing will fall by over two-thirds to about $100 million in 2011-12, and the Government will start repaying debt in 2014-15.
Another principle is rebuilding Christchurch. We have created the $5.5 billion Canterbury Earthquake Recovery Fund for infrastructure in schools, temporary housing, trades training, welfare, business support, and central business district demolition costs—a huge job. All I can say is thank goodness that at this critical time Canterbury has Gerry Brownlee at the helm.
Strengthening education is another principle. Schools and early childhood education will receive an extra $1.4 billion in operating and capital funding out to 2014-15, with total education spending rising to a record—listen to it—$12.2 billion in 2011-12. Constantly vilified by the New Zealand Educational Institute branch of the Labour Party, Anne Tolley is the best Minister of Education in living memory.
Then we have the principle of strengthening health. This Budget delivers an extra $2.2 billion to public health services over the next 4 years—
Chris Auchinvole: How much?
Hon CHRISTOPHER FINLAYSON: —including an additional—for Mr Auchinvole’s sake—$585 million in initiatives in 2011-12. Most people run a mile from the health portfolio—Mr Grant Robertson should surely be running from the shadow health portfolio, because he makes one wistful for Ruth—but Tony Ryall revels in the job. He is admired by everyone.
Focusing on front-line services is another principle of the Budget. We are reining in our unaffordable expenditure while protecting our most vulnerable citizens and keeping a keen focus on improving the performance of front-line services, particularly in the justice area. In this regard, I express my admiration for my colleague Simon Power, who has done 9 years’ work in 3 years. He is a great Minister and a fine parliamentarian, whose contribution to public life will never be forgotten. The final principle is building infrastructure. The Government infrastructure programme receives $1.6 billion more for ultra-fast broadband, fibre connections, and KiwiRail, thanks to my very clever and capable colleague Steven Joyce.
We are safe managers of the economy in tough times. Tough times mean tough choices, and this Government has not been afraid to make them. Labour has a problem; in fact, it has a few problems. It criticises every Government move to reduce spending, but refuses to say that it will reverse those reductions. We all remember the “Axe the Tax” bus, and the crowds of two or three people who would turn up to greet it. Now it turns out that those members would not axe the tax after all, though they apparently want to spend about $250 million—
Chris Auchinvole: How much?
Hon CHRISTOPHER FINLAYSON: —$250 million, I say to Mr Auchinvole—taking GST off food to save the average New Zealand family $1.50 a week. Middle New Zealand will be pleased to know that under Labour it would no longer have to pay GST on Alban truffles, currently selling at $6,000 a kilogram; Californian pomegranates, currently selling at $30 a kilogram; or Philippine figs, currently selling at $2 each. Judging from what I heard about Mr Auchinvole yesterday, perhaps he had too many of those. So much for Michael Joseph Savage’s party of the people!
Not content with this, Labour is also promising billions more for expensive programmes, like Annette King’s “Ministries for Everything”. Apparently, Labour’s policy to fix New Zealand is to create new Ministers, new ministries, and new departments for everything. It is called the “Hail Mary” pass approach: throw something up in the air and hope that somebody will catch it. New Zealanders deserve better than that. They do not want more waffle and they do not want more ministries; they want their Government to focus on what works. That is what this Government is doing.
What is the Hon Phil Goff doing? Well, he used to be the figurehead. He used to be the social democratic store mannequin on which Labour projected its latest ideas of what middle New Zealand voters might like. The Leader of the Opposition did more costume changes during his first year in Opposition than Lady Gaga. Mr Goff was photographed everywhere: chopping wood in the Sunday Star-Times, riding his motorbike in the Listener—
Grant Robertson: That Minister doesn’t know who Lady Gaga is.
Hon CHRISTOPHER FINLAYSON: The member for Wellington Central is so 1950s. I tell him to get with it. This year, I say to Mr Robertson, we have had nothing but silence. Clare Curran was so frustrated that Mr Goff was making no headway as a great Southern Man that she decided yesterday that it was for her to take up the challenge. The only surprise about her performance at question time yesterday is that she did not turn up with a sheep slung over her shoulders.
With Labour, it is all about style over substance. Nowhere is that more evident than in its attitude to the arts. Let us look at the film industry. National has always championed the film industry. We formed the Film Commission in 1978, although Helen Clark liked telling people she formed it—another example of her zealous regard for the truth! Only last week the member for Wellington Central was talking about film as a contributor to Wellington’s economy, but look at his party’s behaviour over The Hobbit last year. When it came down to a choice between trade union Australian thugs and the New Zealand film industry, the Hobbit-haters in the Opposition sold out the film industry faster than one could say “unobtanium”, that precious metal so sought after by earthlings in the film Avatar, which of course was created in Weta Workshop.
Grant Robertson: These popular culture references demean the Minister.
Hon CHRISTOPHER FINLAYSON: Mr Robertson has never seen Avatar, because he is so uncool.
The same thing can be said about New Zealand music. Labour gets all excited about New Zealand Music Month, but for this Government every month is New Zealand Music Month. Turning up to a few functions and eating canapés does not amount to supporting the arts, in my book. We have a wonderful story to tell about the arts. We have a wonderful story to tell about the Budget. These are the areas of core focus for this John Key - led Government. We will always walk what we talk. This is a great Budget, and I say to the member for Clutha-Southland: “Well done, faithful servant.”
GRANT ROBERTSON (Labour—Wellington Central): Chris Finlayson once asked my colleague Charles Chauvel why he had taken an instant dislike to him, and Charles said: “It just saves time.” That was in reference to the member who has just resumed his seat, whom I shared a podium with on Sunday night, when even the national secondary schools’ Shakespeare competition entrants booed that Minister because he was so nasty. He simply cannot deliver a speech without being nasty. [Interruption] Mr Finlayson is correct; I presented the award that is in his name at the University of Otago Sheilah Winn Shakespeare Festival. It is the “Christopher Finlayson Award for Nastiness”. That is what the award is; that is what was read out. That is correct, is it not, I ask Mr Finlayson.
We come here to debate the Budget, and I am sure, Mr Speaker, you are glad that I will do that. This Budget was christened by John Armstrong as “a fairytale of high hopes”. That is certainly what it is: a fairytale of high hopes that has projections, jobs in the never-never, but no plan for growth, no plan to lift New Zealanders out of poverty, no plan to reduce the income inequality in this country, and no proper plan to grow the economy in this country. I prefer another, musical title for this Budget: “Bill English’s Fiddler on the Hoof”. That is what it was: a tinkering, a fiddling, but no real plan to drive this economy forward. There is no real plan to reduce social inequality in this country, and no real plan to protect and enhance our environment. In short, it is a failure of a Budget.
What we saw today in the House on the health budget was, I thought, instructive. The Minister of Health, Tony Ryall, stood up in front of the House today and did not even want to own his own press release from Budget day. He did not even want to admit that his press release acknowledges that the health budget falls at least $170 million short of standing still. Mr Ryall stood up and claimed that more money has gone into health. He likes to claim that a record amount of money is now being spent on health. Well, when I went to the supermarket the other night I spent a record amount of money on my groceries, but that does not mean there were more items in the shopping basket, and the same thing applies in the health system.
The health system is falling behind. Two successive Budgets from this Government have got nowhere near meeting what the health system needs just to keep services at the level they are at now, because we have an ageing and growing population, health costs and health inflation rise faster than normal inflation, and the cost of medical equipment and treatments is growing. Unfortunately this Government has failed yet again in this Budget to give district health boards the amount of money they need to provide services as they are now. That is the reality. There are now only two options available to district health boards: to cut services or to increase charges. Those are the two options that this Minister is leaving the health system.
We all know that we live in tight financial times, but what we could have seen from the Minister today was some honesty about that. He could have stood up in the House and said that he acknowledged that only $420 million extra was put in and that that is not enough to make ends meet. But we did not see that. We had obfuscation from the Minister on that score.
It is difficult for people to look at the health budget and understand exactly where the cuts are, but it is quite clear that in areas such as public health service purchasing we have seen cuts of about $38 million. National contracted services, which sound benign but include Healthline and hospital chaplaincy services, have been cut as well. We have also seen cuts in national mental health services, in the Primary Health Care Strategy, and in health workforce training and development. Those are the core elements of a Budget for health and they have been cut back, and the Minister was less than up front in the House today about those cuts. That is $165 million worth of cuts that the Minister was not prepared to acknowledge today, but the truth is that that is the gap in this health budget and he has not been able to fill it.
What we saw in the Budget was no real commitment to primary care, which is an area that members on this side of the House believe in. We believe that prevention is better than cure. We believe the bias of our investment should go towards primary health, public health, and our children’s health, and we did not see that in this Budget. In fact, we see that primary health care is still at 1.3 percent of the health budget. As a country we have to get it clear in our heads that health is not something that starts in a hospital. Health is something that starts in our homes, our communities, and our schools. That is where we need to be investing, in the early interventions that will help Kiwis stay healthy, rather than parking ever-flasher ambulances at the bottom of the cliff. We need an investment in primary health care and public health that is greater than the current 1.3 percent.
We need to see health in a wider context. There was a very good project in this Budget; it was the rheumatic fever initiative. I congratulate the Minister on putting that money into the rheumatic fever initiative, but in the end we will not address rheumatic fever—a disease that should not be present in New Zealand—without addressing overcrowded homes and cold, damp housing.
Health needs to be seen in a wider context than just initiatives, hospitals, and hospital services. We need to see the wider context of housing, employment, reducing inequality, the taxation system, public transport, and eradicating poverty. Those things will make the fundamental difference to our health status and the health status of New Zealanders. This is recognised right around the world. In July Sir Michael Marmot will visit New Zealand from Britain, and I encourage all members of the House to listen to what he has to say. In the UK he has put forward a comprehensive plan for addressing what we call the social determinants of health—that is, the things that people experience in their lives that affect their health outcomes.
The New Zealand Medical Association has picked up that plan in an excellent document, its Health Equity Position Statement. In that document the New Zealand Medical Association, which is not known to be the most left-wing of organisations, acknowledges the importance of addressing the background causes of health status. I quote from one element of its statement: “The NZMA: … Believes that in order to eliminate inequities in health a whole of government approach will be required. In particular, policies addressing education, employment, poverty, housing, taxation and social security should be assessed for their health impact. [The New Zealand Medical Association] Believes that economic growth should not be viewed as the sole measure of a country’s success and that the fair distribution of health, well-being, and environmental and social sustainability are equally important goals.”
The message coming from the doctors of this country is that we must see health in a wider context. Economic growth is important to health, reducing poverty is important to health, and creating jobs is important to health, and this Budget failed on almost every one of those indicators.
When we look at the report from the Prime Minister’s Chief Science Advisor, Sir Peter Gluckman, he backs up the advice of the New Zealand Medical Association to invest in our children. That is why I am incredibly proud of the work that Annette King has been doing on the importance of children and on the agenda for children that will ensure we invest in children. We must make sure that children get the antenatal, birthing, and post-natal care they need. We must ensure that children are enrolled with well child providers and that B4 School checks are being undertaken. We must ensure that school health services are kept going, unlike what is in the review that is being undertaken by the Minister at the moment. We need to make sure that we invest in the things that will allow our children to learn. School health services are brilliant, not just because they make sure that people get the primary care that they need but because they allow children to learn. We know that if children do not learn, that is the beginning of the slippery slope. That is what Sir Peter Gluckman is telling this Government. That is what the New Zealand Medical Association is telling this Government.
From Labour’s point of view, we know there is not a bottomless pit of funding for health expenditure. We will, when we get into Government, be looking to ensure we find the efficiencies and innovations in the health sector that will allow us to invest more money in keeping New Zealanders healthy. That should be the goal of our policies.
I have one last point on that matter. The regional public health unit of the Hutt Valley District Health Board has estimated that it will cost a family living on the minimum wage 50 percent of their income to put a healthy meal on the table. That is not good enough. It will cost a beneficiary family 71 percent of their income to put a healthy meal on the table. We have to support families so that they can put healthy food on the table. Labour has policies to do that: we will take the GST off fresh fruit and vegetables and we will make the first $5,000 of income tax-free.
Labour will continue to advocate policies that are about keeping New Zealanders healthy in our schools, our communities, and our families. We will continue to invest in hospital services, but Labour also believes that primary health care and public health are essential to the future well-being of our country.
Hon MAURICE WILLIAMSON (Minister for Building and Construction): I start by putting a little bit of context around the Budget debate. This is the 24th Budget debate I have sat through in this Parliament. I have to say that of the 24 Budgets I have known—probably only three short of your count, Mr Speaker—this Budget was drawn up in the toughest circumstances that any Minister of Finance has faced.
I always like to think of little analogies, or parables like this. If a father had told his family: “When we get to Christmas, I’m going to be buying you a 65-inch plasma TV”, and everyone in the family was excited, and if, as the year rolled on, the father lost his job and the business they had went bankrupt, or whatever, when it came Christmas the father would have to say to the family: “You know, we’re in circumstances where I can’t buy you that plasma TV.” What worries me intensely about Labour members, in view of their catcalls all the time, is that they seem to have ignored the fact that when the last election campaign got under way at the beginning of 2008 and we campaigned on a number of things, the world was a very different place—an incredibly different place.
As the global economic crisis started to really bite and take out huge chunks of the world’s economy, the sharemarket in the United States took one of the biggest dives, the property market in the United States fell through the floor, and we experienced the shockwaves right across the world. Portugal, Iceland, Greece, and Spain—“the PIGS”—took a real smack-around, and here in New Zealand the finance company meltdowns and the Government guarantees that had been made in respect of those companies started to change the entire landscape.
If it was not bad enough that the global economic crisis meant that the whole world was a different world and a different paradigm, along came a number of mother Nature smack-arounds, just to make us really realise where we were. So I give absolute unbelievable credit to the Hon Bill English for what he did in this Budget. He did not get into a slash-and-burn mentality. He did not get into a “Let’s tear the place to shreds” mentality. He laid down what I think is a very solid foundation, a bedrock Budget, which does a number of key things.
Before I go into those key things—because I think it is worth rehearing them for this House—I want to say that in respect of my own portfolio I want to show some gratitude to the Minister of Finance. At a time when most Ministers were being told: “There is no new money; what part of ‘no’ do you not understand?”, Bill English saw the reason in a number of cases we put to him. I thank him for that. In one case we got some new money for the electronic SmartGate at customs.
I am enormously proud of that project. In recent weeks over 60 percent of all eligible arrivals at the Auckland, Wellington, and Christchurch airports have been using SmartGate on arrival as an alternative to using the manual desks. The huge efficiency gains and saving of time has allowed customs officers to direct their work at the secondary queue. That is where the bad eggs are, where the drug smugglers and all the other evil people are. It has been a fantastic success. Bill English gave us some new money in this Budget to extend the SmartGate project, both for arrivals and departures, and I thank him for that.
We also inherited 2½ years ago a Statistics New Zealand that was in a state of meltdown with regard to its technology platforms. It had fully depreciated schemes that were outdated, and there were many different variable platforms. At a time when things are tough, when there is plenty going on, it is hard to convince a Minister of Finance that the statistics portfolio is what one would call high on the radar for New Zealand. But at a time when things were tough, he saw the benefit. He saw the merits of what good economic statistics like GDP and the household labour force survey can mean for our planning, and we got a Budget allocation of $58 million over the next 4 years for putting in place some new systems.
Having said that, I return to the key things about the Budget. One of the headline-grabbing facts and figures that is used by the media—I hear the Opposition using it all the time, and it is a really sobering number—is that while we have our books where they are, the Minister of Finance has to borrow about $300 million a week. In fact, it has been $380 million, because the economic circumstances around the world in terms of the money markets has meant that it was worthwhile taking advantage of some of the deals going—and, yes, some of that was in excess of the requirement.
We can argue around the margins—whether $300 million, $310 million, $320 million or, indeed, $380 million was necessary—but it was about $300 million a week. I think most New Zealanders, if they multiply that figure by 50 weeks, soon work out how many billions that borrowing is adding to our debt. What did Mr English do in this Budget? He set about putting us on a path to reducing that level of borrowing, and doing so very rapidly. I think this headline is worth repeating: we are currently borrowing $300 million, yet average borrowings will fall by over two-thirds to about $100 million in the next financial year—that is, 2011-12. And the Government will start repaying debt 2 years later—that is, 2014-15.
I know that most New Zealanders who have had tough times at home and have struggled to make their family budget work know what we are talking about. These are not times of plenty. There were times when Labour was in power when the world was booming. The world economy was in a jubilant mood. Commodity prices were going through the ceiling, and there was no end to the morrow. In the United States money was flowing through the sharemarket, and the Dow Jones knew no top. In some years Labour turned in an $11.5 billion surplus. Well, New Zealanders know that the world is not like that at present—and, yes, the economic cycle will come back and one day there will be better economic times for the entire world—and Mr English recognised that and did something about it.
Mr English also recognised that there is only one way to get oneself out of trouble long term, and that is economic growth. Every family knows that it is no good sitting around whingeing and complaining that they cannot afford this or that. The best thing they can do is try to increase their income, increase their wealth, and increase their financial position. Treasury’s numbers, based on the books that Bill English delivered to this House, show that we are looking at 4 percent growth in the GDP of this country in 2012, and, as a result, 170,000 new jobs by 2015.
This is where the rubber hits the road in terms of the difference between Labour and National. We hear it in questions from Jacinda Ardern and others about how many jobs the Government is creating. Other than when Labour was in power and created a huge number of bureaucrats within the concrete towers around here, the Government actually does not create many jobs, at all. We employ a few people in our offices and a few people in the ministries, in the bureaucracy, but the vast, vast bulk of jobs out there are in the private sector.
Jobs are created by risk takers who put their own money at risk, who put their own skin in the game, and who actually invest to grow the economy overall and make some money. It is a really simple model. They will take on staff if they have some confidence that the economy is on the up, that their products will have customers, that their books will be in good shape and in black ink, and that they will be able to retire some of the debt to the bank. This Budget will have restored a very big chunk of business confidence and restored a very good view of the future to New Zealanders. That is why Treasury’s advice to the Government is that, with the confidence we will get from this Budget, we can be looking at about 170,000 new jobs by 2015—jobs created by the private sector, not by employing a much fatter and greater bureaucracy.
Mr English had to trim some elements of various programmes because they were just not sustainable. What was done to KiwiSaver? The $1,000 was left; a whole range of the elements in KiwiSaver were left. There was an increase in the amount of private savings required and a reduction in the Government contribution, and overall savings will increase because of it. New Zealand has to focus on that. I will say in my last 20 or so seconds that over 24 years I have sat in this House and tried to assess Budgets against their times, and this was the toughest time ever to have to put together a Budget. Mr English delivered what I think is a superlative Budget. The Opposition members are struggling to find things to say against it. I give him 9.9 out of 10, simply because one should never give 10 out of 10 in case there is room for improvement. I am delighted to be a member of this Government and support this Budget.
IAIN LEES-GALLOWAY (Labour—Palmerston North): I will start by doing something that is probably a little unusual—that is, congratulating Maurice Williamson on actually referring to the Budget in his speech. It is the first time I have heard anybody from that side of the House talk about this Budget and try to promote it from National’s point of view. We heard Chris Finlayson talk about 1978 and what previous Labour Governments had done, and about what Labour policy might be, but Maurice Williamson actually tried to talk about the Budget. Having said that, of course I have to take exception to some of the points he made.
Hon Maurice Williamson: Oh, no!
IAIN LEES-GALLOWAY: I know—I know that Mr Williamson is tremendously surprised at the position I am taking.
Mr Williamson talked about the plan for growth, and the income side of the ledger. It was interesting to hear him talk about the income side of the ledger, because that is precisely what is missing from this Budget. There is no plan for growth, there is no plan for jobs, and there is no plan for creating a good, stable business environment. Mr Williamson talked about businesses appreciating the fact that they will have customers who will have money in their pockets and who will buy those businesses’ products. Well, there is absolutely nothing in this Budget to put money into the pockets of working families, of working New Zealanders. People will be no better off as a result of this Budget.
In fact, the only thing this Budget focuses on is making cuts—cuts to the public sector. That is the only focus in this Budget. It is entirely focused on expenditure, so there are cuts to KiwiSaver and cuts to Working for Families. Those are the sorts of things that make working New Zealanders more nervous about their financial situation, and less likely to go out and spend money, which is bad news for businesses in New Zealand. They will not take on more workers and will not create more jobs in this country. So the effect is in fact the exact opposite to what Mr Williamson claimed this Budget is all about. Nevertheless, I appreciate the fact that Mr Williamson attempted to talk about the Budget itself, because I understand why National members would refrain from doing that. It is a lacklustre Budget. It lacks a credible plan: it lacks any sort of plan for growth, it lacks any sort of plan for jobs, and it lacks any sort of plan for getting on top of the $16.7 billion deficit that this Government has created in just the 3 years it has been in charge. Of course members would not want to put their names to this Budget.
I particularly want to talk about the very lacklustre approach to health care that this Budget takes; $165 million is the gap between what the Government is prepared to spend on health and what is needed for health care just to stand still. It is not good enough for members to get up and say that the Government is spending more on health care than it ever has before. Of course it is spending more on health care than it ever has before—
Hon Dr Jonathan Coleman: Thank you—thank you.
IAIN LEES-GALLOWAY: —because every Government, I tell Mr Coleman—
Hon Dr Jonathan Coleman: Dr Coleman to you, sonny.
IAIN LEES-GALLOWAY: —I will take that: Dr Coleman—spends more on health care each year than it did the year before. The question is, what is the quantum? Is it enough to keep up with inflation?
We know that inflation in the health system is far, far greater than it is in everyday life, and that people are struggling with 4.5 percent inflation in everyday life. Grant Robertson said that people are going to the supermarket and spending more on their groceries than they ever have before, but that does not mean that they are getting more for that. Although we are spending more on health care, we are not getting more for our health dollars. So why are Government members getting up and crowing about something that every single Government has done every year before? That is the question.
This health Minister and this Government have their health priorities absolutely up the spout, completely in the wrong place. As important as it is to focus on elective surgeries and waiting lists, which are noble things that we have to get our heads around and tackle, the fact of the matter is that the Government is sucking money out of what will actually improve our health system over time, and what will improve the health of New Zealanders over time—that is, public health care. We need to keep people well in this country so that we can reduce the demand on our health services, which are already stretched. But there is no plan—there is absolutely no plan from this Government to improve the well-being of New Zealanders. That means that for year after year the demand on our health system will simply remain the same—if not get worse—as our population ages, and as we see more and more problems in our population. We all know that the greater the disparity between the haves and the have-nots, the more health issues we will see in our nation.
This Government is creating a much greater gap between those who have and those who do not have. That growing inequality will cause more costs in the health system over time than any other thing this Government could possibly do. This Budget is the second in a row that has failed to meet the cost of delivering current health services, and if this track continues, then our health system will be in a huge amount of trouble in a very, very short period of time.
The cost of living in this country is an issue that all New Zealanders are having to grapple with, as costs go way beyond what people can afford while their wages stay static. One of the things—and this is important for the health system—that helps to keep the cost of living under control in this country is affordable medicine, both through Pharmac and through the fact that the Government subsidises prescriptions so that people can get medicines at a reasonable rate. But there is a huge threat looming to the affordability of medicines in this country, and it is the fact that as we negotiate the Trans-Pacific Partnership, this Government is not prepared to take Pharmac off the bargaining table. It is not prepared to say to New Zealanders that it values affordable medicine in this country, and that it values the fact that people are able to access medicines at an affordable rate—that cost is no barrier to getting medicines in this country.
The Government is not prepared to say to New Zealanders that it values the fact that our health system saves $700 million every year because of the way that Pharmac acts. It is not prepared to say that; it is not prepared to take Pharmac off the bargaining table. That is something that would give New Zealanders surety, but the Government is simply just not prepared to do it. I say that it is about time the Government was unequivocal, and said that because we have a fantastic system in Pharmac, which keeps down the cost of living in New Zealand and makes medicines affordable and accessible, then the Government will not negotiate that away for anything. Yes, things have to go on the table; that is what bargaining is all about. But there is nothing that can be worth bargaining away our access to affordable medicine in this country and it is well overdue for this Government to say that Pharmac is coming off the bargaining table.
In addition to the fact that the Government is underfunding our health system to the tune of $165 million, it has dumped another huge pressure on district health boards by refusing to fund the cost of health workers’ KiwiSaver schemes. That in itself is worth $45 million. That is $45 million extra that district health boards around this country will have to find out of their budgets—out of their budgets, every year. Those budgets are already being stretched by the $165 million gap; add to that the $45 million gap in KiwiSaver and wages for health workers. That money has to come from somewhere. It can come from only one of two places: either cuts to health services or increased charges to patients. People do not need to be paying more to visit the doctor. The cost of visiting the doctor is enough of a barrier. We do not need new charges being brought into the health system. It is outrageous that Government members stand up and say what a wonderful job the Government is doing for our health system, when it is effectively cutting money out of the system and then washing its hands and telling the district health boards they have to find the money it is cutting.
This is a lacklustre Budget. It does nothing for hard-working Kiwis, it does nothing for business in New Zealand, it does nothing for growth, it does nothing for jobs, and it is abysmal on health care. It is no wonder that the Opposition is so deeply opposed to this Budget.
CHRIS AUCHINVOLE (National—West Coast - Tasman): In contrast to the member who has just spoken, Iain Lees-Galloway, who gave a spirited speech but such a sad one, on 19 May the Hon Bill English delivered a Budget full of good news. It was good news for West Coast - Tasman, particularly in relation to health services. It was a responsible Budget that clearly sets this Government apart from the previous one. The Hon Bill English gave us a rational National Budget.
I am honoured to have the opportunity to speak in support of this Budget. I do not think I will ever lose the sense of privilege one has standing in this House of Representatives. I am standing here today on behalf of the people of West Coast - Tasman, and I, in company with my National colleagues, work every day to represent the people who put us here.
I have been particularly busy in West Coast - Tasman over the last 2 weeks and I can say that people there have universally welcomed this Budget. They were not looking for big election year handouts. Indeed, they were extremely concerned over the situation the previous Government had left the country in. They were not looking for election bribes or spending priorities that place re-electing the Government first and the well-being of the country second. They have had enough of that.
Dr Cam Calder: A distant second.
CHRIS AUCHINVOLE: I thank Dr Calder. It is a distant second, indeed. They had enough of that in the three election-year Budgets delivered by Michael Cullen. I always felt there was a touch of: “Oh, what a clever boy am I.” as he pulled a plum out of the pie. The reality was he was so proud of clearing Government debt he encouraged private debt, which has gone through the roof. In fact, one could almost say he forced private debt.
