Thursday, 15 May 2003
Appropriation (2003/04 Estimates) Bill
Appropriation (2002/03 SUPPLEMENTARY Estimates)
Bill
Mr Speaker took the Chair at 2 p.m.
Prayers.
Appropriation (2003/04 Estimates) Bill
Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Appropriation (2003/04 Estimates)
Bill be now read a first time.
Bill read a first time.
Appropriation (2002/03 SUPPLEMENTARY
Estimates) Bill
Hon Dr MICHAEL CULLEN (Minister of Finance): I hereby present the
Supplementary Estimates of Appropriations for the Government of New Zealand for
the year ending 30 June 2003 (B.7). I move, That that paper be published.
Motion agreed to.
Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Appropriation (2003/04 Estimates)
Bill be now read a second time.
Mr Speaker, this year's Budget has been
prepared amidst the most uncertain political and economic situation
internationally for a very long time. The long bull market of the 1990s, fed by
international political and economic liberalisation and growing integration,
seems now a distant memory.
In their place, older and more malign
factors have reasserted themselves: war, terrorism, and their associated fear
and uncertainty; disease; and economic stagnation in many of the world's most
important economies.
Against this international backdrop the
primary objective of Budget 2003 is to tell our own national story of certainty
and stability. Budget 2003 delivers results in terms of gross debt, net debt,
and the operating balance exclusive of revaluations and accounting changes
which exceed the targets set in Budget 2002. It also looks forward to key
fiscal indicators for the coming three year period which are broadly in line
with the most recent December Economic and Fiscal Update. If events unfold over
the next year as forecast this will give room for some targeted and significant
moves in Budget 2004 and beyond.
Since the presentation of last year's
Budget the world has been through a period of turmoil and increasing
uncertainty. The world's key economic engine - the United States - has not only
slowed down but is sending very mixed signals about the short to medium term
outlook. The build up to the conflict in Iraq exacerbated that situation.
Equity markets continue to drift downwards or, at best, sideways, punctuated by
short, unsustained recoveries.
A growing U.S. current account deficit
and a return to deficit financing at the federal level have led to a weakening
in the U.S. dollar which has been the main factor driving an appreciation of
the New Zealand dollar. This has placed further pressure on our tradeables
sector.
In addition to these broader
influences, others, including more local factors, are likely to impact on
growth during 2003 and into 2004. Drought across much of the country,
particularly in areas not normally subject to drought, and late frosts have led
to reductions in land based production. Falling milk prices have combined with
the rising New Zealand dollar to reduce returns to dairy farmers for the
current year well below the very high levels experienced over the previous
couple of years. The SARS epidemic appears to be impacting on the growth in
tourism. Finally, the very real prospect of a dry winter in combination with
the independent redetermination that has reduced the Maui gasfield's reserves
may be expected to impact on growth in the short term.
All these factors will moderate the
very strong growth New Zealand has experienced over the last year or so. Year
to March growth is expected to have been 4.4 per cent, placing New Zealand at
the very top of the OECD growth ladder. The weakening factors already referred
to are expected to be offset in part by a range of domestic factors.
Net migration inflows remain strong and
house prices are rising. Both will support domestic demand. Business and farm
balance sheets are in good shape providing an important buffer. Monetary
conditions are expected to continue to ease over the year ahead.
On balance, it is anticipated that the
domestic factors will create a soft spot in quarterly GDP growth in the middle
of this year, dragging growth down to 2.2 per cent for the year to March 2004.
Growth is then expected to rebound in the following year to 3.2 per cent as the
downside factors unwind and the external sector recovers. It is expected that
easier monetary conditions in conjunction with a recovery in trading partners'
growth will help support the rebound in GDP growth from the latter part of 2004
onwards.
This pattern of economic growth, though
it is likely to continue to be high by OECD standards over the forecast period,
is expected to lead to some weakening of the labour market with unemployment
rising to 5.6 per cent by March 2004 and holding at that level before dropping
from mid - 2005 onwards. This is also likely to be a very strong performance by
international standards.
The strength of the economy over the
last year is reflected in the fiscal forecast for the operating balance
exclusive of revaluations and accounting changes. That figure, forecast to be
$2.29 billion in Budget 2002 and $3.52 billion in the 2002 December Economic
and Fiscal Update, is now expected to be $4.04 billion or 3.1 per cent of GDP.