In 2008 the people of West Coast - Tasman voted for a change. They voted for a National-led Government because they knew that when tough times hit we need sound economic management. That is exactly what people have got from this Government, and they will continue to get it. They know that this is a responsible Budget—a Budget that will drive New Zealand forward, encourage job creation, and boost incomes. This is what I hear everywhere I go in the electorate.
Dr Cam Calder: Prudent guardians. Prudent guardians of the public purse.
CHRIS AUCHINVOLE: Yes, good guardians of the public purse. From the top of the electorate in Tasman, where I visit horticulturalists, down to people in South Westland, that is what they are looking for: a firm Budget that gets things right. The residents of Tasman District—an area known, sadly, for its sunshine wages—know that the only way to increase wages is to grow the economy and to increase productivity. West Coasters know that the only way to create new jobs is to build faster economic growth, as this Budget does, and to encourage employers to take on staff. We have introduced several ways to facilitate that in this Budget and in other labour legislation.
Budget 2011 clearly sets this Government apart from previous Governments. The previous Labour Government had 9 years managing this economy—9 years it could have spent preparing this country for tough times. It could have promoted national savings, encouraged the private sector to grow jobs, built a resilient economy, and boosted export activity. That is where there has been a large absence. Instead, at the end of its 9 years we had a nation that spent $1.10 for every $1 we earned. It is as simple as that.
Louise Upston: Shocking!
CHRIS AUCHINVOLE: Louise Upston says she is shocked. I am sure she is.
Dr Cam Calder: How much is that?
CHRIS AUCHINVOLE: It is $1.10 for every $1 we earned. We had job growth but it was public sector jobs that burgeoned. They were jobs supported not by private innovation or entrepreneurship and income, but by hefty taxes on the job creators. We were left with an economy ill-prepared for global financial recession—so much so that we actually went into recession before the rest of the world. One does not want to be first in some things, and that was one of them.
Jo Goodhew: An indictment on Labour.
CHRIS AUCHINVOLE: Jo Goodhew says that it was an indictment on Labour—
Hon Steve Chadwick: That’s ridiculous.
CHRIS AUCHINVOLE: —and I guess the country agreed with that, I say to Steve Chadwick. The country spoke at the election.
A National-led Government has been left to sort out the mess, and the Prime Minister and his Ministers have been working hard since day one just to do that. I think any member of the Government can testify just how hard our Ministers work. Have members ever seen a Minister spending surplus time in Copperfields? I have not. They work and they work hard.
Where the Labour Government promoted spending and consumption and led by its own example, the National-led Government in three successive Budgets has turned that situation round. We are now a nation of savers and are becoming ever more so. We now spend less that we earn, and the Government has led the way by making value-for-money savings across public services and moving resources from the back office to the front line. This is a responsible Budget—
Hon Steve Chadwick: Tell your grandchildren to save more.
CHRIS AUCHINVOLE: —I say to Steve Chadwick, who, I know, secretly agrees. It is a Budget for growth and a Budget that puts us on track to achieve surpluses by 2015.
This is in stark contrast to the previous Government. It had no plan for the economy. Even now, Labour’s policies are still to spend more on bureaucracy and tax the job creators. Labour members keep listing the reversal of upper level tax breaks as the way to correct the economy. They cannot use a dollar more than once, but they keep using that as a solution for everything—everything. I have news for the new-look Labour Party: New Zealanders have longer memories than that.
From conversations I have had recently I know that the people of the West Coast - Tasman electorate have longer memories than that. They remember a Labour Government that ran the economy into the ground, increased bureaucracy and called it economic growth, and took them into a recession months before the rest of the world. On the West Coast they remember a Labour Government that all but destroyed the West Coast timber industry—and thank goodness National has reasserted it—and called them nasty names when they complained about it. In Tasman they remember a Labour Government that promised them a Ruby Bay bypass road every election year—election after election—and changed its mind as soon as the promise had worked to get it re-elected.
Budget 2011 shows just how different the National-led Government is. Phil Goff’s Labour Opposition has tried to distance itself from its legacy. Labour members know they need a change but a new logo is no substitute for new faces. They need new talent but one new face on the front bench will not cut it, especially when he is straight from the previous leader’s office. Labour members know that they need new policy, but if the best they can do is spend some more—“hit up the rich pricks for some cash and shaft the farmers while you’re at it”—the clear message New Zealanders are getting—
Brendon Burns: —is I’ve run out of speech notes.
CHRIS AUCHINVOLE: Not really. One could say so much more, I say to Brendon. In fact, one has to restrict oneself when talking about what Labour did or did not do. But the message that New Zealand is sending to Labour is to think again and to try again.
This Budget is not tax-and-spend; it is save and grow. It is responsible, it looks to the future, and it is balanced. It is a rational National Budget. With National, rational and balanced is what we can expect, and rational and balanced is what we get.
I have already mentioned Labour and its tax-and-spend policies. But unlike parties to the right of us, this Government will not slash and burn Government spending without regard for those who are the most vulnerable in our society who will be affected. One of the most endearing things that I have experienced in being in this Government was when the Prime Minister said at the beginning of the recession, and our awareness of it, that we would not be affecting the most vulnerable; we would protect them. We have gone ahead and done that. We have faced much criticism for borrowing to maintain the level of entitlements that people have been receiving. We know that the most vulnerable and the unemployed rely on Government support, low-income families rely on Working for Families, and we all benefit from strong public services.
The National-led Government will not slash these programmes. This is why the Government has borrowed through the recession to ensure that we continue to support those who need it. That is why this Budget is a responsible Budget and a caring one. In short, it is a National, rational Budget. Not for the people a Labour Government with a proven record of economic mismanagement; not for them slash-and-burn policies that might give us quicker economic growth but leave people behind. For higher wages, more jobs, a stronger economy, and continued support of our most vulnerable I give the House Budget 2011, a rational National Budget. Thank you.
Hon STEVE CHADWICK (Labour): I was not quite prepared for this, but I will be speaking on the Budget. I sat and listened to National’s Budget with great interest. This is the third Budget that I have felt deeply saddened by. We were given little frissons about this Budget. Little pennies were dropped out there in the weeks before the Budget was delivered. We were softened up by the media that it would be a zero Budget, and I do not think anyone expected pennies from heaven in this Budget. All New Zealanders knew that we were facing hard times, and we all knew we had to be part of this recovery. I listened to that Budget, then went away and analysed it in the areas in which I am most passionate about politically. I found that this Budget hurts. It hurts New Zealanders whom I care about. I believe National likes to care about them too, but it is about where we make our balance of decisions in the Budget. This Budget hurts the New Zealanders in society whom we should be caring about in the future—the children of tomorrow.
The Budget hurts those on Struggle Street. [Interruption] I am now the seniors spokesperson, and Mr Auchinvole is right; I am not a new look for Labour. But I am a granny and I am proud of it. That is why I stay here, to make this place better for my grandchildren and those children who will be the economic powerhouses of this country in the future. I want them to have a reason to stay in this country. This Budget gives them no reason, no hope, and no aspiration of a brighter future. My children are all hurting.
I just wonder what side of the street we all walk along. I wonder whether those people over there go out and go around places like the food banks in their communities, which is where I went. I heard the story from the Salvation Army in Rotorua that there had been a threefold increase in requests for food parcels from families in Rotorua prior to this Budget, and it has grown over this recession. This wonderful Salvation Army gentleman told me that a baker gave him a bag of doughnuts, which they all felt like eating, but he said he would give them to a family that he visits, and he knew they budgeted because they are under the wing of the Salvation Army. The father took the basket of food, thanked the Salvation Army, then cried and said: “This is the first favour of food my children have had in 3 months.” I wonder what sort of people Government members meet every day in their lives, when they can stand up in this House and say that this Budget is wonderful and it gives a bright aspirational future for New Zealanders for tomorrow. Well, it does not. It hurts those families and it hurts the seniors whom I visit.
I went to Dannevirke, along with the wonderful candidate—
John Hayes: That’s right!
Hon STEVE CHADWICK: No, not that one; I went with the Labour Party candidate, who is doorknocking on every house—thousands of houses. I think he has doorknocked 6,000 houses. He joined me in visiting those good people of Dannevirke. Do members know what hurts them? It is the cost of just living. What are they worried about? They are not able to save to buy the mum and dad investments in our State-owned enterprises when they are hocked off. They are not the ones who have any spare cash in their pocket. They talked to me about the cost of electricity and the cost of food that is increasing week by week. They know this; they are on a fixed income. They do not have a lot of savings. They are the ones who are worried too about the cost pressures on families in the future. There are also those people in the middle—that huge group of New Zealanders who are trying to do a job, trying to bring home the bacon for their families, and are struggling to literally make ends meet.
I am proud to be part of a party that has come up with a plan, the Agenda for Children. We believe, just like Sir Peter Gluckman has been telling his leader in the House—and I do not think he has been listened to by Paula Bennett—that the way that we invest in reducing inequality and targeting poverty in this country is the way we get people out of dependence on the State in the future. We agree with Sir Peter Gluckman that every dollar spent on growing healthy children is a dollar that we do not have to spend on building prisons, which the National Party in Government is spending up large on. We believe in investment.
We looked in this Budget at the cradle investments. I saw a little bit of money coming in to new mothers—first-time mothers. That is great, but do they not see that at the same time as they announced the new money for maternity services, Paula Bennett went out there with welfare reform and said: “We will focus on beneficiary reform in this election, and we will punish mothers. We will have kids at home with nobody there to look after them, because we will make those beneficiaries go back to work.” Who hurts? It is not those mothers, but our children. Those children will be left at home. Heaven knows who will be looking after them. What will happen to them?
I heard compassionate liberals like Chester Borrows talking in the House yesterday about the extra bit of money for children in care. Does he not see that if we do not invest in the early years of a child’s life, those children will be falling through the gaps with cuts to early childhood education and not being able to achieve educationally? They will become the offenders in society and they will be incarcerated. Why are we spending that money on children in care and not investing in the first 6 years of a child’s life? Labour’s agenda for change, led by Annette King, says that every child in this country will be registered with a Well Child provider. It is logical, it is sensible, and it is simple. No child will then fall through the gaps.
Why did they say that first-time mothers are vulnerable? Yes, we know that, but should not we be targeting those who are most vulnerable and identifying them at birth? They should not be saying it is just first-time mothers. That is such a patronising view of parenthood. Midwives know that that investment will make a little bit of difference, but in that maternity investment where was the announcement of supporting midwives so they can get on with birthing? Where was the announcement that gave them equal value for service delivery as those in primary health organisations get? Zip; nothing—midwives are to do the work. Actually, it is more for less. Midwives commented on that, saying: “Wonderful, Minister, putting money into first-time mothers, but what about those who provide their care? Give us a little bit of assistance to get on with our job.”
Yes, it is good to see money going into maternity services and it is good to see money going into rheumatic fever prevention. But, as I heard our health spokesperson say, it is about the drivers of ill health. Damp homes, poor and overcrowded housing, unemployment, and poverty are the drivers of ill health. This Government has spent money over the last 3 years on more surgery, because it is sexy to go out and tell Grey Power that we are doing more hips, knees, and eyes. There is nothing about health and wellness. Government members have cut public health funding. They cut public health funding to Healthy Eating - Healthy Action; that has gone. We built a cafeteria in Rotorua so that children had healthy lunches. That money has gone. That service has gone. What is this Government doing in terms of working out how people can remain healthy, stay well, and look after their bodies? No money is going into helping them to remain healthy.
We will see burgeoning costs, and we have already seen that there is a $127 million shortfall in this Budget. The Minister of Health was rattled in the House today. He knows he obfuscated, fudged, and blurred the funding lines. He admitted that $165 million in health has to be funded from savings and doing more for less, which means cuts. All the Minister can do to find that $165 million is cut services. We are seeing it already in home help for seniors, we are seeing it in mental health cuts, and we are seeing it in public health cuts. He will have to find that money from savings. Savings means cuts to services or increased charges for patients. I do not think this is a Budget that will build strong families or resilient families that can take knocks in the future.
JO GOODHEW (National—Rangitata): I rise to speak in the Appropriation (2011/12 Estimates) Bill debate fresh from a 2-week adjournment in which I travelled around the Rangitata electorate—[Interruption]—I am fresh—discussing aspects of the Budget with my constituents. The feedback I have had has been face to face, but it has also been through things I have read in the media. I have some quotations I will use here this afternoon when I talk about this Budget, which is a Budget for the time. The South Canterbury District Health Board chief executive, Chris Fleming, said: “It’s good to see the government’s continuing commitment to the health and disability sector, and in particular the commitment to the new investments announced, particularly given the economic climate we are all facing.”
Then there was a comment from the Timaru Grey Power secretary, John Button. Unlike members on the other side of the House, I will not read just the comments supportive of the Government. Mr Button’s comment expressed some concerns about the changes to KiwiSaver and Working for Families. I will return to those concerns later. But he also said that the increased funding for dementia care beds by $44 million over 4 years was very “encouraging”. My constituents agree with him. The Timaru Boys’ High School rector, Kevin O’Sullivan, said he was pleased that education was spared a swinging axe. He should have also said that there is $1.4 billion of additional funding over the next 4 years in education.
We know, because it has been said time and time again in this House, that $550 million more is going into early childhood education. That is a far cry from the mantra we hear from the other side of the House that there have been cuts. There have not been cuts to spending on early childhood education, but changes to policy—yes. It makes it really uncomfortable for members on the other side, because they want to say that we do not care about early childhood education, but we do. We value it so much that we want more students in it, because when children head off to primary school having not been involved in early childhood education, they are behind the eight ball. Over the past few months I have visited lots of early childhood education centres. They have been heartened to hear, as they have told me lately, that a substantial slice of new money in the Budget is for early childhood education.
I return now to Mr Button’s comments about KiwiSaver and Working for Families. It behoves me to offer him some reassurance on both fronts. Firstly, with regard to KiwiSaver, I tell him that the proposed changes will not come into effect until after the election. They will give rise to an increase in private savings, and they will cause KiwiSaver to become more financially sustainable. Well, what is wrong with that, then? Those changes will free up $2.6 billion over 4 years, but they will not stop the KiwiSaver fund from reaching $60 billion over a period of 10 years. That is fantastic. There are 20,000 people going into this scheme every single month, and they know that the Government will still be generous enough to give them a $1,000 kick-start, and that the taxpayer—because it is taxpayers’ money—will still be putting in $521 each year. But this Budget is certainly making this programme much more sustainable. It is about the voters of New Zealand deciding, though. After the November election they will get to decide between a more sustainable KiwiSaver or a generous but unaffordable KiwiSaver.
Then there is Working for Families. I will give members a couple of examples. It is a large but generous scheme. The cost has certainly ballooned. From $1.5 billion back in 2005-06, it has become $2.8 billion this year. The scheme’s future really is in doubt if it continues in the same way. We are making some changes that will shave $448 million, over 4 years, off that cost, but 280,000 families will not receive a cut. If members look at a high-income family, they will see that that family will receive a cut. A high-income family with four children earning $125,000 a year will actually receive $12.66 less a week. But if we compare that family with a low-income family, again with 4 children but on a very low income of $27,000 a year, we see that they will get $14.18 more every week. They are amongst the 280,000 families who will get more. But the changes will not start until after the election. They will come in over 7 years, and in anyone’s language that means that the voters will get to decide.
Our changes target those in need. It is a sad indictment on members of the previous Labour Government that all they had was a cynical vote-buying exercise in which they chucked surpluses at schemes, and did not target the schemes, at all. But, actually, back on 8 November 2008 the voters saw through it.
Jacinda Ardern: Name one—name one.
JO GOODHEW: We are fixing them up, I tell Ms Ardern. Working for Families is one. KiwiSaver is one.
Jacinda Ardern: What? You think that was a bribe?
JO GOODHEW: Yes, of course it was a bribe. Fiscal prudence is something New Zealanders practise every day in their households, and they want the Government to do the same. They want the Government to live within its means, and that is exactly what Bill English’s Budget does. This Budget was greeted with confidence by the ratings agencies. We were spared a ratings downgrade. In the words of the Timaru Herald editor: “That fact alone made yesterday’s Budget a success.”
I will talk quickly about an announcement that was music to the ears of every New Zealander who understands the value of fresh water. Our package is about the management of freshwater resources so that the Government gets to experience the gold that is its value, and so that New Zealanders do too. The Budget commits $35 million over 5 years to getting proposed irrigation projects up and running. Those proposals will be accepted from this month. We are not wasting any time. It is June, and they will be accepted from this month. But getting a big project underway is always challenging, and in my electorate we have certainly seen that. The Government has recognised that in 2013-14 it needs to consider a cornerstone investment, becoming an equity stakeholder, and so $400 million has been proposed for 2013-14 for that purpose.
But it is not enough to use water just for irrigation. We have to make sure we clean up the fresh water that is not in a good state, whether it is in an aquifer, a lake, or a river. So we are putting an additional $15 million into a contestable fund for that purpose. But, actually, that fund is being added to money that is already there—$264.8 million to clean up water, which is not an inconsiderable sum of money.
My constituents want to know that the Government is looking after their health. They love the fact that there are 1,000 more nurses and 500 more doctors now. They love the fact that we have put aside $18 million more to train an extra 40 doctors.
Chris Auchinvole: How much? How much?
JO GOODHEW: Another $18 million. My constituents are also great supporters of Plunket. This weekend in Timaru we are celebrating the 34th annual Plunket art show. I used to be on the committee. This wonderfully successful fundraiser helps Plunket to deliver services to families—support services. The Government funds the Well Child checks, and we are funding an extra 54,000 checks through Budget 2011. That means that 18,000 new mums will have three extra visits in the first 2 months. I think that is fantastic. That is where we pick up and understand what is happening in those homes in the time when children are under 2 months old.
We are also delivering $68 million worth of additional elective surgery. That means hip replacements for older New Zealanders, cataract surgery, and knee replacements. That will improve the lives of many, many New Zealanders. My constituents want to know that the Government cares about the vulnerable members of our society, so they welcome that funding for dementia, for Well Child checks for young babies, for those people needing surgery, and for those who do not access early childhood education.
But there is more; there is $43 million for a very special 4,500 children who are in State care. These kids are 17 times more likely to go to jail. Ms Chadwick spoke about vulnerable young people who might go to jail. This money is for them. It is to make sure that they do not have a life that is likely to lead them to jail. It is ghastly looking at them and thinking that that is their life to come, compared with the lives of our own children.
I will touch now on the people of Rangitata who live 45 to 120 minutes up the road from where the devastating earthquakes happened. Thousands of my constituents have had damage to homes and businesses, but nothing like what is happening to people in Christchurch. These people are our friends, relatives, and former neighbours. They are in Christchurch city and in the districts of Waimakariri and Selwyn, and we are delighted that the Government has seen fit to put $5.5 billion in the Budget to provide certainty for rebuilding Canterbury.
Lastly, I will touch on the sentiments of the farming community of Rangitata. They are gobsmacked by the financial illiteracy of Labour members, and in particular of Stuart Nash. They have cried foul. They say that when they earn money they pay tax. They say that they have had a tough couple of years but things are definitely getting better. They want apples to be compared with apples. They do not like the financial illiteracy that has been shown by Labour members.
METIRIA TUREI (Co-Leader—Green): On 30 May this year John Key confirmed for the country what National’s election campaign strategy will be all about. He announced National’s election campaign, which is a war on children. National is about to embark on a war on children. On that day, during John Key’s post-Cabinet press conference, he confirmed that his Government will do everything it can to undermine the rights of families to secure livelihoods through the decision to proceed with the vicious, anti-women, sexist recommendations of the Welfare Working Group. He confirmed the misogynist recommendations of the Welfare Working Group. John Key confirmed that his Government will confine our country’s poorest children to even greater poverty.
What was his justification? He compared today’s unemployment rates in 2011 with those of 40 years ago. He said that in the 1970s the unemployment rate was 2 percent and now it is much higher and therefore it is all terrible and everything is broken. I tell John Key that 40 years ago this country had an employment policy of full employment. The then Government showed genuine leadership and supported business to make sure jobs were created so that every person who was able to and wanted to work could do so. Where are those jobs now? They are nowhere, because this Government has shown no leadership, at all. This Government has done nothing to create employment, nothing to show Government leadership, and nothing to provide genuine business incentives to New Zealand - owned businesses to provide more jobs for our people.
In fact, this Government, John Key, and his Minister of Finance, Bill English, take great pride in the fact that we have a low-employment economy in this country. We should not forget that John Key is proud we have such low wages. He considers it to be a market opportunity for New Zealand that we have low wages here that might attract new businesses from outside; international corporates might come here and want to employ our people on miserable, low wages, because that is a market opportunity for New Zealand. He is selling off our families and our children to those international corporates so that they can make money off the backs of the families in New Zealand who work. He is providing no Government leadership and no support to New Zealand businesses that want to provide for and support New Zealand workers here.
Not only is John Key using irrelevant statistics to justify himself but he is in complete denial about the growing gap between rich and poor. When asked last week about this growing gap between rich and poor, John Key said “Are we deeply unequal? I’m not sure that’s right. I haven’t had a really good look”. How disgraceful it is that the Prime Minister of this country has not bothered to understand the extent of the severe poverty faced by children in this country. It is not as if he does not have the people around him to help him find out and maybe to help him have a look at what is really going on for New Zealand families. John Whitehead, the outgoing head of Treasury, knows how serious the growing gap between rich and poor is. Treasury understands it. In John Whitehead’s report he showed graphs of how bad it is.
I will show members the graphs. This graph here comes from John Whitehead’s report. It is a graph of income inequality, comparing New Zealand with other countries. Right here we see that New Zealand is the sixth worst in the OECD. New Zealand is the sixth worst country for the growing gap between rich and poor. That is shameful. It is shameful that John Key does not bother to understand this, because it means thousands and thousands of New Zealand children living in severe poverty.
In John Whitehead’s report is another graph that shows the growth in income inequality. Down at the bottom it shows that New Zealand has the worst record for growing the gap. New Zealand has the worst record for growing the gap—growing it the fastest, and growing it the most. That is a disgrace. We have abundant wealth in this country and it is not getting to the people who need it the most; it is going to those who have the most. We have seen how John Key and his Government have continued that appalling trend through National’s tax cuts for the wealthy, through the increase in GST for the poor, and through the failure to increase the minimum wage or to support beneficiaries so they have a liveable income.
Maybe John Key would like some other evidence. Peter Gluckman, the Chief Science Advisor, whom John Key employed for the very purpose of providing him with evidence—evidence that he is quite happy to ignore—has also identified in his report from last week how serious the issues are with the growing gap between rich and poor and with inequality and its impacts on our children.
In case John Key has not bothered to go and have a look at how bad it is, I will tell him that the first victims of an unequal society and an unfair economy are always our children. Around 240,000 children live in severe poverty in this country. That means for those kids that they live in cold, damp homes where they get colds and flus that keep them home from school. It means for many a persistent sore throat, and, for some, disgraceful levels of rheumatic fever that steal decades from the lives of these children. Rheumatic fever kills those children early. John Key said he had not really looked into it. It means 240,000 children go without the basics every day—raincoats, shoes, a bike, school trips, and glasses so they can see the school board. It means many of those children are in poverty, and living in families who are dependent on a benefit because benefits have been kept so low—first by a Labour Government and now by National.
Many of those children also have parents who are in full-time work paid under the minimum wage, or in casual or uncertain jobs earning a minimum wage that keeps them poor. Again, Labour before, and now National, have kept the minimum wage so low that those families simply cannot survive without Government support. National has made vulnerable families the enemy, in its campaign. It has made vulnerable families the enemy and has launched its attacks—whether it is cuts in services or cuts to income—increasing the gap between those who have the most and those in our country, our own families, who need the most. The Green Party will not be part of this vicious attack on families and children. We will fight against this war on children that was launched by John Key.
The Green Party has the solutions to bring out of poverty 100,000 children within just a few years. One of the ways we will do that is through extending the in-work tax credit to those families who are in the most need. Labour’s unfair policy of the past meant that beneficiary families were the ones most likely to be kept out of accessing that funding. The Green Party would remove the discrimination that those families have faced for too many years, and it would make sure that they get access to the $60 a week that can make a real difference to those families, which other families who are in work do access. We would also increase the minimum wage to $15 an hour. I am very pleased that both the Labour Party and the Māori Party are committed to that policy, as well. That means there is genuine political consensus that people who work full time should get a living wage, I tell John Key.
We would also make sure that the training incentive allowance is extended to beneficiaries both on the domestic purposes benefit and on the sickness benefit. If there is one thing we can do with those who are dependent, for whatever reason, on a benefit, it is that we can make sure they get access to the best possible education so that when they are able to move into work and into a good job, they are more likely to get a very well-paid job to sustain themselves and their families into the future. That is how we care for people when they are in need. That is how we care for children, both for their immediate needs and well into the future.
You know, it reminds me of John Key and his statement on the minimum wage when he said he would not tolerate putting it up because that would cost jobs. Well, I tell John Key that it is frankly duplicitous to oppose a rise in the minimum wage on the basis that some people might lose their jobs, when John Key’s Government announced in the Budget $1 billion - worth of cuts in spending in public services. That means cuts to jobs. It does not mean cuts to BMWs and it does not mean cuts to more flights in helicopters; $1 billion-worth of cuts to spending in public services means cuts to jobs. That means that families will suffer. The Green Party believes in a smart, green, compassionate economy, and that is what we will be working for. Thank you.
NICKY WAGNER (National): I am delighted to speak in support of Budget 2011 because it is a prudent, common-sense Budget for difficult times. It is another step in National’s plan to build a better future for New Zealanders. It does exactly what National promised when it was voted into Government in 2008. We promised to provide responsible economic management, and we have. We promised to build a stronger economy with a focus on savings and investments, and we have. We promised to protect the most vulnerable from the rough edges of the international recession, and we have done that too. Budget 2011 continues to build a strong platform for growth. Importantly, it cuts borrowing and sets a path to surplus by 2014 or 2015. It helps lift national savings, but it also protects our most vulnerable families. It invests heavily in health and education, and it supports the rebuild of Canterbury.
As a one-eyed Cantabrian, born and bred in Christchurch, the funding for the recovery after our earthquakes is the best news. The $8.8 billion—and that includes the ACC and Earthquake Commission payments—will underpin the rebuilding of the city and the province. It reinforces the Prime Minister’s commitment that the rebuild of Christchurch is one of the most important things this Government will do this year and into the future. Research tells us that after any disaster, maintaining the confidence of the people, the institutions, and the businesses is critical. This financial commitment comes just at the right time for Cantabrians. We can now be confident that our city will have the resources and the full support of the Government and the people of New Zealand. We know that the recovery will be a long haul, but we are up for it. We really appreciate the long-term support from everyone. There is $5.5 billion allocated to the Canterbury Earthquake Recovery Fund over the next 6 years, and that fund will be underpinned by Earthquake Kiwi Bonds. These bonds will allow New Zealand residents to help Christchurch by providing money for the rebuild. The bonds will provide a solid investment with a safe return, which will appeal to many New Zealanders looking for secure investments. Actually, it is a good new investment opportunity.
The Canterbury Earthquake Recovery Fund will be used to rebuild infrastructure, including schools and health facilities, and provide temporary housing for displaced families, and it can be used for training, welfare, business support, and the costs of the central business district demolition. The Budget also provides $25 million for the Canterbury Earthquake Recovery Authority over 2 years to help the authority lead the rebuild. The Canterbury Earthquake Recovery Authority took over from civil defence at the end of April, and it is leading the recovery. It has performed very well under the temporary leadership of John Ombler. The permanent chief executive officer, Roger Sutton, takes up his position next Monday, and we are all looking forward to that. The permanent positions in the authority have been advertised. The authority has an enormous challenge ahead of it, but I believe it will work well with the people of Christchurch and we will get an excellent outcome, particularly now that it has been effectively resourced. There is also funding for the rebuilding of the people of Canterbury. There is $10 million for social support to rebuild lives and communities. There is also funding for 4,500 construction-related training positions, including 1,500 new places to begin immediately, worth $42 million.
The Budget has given the people of Canterbury the confidence to stay in the region and to get on with the recovery, and it is full speed ahead. Many people are beginning to see some positives and that there are some silver linings in our situation. A constituent visited my office last week and said that the good thing about the earthquake was that he now had a job. The funding from Budget 2011 ensures that the recession is over for Christchurch and that our city will have a brighter future. We are already beginning to pick up the pieces. Retail spending is back to 95 percent of normal, having dropped to 60 percent after the February quake. Many businesses are doing very well, and the suburbs are booming. Our regional ports have increased activity, and although the job market suffered post-quake it has quickly rebounded. The rebound has been driven by both construction and information technology roles, and in April there was an increase in advertisements for all jobs. There is actually a new increase too in the number of new companies that have been registered this year.
Of course, the disaster has caused job losses, but the Government earthquake support subsidy was very successful in bridging the employment gap. Since it has finished, despite fears that thousands could be out of work, only 750 Cantabrians have gone on the unemployment benefit. It is very positive to see that just last week 255 Cantabrians went off the benefit and into work. My constituent was right; there are more jobs around. It has been great to see large corporates making new investments in Christchurch. Both Coca-Cola Amatil and Kathmandu are investing in new facilities that will employ local people, and that is very encouraging. The Government has also just announced the roll-out of ultra-fast broadband. That will provide a positive boost to businesses and organisations throughout the region. It will support the many new ways of doing business that we are exploring in Christchurch right now, and it will assist us to become a better, more prosperous, and more sustainable city.
All in all, Budget 2011 is a great Budget. It is a great Budget for all New Zealanders, but, more important to me, it is a great Budget for earthquake-shattered Canterbury and Christchurch. I thank the Prime Minister, John Key, and the Minister of Finance, Bill English. Christchurch and Canterbury will repay their confidence by rebuilding the second-largest city in our country to be safer, more beautiful, and more sustainable, so that once again Canterbury will be an efficient and effective gateway to the South Island and will deliver financially for New Zealand way beyond our population numbers.
JACINDA ARDERN (Labour): I will begin my speech addressing the Government’s latest Budget by reviewing some of the claims we have heard in this House from Government members, beginning with those made this afternoon. I find it quite extraordinary that we continually hear the contradiction from Government members that, first, somehow Labour was fiscally unrestrained and spent every single surplus that it ever managed to create. That is patently not true. In fact, when National was in Opposition, it spent most of its time trying to coax Labour into spending the surpluses, which we did not, and which is why we are now in the situation we are in. We would be in a much worse place had Labour not exercised the restraint that it did. The second point that was continually made and that I have heard in this House is that Labour chucked the surplus at unnecessary programmes. When I challenged a Government member to name those programmes, they were named as KiwiSaver and Working for Families. If the Government absolutely believed that those programmes were unnecessary programmes, then why did it not get rid of them? Why, in this Budget, did it not get rid of them? I would wager it is because the Government actually understands that Working for Families is a targeted tax credit aimed at those who need it most, and that KiwiSaver not only was necessary but also continues to be the one thing that, I think, prevents us from being in a potential superannuation crisis. That is the reason why continually tinkering with it undermines the stability of the system. That is the major issue that I have with the Government’s changes to KiwiSaver, not least the fact that it was actually breaking a promise it had made to the New Zealand public.
I will make two extra points. I have heard, I do not know how many times, in this House the statement that this was a Budget for the times, and that Kiwis and households would expect the Government to do what they would do themselves. Well, it is not a hypothetical; households are doing it themselves. When there is a 4.6 percent increase in prices and only a 1.9 percent increase in wages, families are doing it tough. They are facing incredibly hard times due to not just the increase in prices as a consequence of an increase in GST but also increases in ACC levies, tertiary education, and the price of going to the doctor. Almost anywhere one turns, one will find an increase in the cost of living for Kiwis. Kiwi families are having to budget. The expectation, when families sit down and look at their budgets, is not only to find places where they can exercise a little bit of extra restraint and pull back a bit of unnecessary spending but also to look for a way out, which the Government has not done. Families look for a plan to try to remove the tight conditions that they are facing. We know that a lot of New Zealanders are in fact doing that. I do not think that mums and dads looking for second and third jobs is necessarily the best answer in the world, because that puts pressure on their families, but that is what they are doing. We know from the household labour force survey that 20 percent of people in part-time jobs want full-time jobs. Half of them are working two, if not three, jobs just to survive. They are desperately trying to find a way out; this Government is not. That is the difference. That is the difference between the average Kiwi household and what the Government did with this Budget.
The third point I will make is that Bill English continually tells this House that this Government has taken the sharp edges off the recession. I do not believe that for a second. We have a $16.7 billion deficit, but we have more than trouble in our books. We have extraordinarily high unemployment in New Zealand. It has nearly doubled since 2008. We have had a larger increase in unemployment than the US, the UK, and Australia—all our comparable nations. It is hard to survive on the minimum wage in this country, let alone on an unemployment benefit. Yet that is what has happened as a result of there being a lack of a plan to turn round this recession, to bring us out of recession, and to deal with our deficit. If that is not the sharp edge of the sword of a recession, then I do not know what is. If being unemployed and trying to survive and raise a family on an unemployment benefit in New Zealand is not the sharp edge of a recession, then I challenge Bill English to tell me what is. If having no job—being one of those 1,000 Kiwis who queued outside a Countdown in Hamilton for a mere 140 jobs, or being one of the 2,700 people who queued outside a supermarket in Mount Roskill for 150 jobs—is not to feel the sharp edge of a recession, then I do not know what is.
What about the 50 percent of young Māori and Pacific Island males who are leaving school without any plan to move into work, education, or training—50 percent of Māori and Pasifika boys are doing absolutely nothing. They are just part of the 77,000 young people not in education, employment, or training. The Government can tell me that that is just a small blip in the programme, but it has jumped from 58,000 just in the last quarter. If that is not the sharp edge of a recession, then, again, Bill English needs to tell me what is, because his criteria are skewed.
Long-term unemployment has also tripled since National came in. I have to be honest; there has been a response from the Government on this. It was Future Focus. It was its apparent welfare reforms, and it was somehow going to help people into work. I ask how making people reapply for an unemployment benefit does anything tangible to help them into work. Paula Bennett boasted today that 3,600 people have moved off a benefit, but we do not know where they are. We do not know what they are doing. All we know is that they have not moved into a job. Those 3,600 people may be producing a short-term saving for this Government in terms of unemployment benefits, but we will suffer the long-term consequences of potential criminality and of those people being completely marginalised and no longer engaged with our system at all. If those people are not required to walk through a Work and Income door every day or every week to sit down with a work broker who is trying to get them into work, training, or education, then that is our loss. That becomes our loss, not to mention the lost potential of those people who now have no support, let alone any potential to move into supported employment, education, or training. It is a recipe for disaster, and that is what these welfare reforms have delivered for us.
But what about the Government’s response in the Budget to our unemployment situation, which is, as I have outlined, a perfect storm? The Government has predicted that—and Treasury has not refuted it—170,000 jobs will be created over the next several years as a result of this Budget. I say “as a result” because the Prime Minister wavers between saying that and saying that this prediction is just following a trend rather than being a consequence of any direct initiatives in the Budget, but contradictions are all over the place. On one hand, when we ask the Government what initiatives it has implemented to tackle unemployment, the Prime Minister stands up and says that national standards will deliver us those jobs. If it is not national standards, then he says that it is early childhood education, and if it is not that, then it is simply interest rates. The Government says that interest rates are the one thing that will deliver us 170,000 jobs. That is classic trickle down. I do not buy it, I have never bought it, and the last Budget demonstrated that it is already not working.
I absolutely accept that the private sector in New Zealand is generating the majority of jobs. I am not disputing that, not for a second. But that does not mean that the Government has no role to work alongside employers and the private sector to stimulate job creation. The first example is that exporters are crying out for greater stability of the dollar—crying out for it—and if we were able to deliver that, we know that it would increase our exports and thereby increase our jobs.
In respect of investment in research and development, PricewaterhouseCoopers has told us that that would contribute billions of dollars to our economy if the Government was willing to incentivise it. All of that is the Government playing a role in stimulating job creation via the public sector. It is much more active: not only does it allow the private sector its role in job creation but also it does not allow the Government to get away with the excuse in a recession of washing its hands of any responsibility for putting Kiwis into work. That is exactly what the Government has done. It is exactly what the Budget has demonstrated.
This is the challenge I put to the Government: if it believes it is all on those in the private sector, then why will it not listen to them? Why will it not listen to the cries they are making not only for assistance in these areas but also for the Government to work alongside Kiwis to make sure that they are skilled, trained, and ready for the workforce, instead of slashing $90 million out of this critical area. This is not just trickle down; it is blatant irresponsibility, and it is an example of the sharpest edges of the recession.
MELISSA LEE (National): I start by saying that what was irresponsible was Labour’s transferral of people who were on the unemployment benefit on to the sickness benefit in order to improve the numbers. At least we are not doing that.
Jacinda Ardern tried to say that Labour is a fiscally responsible party. That is an oxymoron, to start with. What is wrong with people having two to three jobs, so that those who want to work can get ahead in life? I remember my parents having more than one job to make sure we had a brighter future than they had. I remember that I took on a second job when I was much younger, and even a third job, to try to better my bank balance so that I could travel and all that sort of stuff. I do not see anything wrong with that, and I do not know why Ms Ardern thinks that is a bad thing.
Budget 2011 is about three things: building faster economic growth based on savings and not spending, setting a credible path back to surplus faster and repaying our debts, and rebuilding Christchurch over the next few years. That is basically it. It is a simple yet very, very clear plan to move New Zealand forward, not back-pedalling from where the previous Labour Government left us. After 9 years of bad management we were left with a decade of deficits.
The Labour Opposition would have people believe that New Zealand would be in a much better position if they had chosen Labour back in 2008. Well, let me tell members, we would be $45 billion poorer if Labour was the Government right now.
To top it all off, we have had unprecedented natural disasters that have literally rocked the foundation of this country. The rebuilding of Christchurch will take quite a few years. This National Government has delivered a Budget to return this country into surplus earlier than predicted. A return to surplus in 2014-15 will mean reducing the need for this Government to borrow more and lifting national standards. It was appropriate for the Government to run a larger deficit to help protect New Zealanders and support jobs through the recession, but now that the economy is returning to more normal times we need to reduce our need for extra borrowing and get the Government books back into surplus. That is what this National-led Government is doing, and I am very proud of the Budget our Minister of Finance has delivered.
There are many aspects of this Budget I could highlight that are good for our nation, but to begin with, investing $4 billion in front-line public services in health, education, and supporting our young people into jobs has to be good news in my book. The Labour Opposition makes it sound like the Budget is, to quote one of the Opposition members last night—I think it was Clare Curran—all gloss with no substance. Gloss with no substance is the Labour Opposition’s thin veneer that it actually cares about people who need assistance. If Labour really cared about its people and its constituencies, it would really thank the National Government, because this Government is doing much more than Labour ever did in its term in Government, in respect of looking after people in New Zealand who are vulnerable.
Under Labour’s watch, cancer patients had to wait so long that they ended up going to Australia. Now, under National, cancer patients get attention within a month of diagnosis. Which would people prefer? The National Government can deliver less waiting time. There is no longer the need to go to Australia for cancer treatment. The National Government can produce those results: faster attention, less waiting time, and no longer the need to go to Australia for cancer treatment.
The 2011 Budget improves on what is already a huge improvement in Vote Health, compared with the previous Government’s performance, or lack thereof. It includes $80 million for widened access to medicines, which means that 32,000 patients will benefit from the extra funding in the first year; $68 million for more elective surgery, which is a continuing increase of 4,000 extra operations a year and which will naturally translate to less waiting time for those surgeries; and $80 million for 40 extra medical training places. National promised more doctors, and that is what we will achieve. There will be more doctors so that they can see more patients, with shorter waiting times. Budget 2011 delivers an extra $2.2 billion to public health services over the next 4 years.
Another aspect of the Budget I am really pleased with is Vote Education, which is another big winner, and no wonder. The previous Labour Government failed our children. It was Labour that failed our children, not National, when so many children were leaving our schools unable to read, write, or do maths. It was a disaster, and that is the legacy the former Labour Government left this country.
This Government is delivering an extra $550 million for early childhood education, focusing on increasing participation for Māori, Pasifika, and low-income families. The Budget also includes $66.5 million to increase the number of trades academies and service academies, to keep more of our 16 and 17-year-olds engaged in education and training, as part of the wider Youth Guarantee.
When some children go to high school they are not necessarily academically focused, and they do not do as well as others who are orientated for academic careers in the future and will progress into universities. Trades academies are focused on children who are more interested in the trades for their career in the future, and I think that is fantastic. In one story I heard from a colleague he told me that he had seen some builders who had come out of school unable to read and write. They could not even read instructions on the building material when they were punching holes and hammering nails. That is a sad indictment on our education. Our Minister of Education, Anne Tolley, has provided leadership by focusing on our children to make sure they leave our schools with the ability to read, write, and do maths, and I commend her. The extra money for Vote Education reflects that focus of this Government.
The Budget’s $12 million of new funding with a specific focus on lifting Māori achievement is also a fantastic thing. There is $17 million of reprioritised funding to extend the Te Kotahitanga programme to an additional 20 schools, and I also welcome that. As an ethnic person I recognise the fact that some of us learn differently. I learnt differently when I was in Korea, and when I came to New Zealand I learnt differently again. The way Europeans in their culture teach their children is very different from the way the Māori, Pacific Island, or Asian communities teach their children. They come from different cultures, and this culturally focused method will do very well for the Māori community and the children who are failing in the current system, and I welcome that.
There are so many more specifics that I can brag about, but this Budget focuses on the three points that I made earlier: reducing debt, getting our books back into surplus and increasing savings to promote faster economic growth, and rebuilding Christchurch. Labour apparently has a plan, and Labour members claim that National does not. Labour wants to borrow big and spend even bigger to win votes. But what Labour really has done for New Zealanders who vote for Labour is to make sure they stay poor, because when they stay poor, with no aspirations to do better for their lives, they will keep on voting Labour.
This Government wants to make sure that New Zealanders have aspirations to do better than they are doing. We want them to achieve to their potential. We want them to earn a better living for themselves and their families. Do members know what? Thirteen percent of New Zealanders pay 51 percent of the taxes. I think it was Metiria Turei who said that something was wrong with that picture and said, almost, that those people who earned more should be punished by paying higher taxes. Thirteen percent of people pay 51 percent of the tax. We should celebrate that and congratulate them for their hard work.
CHRIS HIPKINS (Labour—Rimutaka): I say to the member who has just resumed her seat that I would put Labour’s economic track record, after 9 years in Government, against the 2½ years of this National Government any day of the week, at any time that she chooses. Labour, in Government, delivered surpluses year after year, and we paid back the debt. By the time the National Government came into office, Government net debt was nothing. The Government did not have any debt when Bill English became the Minister of Finance, because Michael Cullen cleaned up the mess that Bill English made last time he was Minister of Finance. When Bill English was previously the Minister of Finance we had a huge mountain of debt. When he was turfed out in 1999, Michael Cullen picked up that mess and he paid back the debt and kept the books in surplus.
What did the then National Opposition say? It said the Labour Government should have been giving away tax cuts, year after year after year. Those were the words of Bill English. He said that a National Government would have given tax cuts, year on year on year. All that would have done is put us in the cart we are in now, years and years earlier. The Labour Government did not do that. We left the Government’s accounts in a very, very good state.
When Bill English first became the Minister of Finance in this Government he said: “This is the rainy day the Government has been saving for.”—not a National Government, but a Labour Government. It was the Labour Government that saved for the rainy day, but within 2½ years the National Government has flushed all those savings down the toilet. Now we are looking at massive deficits every year, with no end in sight. This Government is clocking up massive deficits and there is no end in sight. Debt will continue to grow under Bill English’s economic mismanagement, simply because this Government does not have a plan for the future of this country.
New Zealanders are struggling out there. They are willing to do a hard day’s work. They are willing to do the hard graft that it will take to get ahead, but they want some hope from this Government—[Interruption] What was that?
Hon Georgina te Heuheu: They won’t be voting that member’s party back any time soon.
CHRIS HIPKINS: Oh, look! Georgina te Heuheu has looked into her crystal ball and she has already determined the result of the coming election. Well, I say to her that I am quite happy for her to come to Rimutaka any time. She can come to my electorate any time, and she can tell the parents in Rimutaka, in my electorate, any day of the week why they are paying more for their early childhood education. She can come and tell them why her Government wants to hock off State assets—the ones that are left. She can come to my electorate and tell the people why her Government wants to privatise ACC and rip into KiwiSaver yet again. Yet again a National Government is putting the boot into a very good retirement savings scheme, which was introduced by a Labour Government.
Georgina te Heuheu can come to my electorate and tell the people why the Government is going to close Industrial Research Ltd, which is in the Hutt Valley. That enterprise is one of the most successful in the Hutt Valley, and this Government is going to take it away. She can come to my electorate and explain why the Government is going to close Avalon Studios in my electorate. Suddenly we are hearing nothing from the Government benches. Perhaps the member would also like to come and say why there are no night classes left in the Hutt Valley—
Grant Robertson: None at all.
CHRIS HIPKINS: —none whatsoever; none at all. Under this Government there is not a single night class left in the Hutt Valley. Roading in the Rimutaka electorate has been shoved way down the list under this Government. In the Hutt Valley we face the real prospect of no further major roading upgrades for decades to come, so that Steven Joyce can fund his “Holiday Highway” up north so he can get to his bach a little quicker.
New Zealanders want some hope for the future. The people of the Hutt Valley where I live want some hope for the future. They are willing to go out and do the hard work. They are asking this Government where these jobs are, the jobs it wants to push them into doing. Some of the people in my electorate are already working two or three jobs, just to make ends meet. Other people are coming into electorate offices and into Work and Income, saying: “I’ve lost my job. I want another job. I don’t want to go on a benefit but there are no jobs out there for me to get.” They want to work, but there are no jobs there for them to take, because the Government has no plan.
For 2 days in a row I have sat in question time and listened to the Prime Minister being questioned. He has been asked by Jacinda Ardern, 2 days in a row, to say what initiatives the Government had put in place in this year’s Budget to create jobs. He cannot name them. He cannot name them because there are not any. The Government does not have any idea about what it can do to start creating jobs. It is missing opportunities, because it does not have a vision or a plan. Christchurch was faced with a great tragedy, and still is faced with the monumental task of rebuilding, but that creates a huge opportunity for us as well. Out of that tragedy there comes opportunity. One of the opportunities that comes out of that tragedy is to upskill our workforce and train new apprentices so that we can deal with the skill shortages in this country.
Does the Government have a plan for that? No, it has no plan. Instead John Key is talking about importing skilled labour from overseas; getting people to come in from Australia to do the task of rebuilding Christchurch. I say that we have people in New Zealand crying out for work and crying out for training opportunities, so why not get them to do the rebuilding in Christchurch? Why not incorporate training and apprenticeships into the rebuilding of Christchurch? That would be a huge opportunity for New Zealand. But this Government has no plan to capitalise on that opportunity.
What was John Key’s original plan for jobs after the last election? We saw the Job Summit, because John Key wanted to have his photograph taken. He wanted to be seen to be doing something about jobs. What was the one big idea that came out of John Key’s Job Summit? It was a cycleway. I am a cyclist and I like cycling quite a bit. I like the idea of having better cycling in New Zealand but it is not a massive job creator. Yet so far that seems to be the only job creation scheme or job creation idea that has come out of this National Government. That is the only one. How many jobs have resulted from John Key’s cycleway?
This is a Government that said it would focus on the things that matter. I will tell the Government what matters. What matters are jobs, what matters is the rising cost of living, and people not being able to pay their power bills, what matters is giving people hope, and on all three of those fronts this Government is failing dismally.
I turn now to ACC. Nick Smith has been frantically trying, for the 2 years that he has been Minister for ACC, to talk up a crisis, to pretend somehow that ACC is fundamentally broke and broken. It is not; it is not fundamentally broke and broken. It never has been. What this Government has been all out to do is soften up ACC so that the Government can privatise it. That is what we have seen in the last few weeks with the Government talking up privatising the work account. When I asked Nick Smith in question time today whether this would lower the costs to employers, he said yes. I then asked him why. He said he did not know. That was effectively what Nick Smith said. He did not know, because actually there is no scheme anywhere in the developed world that offers the same cover that ACC does for cheaper.
Accident compensation is already the cheapest scheme of its type in the world, and the Government wants to privatise it because it thinks that, in addition to providing accident cover, it can squeeze a profit margin out of it. The only way the private insurance industry will squeeze a profit margin out of it is by declining more claims, reducing entitlements, or increasing the costs to employers. The industry cannot offer the same level of cover without reducing entitlement or increasing costs. It has even said that. Those are not my words. The private insurance industry has come out and said it cannot do it. So what is the industry’s answer? Well, insurers do not want ACC to compete with them, because they know they cannot do it as cheaply as ACC can. They do not want to compete with ACC; they want the Government to block ACC out of the market so the industry can increase the costs to employers and not be undercut by ACC, because ACC is cheap, and because it is good. The accident compensation system is fundamentally sound and has been all along, despite the fact that the Government has been trying to talk up a crisis in it.
The New Zealand public is looking for hope, it is looking for a plan, and it is looking for evidence that this Government has some idea about how it will get New Zealand out of the economic mire it is in at the moment, and it is not seeing it. The New Zealand public is seeing a Government interested in itself, and interested in promoting its own interests and those of its mates—a Government with no plan.
Hon ANNE TOLLEY (Minister of Education): This Budget is all about good news for education—fantastic news for education. I say to the member who has resumed his seat, Chris Hipkins, that he has a very short memory. The previous Labour Government let four schools in his electorate sit and rot—sit and rot—for 7 years. They were not allowed to do any maintenance, and they were not allowed to put any improvements in, while the Labour Government sat back and watched and talked about the possibility of investing $90 million in those schools. It led them on and promised them it would spend $90 million, and what did it do just before the last election? It promised them $14 million between four schools. After sitting and watching those schools rot, it promised them $14 million.
This National Government put an extra $30 million into that area, and that member now has four great schools being rebuilt as part of National’s infrastructure stimulus to put employment into that member’s electorate. This National Government made that investment from its education budget, which has increased by $4.4 billion since National came into Government—$4.4 billion extra into education since National came in to lead the Government.
This Budget continues that spend, that investment in education, which we know will provide opportunities for young people to go on and realise their potential. This Government has said the Government will no longer sit back and watch kids fail in school—fail in school. We are not going to say the only way for them to get their qualifications is to raise the school leaving age. No, this Government is investing in those young people. What did we do in this Budget? Apart from making lots of money available to the sector, we put in support for our key policies. We put in extra money to support network and leadership, and to spread good practice around national standards. National standards are giving schools and teachers good information about students. Most important, they are giving parents good information about how well their child is doing. So we put some money into supporting schools with their implementation of national standards.
We have also put money into supporting schools in the development of the Youth Guarantee. The previous Labour Government looked at young people and said they were leaving school without qualifications, so it would design a fancy name for a programme: Schools Plus. It was all a hoax. It was nothing more than a name. There certainly was no money. All that the Labour Government did was to put up the school leaving age and say to the schools that they had to get some qualifications for those kids, and it would keep those kids in school until the schools did that. This Government has said kids actually learn in different ways. We understand that, so we have put money into trades academies. We have opened eight trades academies this year—eight trades academies. Another four will open next year, and this Budget puts money in for another five to open next year. In terms of service academies, we brought them all together and we revamped them, and there is money in this Budget for more service academies.
I have been up and down the country meeting the young people who are taking part in the trades academies, and I have to say there is a light in their eyes. They are enjoying their education—for the first time in years, some of them tell me—because they are doing something they love, they are in an environment that values them as young adults, and they are getting their qualifications. This National Government has made that available. In fact, when I was in Canterbury last week opening the trades academy there, one of the tutors said to me that he had had a call from a parent. The parent was just ringing to check that her son was actually turning up for his class at 8 o’clock in the morning. She wanted to make sure that he was actually turning up for his class at 8 o’clock in the morning, because to be perfectly honest, she said, he had never turned up anywhere at 8 o’clock in the morning. He was out of bed and off to the trades academy at 8, and she wanted to know that he was there. The tutor actually had to say to that mother that her son was there before him. Every morning that boy is there, ready to go, learning, and gaining his qualifications.
That is the difference that this Government is making for young people up and down the country. Eight new service academies are being funded to open next year, on top of the nine that are already operating throughout this country.
In this Budget we have put in $51.5 million for the School Network Upgrade Project, because we know that technology is a leading component of schooling today. It makes the difference for people in rural areas and for many of our Māori kura. It makes the difference. It is absolutely essential as we roll out fibre across the country, with a particular emphasis on servicing schools, that the schools themselves have the right sorts of facilities to take advantage of that fibre. This Government has provided an 80 percent subsidy to schools, as against the previous Labour Government’s contribution, which was at such a miserable level that very few schools were actually able to take up this project. This Government has put its money where its mouth is and said it knows that technology is hugely important to the development of education in this country. We are prepared to fund it, and we are prepared to put the money in to make sure not only that the fibre is delivered to those schools but that they have the infrastructure to support it in their school grounds.
Speaking of school grounds, I say this Government has invested $200 million more each year in property development than the previous Labour Government did—$200 million each year. That has meant that good jobs in the construction area and in the design area are available out in provincial New Zealand. It means that schools have been developing what they call modern learning environments: upgrading their classrooms and upgrading their properties, so that children are learning in a modern learning environment.