This results in a gross debt forecast
for 30 June 2003 of 27.3 per cent of GDP, compared with the forecast of 28.6
per cent in Budget 2002. The corresponding figures for net debt are 14.0 per
cent and 16.8 per cent. Thus, for the third year in a row, performance has
exceeded expectations.
The final operating balance for the
year, including revaluations and accounting changes, is likely to be severely
affected by revaluations, including those in the Government Superannuation Fund
and Accident Compensation scheme. Revaluations are presently estimated to total
$2.68 billion, reducing the final operating balance to $1.36 billion. This does
not, of course, affect the cash position.
These revaluations flow in large part
from changes to the discount rate arising out of changing interest rates. As
such they are the reverse effect of the positive impact on the operating
balance of rising interest rates in earlier years and themselves are likely to
be at least partly reversed out over time. The ACC revaluation is also
substantially affected by recalculations based on, for example, a reassessment
of experience of the very long tail of the most serious cases from the 1970s
and 1980s.
The forward forecasts for the operating
balance have to be compared with this year's OBERAC. For 2003/04 a small drop
to $3.8 billion is forecast, rising thereafter to $4.5 billion in 2004/05, $5.3
billion in 2005/06, and $6.2 billion in 2006/07. Gross sovereign issued debt is
projected to fall to 23 per cent of GDP in 2006/07.
This is well below the government's
stated prudent gross debt upper limit. In this light it is useful to provide
some additional focus around the debt target and the fiscal possibilities that
exist over the forecast horizon.
The broadly stated target is to keep
gross debt below 30 per cent of GDP. However, given prudential management with
a margin for risk, the bias is more against increasing debt than lowering it so
that there will be a natural tendency for the gross debt percentage to trend
downwards over time.
The projected decline does indicate the
likelihood of sufficient fiscal headroom in Budget 2004 for some significant
initiatives beyond the amount presently allowed. Whether these will in fact
proceed will depend on a number of judgements about the economic and fiscal
position, including the level and direction of the structural surplus.
Should present indicators prove to be
accurate, the Labour Progressive Government will be in a position to make some
significant improvements in the level of family assistance to low to middle
income families and in the incentives to move off welfare benefits into
employment. Work will be proceeding on a range of possibilities over the next
year with the final choice of measures in part dependent on the amount of money
available. The United Future Party will of course, be consulted about the shape
of the proposed changes.
One decision has already been taken in
the context of this year's budget. The strength of the government's fiscal
position has enabled us to move to full funding of contributions to the New
Zealand Superannuation Fund a year earlier than anticipated. The Fund is
expected to go to market in the final quarter of 2003 in what seems likely to
be a favourable combination of a relatively strong New Zealand dollar and
moderate equity prices.
The New Zealand Superannuation Fund is
part of the government's capital budget. Another large part of that is occupied
by the State-owned enterprises.
This Labour-led Government indicated,
on taking office, that it was no longer in a "preparing-for-sale"
mode with respect to the SOEs, but a "long term hold" one. Some 18
months ago work began on the implications of that stance for both the Crown and
the SOEs.
Because of the size and strategic
significance of the SOEs, it is crucial to the success of the economy that they
perform well and are able to achieve their full potential to best advance the
government's economic objectives.
There is no intention to abandon the
basic framework established in the 1986 State Owned Enterprises Act, or to
become involved in operational matters or compromise the accountability of SOE
boards.
But we do need to adjust to the
post-privatisation environment. Specifically, we need to get the balance right
between allowing SOEs to grow and diversify, and ensuring that Crown capital is
available for the government's other priority areas.
In particular, I will be seeking to
incorporate SOE requests for equity for significant investments into the normal
budget process, where commercial realities allow, so that the Crown can better
integrate its capital management.
Mr Speaker, the SOEs make a significant
contribution to the Crown’s revenue, the bulk of which, of course, comes from
tax.
We have shown that we are prepared to
listen to rational arguments where tax is creating unnecessary problems for
businesses. Our tax simplification
initiatives are an example of that but most tax acts have a number of measures
that are a response to problems raised by the business community.
This is an ongoing process. Early in our first term of government,
legislation was enacted that allowed a deduction for research and development
expenditure that is reported as an expense for accounting purposes. A private sector group has been established
to report to the government on how well this is working. It would not be surprising if this results
in some modifications to the law to remove any identified problems.
The next tax bill will include a
proposal to subject to GST some imported services and to remove multiple layers
of GST that can be imposed on the financial sector. These are issues that have been worked through with private
sector co-operation and remove deficiencies in the GST rules that were
recognised but not resolved when GST was first introduced.