We have said that the achievement of Māori students in our mainstream schools is nowhere near as good as the achievement of Māori in kura kaupapa schools. That is not acceptable, because 90 percent of Māori students are actually in mainstream schooling. Their results can be described as abysmal. The previous Labour Government did not address that lack of achievement by Māori and Pasifika, apart from sitting back and talking about it in communities, and wringing its hands and doing nothing. This Government is determined to ensure that every single child who goes to a school in the New Zealand education system has the opportunity to develop to their full potential. Whether they are Māori, Pasifika, Asian, or European, they all should have the same opportunity to get an excellent education, and we are determined to make sure that that happens.
We are putting extra money in so that another 20-odd schools will be able to get into the Te Kotahitanga programme, which trains teachers on how to work with Māori students. Actually, it is really good for Pasifika, Asian, and European students as well, but it teaches teachers to recognise that valuing identity, culture, and language in our Māori students helps with their learning. And if we can help those students with their learning, then they will achieve. So this Government has put in a lot of effort, and I thank my Māori Party colleagues for the assistance and the perseverance that they have put into developing good policies to help to lift Māori achievement.
This Budget is all about good news in education for young New Zealanders, and I am very proud to be part of a National Government that even in these really tough economic times is prepared to put a huge investment into education.
Hon TARIANA TURIA (Minister for the Community and Voluntary Sector): I too am really pleased to be able to stand today to talk about the Budget. A typical budget in any household would look at all the costs to be accounted for and weigh up the essentials alongside the luxuries. It would provide a plan for how best to pay the bills and perhaps deal to the debt. Our Budget is no different, except that Budget 2011 is all about essential spending with no room for luxury items.
The essential items that I want to focus on are Budget lines associated with rheumatic fever, family violence, and sexual health. I define these as essential items in that they are intimately and directly associated with the health and well-being of a family, yet too often they are the issues that have been associated with poverty, prejudice, and pressure. Consequently, they have not received the attention they warrant. Throughout all of our decisions in Budget 2011 we have tried to advocate for those who are the most vulnerable, those who need it most.
I have to say that one of the most promising pieces of policy advice I have ever seen from Treasury is John Whitehead’s swansong statement on living standards, in which he declared that tighter Budgets require an even greater focus on making sure that resources go to those who most need them. The report, Working Towards Higher Living Standards for New Zealanders, addresses the need to improve the living standards of those who have had a poor long-term outlook, which is a theme dear to my heart.
Māori Party members, from our first day in this Parliament, have raised questions about the quality and efficiency of the annual spend across the State sector. Is it getting to those who need it most? Is the trickle-down theory working for the people who should benefit? Is there a better use of limited funds so that we actually make the difference that we seek? These are the questions that have motivated us in Budget 2011.
In the family violence prevention field, all the evaluations of the It’s Not OK campaign told us that it is not enough just to raise awareness, and that families and friends want to know exactly what they need to do to get help. The research told us that people felt that the television ads had helped them to understand that violence was unacceptable and change was possible. Budget 2011 builds on that research and is targeted to help create the long-term changes that are needed to prevent violence from reoccurring.
I have to say that the new direction has not been universally popular, but I have no regrets about our decision to focus on front-line services—services that are focused on restoring family safety and family well-being where violence has occurred. Although I can appreciate the concerns of providers when their programme funding has been cut, or when potentially they stand to lose workers as a result of the new direction, at the end of the day we have to think of the bigger picture—that is, of course, what we can do to protect our families from harm.
Our greatest campaign must be our fight to support families, to bring back the balance in their lives, and to encourage them to be violence free. The great bulk of the funding will now go into the Family-Centred Services Fund, which will encourage flexibility for families to achieve longer-term transformational change in their environment.
In the current climate funding is limited, and we have to make sure that every taxpayer dollar is invested where it will have the most impact. There was no new funding, so I wanted to channel the $11 million that I have responsibility for into services at the front line so that families in crisis are kept safe and are supported to be resilient and strong. I make no apology for that. The focus of the funding in the family violence prevention area is also to encourage providers to work together to reduce service fragmentation, duplication, and gaps in order to provide more effective front-line services that better respond to local need.
Those are very much the same factors that influenced me in redirecting the $1.5 million of funding that is spread across thousands of groups in 37 various regions, under the mantle of the Community Organisations Grants Scheme. We all know that we have communities with significant issues that have little or no funding. Funding has been small in the past, and this does little to create sustainability. So rather than have the widely dispersed, lolly-scramble approach, which gives a little to a lot, I wanted to do something different. I wanted to be a bit bolder, and to place our trust in communities to address their own issues in an approach that encourages existing groups in a region to work together for the good of the community.
When it came to our initiatives in health, again, we looked for what would give the greatest gain. On top of my list was doing something about the appalling rates of rheumatic fever that have come to light. No Government can ignore the fact that our rate of rheumatic fever is 14 times higher than in any other OECD country. We should all be ashamed of that. Although I am sure there will be questions at some stage about how we got to this point, especially after years in which we should have been addressing significant issues, in housing and right across the social sector, my focus is firmly fixed on what we can do to make a difference, not on what we have not done.
The concern for us in the Māori Party is to observe that the large disparity between ethnic groups appears to have worsened over the past 20 years. The mean incidence rates for Maori and Pasifika children aged between 5 and 14 are now between 20 and 40 times higher than for other New Zealand children of the same age. This is catastrophic when we consider the whole way in which rheumatic fever impacts on our children in the long term, and certainly the impact on families. Rheumatic fever is an entirely preventable disease, but it can have serious consequences during childhood and throughout one’s whole lifetime. The $12 million investment announced in this Budget will support a number of initiatives, such as an increase in front-line community staff, school-based sore throat clinics, and a range of research and training programmes for health professionals and community health workers.
I think there is a really important message here also for general practitioners, who are at the front line of community health—that when a child from a Maori or Pacific w’ānau presents with a sore throat, those practitioners prescribe Amoxil immediately rather than wait, test, and then fail to see that child come back for treatment. They must treat it right there at the point of contact when the family brings in their child.
The other announcement I made in health was about targeting the particularly high-risk groups in the sexual health and reproductive health arena. We have put a focus on a range of areas: addressing the incidence of chlamydia in rangatahi, supporting African communities, and expanding health promotion initiatives aimed at reducing the stigma faced by people living with HIV and AIDS.
There are other highlights I am really proud of in this Budget. There is $6.5 million to expand family-based literacy programmes to all decile 1, 2, and 3 schools—I say thank you to Minister Tolley. There is funding of $3.3 million for community-based initiatives to increase digital literacy and connection. Of course, the major highlight is the investment of an additional $30 million in Whānau Ora. This investment confirms and validates the momentum and potential of the Whānau Ora approach, uplifting w’ānau to increase their capacity and capability, and reducing, over time, their reliance on Government-funded services.
We know that several hundred w’ānau, including several thousand individuals, are already engaged in planning and development at the w’ānau level, and are connecting to existing service delivery, and increasingly to the Whānau Ora service providers. Our w’ānau are the greatest source of our strength; their needs cannot be put aside as a luxury item for another year. The investment we have made in placing Whānau Ora on everyone’s agenda could not have come soon enough. Today, as I said when I started my speech, I am really proud to stand and support the Budget of this Government. Kia ora.
Hon STEVEN JOYCE (Minister of Transport): In last month’s Budget the Government laid down its cards. It laid down a clearly laid out plan for New Zealand’s future. We are firmly focused on meeting and beating the challenges laid in front of this country over the last few years and on getting New Zealand on a path to much stronger growth. The Budget is another firm step on that path.
Firstly, the Budget is about balancing the books. It is about getting back into surplus in 2014. It is about keeping interest rates lower than they were under Labour. No surprise there; Labour does not think interest rates are important for economic growth. That is what we learnt this afternoon in question time. The Budget ensures a competitive exchange rate over time, which is important for exporters and for New Zealanders. The Budget is about balancing the books, first of all.
Secondly, it is about balancing the books by controlling expenditure, not by adding taxes. That is very important. New Zealand finally has a tax system that encourages hard work and savings. Three-quarters of New Zealanders now have a top marginal tax rate in this country of 17.5c in the dollar. The top rate of 33c in the dollar is designed to encourage skilled workers—and I do not mean encourage them to leave the country like Labour did over its last 9 years. The 28c in the dollar company tax rate is also designed to encourage New Zealand businesses. It is crucial that we do not sacrifice that tax rate, so we have controlled the urge of the Opposition parties to add to the tax base and have tracked a path to surplus while maintaining our competitive tax system.
Thirdly, the Budget is about savings—firstly, national savings. KiwiSaver has been put on a much more sound footing. The reality is that when we are borrowing more than a billion dollars a year to place that money into a deposit account, it does not add to savings. We have changed that system. Over time, greater employer and employee contributions will add to national savings. More important, cutting the deficit increases Government savings and national savings.
In terms of savings, the Budget is also about having something to invest in. We need something more than finance companies for New Zealanders to invest in, so we have created a mixed-ownership model, which will not only provide opportunities for New Zealanders to invest in but also provide opportunities for these great Kiwi companies to grow. Those are three things.
Fourthly, the Budget is about Christchurch, which is crucially important. For the rebuild of Christchurch there is $5.5 billion to help Christchurch get back on its feet. That is a major commitment by this Government to the people of Christchurch—and rightly so.
Fifthly, the Budget is about infrastructure—so much infrastructure. We are investing hugely in New Zealand’s future. We are investing $1 billion in this Budget alone for ultra-fast broadband, which will be transformative for this country. The ultra-fast broadband and the rural broadband initiative alongside each other will take this country forward like no other Government programme—he said, slightly selfishly.
The $1 billion a year or more for the roads is very important, as well. There is a $4.6 billion turn-round plan for KiwiRail. We do not hear Opposition members talking much about that, but it is a massive investment that this country is making in its future through this Government. There is also a massive investment in commuter rail in Auckland and Wellington. There are huge amounts of investment for infrastructure, and thousands of jobs from that infrastructure. Most important, as we come out of the recession and get faster growth, we will not have the infrastructure blockages we have had historically when recessions come right.
It is important to note that this is the first time, I think—in living memory, anyway—that any Government has been able to maintain an infrastructure programme of this size in tough economic times. It is one of the unsung stories of this Government that we have been able to do that. People will look back and say that the Government invested in New Zealand’s future at a time when it would have been far easier just to snap up the cheque book and put it away.
Sixthly, this Budget is about investing in education and skills. We are doing huge amounts in that area. Anne has talked about what is happening in the preschool sector and also the schools sector. The national standards policy is another unsung story of this Government and will see us in great stead in the future.
In the tertiary area there are record numbers of places. There are record numbers of graduates. We are meeting the demand and, more important, we are demanding results. The previous Government used to be very good at tipping money in the front end. It was very good at that. The Labour Government got the bucket out and threw money in the front end. It was like throwing money in the fire, and Labour would not worry too much about accountability at the back end. We are into accountability at the back end. We make sure that the accountability is there. We do not have any phantom industry trainees. We are getting rid of phantom industry trainees. Labour members go on about industry training, but in 2008-09, 44 percent of the people officially receiving industry training did not get any credits whatsoever. They did not actually earn a credit. They were not industry trainees; they were phantom trainees. That is what they were; they were phantom trainees courtesy of Labour.
Then there were other areas that were not directly addressed in the Budget—areas like innovation and trade, where we are putting in a number of things in a steady progress forward.
Grant Robertson: “Steady progress.” That’s ambitious for New Zealand!
Hon STEVEN JOYCE: We have investments in tourism and investments in export education. Regulatory reform continues and we are getting more productivity out of the public sector. That upsets the member for trade unions over there, Mr Robertson. That productivity is very important, again given how much money Labour poured in the front end over its last 9 years in Government and given that it did not do anything about checking for accountability.
The future is looking very positive. The future is now looking very positive. We have in this country the best terms of trade in 37 years, which is crucially important. It is not Government-generated, but it is crucially important that we have that opportunity to grow exports at a time when the Government is focusing on exports. We also have one of the best interest-rate tracks in living memory. As I said, going forward we have massive investments in infrastructure in the Christchurch rebuild, and we even have the Rugby World Cup between now and the end of the year. So things are looking up.
There are those to the left of us who think we should spend lots of dough. That is their solution to all the problems. In fact, they do not have many solutions. Do members know what Labour’s really big ideas are for the upcoming election? Let me guess: research and development tax credits. That is a hoary old number, is it not? [Interruption] They are worth a lot more money than they think, but that is Labour’s new solution. After 3 years in Opposition, Labour members say they will roll out the old game of research and development tax credits. Their other suggestion is skills training—more phantom trainees. They want to get out there and shovel more money in the front end again. It did not work effectively across the first decade of this millennium, and it would not work effectively now. It just goes to show how bankrupt Labour members are of ideas if all they can do is come out and rerun their 2008 election policies, which we all know were hugely successful that time round!
They have opposed every single spending change this Government has put forward, they have opposed the KiwiSaver changes, and they have opposed the mixed-ownership model. If we take all of that out of the Budget, then suddenly they are looking at a very massive deficit and they do not want to talk about that. They do not want to talk about that, because they have no idea how they will fill that gap. All they are doing is sitting there and criticising the Government. Somehow, they are saying that the Government has no plan when it has this absolutely comprehensive plan for New Zealand’s future.
Dear old Labour members are sat there looking from the sidelines, bereft of ideas, and looking to basically run things back to 2008. They want to put up personal taxes again. Labour is the party that supposedly goes on about skills training, but it wants to put up personal taxes for higher-skilled workers. It wants to restart emigration to Australia. That is Labour’s big plan. It also wants to take away all the changes that Nick Smith has made to ACC to bring it under control. It is fantastic that this Government has improved the outcome for ACC. Labour members do not know what happened. They do not know how ACC got into the big hole financially. They still think it did not happen. Hipkins said before that it never happened. He was not sure what happened. In the meantime we have sorted out ACC and got it out of the hole again, and Labour members are still wondering what the hell happened. That is the trouble with that crowd on the other side of the House: they are completely dumbstruck. They have no idea what to do except to rerun their 2008 campaign.
This Budget balances the books. It does that by controlling expenditure. It keeps the tax system that encourages hard work and savings. It focuses on actual savings rather than on just borrowing money to make ourselves feel good by putting it into another account. It is about the rebuild of Christchurch. It is about huge amounts of infrastructure. And it is about investing in education and skills. It is a strong plan for sustained, real growth for this economy. New Zealanders will support it—New Zealanders are supporting it—because they see that this Government has a plan to help them get ahead and have the brighter future they deserve. Thank you.
SU’A WILLIAM SIO (Labour—Māngere): I congratulate the previous speaker, Steven Joyce, because he is the first speaker on the Government benches whom I have heard actually try to address the Budget. Every other speaker I have heard in this House deviated from the Budget and had difficulty standing in front of this House to speak about the Budget. Those words are all very fine and nice. Balancing the books—how do we do that when we are in debt and the Government continues to cut off the only means of revenue coming into the nation? How can we save, when we are making it difficult for people to save more? They have to pay double to save the same amount of money. I ask that member: in terms of infrastructure, in terms of the things he has outlined, how does that translate to high-paying jobs for the unemployed? How does that translate to lower food prices? How does that translate to lower power prices? How does that translate to reducing the poverty that we see is now worse than ever before under this Government?
Government members have struggled in the past few days to defend their Budget because, in the words of Dr Pita Sharples the other night, it is a “black” Budget. Others have said it is an indefensible Budget. I am one to say that this is a Budget that runs in the same kind of pattern as the Budgets of 2009 and 2010. Let us go back to the 2009 Budget. What did we hear? We heard it was going to be a mana-enhancing Budget, it was going to be a step change, and that it would somehow move our economy on to the road of recovery. What we got was cuts, cuts, cuts—cuts to education, cuts to health, the undermining of KiwiSaver, the undermining of the Cullen fund, and unemployment at 6 percent, in the first Budget of this Government. In Budget 2010 we heard of a tax switch—a tax cut that would be financially neutral and no one would be worse off. Is that not what we heard in this House? Well, $9 billion of tax cuts went to the top 10 percent of earners. Those on $150,000 a year were the ones who were better off. The rest of us were worse off by $18 - plus for the next 3 years. The rest of us ended up paying GST at 15 percent. There were more cuts to education, more cuts to health, the public sector lost 2,000 jobs, and the rate of unemployment went up from 6 percent in 2009 to 7 percent in 2010.
Today we heard the Prime Minister John Key say that it is the private sector that creates jobs, and the Government’s role is to facilitate that. We totally agree. The private sector should create jobs. It has a role to play in creating jobs. The Government has a role to create jobs. My colleague Jacinda Ardern asked which of the many initiatives Government members have been prancing about promoting will create the 177,000 jobs the Government says it will create, but Mr Key could not answer that simple question. He could not answer. Why? In theory it all sounds nice. We give money to big business, we give money to the private sector, and they will then reinvest it in the economy and jobs will be created. Have they been able to do that? I ask the public: has this Government been able to do that? No, it has not.
Let us look at what we can measure National’s performance on since it has come into power. If we look just at jobs that have been created, the last time National was in Government was in the 1990s. In 1991, under a National Government, we had the highest unemployment rate in the history of New Zealand, at 11.2 percent. In December 2007, under a Labour Government, we had the lowest unemployment rate, at 3.5 percent. When Labour left office that is where the rate of unemployment was at—3.5 percent. In 2009, after National’s first Budget, there was 6 percent unemployment.
H V Ross Robertson: How much?
SU’A WILLIAM SIO: It was 6 percent unemployment. In 2010 it was 7 percent unemployment. In 2011 unemployment still hovers at almost 7 percent. That is the Government’s record, and we can measure that. Under this Government 271,000 people so far are without jobs, and the number continues to climb. The Government does not even have a plan for full employment. According to the Government’s measures, it predicts that we will continue to have unemployment at 4 percent, up to the year 2025. That is why I ask how this Budget translates into creating real, sustainable, and high-earning jobs. It does not.
Not only do we have high unemployment under this Government but we also have debt. Labour takes that seriously. Why does Labour take it seriously? It is because under Labour we brought down Government debt to zero. In fact it was a surplus at 7.6 percent to GDP. Today, under the John Key - led Government, we now have debt that is projected to reach $16 billion in a matter of weeks—$16 billion in a matter of weeks. We are paying this debt at $380 million per week, according to the Government. Those are the Government’s figures. But despite the efforts of this Government to point to Christchurch and the rebuilding of Christchurch as if somehow this is to blame for our debt, the rebuilding of Christchurch is only 10 percent of the debt. Now we know that Bill English has borrowed $100 million extra but did not bother to let anyone else know about it, and it is not needed right now. Not only do we have a huge red hole, created by English and Key, creating this debt but this Government has cut significant funds in this Budget, again from KiwiSaver, from Working for Families, from education, and from health. Not only are we borrowing billions of dollars but we have cut off our source of revenue generation. We are also cutting out millions of dollars in core fundamental things that this country really needs. We are in a red hole, and the reason is mismanagement of the economy by this Government and the huge tax cuts that the Government gave to big business and their mates. Not a single job has been created, if we look at those unemployment figures doubling since National has come into power.
Some commentators have said recently that there is a small feeling of business confidence, but they also say that despite that confidence, it has not translated to major investment they say would come and to job creation they keep saying would come. Well, business should feel somewhat confident. We have put in taxpayers’ money to failed finance companies, and even shored up AMI Insurance for $500 million. But none of that work has translated into investment into this country and job creation. Instead, what we are seeing is businesses putting up their prices, and they took that lead from when this Government raised GST to 15 percent. Food prices, school uniform costs, electricity costs, early childhood education, and petrol prices—the cost of living is rising faster than wages. Since 2009 prices have risen by more than 6 percent. Since 2008 the cost of a cup of milk has risen by more than 20 percent. Power prices have risen by more than 10 percent, and wages have increased by only 1.9 percent.
I will finish by saying that on Sunday the community of Auckland gathered to celebrate the 49th anniversary of Samoa becoming independent. The Rev. Tanielu Le Mamea gave a saying to the leaders who were present: “E afua mai mauga faamanuiaga ose Atunu’u po’o se aiga.” If I were to translate that, he said that the villages and families are fed with water that flows from the mountains. If I were to say that the mountains are this Government, or the leadership of our nation, and the water is this Budget, then if the water flows from the leadership and it is nice and clean, the families, nations, and communities are happy and healthy. But when the water flows and it is dirty and murky, and the children have to drink that kind of water or bathe in that kind of water, what we can expect to see is many communities and many families being sick. At the end of this winter that will be the gift of this Government in its Budget 2011—a lot of sick and poor families.
JONATHAN YOUNG (National—New Plymouth): I thank the Opposition member Su’a William Sio for some of those figures he gave us. I am very pleased to hear that the previous Labour Government left us with zero debt at the end of its term. I wonder how come it might be that it started in its term of Government with a $34.4 billion debt, and ended with a $34.7 billion debt.
Michael Woodhouse: How does that work?
JONATHAN YOUNG: How does that work? Perhaps if Labour members could figure that one out, they might be able to figure out how to get back on the Treasury benches. Considering that when we increased GST, 2.02 percent compensation was given to all New Zealanders, I also ask what the amount was that the Labour Government at the time compensated the people of New Zealand with when it increased GST from 10 percent to 12.5 percent. Does anybody recall that amount? What was that amount?
Melissa Lee: Fat zero.
JONATHAN YOUNG: Zero percent—zero percent. There was no compensation.
Michael Woodhouse: How fair is that?
JONATHAN YOUNG: Yes, how fair is that? I think it is quite obvious that we have Opposition members who are very selective in their memories regarding the issues of their fiscal management.
We have heard much in this Budget debate, but we need also to understand the history this Government has inherited. We have heard much about the property bubble of the 2000s. There has even been recent talk about a commodity bubble. In a world of inflation and deflation, bubbles go up and they go down, and sometimes they also pop. This Government is all about bringing some equalisation, some balance, and some sustainability into the growth of our economy, so that wealth generation does not go through speculative, boom and bust cycles. Savings and investment, rather than, in many cases, borrowing and speculation, will ensure that New Zealanders in the future will have a stronger foundation for their wealth creation.
As we look back on the 15 years to the end of 2004, we see that New Zealanders experienced significant improvements in their standards of living. Real GDP increased by an average of 3.2 percent, and during that time nearly a half a million jobs were created. That is over 33,000 jobs per year. So when Treasury forecasts 4 percent growth, and lifts that figure from 33,000 jobs upwards, we can understand that that sort of estimation is based upon a historical record. However, since the performance of the economy up until 2004, the strength of that growth has steadily declined. Real GDP per person has not grown since 2004. The economy was in recession even before the global financial crisis hit. The downturn in economic performance coincided with a number of factors—for example, the construction and the housing market boom, with the prices of existing houses increasing by 115 percent between 2001 and 2007. Household debt as a share of disposable income rose from 105 percent in 2001 to almost 160 percent in 2009. We were growing our wealth based on borrowing and speculation. This Budget brings New Zealanders and the Government to a place where we look at a stronger fiscal foundation for our growth towards the future.
Also seen during this time was a decrease in the growth of our exports. Real export growth from 2004 onwards averaged less than 1.4 percent per year, compared with 5.4 percent in the previous 15 years. No new jobs were created in the export sector from 2004 onwards. We were in a very sad and sorry situation as a country. But what was growing was an increase in the State sector, by 50 percent under the previous Government. Over the last 2½ years the New Zealand economy has, of necessity, been readjusting. We have seen the absolute necessity of bringing the economy on to a more sustainable footing. This is what Budget 2011 does. We can borrow only for so long until the odds turn against us. As a country, our net debt, being private and public borrowing, has put us in an uncomfortable position of being seen in the same category as nations such as Portugal, Ireland, Greece, and Spain. We have seen a massive increase in spending over this last decade. That spending has been not just in the private sector around the purchase of, perhaps, domestic properties but also in relation to spending on core Crown initiatives and expenses. In 2004 our core Crown spending was sitting at just over 27 percent of GDP. That figure has grown to 35 percent.
New Zealand has become used to spending more and expecting more. We have gone through a decade of opulence. But after facing the global financial crisis, New Zealanders are now seeing the need for more prudence, which is why the vast majority of New Zealanders support this Budget. Prudent, prosaic, pragmatic economics such as this needs to rule the day. Budget 2011 does this. The Government, in its prudent management, has looked ahead. It has asked what is sustainable in its present form, and what is not—unlike members opposite, who continue to put their heads in the sand and have a borrowing, borrowing and spending, spending programme, which does not address the real issues in terms of the thinking of New Zealanders.
We have asked what we can truly afford not only for the economic cost but also the social cost to our country. We have identified programmes that New Zealanders support such as KiwiSaver and Working for Families that needed some adjustment in order to be truly sustainable on a long-term footing. This Budget is about building certainty and sustainability. We have been working on State sector improvements and on front-line services since the beginning of this Government’s term. For 2 years we have signalled to the public sector the need for greater efficiency following large increases in public spending in the last decade. Why? Because the tradable sector, the sector that earns our country income, must become more predominant in our economy, and the State sector needs to take a smaller piece of the pie.
We are committed to better value for money from public spending so that we can build better, smarter public services for all New Zealanders. National is capping back-office jobs and streamlining bureaucracy to focus on front-line services. As a result of these efficiencies we have seen 300 more police officers, 1,600 more teachers, 1,000 more nurses, and 500 extra doctors. The total number of equivalent positions in important front-line areas has increased by about 6 percent. We have capped core Government administration, excluding front-line services, at around 38,000 people. There are now 2,000 fewer full-time positions, but that is during a time when we have increased front-line positions. Under National there are 17 percent fewer communications and public relations advisers in the Public Service. Although we have seen increases in front-line staff, the overall total of equivalent full-time staff in the State sector has decreased. We are achieving more for less—more for less. Public Service administration grew by 50 percent under Labour. Growth in the Public Service averaged 5 percent, or about 1,800 people per year. We are seeing this Government providing more public services for less cost to the New Zealand taxpayer. That is why this Government has popular support in relation to Budget 2011. Thank you.
Hon Sir ROGER DOUGLAS (ACT): National and Labour are the biggest obstacles to the reform, modernisation, and eventual success of New Zealand. The Appropriation (2011/12 Estimates) Bill shows why. National, like Labour, has elevated means over ends, pragmatism over principle, posture over policy, cynicism over sincerity, and symbols over substance. National may have inherited the financial mess from Labour, but that is no excuse for not tackling its causes head on. When it comes to means over ends, we can all agree that we want to see New Zealanders enjoying the best living standards possible. Only ACT, however, identifies and promotes means based on private enterprise, choice, and competition, which will deliver that end on a viable and lasting basis.
Unfortunately, National has long since succumbed to bribery via increases in Government expenditure as a means to that end, a means that is not viable and leads only to lasting debt. The end result of decades of bribery by both National and Labour Governments is a level of Government spending—that is, local and central—that now represents over 40 percent of GDP. Best international estimates of the optimal level of Government spending are in the region of 19 to 22 percent of GDP. Running at nearly double that level can mean only an economy hobbled by excessive taxation and bureaucracy and warped incentives. That is exactly what we have in this country at the moment. A Government that makes no serious effort to change that when it has the opportunity is clearly a Government that puts pragmatism before principle. It fails to do the right thing because it is simply too hard and runs the risk of upsetting vested interest groups and lobbyists. Although ACT welcomes the opening up of certain State-owned enterprises to private ownership up to 49 percent, we are left wondering why National lacks the courage of its alleged private enterprise convictions—
Mr DEPUTY SPEAKER: The member cannot use those words. They are an aspersion on members. I ask you to withdraw that comment.
Hon Sir ROGER DOUGLAS: I withdraw that comment. National lacks the conviction of its alleged private enterprise standing and wants to retain a majority interest in, for example, an airline and a television network when such things are properly the purview of the private sector.
Cuba nationalised everything in sight in the 1960s but eventually learnt its lesson and is now busy privatising again. If Cuba can, then surely we can. It is not just a question of the money that so-called asset sales would bring into empty Government coffers; it is that Governments have no business owning such things as television stations, etc., in the first place.
In its obsession with not frightening the horses, this Government tries to create the appearance of tackling the present crisis when in fact it does as little as possible. This is where posture over policy comes in. National at one time pretended to be enthusiastic about New Zealand catching up to Australia by 2025. It even created a task force charged with telling us how we could do that. The task force was even chaired by one of the best economic brains in the country: ACT leader, Dr Don Brash. The task force made many excellent recommendations. What has National done? It has filed them in the rubbish bin. National’s purported commitment to catching up to Australia by 2025, if ever, is now shown to be as hollow as Helen Clark’s infamous commitment to returning New Zealand to the top half of the OECD by 2010. It is all posturing, with no policy to back it up. Even when the posturing was eventually abandoned, has Mr Key abandoned any pretext of wanting to catch up to Australia by 2025? Let him tell us, but if the answer is yes, as this Budget would indicate, where does that leave his claim to be ambitious for New Zealand?
In its failure to tackle the looming crisis facing our nation, this Budget is a symbol of National’s cynicism. National knows, for example, that in reinstating a youth minimum wage, at least 12,000 new jobs for young people would be created in short order. The Budget could have signalled National’s intention to do that. It did no such thing. Instead, it relied on the tired old Muldoonist tool of subsidisation. Its youth employment package, which created fewer than half as many jobs at an enormous cost to the taxpayer, is a further instance of this Government not only spending too much money but also spending it unwisely.
I mentioned at the outset the Government’s propensity for symbolism over substance. Is there a more eloquent example than that of National’s continuation of Labour’s big government approach to early childhood education? Ever greater wads of taxpayers’ money have been thrown at the sector, with both parties touting it as illustrating their caring natures. In practice, what is to show for all this generosity with other people’s money? A 300 percent increase in expenditure over 5 years has resulted in a 1 percent increase in participation. It is symbolism over substance, and at what cost?
In 2009 the Russian Prime Minister, Putin, observed in a speech in Switzerland: “Any fourth grade history student knows socialism has failed in every country at every time in history.” As a surviving luminary from the collapsed Soviet Union, Mr Putin should know what he is talking about. It would seem that our politicians have failed to heed the lesson that Mr Putin correctly says is obvious to any fourth grade history student. Sadly, the Budget confirms this is the case. Government assets over the last 10 years have more than doubled to 120 percent of GDP, or $223 billion. Billions of dollars that would otherwise have gone to the private sector have been invested in assets that show very low return.
As former President Ronald Reagan once observed: “In this present crisis, government is not the solution to our problem; government is the problem.” The New Zealand Government is too big, too intrusive, and spends too much. National’s Budget did nothing meaningful to change that. As my colleague Heather Roy so accurately described the Budget yesterday, it was a dire disappointment and an abject failure of nerve.
JAMI-LEE ROSS (National—Botany): Thank you, Mr Deputy Speaker, for this opportunity to speak on Budget 2011. When I was looking to join a political party about 8 or 9 years ago, I went home one night and assessed the Labour Party website versus the National Party website. I assessed the policies of the National Party and the Labour Party, and I went away and ended up signing on the dotted line with the National Party. As I sit through my first Budget as a member of Parliament I can say I am very, very pleased I made the decision to join the New Zealand National Party and not the New Zealand Labour Party.
This Budget is about building growth. This Budget is about getting this country back to surplus. This Budget is about building jobs for New Zealanders and seeing a build-up of national savings.
The previous speaker from the Labour side of the House was my old friend Su’a William Sio, with whom I served on the Manukau City Council several years ago, for about 4 years of our political lives. Back when I knew Su’a on the Manukau City Council he was a very sensible politician. He believed in controlling government expenditure. He believed in keeping costs—to the ratepayer at that time, and now, when we talk about this Budget, the taxpayer—to a minimum, and in sensible policies.
I have to say, having heard Su’a William Sio speak for the first time whilst I have been in the House, that I was bitterly disappointed with what I heard from him and from his Labour colleagues throughout this Budget debate. This Government is about controlling costs and building growth. Unlike the other side of the House, we do not believe in lolly scrambles and we do not believe in buying votes with public money. If that party over there took the time to put together a Budget—of course, all David Cunliffe has at the moment is a spreadsheet—we would see a Budget that was about buying votes, about hurting businesses in the country, and about not creating jobs. We would see a Budget about hurting the very people who create jobs in this country.
I am pleased to be speaking in support of this Budget, which was led by the Hon Bill English and delivered several weeks ago. When I found out that I would be speaking after the Hon Roger Douglas, I thought to myself: “Goodness, what am I going to say?”. But as I was sitting and thinking about the Hon Roger Douglas’ time as the finance Minister, I thought to myself: “What would he be most disappointed about as a former Minister in the fourth Labour Government?”.
Well, I can tell members that the Hon Roger Douglas would be most disappointed about the performance of the Hon Phil Goff and the economic views that he is leading the Labour Party with. You see, the Hon Phil Goff of the 1980s believed in reducing tax. The Hon Phil Goff of 2011 believes in hurting New Zealanders by increasing taxes further, making it more difficult for New Zealanders to live. The Hon Phil Goff of the 1980s—the Hon Phil Goff that the Hon Roger Douglas would remember—believed in the need to reduce income taxes and move towards GST. That is something that this Government did very recently. The Hon Phil Goff of 2011 believes that GST can be reduced. He does not tell us how he would pay for it, but that is what he is campaigning on around the country.
The Hon Phil Goff of the 1980s also saw the need to invest in future assets by selling assets that are good for Kiwis to invest in. This Government is doing that now. This Government is proposing to the country a mixed-ownership model, whereby Kiwis will have the opportunity to invest in successful companies. Out there in the real world people rarely have the opportunity to invest in good quality companies. Many people have invested in finance companies and lost their money. If MPs went to their local Grey Power meeting and asked those people whether they would rather invest in a finance company or in a successful Government company—a company that the Government is giving them the opportunity to invest in, so that we can build more assets for New Zealanders—what do MPs believe they would say?
Well, I have spoken to many of those people out there. I have asked them whether they would prefer to invest in finance companies or in the successful companies that we are now making available. Every single time they have told me: “If we invested our money in finance companies, it would be at great risk, but here is an opportunity for us.” This Government is putting to the people an opportunity to release more money for capital growth and capital investment in the country. It gives people the opportunity to invest in quality companies.
The other point I would like to mention about the Hon Phil Goff of the 1980s was that he actually believed in reducing compliance costs for businesses around the country. This Government believes in reducing compliance costs for businesses, but the Hon Phil Goff of 2011 is out there campaigning on making it more difficult for businesses to survive under a future Labour Government, if that was to ever happen.
I believe this Budget is a good-quality Budget. I am proud to support it, because we are seeing more funding for health, we are seeing more funding for education, and we are seeing more funding for justice. We are seeing a $1.6 billion infrastructure programme.
I want to particularly mention the extra funding for early childhood education. During the recent Botany by-election, members of the Labour Party ran around like headless chickens trying to scare people into thinking that funding for early childhood education had reduced. At the time I was proud to say that the Government I was representing in that by-election was spending a record level of money on early childhood education. Let us look at what the Government is delivering. It is now delivering an extra $550 million for early childhood education. I would like Sue Moroney to stand up and thank the Hon Anne Tolley for the extra funding that she has put in.
Sue Moroney: I raise a point of order, Mr Speaker. I want to know whether the member was actually yielding his call, because I would be very pleased to take a call. He invited me to get up and take one, and I want to know whether he was yielding.
Mr DEPUTY SPEAKER: No; I think you have the next call, and you can have 10 minutes.
JAMI-LEE ROSS: I am looking forward to that speech of thanks to the Hon Anne Tolley. I will be listening intently when that comes along, because $550 million for early childhood education is a lot of money. It is going to the children who will benefit the most—children from Māori and Pacific Island communities and children from the most disadvantaged communities that need a bit of a hand up, a bit of help, to get themselves into early childhood education. A big part of that funding will go towards helping them. I am proud to stand here now and say to the people of Botany and those listening that $550 million extra for early childhood education is a good amount of money, and I am pleased to support that.
I also support the extra $2.2 billion that is going into public health services over the next 3 years. An additional $585 million worth of initiatives is coming in 2012.
Let us also talk about justice. The justice sector is receiving $157 million more over the next 2 years. I was out recently with the police on a Friday night on a ride-along, as I know many members of Parliament sitting here have probably done. The police out there on the streets are very appreciative of the funding and the focus that this Government has put into law and order. The public are very pleased about the focus on law and order and the funding that this Government has put into it, about the extra 300 police officers the Government has delivered for Counties-Manukau, and about the extra 600 police officers around the country.
This Budget goes a step further by increasing the funding in the justice sector. It is increasing the funding in an area that New Zealanders are very concerned about and hold dear to their hearts—that we continue to fund justice to a suitable level. This Budget increases funding for health, education, and justice, and it helps to build growth around the country and get this country back to surplus. I am very pleased to support it, and I look forward to the speech of thanks from the member Sue Moroney.
SUE MORONEY (Labour): That was an interesting contribution from the member Jami-Lee Ross, who spoke about the recent by-election in Botany, which he was involved in. It was interesting that he even talked about that by-election when he was referring to early childhood education, because that member froze when he was at an early childhood education meeting during the by-election.
One of the people from the Botany electorate got up and asked him to explain why, if the funding has not been cut to early childhood education, that person’s centre had had its funding cut. The member could not answer the question. Worse than that, the woman said to him that as a result the centre had had to put up fees, and two young boys who desperately needed early childhood education—Pacific Island children—had been withdrawn by their parents because they could no longer afford the fees for that centre. This woman from that member’s electorate—it was not his electorate at the time, but it is now—asked him to explain to her how that could happen if his Government had not cut funding. He had no answer. He could not answer the question.
Today he gets up in this House and tries to pretend that the funding cut, which he said had not happened in the first place, has now somehow magically been reversed. Well, I will be very interested to go through blow-by-blow to make sure that the New Zealand public understands the smoke and mirrors that is going on with this Government and its so-called investment in education. It will not stand up to any level of scrutiny. The Minister of Education knows that and so do all of her colleagues, who have suddenly gone very quiet. Perhaps they have gone quiet because they want to know what the real story is in education. They do not believe it themselves. They know that it is not true. It cannot possibly be true that a whole lot of money has suddenly been found for education. The truth is that it has not been. I think I will probably have to get on to that after the dinner break.
Sitting suspended from 6 p.m. to 7.30 p.m.
SUE MORONEY: As I was saying before the dinner break, this Budget absolutely shows that the Government has no plan. If there was ever a time in our history when we needed a Budget with a plan, it is now. This is the third Budget of this particular Government, in a time of worldwide global economic recession. Third Budget in, we still have no plan for economic growth.
We do not have a plan for economic growth, but we have a prediction for economic growth. How is that? We have a prediction based on shonky figures. Next year we will suddenly have 4 percent economic growth, but guess what! Last year’s Budget predicted that as well, but it never happened. It was predicted the year before that, but it never happened. With this Government it will always be around the corner; it will always be next year. I ask how it can be when there is no plan for growth in the Budget that has been delivered.
On the issue of education, I have noticed in this debate that every single one of the members opposite has been fooled into getting up and gloating about the increased funding for education. Their Ministers failed to tell them that the increased funding for education does not even keep up with inflation, let alone keep up with roll growth. When that happens in a Budget, it means that schools will be under increasing funding pressure. When schools are under increasing funding pressure, the quality of the education goes down, but also schools look to families to make up the funding gap. They look to families to do that by increasing the donations they ask for. Once again, this Government—like it has a habit of doing—is passing costs from the Government on to families. Families can ill afford those costs being transferred on to them now. They face increased costs of living all of the time because of that Government’s decision to increase GST.
Families also face increased costs for early childhood education. Let us talk about early childhood education, because that issue—
Louise Upston: Looking forward to it.
SUE MORONEY: Louise Upston has been one of the most fooled on this issue. National members have been tricked by their own colleagues into thinking that this is good news. I am afraid it is not, and I will explain very carefully—
Louise Upston: In detail would be good.
SUE MORONEY: —in detail why it is not. Since National has been in Government, we have had massive funding cuts to early childhood education. They started in 2009, when that Government cut—I tell members to check the Budget figures—$295 million from early childhood education. It cut funding from an area where increases and improvements for staff-child ratios were planned. That Government cut those improvements—$295 million. That was its opening shot with early childhood education.
But wait—there is more. It got worse the following year. In 2010, in that Government’s second Budget, it cut early childhood education by an additional $300 million. If we add those two figures together, we find that this National Government’s first two Budgets cut $585 million out of early childhood education. In 2011 the Government came along and said it was OK, because it was going to put $550 million back in. But $550 million does not add up to the $585 million it has already taken out. It is worse than that, because it will take the Government 4 years to bring in the $550 million. Given what the Government destroyed in 2 years, it will take it 4 years to not even get back to what was in place before 2008. That is exactly the situation that the Government is facing.
I invite any of those members opposite to visit an early childhood education centre, one of the 2,400 centres right throughout the country that on 1 February this year got a massive funding cut. The ones that employ 100 percent qualified staff had their funding cut on 1 February by $1.30 per child per hour. On 1 July this year, when this supposedly huge amount of funding comes into early childhood education, how much will their funding go up by? Remember that it was cut by $1.30 per child per hour on 1 February. It will go up by 9c an hour. I do not know what the numeracy levels are like in the Government, but surely those members can work out that losing $1.30 an hour and then gaining 9c an hour does not make up for the funding shortfall. It by no means makes up for it.
The centres that have had to put up fees to compensate for that Government’s funding cuts in early childhood education will not be reducing their fees as a result of the Budget. Those fees will continue to increase at all of those early childhood education facilities. Again, we see funding cuts from that Government, and we see smoke and mirrors. It has a bad impact on families because they will continue to face those fee increases for early childhood education. That is early childhood education. The Government took out $585 million, and now it thinks it will trick us by putting in $550 million over 4 years.
In my remaining few minutes I will talk about the compulsory education sector, because that is just as sad. The Government has increased funding to primary and secondary schools by 2.92 percent. Government members think that is great, and they want to trumpet it. But guess what! Inflation is running at 4.5 percent, so those schools are facing a funding cut before they even start. It gets worse. Not only does that funding increase not even make up for the inflation cost, but also it certainly does nothing for the roll growth that both primary and secondary schools are facing. They will have to educate more children with less money, because it will not stretch as far. That is the real story of what is happening with education under this Government.
Professional development right across the education sector has been cut again by this Government. Anyone who understands and believes how important education is to our future will know that that is a dumb decision—a dumb decision—because we need the best, most up-to-date teachers in front of our children. Our children deserve to have excellent teachers in front of them, weaving their magic with them every day that they are at school, because that will make a difference.
Instead, that Government is spending $37 million on its failed national standards. Most of the schools do not want those national standards. It is not only the schools; the boards of trustees do not want those national standards either, because they are failing. This Government is throwing more and more money—in fact, about $37 million in this Budget—at trying to fix up a failed system. It is not working. There is no plan for the future and it is certainly not good news for education.
LOUISE UPSTON (National—Taupō): It is great to stand in this House and speak in the Budget debate on this Government’s third Budget. This is a sensible, responsible, and balanced Budget. Clearly, it is a Budget that suits the times we are in. Hard-working New Zealanders, including the hard-working members of my electorate, want to know that they have a Government that is being responsible with their hard-earned tax dollars. That is why they are pleased to have strong leadership in these challenging economic times from Prime Minister John Key and the Minister of Finance, Bill English. This Budget is clearly about building a stronger economy, because we know and New Zealanders know that is the only way that they and their families will get better jobs, higher wages, and the sorts of services from the public sector—whether it is health, education, or the police—that they deserve and expect from their hard-earned tax dollars.
I want to give members the context, because members opposite tend to forget the fact that there is a plan. I do not think they would recognise a plan, because they have not seen one before—in 9 years they did not have one. I will go back and look at the 2009 and 2010 Budgets to provide a bit of context for where we are now. Rather than talk about my perspective, I thought it would be helpful to bring members the voices of my constituents, because over the last 2 weeks in the adjournment I have been out in every corner of my electorate—literally. I have spoken in cafes, spoken to social services groups, visited early childhood education centres and schools, because they are important beneficiaries of this Budget, and spoken to Grey Power and Age Concern. You name it, I have met them over the last couple of weeks, because it is important that they understand this Government’s plan for a stronger economy. These were the words they used. They said that this is a fair Budget, and that it brought them pretty much what they expected. They said it is responsive, responsible, logical, and understandable. Some of them feared there might be something drastic in the Budget, but they were reassured when they realised there was not.
The overwhelming concern from the constituents in Taupō was the level of Government borrowing: $300 million a week. I could see the level of horror at what that sort of figure meant for us as a country as I spoke to them and looked in their faces, as well as the desperate need for us to get our debt under control and get back to black as soon as possible. To be fair, some of them were also concerned about some of the programmes they had become used to, like Working for Families and interest-free student loans. When we explained the detail of how these changes would mean we would get to keep those programmes, but make them affordable and sustainable over time, their concerns disappeared before my eyes.
Let us look at this plan. We started with our first Budget in 2009. It was clearly based on helping New Zealanders through the worst times of the recession and on starting to turn round the forecasts of ever-rising debt. In 2010 the next year of the plan built the platform for savings and investment, and it had the biggest tax reform in 25 years, which ended up with 73 percent of our earners paying no more than 17.5 percent tax. I get sick to death of hearing Opposition members talk about the fact that this side of the House gives tax cuts to the rich, so I remind the House that two-thirds—now focus on your maths guys, I say to members opposite—of the cost of the income tax cuts from last year has gone into reducing the bottom two tax rates. Those are the ones down there. So two-thirds of the cost went to the bottom two income tax rates.
Hon David Carter: They don’t want to believe it, do they?
LOUISE UPSTON: There is no response from members opposite. As for the third year of the plan, Budget 2011 involves a faster return to surplus, making sure that we get a year ahead of what we had projected in the last Budget—it is great to have a plan when we are delivering ahead of schedule—as well as a plan to rebuild Christchurch and to ensure that we have higher national savings. This is in the context of the forecast we had when we came into office of debt hitting 60 percent of GDP. We are now managing within our plan to keep it under 30 percent. That is a stunning result, and it is half of what the previous Government would have done.
Let us talk about some of the areas that are important to my electorate, and I will talk specifically about families. Another thing that frustrates me is hearing members opposite talk about the fact that this Budget is tough on families. Again, I want to correct some of the myths from that side of the House. Working for Families—
Hon David Parker: Remind us about KiwiSaver.
LOUISE UPSTON: Let me start with Working for Families. Admittedly, it is a programme that was introduced by Labour—credit where credit is due—and for families in need it has been working. But one of the challenges with this programme is that it was on a projected spending level that was never ever going to be sustainable. So what did we do? We have looked at the families that perhaps most people would have expected would never have got it in the first place. For a family earning $100,000, $120,000, or $140,000 a year, most people did not have an expectation that they would get Working for Families on that income level. What we have done with this Budget is ensure that 280,000—that is a big number; do you guys know your maths, I ask members opposite—families will be better off with our changes to Working for Families. Those members are not interested in hearing that, so I will say it again: 280,000 families will be better off. We on this side of the House realise that when we have a programme that in the 2005-06 year had doubled its spending, it is clearly not sustainable.
Early childhood education is another classic example. Here is one of the questions I have been asking when I have been out in my electorate. It is a fairly simple maths question, so I am hoping members opposite can figure this one out. If over a period of 5 years we spend three times as much money, what would we expect in terms of an outcome? Most people logically say that maybe we would get three times as much for our money. Unfortunately, under the early childhood education policy of the previous Government, after 5 years and three times as much money spent not even 1 percent more children were participating. I am absolutely shameless in saying that, for me, Māori and Pacific students who have no early childhood education deserve a better go. They deserve to be in early childhood education, because if they are not, they will never catch up. This side of the House is not willing to tolerate that. Our clear and simple focus is on participation. We are spending $1.4 billion, which is the most ever. Of the $550 million that is additional, some of that money—$416 million—is specifically for roll growth. So that annihilates the comments from the previous speaker, Sue Moroney, who said that it does not take that into consideration.
On a local note, $4.8 million has been put into the Lake Taupō boat harbour facilities, which will have a significant impact in my electorate. Unfortunately, the previous Government let the assets run down, but this Government has said that this is an icon for New Zealand and we need to make sure that New Zealanders and visitors from overseas enjoy our lake, so $4.8 million has been put specifically into that. The final positive piece of news for the day is that Mighty River Power has announced in my electorate today that $466 million will go into a new plant at Ngātamariki for geothermal developments, which is good news for my electorate. It is good news for this country, and I say bring it on.
CATHERINE DELAHUNTY (Green): Tēnā koe, Mr Assistant Speaker. Tēnā koutou e te Whare. Budget day seems a long time ago now, that dreadful day when we sat here staring at each other with those blue documents. It is amazing what has happened since. It seems to have been out there in the community, and I seem to have been in meetings constantly discussing it. It was interesting to hear the speech of Louise Upston, who has just resumed her seat, because Sue Moroney, Louise Upston, and I have been in a lot of meetings, talking about education, and people do not seem quite as happy as she might have wished.
It was a very calculated Budget. It was definitely very calculated, and it pushed the middle-class people of this country right to the edge of their voting tolerance, but not over the edge. The Government has further privatisation of State-owned assets on the books, but it was quite careful to say that that would happen later. It was interesting to think about the Budget in terms of what we were paying for, and how we are going to pay for tax cuts to the top 13 percent of earners in this country. Although the previous speaker claimed that the lower-income people benefited hugely, I am not sure that 25c an hour for people on the minimum wage can be described as wonderful relief from their financial problems.
The Budget did not lift people out of poverty and it did not assist people on low incomes. But it was very educational, and I will talk about education because membership of the Education and Science Committee is something I share with the members I have just mentioned. This Budget was very educational, but not actually as generous to the education sector as the Government likes to claim. As Sue Moroney pointed out, there has been a 2.9 percent increase in operational funding to schools. We have to be clear that we can spin numbers any way we like, but we cannot say that that will cover the cost of inflation or the absolute growth in rolls. These factors will strongly affect schools that are struggling with increased running costs, and I am not sure which ones are not.
An increase that fails the basic test of meeting inflation is actually a cut, and that is not the only area of deep concern to the Green Party. In looking beneath all the rhetoric about protecting education from the cuts to public services, we need to unpack the impact of that in terms of the way in which this was a zero Budget for schools. A classic example of this is the analysis of what schools have to pay for out of their operations grant. If that 2.9 percent does not cover the inflation, and the schools have to pay for a lot of the services that they use from their operations grant, something is going to give. An example is school support staff. They have to be paid out of that operations grant, so there go the hopes of our workers—our school support staff—in terms of getting a decent wage increase or the hours needed to do their job. It is not just a matter of those people saying they want more money to look after our vulnerable and marginalised children and ensure that there is inclusion; it is the fact that they actually need the hours to do it. I will give an example of what that means to a family whose child has a disability and is currently participating in school, with the support of a person whose hours are paid for out of that operational budget. That child loses that person; that child loses his or her human rights to participate, and that should be of concern to all of us.
The Budget continues to fund the implementation of national standards, but, as we heard at many of the meetings we have been to on education already, what a waste of resources that is, because $37 million is being spent to force something on to schools that, in large measure, cannot refuse to try to do it but would rather spend the money on rolling out the modern curriculum than measuring students according to the narrow and confused standards of success and failure, which will not result in a national overview of any real value and will not set any standards worth having—unless, of course, one believes that league tables will create better results and that it helps young children to become confident learners if they are labelled. Labelling some children as losers at an early age has predictable results, which is why countries as diverse as Korea and Finland have abandoned these assessment models and have broadened, rather than narrowed, their curricula.
This waste of money on national standards is not the only problem; we have the Budget’s educational allocation. The Green Party is very concerned about the commitment to the privatisation of State assets, which leads us straight to the pilot project for public-private partnerships in respect of school buildings. This Budget allocates $800,000 in the next year to develop a detailed business case for public-private partnerships in the procurement of new school property. The Government has to do that because it got exposed by Radio New Zealand National for not having one that worked. So it is going to do that and it is going to increase the money to $6.7 million by 2015. Well, I could save the Government that money right now and tell it that there is no business case for public-private partnerships in public schools. The existing business case obtained by Radio New Zealand National earlier already showed that developing the contractual models and conditions to allow these public-private partnerships to go ahead would cost as much as any supposed benefits achieved from them.
The overseas evidence is clear that however we set up public-private partnerships, the public ends up funding the project, while the private partner creams the profit off the top. That is why the private partner is there; that is why it wants to be there. Meanwhile, the ability of boards of trustees to make strategic decisions about the future of their schools will be constrained by the “private” partners. What happens after 25 years when the private partner returns a run-down asset to the State? The potential costs to the public are huge. That is the history and that is the evidence, so why are we wasting Budget money trying to make a business case for a failed model? The Green Party has been the only party to consistently oppose public-private partnerships in the education sector, and we continue to do so in the face of this educational allocation in the Budget.
The public sector cuts and job losses across many departments will also impact on education. Already it has been signalled that the Education Review Office and the New Zealand Qualifications Authority will be merged. This may have little meaning in terms of them both performing functions related to the education system so they could therefore share an office. However, that may not be the agenda; there may well be problems if the real issue is around cutting costs and losing staff in both organisations. That is what Public Service cuts are about. It is not actually about rationalising for the sake of meaning; it is about rationalising for the sake of money. The term “efficiency” can be the label for a multitude of sins.
The Budget also failed to reverse last year’s cuts to early childhood education; $400 million was stripped from the sector last year, and this year the Government has so generously put back $550 million. But this does not reverse the cuts to centres with more than 80 percent qualified staff. Those centres will continue to face the unpalatable choice of either firing their qualified staff or charging more to parents to make up the shortfall. Louise Upston, Sue Moroney, and I attended a kindergarten conference where people raised this issue with us. They were deeply concerned and were not supportive of this direction. They do not want the Government to pursue this path. We already know that thousands of children around the country are missing out on high-quality early childhood education. I emphasise the word “quality” because that is what “qualification” actually means; qualification and quality are connected words. They are missing out on high-quality early childhood education because of these cuts. In the current environment the $150 million that has been put back barely meets the expected roll growth and demand. This is not an investment in the early years of a child, which all the evidence suggests is so important. It is barely enough to keep the sector afloat.
The one ray of light is that the Budget provided money to target groups that are currently at a disadvantage in accessing early childhood education. Everyone supports early childhood education being available to all, particularly to communities in most need. However, we continue to have major concerns about who is missing out when aspects of universality are undermined in the name of targeting. On the one hand, it looks good to say we know who is missing out and we will put the scarce resource with them, but, on the other hand, if we lose universality we will miss out on all the people with mild to moderate needs. That has always been true in education, and that is why the universal provision of things like welfare and education is so important: sometimes the research does not work.
Everyone from the Children’s Commissioner to the Chief Science Advisor has called for more spending on early childhood education, not less, and also for high-quality and universal availability of early childhood education. So why have a Chief Science Advisor if the advice is going to be ignored? My colleague Gareth Hughes, who has two young children, recently said that he would not send his child to a dentist who was not qualified, so why would he accept that in an early childhood teacher? I think that is a fairly irrefutable argument. We do not send kids off to get their teeth fixed by a dental nurse who is almost qualified, or maybe not qualified, but is an awfully nice person and loves children. So how come it is OK when it comes to their education?
It is a curious fact that the Budget fails to prioritise children when we all know they require a greater investment in resources than motorways, sporting cups, and irrigation systems. The Government has a choice, and it now has the evidence that children must be put first in our economy, not last, and that means their education from early childhood right through to high school. We have huge issues in education to address in relation to bullying, and this needs a major investment in restorative justice in schools. Some good work is going on, but we are not leading it from Parliament. It is being led by the community sector and by many of the academics, and it is being piloted in very good schools. But this Budget is not helping those issues. Kia ora tātou.
Hon JUDITH COLLINS (Minister of Police): I must say it is a pleasure to stand and speak in support of this Budget, because as Budgets go this has been quite extraordinary. We have had the most difficult of economic times, which we inherited when we came into Government. Having listened to some of the Opposition members tonight, it has been marvellous to think that they live in a world where there was no economic recession. They think we should have the coffers full of money just flowing in and everything would be fine. But, actually, most of the world is still going through some very difficult financial times—frankly, much worse than what we are going through.
We have been very fortunate in many ways, but we have not been fortunate in having to deal with some real tragedies. We have had the Pike River tragedy and we have had earthquakes, particularly the earthquake this year in Christchurch, which killed 182 people. It cost this country billions and billions of dollars and cost this Government billions and billions of dollars. The fact is that we cannot afford to leave the people of Christchurch to fend for themselves. We cannot do that. As a responsible Government, we cannot let our second-largest city—20 percent of our economy—just wither and die. It behoves all of us New Zealanders to support Christchurch during this time.
This Budget has actually achieved something else quite miraculous: it has helped achieve the lowest interest rates that we have seen in New Zealand since 1964—1964. That is the year I started school.
Michael Woodhouse: 20 years ago?
Hon JUDITH COLLINS: Yes, a mere few years ago; Mr Woodhouse is quite right. Who would have thought that in this time we would be having that? We have heard a lot about inflation. I heard an Opposition member tonight talk about inflation being at 4.5 percent. She clearly did not know that when Labour left office the inflation rate was 5.1 percent. The 4.5 percent figure actually includes the increase in GST, which is a one-off situation. For most families who own their own homes or young couples who have bought their own home and have a $200,000 mortgage—which is completely an average-sized mortgage; in fact, it is a quite modest mortgage for many families, particularly those in the Auckland region—this lowest interest rate since 1964 means $200 a week extra in their pockets that they do not have to pay in interest to a bank. That is what it means. That is real money in someone’s pocket.
We have also seen average after-tax wages increase 7.1 percent in the last year. That is significantly more in real terms than the inflation rate. So most people are better off, despite the very tough economic times. We have already heard that something over two-thirds of New Zealanders are paying a top tax rate of 17.5 percent. That means that most people in New Zealand are now keeping a far greater chunk of the money they earn in income. This Budget has been able to achieve increases in education funding, health funding, and justice sector funding. It has helped to not only look after the people of the Canterbury region, but also look at increasing those spends. In my own sector, the justice sector, I am absolutely thrilled that we have been able to secure an increase in the budget of the Serious Fraud Office, because it is still dealing with the aftermath of the finance industry’s meltdown, one could say, and issues regarding fraud.
When I listen to some of the talk tonight about asset sales and mixed-ownership models in relation to some of the State-owned enterprises, I do not hear from the Opposition the fact that this will mean that many New Zealand mums and dads will be able to purchase shares in good New Zealand - owned companies that they can have reliance on and faith in. They will no longer have to put their money into finance companies that go bust because they are lending on schemes. That is what we are seeing. We are seeing New Zealanders able to invest in their own country and KiwiSaver able to invest in its own country. It is able to invest here and help New Zealanders get jobs and keep jobs.
I also noticed the other day that—oh, gosh—unemployment has come down again. Did I hear anything from the Opposition about that? No—not a dicky-bird. There was not a word of congratulations to my colleague the Hon Paula Bennett—not a word. There was not a word of congratulations to the employers of New Zealand who have given more people a chance—not a word of that. There was not a word of acknowledgment to people who are actually getting out and doing their very best. There was not a word of acknowledgment to my colleague the Hon Kate Wilkinson that the 90-day bill has actually helped get a lot of people into jobs. There was not a word of acknowledgment—not a word at all. I heard instead that we should raise the minimum wage, which would actually lose about 6,000 people their jobs. But never mind; those members do not care about that, do they?
We have also seen a reduction in Government borrowing. I think it is important that we explain again for the Opposition why this is so important and how the interest rates have been kept the lowest since 1964. Just in case anyone forgot, that is the year I started school. By the way, I had only a playcentre education before that, I have to say, with a doting mother and father who read to me, but somehow I managed.
Michael Woodhouse: Slipped through the net.
Hon JUDITH COLLINS: Yes, three degrees later I still seem to somehow get through. I do not know how that happened! Frankly, because this Government is cutting debt and because the ratings agencies can see that we are being extremely responsible—that our plan is actually a plan that works, not a plan that just makes plans and does nothing else—they have faith in New Zealand. This is an outstanding result for a Budget that has been able to deliver for so many families. Yes, we know that it is tough in the Public Service at the moment, but it has been tough for years in the private sector. It has been tough for years under higher interest rates and it has been tough for years with red tape. This Government has set about redressing some of that imbalance.
We have also seen more money for health. We have more money for health at a time when so many other comparable countries have to cut their health budgets, cut their justice budgets, and cut their education budgets. Yet this Government has been able to actually produce more money for health. Even better than that—and I think the Ministry of Health and its Minister should get some credit for this—we have been able to get better outcomes for Kiwis. What is the longest time anyone has to wait for cancer treatment now? A month. Under Labour, people were waiting 9 months and going off to Australia for it. We had to look to Australia for our health system. Now it is happening here instead. It is an outstanding result around more nurses and more doctors.
In police—I cannot help but talk about this just a wee bit; I am so proud of them—we will have 600 extra front-line staff by the end of this year. That is an outstanding result. Crime dropped by 6.7 percent per capita across the country. In some parts of New Zealand, such as the Waitematā area, there was a 12 percent reduction in crime. In the Counties-Manukau area there was a 9 percent reduction in crime. In the Auckland area there was a 10 percent reduction in crime.
We are seeing some staggering results where the Public Service is really showing what it can do. Unlike the Labour Party, I have faith that the Public Service can do even better. I have faith that members of the Public Service understand that these are tough times, and everybody has to pull together and look at how we can do better as a country. We are just a little country, but we can be very proud of this very good Budget.
SHANE ARDERN (National—Taranaki - King Country): When I spoke in the debate on one of the taxation bills immediately after the Budget, I challenged my Labour colleagues to justify the position they took when they made the comment that dairy farmers in New Zealand were not paying their share of tax. I gave a reasonably hard-hitting speech towards them. I do not intend to do that tonight; I will spare Mr Assistant Speaker Robertson and the Labour Opposition that. I intend tonight to draw the comparison between Labour’s vision for New Zealand and that of the Key Government’s Budget, which we have been debating tonight.
First of all, let us look at where we can grow the economy. The real irony of the comments made when we last debated this issue about dairy farmers not paying enough tax is that the only way we can grow this economy is to grow our export sector. That is the only way. There is no other way. There is no magic bullet. We cannot pay for the educational aspirations that the Green member spoke of, we cannot pay for the extra police that the Minister of Police spoke of, and we cannot pay for any of the things that I am sure the whole House would be united on unless we have a strong, growing, and dynamic export sector. The only way we can get a growing, dynamic export sector is to have tax rates that are competitive with those of our international competitors, which we must trade against. That is why this Government has announced that it will cut company tax to 28 percent and implement across-the-board personal tax cuts as and when they are affordable.
We have heard from members on the other side of the House that this Government is interested only in supporting its rich mates. We hear that all the time. But we do not hear from those members where they would invest in order to bring about some of the changes they say are necessary. Let us look at what this Government has done. It has supported the Global Research Alliance on Agricultural Greenhouse Gases. A lot is said about greenhouse gas emissions, and Labour has just announced that it will bring forward the entry of agriculture into the emissions trading scheme. But let us look at what the Key Government has done. It has contributed $45 million to the global research alliance, to increase food production and tackle greenhouse gas emissions.
This will come as a surprise to members on the other side, but we are a food producer with one of the lowest carbon footprints in the world. Our farming systems are such that we produce food with a lower carbon footprint than most other food producers, even when that food is exported to markets on the other side of the world. We are one of the best in the world; we are already ahead of the game. But what is Labour’s response to that? It would be to slap a tax on the farming sector. That would increase the cost of food and make us less competitive, and that would create more production in systems across the other side of the world that are less carbon-friendly in their production systems than we are.
What else has the National Government done? It has put $50 million in funding over 10 years into the New Zealand Agricultural Greenhouse Gas Research Centre.
These are true investments; they grow on the back of the growth of the export sector. They are real, tangible investments that will bring about actual results, as opposed to the envy-type tax that we hear about from members opposite. Those members identify a small sector of the population, which represents about 27 percent of the country’s export earnings, and suggest to the community that those people are not pulling their weight. But I say that they are a group of people who, as individuals, more than pull their weight and more than pay their fair share of tax, and they are the first to contribute whenever there is a major crisis, such as the Christchurch earthquake. We saw that with the Fonterra tankers and the Farmy Army in Christchurch. Someone must defend them, and that will be me.
National will amend the emissions trading scheme to make it fairer to farmers and families. We did that straight after we took office, and there is reference to it in the most recent Budget, as well. We did that straight after becoming the Government.
National will implement a more balanced approach to the policy of tenure review in the high country. People should have heard Labour’s opposition to that—they should have heard it. It was pure vitriol; I have never heard the like. I sit here and struggle with the reason why people would be, I guess, so bent and twisted towards the agricultural sector as Labour members can be at times. I guess we had that question answered the other night, when we watched “Comrade Keith” on a dairy farm in the Waikato. The only downside of that, of course, is the fact that Keith is leaving Parliament. We may have one member in the Green—
The ASSISTANT SPEAKER (H V Ross Robertson): When the member is referring to a member in the House, he must use the member’s full name.
SHANE ARDERN: The member Keith Locke spent a couple of days on a dairy farm on Make the Politician Work. It was apparently a couple of days, but there was only one milking in those 2 days that I saw, and most farmers have four milkings in 2 days. But I guess that is just part of the ignorance of the debate. Anyway, the fact that we now have a member of the Green caucus who has spent a few hours on a dairy farm is great, but it is of course unfortunate that he is leaving. So the only one who has any knowledge about how that sector works and operates will not be here to share with the House the knowledge he has picked up.
What else has the National Government done in its Budget? It has invested $35 million over 5 years to get irrigation projects under way. Why is that necessary? I heard, in reference to it, that it would be better to put that money into education. Well, anybody could argue that, and I guess we could justify it, but what would pay for that education if we did not invest in the very sector that produces the exports that will pay for those increased expenditures? So there is $35 million to unlock what is a huge opportunity for New Zealand in agriculture, a huge opportunity for the economy, and a huge opportunity to fund some of those extra social spending needs that many members have exposed, or have suggested they are exposing, in this debate.
There is $300 million going into rural broadband initiatives to bring ultra-fast broadband to rural schools and communities. The only way we will be able to create a modern, dynamic, growing export sector is to have it up to speed in regard to technology, so that it can compete against those countries that can produce products around the world as cheaply as we can. We are a small, isolated, rural economy. I know that Labour members hate that. I know that it just grates on them, but it is still a fact. We are a small, isolated, rural economy that earns its way in the world by exporting high-quality protein foods to markets that are generally a very long way from where we produce the products. We do that, as I said, with one of the lowest carbon footprints in the world, so investing $300 million in rural broadband initiatives to bring ultra-fast broadband to schools and communities is an essential investment in infrastructure if we are to be competitive in the world.
There is about $450 million for rural infrastructure in a range of other services, with roading being one of the major ones. Under the Labour Government we had 9 years of lost opportunity. There was a range of areas where investment would have driven the export sector and where we could have seen much greater prosperity for our rural communities. But what did we see? This is the legacy of the Labour Government. If members were to travel around electorates like my own, Taranaki - King Country, they would find rural schools that were once centres of excellence in education but that are now closed and abandoned. That is the legacy of the Labour Government.
It is also the vision of Labour, if we look at what it would do if given a chance, going forward. Labour members’ answer to the problems that we face—the $380 million of borrowing per week, as stated in their comments in question time the other day—is to tax the farming sector more so that we would be able to borrow less. We could spend more, we could grow the bureaucracy, we could push up interest rates, and we could drive down exports. We could get an economy that was unbalanced, and that would somehow rebalance what those members see as an inequity. But I say that the only way this economy can grow is to increase the exports of high-quality products, to make New Zealand a more dynamic, more prosperous economy and a place to which young people want to come back.
I will finish with this story. My son, who has an information technology degree and who is in London, said to me that he wanted to come back to farming. How should I have answered that—“You are fine as long as it is not a Labour Government, son.”?
Hon DAMIEN O’CONNOR (Labour): I have some admiration for that member, Shane Ardern, but I know that he is really concerned about his mates. He knows that when National has finished selling off the State-owned enterprises Fonterra will be next, and he feels very uncomfortable about that.
Many, many words have been said about the Budget, and I will use my own. But first I make reference to well-known commentator Jane Clifton. Her description of the Budget is that “a library might struggle to assign an ISBN:”—that is, an international standard book number—“fact, or fiction? Romance, even? There are so many variables around those figures,”. That is a very good summary of what is basically a dishonest and unfair Budget.
There is a $4 billion gap between what the Inland Revenue Department says can be produced from this economy for Government expenditure, and what Treasury says can be produced. That is an irresponsible gap, in my view, and none of the members on the other side of the House have attempted to get up and explain it, not even the Minister who is going to sell off power companies to build her prisons. She could not explain that $4 billion gap.
Is the Budget fair? Does it make New Zealand a fairer place? No on both counts. I came into this Parliament, as most of my colleagues did, to try to make New Zealand a better and fairer society. This Budget has failed. That Government failed for the third time to make a fairer New Zealand. The first Budget was the greatest inequity of all. It gave huge tax cuts to the people on the highest incomes and it gave a pittance to people on lower incomes. This Budget continues down that unfair, inequitable, immoral path—that is, to give the money to the top and hope it trickles down to the people at the bottom. National tried that through the 1990s. It does not work; it does not work around the world. The reality is that this country is one of the worst countries in the OECD for disparities of wealth and for inequality. Those are the facts.
Let us see what this Budget does. Many things have been said about it, but the Budget is based on the objective to sell State assets. Most of the initiatives in the Budget depend upon, the Prime Minister says, a mandate at the next election to sell down the State assets. Why would we do that? Why would we sell an asset that delivers a 15 percent return to pay down debt that we get for 4 or 5 percent? It is just dumb economics. The only reason National is doing it is to offer opportunities for its mates. Mark Weldon has a stock exchange that is almost a joke, because the major assets keep getting sold off to large overseas investors. Lion Nathan is one of the last. It is a big player in Australia and is on the Australian stock exchange. It has gone from New Zealand. It was one of the companies that this country proudly developed, and the NZX continues to allow that sell-off of our assets.
We need a fair, balanced capital market, but there are no toys to play with. So John Key, as a money trader, and National, as the recipient of large amounts of corporate funding, have promised those people that we will deliver them an opportunity to buy blue-chip, gilt-edged State-owned assets. The member over there looks very uncomfortable, and so he should. He knows that that is the truth. Here we have assets owned by every mum and dad in this country, and John Key says we are going to sell them to mum and dad investors. We own them now! So whom will they be sold to? Those who are lucky enough to be the beneficiaries of the large tax cuts will be able to afford the shares and they will, as they did with Contact Energy, flick them off for a healthy profit to overseas investors. Sure as day follows night that is what will happen, and that is why it is outrageous.
The next thing the Government intends to do to pay back its mates is to privatise ACC. We saw this in 1998, when the National Government had to deliver to the people who were funding and supporting it. It said to the insurance companies that it would deliver them a big chunk of a very big, healthy, profitable market in New Zealand—that is, the area of accident compensation. We have seen reports identifying time and time again that ACC is the best system in the world bar none for no-fault accident cover. It is the cheapest; it is half the rate of Australia’s scheme. I confess that our accident rate in the workplace is not right. If the Government had properly funded the Department of Labour we hopefully would have had a few more mines inspectors, we would have had a few more work inspectors, and we would have saved lives up and down this country. The area of ACC and accident prevention needs some work, but it is the best system. It gets lawyers and their grubby hands off litigation—
Charles Chauvel: Excuse me.
Hon DAMIEN O’CONNOR: —with all due respect to a couple of lawyers around, of course. But my colleague knows full well that offered the opportunity, lawyers will take it and get their grubby hands on all that money. They will not deliver it to the people who have accidents and who need it.
It is scandalous that we sit back. New Zealanders might be apathetic, we might be comfortable, and we might be a bit slack, but we are not stupid. As I go around the workplaces in my electorate, people shake their heads at the idea that State-owned assets will be privatised, and they shake their heads about ACC being privatised. I spoke to someone the other day who had been covered by an accredited employer under the old scheme, under the 1998 initiatives. He had tried to get cover and had had a hell of a battle. He had been unable to get what he expected to get under the ACC system prior to 1998. If people think that is bad, just wait. Let every New Zealander wait and see what happens if National ever gets the opportunity to privatise ACC.
The third thing of concern coming out of the Budget is the same criminal act—
Hon Member: Criminal?
Hon DAMIEN O’CONNOR: —well, immoral act that Robert Muldoon committed on superannuation and savings in the 1970s—that is, he destroyed the growing confidence in superannuation and savings across New Zealand. Although the changes are portrayed as being rather minor, they undermine confidence. I have met people old and young right across the West Coast - Tasman electorate and elsewhere who are sick and tired of the Government playing around with superannuation. This latest move on KiwiSaver has ripped the confidence from people who were just starting to believe in saving for their future.
Hon Member: Rubbish.
Hon DAMIEN O’CONNOR: It is not rubbish. If those members got off their chuffs and went out and spoke to real people, instead of having the corporates come in, they would hear those messages too.
This is an unfair Budget. It continues the philosophy and policy that the National Government will look after its wealthy mates and squeeze every other poor New Zealander. Those New Zealanders do not have many options. There are 170,000 jobs in the Budget and a $4 billion gap in revenue projections. That is the fiction that this House was delivered with the last Budget. We have said we will not sell State assets. We have said we will renationalise ACC. Let that be a warning for all the private companies that are sniffing around now. We have said the first $100 a week of income will be tax-free and we have said that GST on fruit and vegetables will come off, because we understand the pressure on the average working family in this country. It is about time a Labour Government gave those people a fair go.
This Budget is outrageous. It entrenches the privilege and the position of the wealthy in this country at the expense of all the others.
MICHAEL WOODHOUSE (National): There are so many good things to talk about in Budget 2011 that it is really hard to know where to begin. I think it is worth looking at one of the expenditure areas so important to New Zealanders, and that is Vote Health. I was fascinated to see the press release the New Zealand Council of Trade Unions put out on the day of the Budget. It said that its analysis of health expenditure estimated that Vote Health would need to increase by $564 million just to keep pace with population growth, ageing, new treatments, etc. But Budget 2011 did better than that, with $585 million being made available for health as part of a $1.7 billion commitment to health over the next 4 years.
We have had the largest recession in 80 years, and countries all around the OECD are taking austerity measures and laying off doctors. I think the UK is preparing for cuts of around 4 to 7 percent per year as part of a £20 billion reduction in its health expenditure. Portugal announced new austerity measures, including slashing spending on health services. Ireland has just laid off hundreds of people in the health sector. Amongst all of this, this Government has raised Vote Health by $1.7 billion. There is $80 million for new medicines.
Dr Rajen Prasad: Somebody has already given that speech.
MICHAEL WOODHOUSE: Well, it is worth hearing again, I say to Mr Prasad. Good news is worth repeating again and again, so the member should listen up. I am sure he will be delighted to hear the data again. There is $68 million more for elective surgery. National campaigned on moving up the number of elective surgeries from 114,000 in 2008 to 190-something-thousand by 2025. The Government has achieved one-third of that growth in just 2 years. There are now more resources to do more surgery and to return more New Zealanders to health. There is $55 million more for mothers and babies.
How is it that the Labour Government poured billions of dollars into the health sector for absolutely no increase in services in real terms, whereas the National Government has been able to achieve such a dramatic improvement in performance? I think there are two reasons. First, this Government is not in the business of running back-office bureaucrats. I am very pleased to say that to members on this side of the House, front-line staff and hard-working doctors and nurses are much more important than policy analysts and administrators, the numbers of which went up under Labour by several thousand, just in the health sector. I am proud of the fact that 1,000 extra nurses and 500 extra doctors have been added to our hospitals and health services.
The second reason is that the Government understands that it is possible to be more productive and to produce a lot more with a little more. Simply setting expectations about performance and watching our district health boards meet and exceed them has been particularly pleasing. District health board staff tell me how proud they are of those achievements, and I look forward to those productivity improvements continuing.
One of the vote reductions that has flown a little below the radar has been in Vote ACC, in the Government’s contribution to the non-earner account. A more than $600 million reduction in Vote ACC has been achieved. It is not because we have cut or slashed; it is simply because we have set a higher expectation for rehabilitation performance in ACC. That $600 million is part of a multibillion-dollar reduction in the future costs of present claims. I look forward to more of that happening when ACC is opened up to competition in the work account. It will work. Competition is a good thing. If competition does not work, employers and the self-employed will be given the opportunity to stay with ACC this time, as opposed to what happened in 1998. That is a fail-safe device that means that if the premiums go up, then all an employer has to do is simply stay with ACC.
Many more expenditure areas are good news in the Budget, but I think the real story about Budget 2011 is the path to surplus that has been outlined. Despite the global financial crisis, finance company collapses, two earthquakes, snowstorms in Southland, kiwifruit scares in the Hawke’s Bay, and storms in the North Island—despite all of those things—this Budget provides $5.5 billion for the rebuild of Christchurch, and returns the Government’s books to surplus a year earlier than Budget 2010 would have. It has been done without the slash-and-burn austerity measures that have been so evident around the world, but with a nip here and a tuck there. There have been some changes to some programmes like KiwiSaver, Working for Families, and interest-free student loans—programmes that the electorate have told us are important to them, and which will be preserved and sustained under these changes.
There are also changes for which the Government has said it will go to the electorate in November and seek a mandate. There is no simply doing what the Government likes, as was the experience under the Labour Government. This Government does not treat the public like they are idiots. We will go out and ask the public what they think, and seek a mandate to do those things, and some other things, as well. It is definitely being done without punitive tax increases. Certainly Labour would increase the top tax rate. It has been done without an earthquake levy, which the Greens proposed. New Zealand taxpayers will get whacked around enough as a consequence of the earthquake, with increases in Earthquake Commission levies and other insurance levies. Frankly, I think that is enough.
It is sad to have to reiterate the huge benefits that last year’s tax switch has given taxpaying New Zealanders, but I will do it again, simply because it takes a while for the message to get through. Two-thirds of the tax rates were applied to low and middle income earners, and that two-thirds group now pays a top marginal tax rate of 17.5 percent. I am sorry to keep Mr Faafoi awake. I am sure that if he sat up, it would be easier for him to listen. The top marginal tax rate is 17.5 percent. That is one of the lowest top tax rates for low and middle income earners anywhere in the world. Labour will bang on about tax cuts for the rich, but the facts simply do not bear up under scrutiny.
Dr Rajen Prasad: Yes, they do.
Louisa Wall: They do, actually.
MICHAEL WOODHOUSE: Members should listen up, because the facts are these: according to Deloitte, in 2008—
Louisa Wall: The top 10 percent got how much?
MICHAEL WOODHOUSE: Listen, and I will tell the member. In 2008 the top 12 percent paid 46 percent of the personal income tax burden in this country. Three years later one would imagine that that proportion would have gone down if the tax cuts were for the rich. The top 13 percent, because there has been an accretion, now pays 51 percent of the personal income tax base in this country. Do members know what? Most high-income earners think that is fair enough.
We have a progressive tax system. Some might think that Working for Families is a little too progressive. A family with two kids, earning 50 percent more than another family, might pay 700 percent more in income tax and have a marginal tax rate of around 58c in the dollar. Most people think that is fair enough. But they do not think that tax rate is too easy and they should be whacked again.
I will tell you where the job growth—
The ASSISTANT SPEAKER (H V Ross Robertson): You are bringing the Speaker into the debate.
MICHAEL WOODHOUSE: I will tell members where the job growth will come from. It will come from travel agents. Those people will be heading to travel agents, and the really rich will go to their tax accountants. My mates in the tax sector would love to see Labour come back and slap on top personal tax rates of 39 and 40 percent. That creates the sort of tax planning need that accountants have done so well out of under the Labour Government. Labour members complain about loss attributing qualifying companies, they complain about the rich getting Working for Families, and they complain about the children of the rich getting student allowances. If that were the case, why take the top tax rate and widen it so much from the trust rate, which creates the environment for legitimate tax planning exercises? Do not think that it would stop there. High tax rates would be followed by higher spending, higher interest rates, higher borrowing, and higher exports of our best and brightest in this country.
I will put this Government’s Budget and this Government’s plan for growth up against whatever Labour has to offer at the November 2011 election. I have no idea what Labour’s plan is. We would not know, given the speeches we have heard in this debate. I am very happy to put this Budget up at any time against Labour’s policies.
PHIL TWYFORD (Labour): The previous Government speaker would like to portray this Budget as a balanced, sensible, compassionate Budget. But I do not think so; nor do the people of Te Atatū. The Minister of Finance has demonstrated with this Budget his higher calling as a bean counter, which I say with apologies to bean counters around the country. This Minister’s goal, his big goal, is visionary. He wants to balance the books. Not for him are the idle dreams of nation-building, of building great things, and of liberating the potential of our young people. No, the fantastic vision of this finance Minister is to balance the books. He is determined to do that by 2014, and to do it he will make cuts. He will make cuts that will squeeze the life out of low and middle income New Zealanders. His reflexes as a Minister of Finance are to cut, borrow, and hope, and I say to this House that those cuts will hurt hard-working New Zealand families. The cuts are not trivial, as the members on that side of the House have tried to say. They will add to the enormous financial burden and pressures that are being felt by people all over the suburbs of west Auckland and around this country.
Let us look at the cuts: $2.6 billion has been cut out of KiwiSaver. That is money being taken out of the pockets of hard-working New Zealanders. That is breaking a contract the Government made with those New Zealanders to save for their retirement. Government members are breaking a contract. It was a partnership between savers, the Government, and employers, but this Government has ripped the guts out of it. The $10 a week cut out of the tax credit is $10 a week out of the pockets of savers.
The Minister says the cut to Working for Families is miniscule, but it will be felt by 50 percent of the families who currently benefit from Working for Families. The Government has cut $440 million by changing the abatement thresholds and rates—a $448 million cut, but the Minister of Finance says that is miniscule. A family of 4 earning $80,000 a year will lose up to $50 a week. This Government is taking $50 a week out of the household budgets of families earning $80,000 a year, and the Minister says that is miniscule. But I tell members on that side of the House that plenty of families in Te Atatū who are in that position, and who earn $80,000 a year in household income, are losing fifty bucks a week because of this Government’s cuts.
Let us look at health and education. There are $1.2 billion in specified cuts, and another billion dollars in unspecified cuts. That is how this Government manages the economy. The Government has said to the heads of the Public Service that they have to cut a billion dollars out of their budgets. The Government does not care how they do it, but they should just make the cuts. Well, I say “Watch out Rangeview Intermediate, watch out Tirimoana Primary School, and watch out Massey High School, because you are going to feel it!”. Those schools will feel it in their operating grants next year, and that is a fact. I say “Look out Waitakere Hospital!”; it will feel the edge of those cuts in the next financial year.
Who is taking the hit in this Budget? Who is picking up the tab for the corporate bail-outs? Who is paying the bill for the rebuilding of Christchurch? The cost is being laid fairly and squarely at the door of low and middle income New Zealanders by this Budget. No matter how much members on that side of the House grizzle, moan, and roll their eyes, they cannot avoid responsibility for what this Budget is doing to low and middle income New Zealanders, because those New Zealanders are the ones who are struggling to save for their retirement. They are the ones who rely on the extra dollars they get from Working for Families, and they are the ones who rely most heavily on being able to send their kids to a good local school and not having to drive them across to the other side of town. They are the ones who rely most heavily on being able to afford to get their kids to the local doctor when they are sick. But all those things will be squeezed by this Budget.
Last weekend I talked to a young couple who live in Larissa Avenue in Henderson. He is a security guard and she works in customer service. Their rent has gone up $60 a week. They have had to move across town, because they could not afford the cost of petrol to get to work and back every day. Worst of all, they have not been able to get their 3-year-old son into early childhood education, because the fees have gone up and they simply cannot afford it. This Budget does nothing for that family. It does nothing to help them. This young couple is paying the price of a failed economic policy by this National Government.
We know that New Zealanders are reasonable people. We know that they are patient. They understand that the money has to come from somewhere. They know that the Government’s finances have taken a hit from the earthquake in Christchurch. New Zealanders are patient, they are understanding, and, actually, all of this would be OK if they at least knew there was a plan to get the economy moving together. It would be OK if they knew that this Government had the slightest semblance of an economic development strategy for New Zealand. But that is the thing: there is no plan—there is no plan.
The other thing that would make it bearable is for people to pay their fair share of the burden. But people instinctively know that this Government, through this Budget, is laying the cost of Christchurch and the cost of the recession at the doorstep of low and middle income earners. The idea of people paying their fair share is a foreign concept to this Government.
The Budget has major credibility problems. As the days have passed since Budget day, it has become increasingly clear that the Budget is built on very shaky foundations. The numbers are dodgy, and the growth forecasts are optimistic to say the least. The Budget relies on a billion dollars of unallocated cuts to public services. It relies on revenue predictions that are $4 billion more optimistic than those from the Inland Revenue Department. How irresponsible is that? The Government had one set of projections from Treasury, it had one from the Inland Revenue Department, and there was a nearly $4 billion difference. What did the Government do? Did it choose the more fiscally prudent option, the conservative option? Did it choose a sensible middle way? No. What did this Government do? It chose the most blatantly optimistic assumptions to base its Budget on.
This Government is relying on an economic growth track that it has not once delivered on in its 2½ years of economic management. Looking at the growth curve after the last Budget, we see that the Government predicted that the curve would go up. But what did it do? It went down. If we look at the growth curve from the last 6-monthly update, we see that the Government said there would be growth in jobs and the economy would go up. What did it do? It went down. But with a touching faith in its own projections, the Government is predicting yet again that growth will go up on the basis of this Budget, with nothing—nothing at all—to substantiate that prediction. I think this Minister of Finance is the mañana Minister. Growth will always come tomorrow—mañana, mañana.
Finally, this Budget relies on dodgy accounting for unmandated asset sales, and that, I think, is perhaps the worst thing about this Budget. It is the thing that really sticks in the throat of the people I talk to in the electorate day by day. By two to one, the polls tell us, people oppose this Government’s policy of asset sales. Based on the conversations I have been having in Te Atatū over the last few weeks, I say that in that area it is more likely that people are nine to one—nine to one—against this Government’s policy of asset sales. They know that this Government is trying to sell them something they already own. They know there is no economic logic in selling off our highest performing State assets, the income stream of which the Government relies on to service the national debt. They know that saying that mum and dad investors will be at the front of the queue is a nonsense, when it is clear that these shares will end up, before long, in the hands of foreign investors. They know that inevitably when we hand over a natural monopoly to private interests, it is an invitation for price gouging. Power prices will go up when these assets are sold down; make no mistake about it.
The really galling thing is that Mr Key and Mr English deny their broken promises. They deny that the Budget has already banked the $5 billion to $7 billion in income from the sales. They have banked the sales, but in this bizarre National world they have not made any allowance for the lost dividends. That makes no sense, and it will not do a thing for the economy.
COLIN KING (National—Kaikōura): It is a pleasure to get to one’s feet and have the opportunity to speak to the Appropriation (2011/12 Estimates) Bill. On this side of the House we certainly see the Budget as being well-received, and that is a mandate we take great comfort in. The speaker who has just resumed his seat, Phil Twyford, would make one slash one’s wrists—and I say that with some consideration—because the tone in which he would lead his constituents to support him in the future is so negative. It brought back to me the dialogue that occurred when the Government brought together the city of Auckland, which has been so very successful. That person ridiculed and riled against every effort this Government made.
I must say that one has to thank Labour very much. Many DNA traits exist within Labour members, and one of them is to preach the politics of envy. I allude here to what happened about 3 weeks ago. An old farm saying—Mr Assistant Speaker Roy will understand it—is that we cannot stop a dog that bites. All we can do with a dog that bites is give it a bullet. Effectively, that is what the New Zealand people did to the Labour Government. Labour members cannot prevent themselves from attacking the farming community, which is the rural and provincial heartland of New Zealand. Labour members are running a line that connects with rural and provincial New Zealand that suggests that Labour policy on taxation would be to tax revenue, not profit. They then went on to say that they would start gouging profit from farmers of at least $800 million, just when farming is getting back on its feet after 9 years of oppression under Labour. What Labour would do with that $800 million, which equates to about $30,000—
Hon David Carter: $33,000 per typical farmer.
COLIN KING: —$33,000 per typical farmer— is hand it out to research and development. It would do what the member from Dunedin spoke about: creative accounting for research and development tax credits. But the research and development credits would be capped somehow. I do not know how Labour would ever bring that about. In fact, when that became a question to the Leader of the Opposition, Phil Goff, he did not know either. That tells us a lot about Labour. We have a lot to thank the Labour Opposition for.
Coming up to this election in November, I was concerned that complacency would get into our voters in provincial and rural New Zealand, and that they would not see the urgency to get out there and vote. However, I can tell members that the fire is back in their belly in the rural heartland of New Zealand, and they will be voting. I have spoken to my learned colleagues Shane Ardern, who is the chairman of the Primary Production Committee, and Minister David Carter, who will be at the Fieldays. Farmers will be talking about the emissions trading scheme. They will be talking about the gouging of $800 million from their top line. It is very important. Sadly, that is the legacy of Labour.
The failed member for Waimakariri made the comment that the Labour Government had surpluses every year. That is nothing to boast about, when it wasted them. That is the problem. When New Zealanders looked at the performance of the Labour Government when it was in office, they saw that the problem was that the surpluses were wasted. During hard times, when New Zealanders looked at what had been achieved, they saw that nothing had been achieved that has endured the recession we face today. All the Labour Government did was create a debt-fuelled consumption binge.
We saw that the export sector went into recession in 2004. Earlier in the debate Mr Hodgson raised the question of when inflation reached 5 percent. I can tell Mr Hodgson that it reached 5 percent in 2008.
Hon Pete Hodgson: I raise a point of order, Mr Speaker. It might be of some interest to the member that I have not taken part in this debate.
COLIN KING: That was not a point of order.
The ASSISTANT SPEAKER (Eric Roy): Sorry, I missed all that.
COLIN KING: What I wish to do with the rest of my time is concentrate on where we are at, at the moment, in the primary sector. We have the lowest interest rates in 40 years, and effectively those interest rates will aid the rural community. Not only will they aid the rural community but also they will assist the 400,000-odd small to medium sized enterprises that employ New Zealand workers.
Another point, which was made by Judith Collins—the wonderful Minister of Police, Minister of Veterans’ Affairs, and other things—is that if a young couple owe $200,000 to a bank as their mortgage, today, under the environment that this Government has created they are effectively paying $200 less a week in interest. That is stunning.
David Shearer: Ha, ha!
COLIN KING: When Mr Shearer is in Government he can take credit for the good things, as long as he also takes credit for the bad things. We accept that these are hard times. What we are really seeing here—and it is probably a point for Labour—is that there is nothing wrong with getting one’s head in the clouds. But the problem with Phil Goff and Labour at the moment is that they have let their feet get off the ground.
I will spend a few moments concentrating on the primary sector, boosting rural growth, and investment in irrigation. Those were opportunities that Labour passed over. I know that those who are informed adequately will be asking themselves why the Labour members were not able to win those arguments, so as to be able to spend that money wisely and create headroom in our economy, so that we could effectively grow this country’s economy, create employment, and go on from there.
What has this National Government done? It has put together $35 million that will be spent over 5 years to help develop proposals to a stage where a business plan can be developed. One of those situations will be in the Ward-Flaxbourne area, which is in Marlborough. It is remarkably dry and remarkably fertile country. Its soil temperatures at this time of the year are normally below grass-growing levels because of frost and suchlike, but the opportunity to get water from the Ure River or the Conway River through to that area would change the opportunities, confidence, and reliability for those farmers.
On top of that, we have to thank the able Minister of Agriculture, David Carter, for his vision around water storage and for the $400 million that has been put aside for future investment. That is really showing leadership. In the Āmuri Basin in North Canterbury there is a small area that has been irrigated, courtesy of the National Government in the late 1970s. We have seen that small area become an oasis. One can see a mouse run across the paddocks with its own cut lunch. These are all opportunities that passed Labour by. When Labour is measured on how it squandered those surpluses and how it took money out of the pockets of hard-working, enterprising New Zealanders and wasted it, it will be kept in Opposition for many, many years.
In conclusion, it gives me great pleasure to support the Budget and the motion moved by the Minister of Finance, but I repudiate the amendment to that motion in the name of Phil Goff, who has been tested and found wanting in the context of coherent and forward-thinking policy. Thank you.
Dr RAJEN PRASAD (Labour): We clearly have a very different view of this National Government’s Budget than those expressed by National MPs in this debate. This Budget is driven by the particular ideology of the National Party, which includes, as an article of faith, giving tax cuts to those who are relatively well off financially in order to grow the economy sufficiently to create jobs. National believes that it is just and fair to give tax cuts that increase the incomes of those at the top, while giving a very small tax cut in dollar terms to those on low or modest incomes. National believes that it is fair to raise GST to 15 percent, which is one of the highest consumption taxes around, and that the tax cuts will compensate everyone in the same way, thus not impacting on anyone unfairly. National believes that the private sector does everything more efficiently than the State sector. National forgets the many failures. National believes that the State has no business owning assets, regardless of the strategic importance of those assets to New Zealand and thus to the common good. National believes that the State sector must be kept small, and that if it grows in size with a larger population or with the growing needs of our society, it needs to be cut as a matter of priority. National believes that citizens experience problems of living primarily because of the choices they make, and thus National takes a pathological approach to the personal issues people face; hence the adoption of a punitive approach to citizens who experience problems, regardless of what science tells us.
Those are a few of the principles that drive this National Government and its major support party, ACT. There are many others, but that will suffice for the purposes of this debate.
Pursuing its ideology over the last three Budgets has actually created problems for this National Government that a future Labour-led Government will have to address. Let us look at some of those principles and where it has led this Government. They are facts that the National Government refuses to accept. The Government has created a huge financial hole for itself by giving billions of dollars in tax cuts over the next 4 years. It knows it will not recoup that cost from increases in GST, as it anticipated. Although members opposite often say that the tax cuts were fiscally neutral, clearly it has not been so. It is a defence of the ideology; it is not smart economics. It has led the National Government to start a borrowing spree second to none. Its tax take is significantly lower, and it has to borrow to make up for that tax shortfall.
The National Government has also been forced into making deep cuts in expenditure to feed its ideology of tax cuts at all costs. It has conducted an unprincipled defence of its ideology in its ensuing programme. It has been neither courageous nor intellectually honest in accepting the impact of its policies and decisions. Every member of the National Government has parroted the same message of inheriting an economy that was a basket case, and that they had no option but to embark on the agenda that has unfolded over the past 3 years.
Sandra Goudie: The truth put out.
Dr RAJEN PRASAD: See? Another parrot; there she goes. Despite what members opposite say, the public knows that the last Labour Government paid the country’s debt that was left behind by the previous National Government and saved for a rainy day. The National Government could have managed through the recession with the headroom it had in the economy bequeathed to it by the last Government if it was smart about it, but it was not. It was not smart. National insisted on tax cuts against all common sense.
Now National has to preside over deep cuts to the Public Service, record borrowing, asset sales, slashing KiwiSaver, and many broken promises. Who would want to trust National? Anybody on this side?
Su’a William Sio: No.
Dr RAJEN PRASAD: The intellectual dishonesty that pervades this Budget and the rhetoric surrounding it was best described by John Armstrong of the New Zealand Herald when he casts its growth projections as “A fairytale of high hopes on a frayed thread”. That description actually fits the rest of the Budget indeed. The projection that the economy will return to surplus in 2013 is based on hope, unjustified optimism, and magic, not reality. I wonder how many members of the National Government will give an undertaking—and I am looking—to resign when this projection is not realised. Any? There is not one. They are silent.
Sandra Goudie: I will.
Dr RAJEN PRASAD: That member will be long gone. Maybe the member will come back and apologise publicly.
Government members have not adequately explained their policies in response to questions from my colleagues this week, including questions asked on the projection of the number of jobs created, the difference in tax take projections between Treasury and the Inland Revenue Department, and the fact that the Government is borrowing to fund the impact of its tax cuts. Indeed, this is a fairytale of high hopes on a frayed thread.
The position taken on this Budget by the Labour Opposition is based on a different narrative about our society. It is one that believes the wealth and resources of a country are created by all its peoples, and that benefits are accrued to them on a just basis. Our narrative is based on a conviction that New Zealand is a great society in which we can all do well, and in which we all contribute to the maximum that our abilities permit. It is based on a conviction that we ought to invest in the generations that follow us and to leave them all in the best place possible to take this country to new and greater heights.
So how does this Budget impact on children? This National Government is used to saying that it has taken the hard edges off the effects of the recession, and clearly it believes it has done enough. It has not. Although adults might be able to withstand short-term hardships, children cannot, because for them time takes a different dimension. The development stages that children go through are time-sensitive, and they have only one opportunity for brain development in the early years. They have only one opportunity for bonding and forming trusting relationships in the early years. They have only one opportunity to learn in their early years and to meet health milestones. They have only one opportunity to be placed on a positive development pathway in the early years. Children cannot park their development needs until the economy improves. We have to make sacrifices for them now.
This National Government has no long-term appreciation of the needs of children and of the families that care for them. If it did, then some of its current policies on parents and work would be different. Failure to achieve these time-critical development milestones leads children to a life of catching up, which is something too many never achieve. Those children populate our negative statistics and impose a heavy financial and emotional cost on the rest of society.
In three Budgets the National Government has presided over a number of developments that impact directly and indirectly on our children, including a significant rate of unemployment, rising rates of child abuse—which National does not know what to do with—more and more people struggling to balance their budgets and cope with increases in the cost of living, rising youth unemployment, a growing underclass, and fewer opportunities to be healthy. Cost of living increases are now playing havoc with families, especially those with young children.
There is clear evidence that poverty and hardship is increasing in our families. The cost of visiting a doctor is beyond many, the cost of early childhood education has increased, the cost of renting has increased, and the steep increases in ACC affect many families. Cosmetic changes in services to children and families here and there do not constitute a well-thought-out policy on the needs of our children and of the families who care for them. In fact, this Budget does the opposite: it confounds their development needs. If this is the best this Government can do, then it stands accused of lacking courage, foresight, and awareness of what makes for a strong nation in which we lift the life chances of all citizens, especially our most vulnerable.
There is little that is ethical about constantly laying the development challenges of the current climate at the foot of the previous Government. There is little gain in some members constantly promoting the mantra that only the private sector produces jobs, and therefore the interests of business are paramount. If our families do not produce the thinkers, developers, and workers of tomorrow, the owners of capital will not have anyone to assist them to extract profit from investments. Although the National Government talks about balance, nothing could be further from the truth when it comes to the development frame it is using.
Clearly, there are two narratives around this Budget. Although Labour believes that the economy should advantage all our citizens, especially our most vulnerable, this Government still believes in laissez-faire capitalism and the unjustified reliance on the market for everything. Labour will demonstrate in the election campaign its response to the needs of our children. Thank you.
CHRIS TREMAIN (National—Napier): I start my 2011 Budget speech by acknowledging people. I guess it is people whom I want to try and bring in throughout this speech tonight, because many of us have risen to our feet and spoken about the paper that makes up the Budget, but at the end of the day it is a Budget that is driven through leadership, regardless of who may be fortunate enough to be in the Government. It is that leadership that shapes the way we take a country forward and the impact that has on the people we lead from all walks of life. So I want to talk about those people and my experience of working with them over the last 2 weeks through the adjournment period, and about their different walks of life, from the Samoan community and their 49th anniversary of independence, to a footy game in Murupara and a group of people in that community, to the Stravinsky ballet—all sorts of things that all of us as MPs have the privilege of attending throughout an adjournment. I want to talk about how the Budget has impacted upon those people.
But I want to start by acknowledging two people in particular. The first of those is the Hon John Carter, who has been a wonderful representative in this House for the people of Northland. He has certainly been a mentor for me, and I know he has for many other new MPs in the House. Although I do not ever pretend to rise to Mr Carter’s level of humour or ability to tell a joke, I certainly respect particularly his final comments about being a man for the people.
If there is anything about John Carter that will be remembered in this House and throughout New Zealand, it will be that he was a man of the people, and he is certainly a man I admire.
Su’a William Sio: He’s a good man now that he’s gone.
CHRIS TREMAIN: He was a good man. The second person I will acknowledge tonight from within the House is my colleague and friend Craig Foss, and his step-up to become a Minister after the Budget. Mr Foss has worked hard in the Tukituki electorate, and certainly as chair of the Finance and Expenditure Committee he has done a fantastic job. I congratulate him on that role and wish him all the best.
In coming back to the 2011 Budget, as I said at the start I will talk about people and the impact that the Budget has had on them. I will start with a visit I took to Wairoa after the Budget. I will talk about East Coast Lumber under the leadership of Mike Pollock, but also in particular about AFFCO, under the leadership of Dean Tucker there. The AFFCO chain has been in a position of some difficulty and jobs have been under threat, but it was absolutely fantastic to visit that chain over the last 2 weeks to talk not only to Dean but also, more important, to the men and women on the chain at that AFFCO plant. We sometimes overlook how much people understand a Budget. They might not understand it at the macroeconomic level that some of us want to talk about here, and they do not really understand about GDP and all that sort of stuff about the percentage of debt to GDP. They do not really care about that, but they do understand basic economics at a household level.
People understand some fundamental things. Firstly, they understand that one needs to earn more income than one spends in a household if one is to have any sort of choice going forward. That is a basic, fundamental thing they understand. They also understand that if one is not earning more income than one is spending, then one is going into debt and will put that on to either a credit card or a mortgage. They know that over a period of time, if one goes more and more into debt, one will ultimately get into the proverbial. They also understand that bringing down debt is a really important thing.
I tell members that the guys on the chain at AFFCO understand those fundamental things, and they understand how important they are to their own business. What was really exciting to hear about at AFFCO was the investment that company is now making not only into the lamb chain but into an extra beef chain there, so more jobs are rolling out. Security is coming for that workforce that was not there before, and that is being driven by the strength of the commodity prices in the farming sector there. People understand these fundamental things, and I guess that is the point I want to bring to this Budget debate.
Some simple Budget messages came through in 2011. They were really straightforward, because this Budget is about taking New Zealand forward and taking us away from the position we are in. It was Economics 101. The first one was about taking us from a deficit into a surplus. People in Wairoa understand that and they understand the importance of that. I was there talking to them—once again, not talking on a GDP or macroeconomic level, but just talking about the basics of getting our country back into surplus—and they understood that. There is a second thing those people understand. I spoke about taking the deficit from the $16 billion that is currently forecasted and in 2014 bringing it back over into surplus, and that was great. They understand the need to bring the debt back into reality, and I think that is important too. They understand that with regard to their own company and really see a major future there.
The other company I visited in Wairoa was East Coast Lumber, which is another amazing business with a real future up there, with the forestry industry going ahead in leaps and bounds. Again, talking to the workers there—
Hon Steve Chadwick: It’s all cyclical.
CHRIS TREMAIN: You see, over on this side of the House we do not just go and talk to our party members; we go out and talk to real New Zealanders. What Labour members do not get is that we actually talk to people at a level they understand.
The message I am trying to give to the House tonight is that this Budget is simple Economics 101. It is about bringing our debt down, it is about returning the country to surplus, and it is about growing the economy. On each of those levels, we are doing that. We are creating an economy that will allow people in Wairoa to get ahead. I think that is absolutely fantastic. When we get out there and talk about that, and talk about our plan—
Hon Members: How?
CHRIS TREMAIN: How? This is a great opportunity to talk about our plan, which we put into place as soon as we came into Government. It is a six-point plan that was absolutely fantastic and that we are continuing to drive through.
The first part of that plan—for the benefit of Opposition members, as they have asked me to talk about it tonight, and we did in the urgency debate—was to reconfirm the tax rate. It is absolutely fantastic; 75 percent of this country will now be paying tax at no higher than 17.5c in the dollar. In Wairoa, they love that. It is no more than 17.5c in the dollar. If they have families, guess what! They are still getting Working for Families, I say to Louisa Wall. They are getting Working for Families there. So that was the first thing: getting taxes right. I am proud to stand on this side of House and say there are people out there who will no longer be getting Working for Families at the top end of that bracket. But at the bottom end, guess what! Labour members are not going out there and talking about that much, are they? People at the bottom end for Working for Families are getting more money. We reconfirmed the tax rates—absolutely fantastic.
The second thing we agreed on in this Budget was to continue our investment in infrastructure, and again, that is a huge opportunity for the people of Wairoa in my electorate. One of the infrastructure investments we are making is the roll-out of ultra-fast broadband. That is absolutely sensational. That roll-out of fibre will come up from Napier, through Tūtira, all the way to Wairoa. Actually, it is going all the way to Tūai. It goes to Nūhaka, and all the way through. It gets to Māhia School. There are three or four schools that will not get fibre to the gate, but they will get satellite though. That is absolutely fantastic. So that was the second part of the plan—investment in infrastructure. Another part of that investment in infrastructure in Wairoa was the roll-out of a brand new road in the Matahōrua Gorge for $30 million. The people of Wairoa are enjoying driving back to Napier a lot quicker than they previously were. It is great for the forestry industry. They are driving trucks with logs back to the port—fantastic, all good.
The third part of the plan was to continue to focus on trade and innovation. Let us just talk about science and innovation for a minute. That is the third part of the plan. Members on that side of the House continually say that there was very little investment in science and innovation. Well, I say to those ladies and gentlemen, turn to pages 270-1 of the Estimates of Appropriations. In the Budget, $773 million is going into science and innovation, $215 million alone is going into Crown research institute core funding, and there is massive investment into our private investment. It is a huge investment into science and innovation—part of our plan for taking this country forward while getting our debt under control, while getting growth going forward, and while getting our country back into profit. It is absolutely fantastic. The people of Wairoa and Hawke’s Bay think this is a wonderful Budget, and they are looking forward to a second term of a National Government. Thank you.
LOUISA WALL (Labour): Kia ora, Mr Assistant Speaker Roy. I am a day late, but talofa lava. I trust all New Zealanders enjoyed Vaiaso o le Gagana Sāmoa/Samoan Language Week.
It is my pleasure to speak in this 2011 Budget debate. I will start with a quote. John Donne said: “No man is an island, entire of itself; every man is a piece of the continent, a part of the main;”. I will interpret that quote within a modern context and within this Budget debate, because it pretty much symbolises where we on this side of the House sit in relation to what being a Government means.
For us, we like to collect taxes and we have a progressive tax system, because we believe that people who earn more should give more.
Sandra Goudie: Like to rip off the workers.
LOUISA WALL: Not to rip them off, but because they belong to a collective. That collective is called society, which is called the community of New Zealand. For us, when we collect taxes, we want to invest in collective public goods and services. For us, that means we want to invest in a public-good health system, we want to invest in a public-good education system, and we want to invest in a public-good social and economic system that will ensure that all New Zealand children—regardless of who they are or where they happen to be born, as they are not in control of that—have access to general practitioners and early childhood education centres. We want to ensure that they are on a trajectory so that they can make the best of their lives. That narrative defines the difference between the priorities of team Labour and of National and its leader, John Key.
Let us look at what National has done. Every week we borrow $44 million—
Hon Steve Chadwick: How much?
LOUISA WALL: —Forty-four million dollars—so that 10 percent of taxpayers can get 40 percent of the take. What does that 40 percent actually translate to? It translates to $17.6 million. Who are some of these people who are getting that $17.6 million? I will tell members. The source is a New Zealand Herald executive pay survey from 30 April 2011. It states that the chief executives of New Zealand’s 47 biggest companies received pay rises of 14 percent, on average, while the median average income for all New Zealanders has fallen by almost 5 percent.
Su’a William Sio: How much is that in real terms?
LOUISA WALL: In real terms, those chief executives got, on average, $500 a week each in their pockets from tax cuts, plus they got 14 percent pay increases, on average.
But what does that really mean? I will break it down, because this narrative has to be relevant to the electorate of Manurewa. The electorate of Manurewa has concentrations and pockets of people who live in poverty. They receive State assistance, as the Hon Paula Bennett will know, and these people care every week whether they have enough money to pay rent, buy food, and feed and clothe their children so that their children can go to school. When I went to the Manurewa Netball Centre opening a few weeks ago I had a conversation with a woman whose main preoccupation was the fact that she could buy only one 2-litre bottle of milk every week. Sometimes midway through the week she had to water down the milk so that she had enough milk to put on the cereal for her children.
Su’a William Sio: They won’t understand that.
LOUISA WALL: No, I do not think members opposite understand that. I think some of them do. I think Paula does, but the majority of National members have no idea about how our families are living. We make no apology on this side of the House for absolutely caring—
Hon Dr Nick Smith: How many children have you got?
LOUISA WALL: I do not have any children; I am an auntie. I—
Hon Dr Nick Smith: I have four.
LOUISA WALL: Well, good on Dr Smith. He is in a position where he does not have to worry about whether he can buy one or two 2-litre bottles of milk. I ask whether he has to worry about buying more than one 2-litre bottle a week.
Hon Dr Nick Smith: I am very fortunate.
LOUISA WALL: Dr Smith is very fortunate. We should all care about families who are in a position where they have to debate those issues every week. So why are we giving tax cuts to people whose questions are about where they should go on holiday this year, whether they should upgrade their car, or whether they should maybe sell and upgrade their house? That is the reality.
Earlier this evening a few people on this side of this House went to a meeting called by Metiria Turei, the honourable co-leader of the Greens, and Rahui Katene. The meeting was about the Aotearoa Equality Group, because we acknowledge that inequality is growing in our society. The invitation went to every single member of the House, and do members know what is really interesting? Does anyone think there was a National person there? Do members think that anybody in National would bother to come to that meeting? Jackie Blue probably would, but someone probably said she could not go to that meeting. It would have been great to see somebody from that side of the House come to the meeting, but nobody bothered to come, and that says to me that they do not care. Those members do not care that there is growing inequality in our country. There is a huge gap between rich and poor.
Let us look at the legacy of this John Key - led National Government. He promised us a brighter future. What does that look like? What does that brighter future look like? Here are some examples, and these are not from our policy unit. This one is from the Children’s Social Health Monitor 2010 update, which was released on 13 December 2010. It states that poverty and hardship are rising, admissions to hospital of children with diseases associated with poverty such as respiratory diseases have increased by more than 2,000 per year since 2008—I think that was when National got in, was it not—and Māori and Pasifika children are being hit the hardest.
My critique of this Budget is to ask how it helps the most vulnerable children. How does this Budget help the most vulnerable children? The reality is that it does not. It does not help the most vulnerable children. In the electorate of Manurewa we have an underprovision of general practitioners and of early childhood education centres. The reality is that if our children do not have the basics to start their lives, what happens? They enter the education system, and what happens when they enter that education system?
Sandra Goudie: What does she think national standards are for? Hello!
LOUISA WALL: No, Sandra Goudie does not care. They have reading ages of only 2 and 3-year-olds, and that deficit follows them throughout their lives.
If National is really serious about addressing poverty, why does it not make sure that market failures are addressed, that we ensure that there are general practitioners in communities, that children have access to Well Child providers, and that children have access to early childhood education centres? Our children need to enter an education system where they can make a good life for themselves and for the children they will have. That is the challenge for the Government: the question of how we redistribute taxes in a way that ensures that we do not create intergenerational illiteracy and intergenerational benefit dependency. The reality for a lot of our young people is that children are having children. I want to see some real practical policy initiatives that meet the needs of people who live in communities like Manurewa, Māngere, and Manukau East. That is what we really want to see.
When I look at the Budget, I see that it will not help anybody in my electorate. It will not make a big difference to the children who live in the electorate of Manurewa. But I have hope. I have hope that we on this side of the House will mobilise the people of New Zealand, because we care about those kids and the circumstances of their parents. We will not be punitive and penalise them for the circumstances they happen to be in, because any one of us could have been born in a context where we do not have the building blocks that Nick Smith’s children do, where they have a parent who can look after their needs.
Dr JACKIE BLUE (National): I am delighted to participate in this debate on Budget 2011. It is a Budget for our times, and like the previous Government speaker, Chris Tremain, I would like to take the time to wish the Hon John Carter all the best in the Cook Islands. I know that the Hon Craig Foss will do an excellent job as a Minister; it is well deserved.
This Budget is not about borrow and hope. It has been very carefully thought out. It is a Budget for our times. We have had a difficult time in the last couple of years, so it is being taken very seriously. It is about making those next steps in building faster growth, increasing national savings, and creating sustainable jobs for the future. It is about ensuring the Government returns to surplus by 2014-15, by halving the deficit next year and halving it yet again in the following year. It is about investing significantly in health and education while continuing to protect the most vulnerable New Zealanders.
We have clearly set out our policy to New Zealanders, so they can give us the verdict come election day on 26 November. The voters can decide. There is no lolly scramble, because we cannot be irresponsible. We cannot engage in a big spend-up and big knees-up and put our economy at risk when New Zealanders are working so hard to pay off their own debt. Equally the Budget is not a case of slash and burn. It has been very carefully thought through. It is about building faster economic growth and higher national savings, getting a credible path back to surplus, and rebuilding Christchurch over the next few years.
My congratulations go to the Hon Tony Ryall, who over his term as the Minister of Health has shown remarkable leadership. Vote Health was the biggest recipient of Budget 2011. Health is one of the few areas to receive a modest funding increase, which will be paid for by making efficiencies in other Government departments. It continues the Government’s election pledge to continue the growth of funding in the public health system. Budget 2011 is delivering an extra $2.2 billion over the next 4 years, including an additional $585 million in initiatives this coming year. The Budget included $80 million for widened access to medicines, and it is expected that around 32,000 patients will benefit from that widened access in the first year. In all, the investment in medicines—together with the $100 million extra in the last 2 years—means that over this term the Government has invested an additional $180 million in medicines. More patients will get access to the drugs they need to keep them healthy and well, and out of hospital. That is what it is all about.
Despite the serious economic situation we have been in, the Government has continued to invest new resources in the health sector to meet our commitment for strong and enduring public health services. This is in contrast to many countries around the world that have taken the opposite approach: they have slashed their funding of public health services in response to the global financial crisis.
Although New Zealand has weathered the storm better than some countries, this Government still has to make some tough decisions, especially when faced with the events of the two Christchurch earthquakes. Indeed, the world changed: New Zealand changed on 22 February this year, and it had an amazing and considerable impact both in personal and financial terms, and on the whole of the Canterbury region. The Government has had to provide support packages for Christchurch in the short term and to the displaced population, whether they remained in Canterbury or went elsewhere in New Zealand, and that has put tremendous pressure on health services across the country. Facilities in Christchurch, both public and private, have been damaged, and some are beyond repair. The efforts of the entire health workforce in Canterbury and the extra assistance provided nationally have been absolutely outstanding. I acknowledge and commend those workers for their work and their perseverance.
I want to focus on one area that will make a real difference in health, and that is the extra money that is going to mothers and new babies. There is over $20 million over 4 years for Well Child visits. Currently there are 12 free child visits, from birth to 5 years. The additional money means there will be an extra 54,000 Well Child visits, which average out to an extra three visits from birth to 8 weeks, to be targeted to those mums and babies who will benefit. There is also $33 million over 4 years for quality and safety initiatives. These include multidisciplinary reviews of all births, parent information services, assisting vulnerable mothers’ access to health and social services, assisting midwives to make appropriate and timely referrals to other practitioners, and the one-off funding of $2 million for the collection of national district health board maternity data. I know that has been very well received. These budgetary allocations build on the extra $103 million that was in Budget 2009 for maternity services, and these include longer stays for new mothers in hospital, optional team meetings each trimester for at-risk mums, full funding of PlunketLine, and obstetric training and/or refreshers for general practitioners who want to get back into deliveries, and also meeting the costs of the extra births each year.
It is very clear that better economic performance will enable us to spend more on health care, and, at the same time, New Zealand must strive to get more services for existing health spending, by reducing waste and bureaucracy, and lifting productivity. There is no doubt that Budget 2011 sets out the next steps to build faster growth, increase national savings, and create sustainable jobs. Strong fiscal policy and management, and commitment, from this Government have provided the backdrop against interest rates, which have fallen dramatically to the lowest level since 1964. Tax changes have put more money into the back pockets of hard-working Kiwis, and more money into household budgets at a time when it is really needed. Annual inflation when Labour left office was 5.1 percent; now it is 4.5 percent. That includes the one-off impact of the GST rise in October, for which everybody, including beneficiaries and superannuitants, was compensated. Our tax reforms mean that three-quarters of New Zealand taxpayers now face a top marginal tax rate of only 17.5 percent. Despite difficult global conditions and international pressure on food and petrol prices, our tax reforms have helped to ensure that Kiwis’ after-tax wages on average have risen faster than the cost of living. Increases in after-tax wages have flowed through to superannuation rates for older people, with superannuation rising by $166 a fortnight for a married couple since September 2008, an almost 20 percent increase, or 8.5 percent once we adjust for inflation.
Just today we have had very good news that the total number of people on welfare has dropped by 2,295 in the last month. The total number of benefits paid has fallen for 4 consecutive months. That is extremely good news. There is no doubt that the Government’s Future Focus package and increasing business confidence have made a real difference, and more people are finding work. More than 9,000 New Zealanders went off benefits and into work in May, and that is down to greater business confidence. Businesses that have confidence will employ people. They will expand their businesses, and that is what we are seeing. It is clear that the reforms that have already been implemented by National are having an impact. Our economic performance will deliver higher incomes. It will help people directly and it will allow social spending to grow where it is needed. Thank you.
KRIS FAAFOI (Labour—Mana): Thank you very much for the opportunity to speak in this Budget debate. Just before I start, I will touch on an issue that the previous speaker, Dr Jackie Blue, and numerous National MPs have raised during this debate: that this is a Budget for our times. I would like to know which reference group “our” is. When I am out and about in Mana, I do not hear anyone say this is a Budget for our times. I do not hear anyone saying that. I hear them say “This is a Budget for their times.” There is nothing in this Budget for us here in Mana. When I hear the people in Mana talking about the Budget, they say they are worried about the cuts to KiwiSaver, the asset sales, and the cuts to Working for Families, and that is not a Budget for our times. That is not a Budget for New Zealand in 2011.
The previous speaker also said this Budget was about protecting the vulnerable. Ha, ha! That is a comedy act. Taking $600,000 away from Women’s Refuge does not protect the vulnerable. Let me look that up on Google and see whether that protects the vulnerable. Making cuts to early childhood education does not sound like protecting the vulnerable to me. Also, taking $120,000 out of a mental health care unit in Waitangirua called New Avenues, leaving those community-based mental health patients with nowhere to go, does not sound like protecting the vulnerable to me. It does not sound like protecting the vulnerable to me.
I have the Minister’s Executive Summary of Budget 2011 here in my hands, and I am seriously thinking of entering it in the fiction section of next year’s New Zealand Post Book Awards. This and the volumes that accompany it should go right next to the Warren report, because just as no one believes that Lee Harvey Oswald acted in isolation when killing John F Kennedy, no one believes anything in the volumes of this Budget. No one believes anything in this Budget. Its author—National’s deputy leader, Bill English—should be commended for the creativity in this Budget. And the chief storyteller—John Key, the National leader—should also be commended for his effort at selling this Budget to the people and thinking that it is good for them. It is not.
There is much that is unbelievable in the Budget, like the promise of 170,000 jobs. Wow! Where will they come from? Can someone show me right in here where those 170,000 jobs will come from? They will not come from early childhood education or national standards, as the National leader, John Key, said in this House yesterday. They will certainly not come from there. Where will the 4 percent forecast wage growth come from? Where will it come from? Where in this Budget is there a plan to make sure that 4 percent wage growth actually becomes a reality? I do not think it is anywhere in there. And this is a good one: no one believes that there is a $4 billion gap between what the Inland Revenue Department and Treasury say is the forecast revenue out of this Budget.
Something is missing from this publication, and it is called a plot or a plan. There is no real plan: no coherent plan to create jobs, for economic growth, or to help Kiwis who are struggling at the moment. This is not a Budget for our times. There has already been a review of this publication, and the Acting Secretary to the Treasury said the growth forecasts in this publication are too optimistic. So maybe it has no show of winning next year’s fiction award in the New Zealand Post Book Awards. Maybe it does not.
The other thing that is fiction about this document—and this fiction comes from the members on the other side of the House—is that this Budget is prudent. Ha, ha! This Budget has $16.7 billion of deficit in it. The audacity of the members from the other side of the House is such that they say our plan is to borrow and hope! You are borrowing and hoping right now.
The ASSISTANT SPEAKER (Eric Roy): Order!
KRIS FAAFOI: The Government is borrowing and hoping right now. Excuse me, Mr Assistant Speaker Roy; I apologise for that. This Budget is fiction, and it fails to address the major problem right here in New Zealand society, which is how to help hard-working Kiwis who are struggling to make ends meet.
Earlier in this debate I heard Melissa Lee, an MP from the other side of the House, say this Budget is about savings—this Budget is about savings. So why did the Government cut $2.6 billion from KiwiSaver? I know that when I have been out at street corner meetings—and when I went to the Ekalesia Faapotopotoga Kerisiano Samoa Church last Sunday—one of the questions I get there regularly is, why is the Government making cuts to KiwiSaver? People say they made a deal when they signed up to KiwiSaver that they would put in a certain amount and the Government every year would put in around $1,042, so they could over a long period of time build up a nest egg for themselves and their family, so that when they reached retirement age they would be able to support themselves. But in this Budget the member tax credit has been cut in half. The Government is tinkering more with the KiwiSaver scheme so that the member tax credit goes from $1,042 a year, as I said before, down to $521.
I know that definitely in Mana, from right across the spectrum—whether one is from Cannons Creek, Paekākāriki, or Raumati South—people are really concerned that this Government has broken its promise to the people of New Zealand. John Key made that promise. He said National would not tinker with KiwiSaver. Lo and behold, in Budget 2011, what do we get? The Government claims it is borrowing in order to pay for KiwiSaver, but that is not the truth at all. It is borrowing in order to pay for the tax cuts that it brought in last year, of which—and this is the truth—42 percent goes to the top 10 percent of earners. The argument has always been that people on low and middle incomes at the moment are struggling to make ends meet, yet the Government’s ill-advised and ill-planned tax cuts went to those who did not need them as much as those people. As I say, this is a broken promise from this Government—a broken promise from John Key not to tinker with KiwiSaver. I think another speaker from this side of the House said earlier that this repeats the mistake of the Muldoon era of tinkering with the confidence that Kiwis have in a robust superannuation scheme.
What else do we have in this Budget? Asset sales. When we start to talk about asset sales, the members on the Government side of the House go quiet. They know just how unpopular asset sales are.
Hon Dr Nick Smith: Good policy.
KRIS FAAFOI: Nick Smith says it is a great policy. Well, let us see how that goes out on the hustings, and how that went in the New Zealand Herald 2 or 3 weeks ago. A great policy! The best line that this Government has about asset sales is that it is selling the assets to mum and dad investors. Well, mum and dad investors already own them, and I am sorry to say that at the moment mum and dad investors are struggling to put food on the table. Can someone on the other side of the House please tell me how those mum and dad investors will be able to afford to buy shares in assets that they already own?
Hon Dr Nick Smith: KiwiSaver.
KRIS FAAFOI: The Government has already gutted KiwiSaver.
The four power companies that are owned by those mum and dad investors right now bring in $700 million. What happens to those profits if—what is the line they use? The mixed-ownership model? The mixed-up ownership model! What happens if that profit starts to go overseas? Well, that constant flow of revenue that New Zealand taxpayers receive to make sure that we are paying off debt, and that we are paying for the things that Kiwis rely on, will go overseas. Government members say they will not sell off all of the assets. Well, let us see what happens when Don Brash enters this Parliament. If—God forbid—he does enter Parliament, it will be completely, absolutely, 100 percent guaranteed that those assets will go overseas.
But what is the reality? We have had the fiction; what is the reality? The reality is that Kiwis are struggling to make ends meet. That was borne out in the Kapi-Mana News a couple of weeks ago when it said: “More turning to food bank”. There it is, in black and white: “Three years ago we had 20 families ask for parcels, last year it was 32. Our cupboards are very bare right now. There seems to be so much more pressure on people today, the wages are not there, while prices for food and other things like rent and power keep going up.” There it is in black and white. What about this week’s Kapi-Mana News? There is a half-page advertisement asking—pleading—for people to take food to the food banks, because they are so stretched. The earlier edition of the Kapi-Mana News says the St Vincent de Paul’s shop, which has been in Porirua for 26 years, for the first time in 10 years has run out of food. Not only has it run out of food but it has also run out of people to bring food to its shop, because the supply and the demand are going absolutely nuts—absolutely nuts.
So what do we need? We need to have a Government with a plan, a Government that realises that prices are rising faster than wages, and a Government that makes sure we can give hard-working Kiwis a break. We need to have a Government that will stop asset sales, so that we can keep our power prices under control, and also so that we can make sure that the mum and dad investors that the Government is talking about, who actually already own those assets, can continue to own them. We need to have a Government that will take some bold steps, like making the first $5,000 of income tax-free—that is a real step towards making sure that people can make ends meet—and taking the GST off fresh fruit and vegetables. You know, that move will cost us about $300 million, but when we are spending half a billion dollars on obesity-related diseases I think that is a very wise move.
Hon Dr NICK SMITH (Minister for the Environment): Budget 2011 will go down in history for two important reasons. The first is that this is a Budget in which the Government has backed the people of Christchurch in their hour of need. This John Key Government is committing $5.5 billion to the earthquake recovery of that city. That is right, that is proper, and I think that every parliamentarian should back the support in this document for New Zealand’s second-largest city.
The second key element for which this Budget will be noted is that it will get New Zealand back in the black. The deficit will be halved in 2011-12, and halved again in 2012-13, and the economy will be back into surplus in 2014. I notice that a big line-up of Labour MPs have been wearing red ties. That is entirely appropriate, because everything we have heard from Labour in this Budget debate has been about all the extra spending it would do and the greater degree to which it would drive New Zealand into the red. I challenge Mr Kris Faafoi, because the only policy positions he announced were about spending more money. He is completely out of touch, as are all Labour members, in respect of New Zealand and the balanced position that we on this side of the House are taking.
Much has been said in this Budget debate about how the Budget sets out to keep interest rates low, how it increases real incomes for families, and how it will build 170,000 new jobs. It is about the focus on exports, about the increase in investments that we will make in the productive part of our economy, and about savings.
I want to particularly put on record the very real gains this Government is making in respect of the environment, despite these very challenging times. This Government is committed to a practical programme of significant environmental gains. Let me go through a few of them. We have invested $347 million in the hugely successful home insulation Warm Up New Zealand programme. That is 100,000 New Zealand homes—2,800 in my own electorate in Nelson. Members opposite ask where there is anything in the Budget about jobs. I invite them to come to any electorate in New Zealand and see the real New Zealanders who are out there putting insulation in homes and making a real difference. Take the billion dollars in this Budget for the electrification of rail in Auckland.
Let us look at the issue of climate change. We are making real progress, in contrast to the years of extravagant carbon-neutral promises made by the previous Government while our emissions went through the roof. Our well-balanced emissions trading scheme, now nearly a year in place, is delivering real benefits.
Hon Steve Chadwick: Linked to productivity.
Hon Dr NICK SMITH: For the benefit of Miss Chadwick let me compare the notes. In the last year we have seen over 1,000 megawatts of new renewable generation consented—the highest ever. In fact, in no other year has there been more than 300 megawatts of renewable capacity consented, and we have consented 1,000 in the last year. The average during Labour’s years in Government was about 200 megawatts per year, and the great irony, of course, is that in those years more than double that amount was consented in respect of thermal generation from fossil fuels. The combination of the price signal from the emissions trading scheme, our reforms to the Resource Management Act, and the national policy statement on renewables is delivering the much-needed shift in New Zealand away from fossil fuel electricity generation to renewables.
We have also seen a reversal in the deforestation that occurred so aggressively in Labour’s last years, in which a record 30,000 hectares of forest was lost. In our first year we turned the corner: a little bit of afforestation. Last year there were an extra 4,500 hectares. This year we are expecting 5,700 hectares and that is real environmental progress. We have seen in this Budget the huge commitment to the Global Research Alliance on Agricultural Greenhouse Gases on reducing agricultural emissions and a commitment of $50 million for the Agricultural Greenhouse Gas Research Centre. That research is absolutely crucial for New Zealand but crucial also for the globe, in the sense of how we produce food to feed another 3 billion people expected by 2050 while containing emissions. The important balance this Government has struck with the emissions trading scheme is ensuring that New Zealand meets its Kyoto obligations at least cost, that we start to make the transition to a low-carbon economy, and that we pace ourselves realistically, relative to the progress being made in other countries. It is interesting that at a conference I attended recently New Zealand was openly described as making more progress than any other country in the Asia-Pacific region, with the balanced approach we are taking to the huge challenge of climate change.
Another key area of work has been strengthening the national direction under the Resource Management Act. Last November we completed the new national coastal policy statement. In February we gazetted a national policy statement on renewable electricity, and in May added that on freshwater management. We are currently consulting on a national policy statement on biodiversity. I note that in the 9 years of the previous Labour Government there was one national policy statement in 9 years. In the complete 9 years of the previous Labour Government there was one national policy statement in 9 years. We have done three in 1 year—three in 1 year and that is very real progress, and equally so in respect of national environment standards. Last November we put in place national regulations requiring water metering. We cannot manage fresh water unless we measure it, and we put those regulations in place last year. That will move us from 33 percent of water takes being measured to 98 percent by volume being measured, within 6 years. In January I announced the new air quality standards, including the introduction of offsets. Last week, as part of our work with the Green Party, I announced a new national environment standard on contaminated soils. These steps reinforce the stronger national direction that this Government is giving to resource management.
The Budget makes provision for $15.2 million for the long overdue clean-up of the Tūī mine. This is the largest clean-up project that has been undertaken since Māpua a decade ago. That project was not well managed by Labour, and there is a real challenge for us to make sure that we do a good job of that clean-up. This Budget also contains a new contestable fund for clean-ups. It is interesting to make this comparison. Between 2009 and 2014 this Government is budgeting to spend $94 million on the clean-up of our rivers and lakes; $94 million. How much did Labour spend on clean-ups in its last 5 years in office? It was $16 million.
Hon Steve Chadwick: $17 million.
Hon Dr NICK SMITH: No, check the Budget tables. We are spending five times as much on clean-ups of our lakes and rivers as was spent by the previous Government. I say to members opposite that words come cheap; financial commitment is what counts.
If we look in terms of the commitment to the new Environmental Protection Authority that will take effect on 1 July, the new legislation that we have brought together in respect of the exclusive economic zone, and the new legislation dealing with a very practical issue of freedom camping, we see that this is the sort of practical, environmental, blue-green progress that this Government is making in this space.
I also note the appointments that we made to the Environmental Protection Authority and the board. I was astonished by the claim by the Green Party, and I quote what it said: “None of the eight board members of the EPA love this country and want to look after it.” What absolute arrogant nonsense! How dare it say that a man like Anake Goodall, the chief executive of Ngāi Tahu, has no love for this country? How dare it say that about the likes of Gillian Wratt, a very experienced botanist, who is the chief executive of the Cawthron Institute? That is the sort of arrogance we get from the Green Party. One does not have to be a card-carrying, sandal-wearing Green Party member to love this country. That is evidenced in this Budget by a very balanced and strong commitment to our environment. This is a sound, effective Budget that is appropriate for the times, and the House should back it.
CHARLES CHAUVEL (Labour): I want to talk about a key aspect of the Budget that concerns me the most. It is the proposal to sell off stakes in Air New Zealand, Meridian Energy, Genesis Energy, Mighty River Power, and Solid Energy.
Sandra Goudie: We’re not.
CHARLES CHAUVEL: Ms Goudie has just interjected with a denial, but if she has a look at the Budget documents she will see that all the forward projections for revenue and all the forward projections on a fiscal basis relate to, and rely on, the sale of these assets. It is all very well to say the sales will have to be approved at a general election, but the reality is that the sums will not work if this short-sighted policy is followed. Why is it a short-sighted policy? For some time before I came into Parliament I was the deputy chair of Meridian Energy, which is the biggest of the State-owned power companies.
Hon Dr Nick Smith: Political appointment.
CHARLES CHAUVEL: Of course, that Minister has never made a political appointment in his life! Meridian Energy is currently valued at $6.3 billion. It is the biggest of the State-owned power companies. If it goes, along with the other companies, then it will be gone for good.
What we can do with the revenues, with the dividends, from those companies is to pay 10,300 teachers every year, pay 12,600 police officers, undertake 33,000 hip operations, pay for 69,700 university placements and 91,500 polytechnic placements—
Sandra Goudie: Spend, spend, spend.
CHARLES CHAUVEL: All those spending commitments, I say to Ms Goudie, are investments in this country and investments in the people of New Zealand. If we sell these assets, we will not be able to undertake that spending, that investment in people. What will happen when those assets are gone? We do not have the answer to that from the National Government.
Debate interrupted.
The House adjourned at 10 p.m.