A key concern of tax policy in the
future will be to underpin in the tax area the government’s overall commitment
to an open economy with strong international links.
The next tax bill will include
legislation to put into effect the agreement we have reached with the
Australian government on trans-Tasman imputation. This agreement is a landmark.
It is the first time our two governments have coordinated a common
approach to tax issues. We shall look
for any future opportunities to build on this.
A tax policy priority this year is to
bring forward proposals to enable overseas venture capital to be invested in
New Zealand in accordance with normal international tax rules. This will ensure
that New Zealand does not lag behind similar Australian initiatives in this
area. Similarly the government will
this year consider measures to provide a temporary exemption for migrants from
tax on foreign income, the cost of which, in many cases, must now be paid by
New Zealand businesses that require the skills of those migrants.
These are various ways the government
is updating our tax system in line with our economic objectives.
The fundamental objective of our tax
system remains the raising of revenue to meet our social and economic objectives. This needs a constant programme of measures
to counter the ingenuity of those who will go to great lengths to avoid tax.
The next tax bill will include measures
along these lines. One of these is
aimed at schemes that are structured to offer high income investors a return
from tax deductions to the extent that the investors need not be concerned with
the underlying economics of the arrangement.
Many of these base maintenance measures have been targeted at individual
taxpayers. Large companies and the financial sector benefited from New
Zealand’s strong economy over recent years.
Budget 2003 provides Inland Revenue with the resources to apply the law,
and proposes changes to the law if that is needed, to ensure that these high
profits are being matched by tax payments.
One other significant initiative in the
tax area this year is the inclusion of legislation to provide for a new lower
rate of tax on employers’ contributions to superannuation schemes for employees
earning less than $38,000.
One very useful way to think about
providing an adequate income in retirement is the World Bank approach, which is
based on three tiers: public provision, employment-related provision, and
private provision.
The Government’s current focus is on
the second tier of the World Bank model, employment-based superannuation. This has the most potential for getting New
Zealanders into long-term savings patterns.
The Government acknowledges that there
are a number of disincentives to saving through employment-based schemes and
for employers to offer these schemes.
Within the next few weeks, the
Government will be introducing legislation to remove the current over-taxation
of employers’ contributions to superannuation funds on behalf of low-income
savers. The present tax rate on
employer contributions is a flat 33 per cent, regardless of income.
From 1 April next year, employers can
apply a lower tax rate of 21 per cent on contributions made to superannuation
funds on behalf of employees earning under $38,000 a year. This should remove one of the disincentives
for low-income earners to save through employment-based schemes.
The direction of the Government’s
future work in this area is to look at removing the disincentives for employers
to offer these schemes, and the inequity of the current tax law in overtaxing a
fund’s earnings in relation to low income savers.
The savings industry and the government
are cooperating on this work which is moving in parallel with that being
undertaken by the Periodic Review Group on retirement income policy.
Mr Speaker, fiscal certainty and
prudence have been the hallmarks of this Government. We have resisted pressures to spend surpluses before they arrive,
or to give them away by means of unsustainable tax cuts. Other jurisdictions are demonstrating how
easy it is to slip back into substantial deficits. It is a path we do not choose to follow if for no other reason
than that we are in the most favourable demographic position we are likely to see
for the next two generations or more.
At the same time as saving for the
future we need to be actively building it as well. Budget 2003 does this through a series of targeted spending
initiatives aimed at smarter growth helping to build stronger and more secure
communities.
Much of the additional spending
underpinning smarter growth is directed towards strengthening the Government’s
Growth and Innovation Framework.
Fostering innovation is critical to New
Zealand’s growth potential. The 2003
Growth and Innovation package contains measures to increase the applied value
of publicly funded research, promote greater private sector investment in
research and development, and develop closer links between public sector
research institutions and industry.
$140 million, plus $12 million capital, is committed to new investment
in Vote: Research, Science and Technology over the next four years.
A new pre-seed Acceleration Fund will
be established. This fund will have $19
million to invest over the next four years, in partnership with the private
sector, in the early commercial development of promising discoveries in our
research institutions.
Existing research funds such as the New
Economy Research Fund and the Marsden Fund are being boosted substantially
again.
The 2003 Growth and Innovation package
also makes a significant contribution to building skills and talent. For example, the package includes an
initiative to enable more active marketing of skilled potential immigrants and
measures to strengthen the interface between industry and the education sector,
including additional resources for training schemes.
As part of the implementation of the
Growth and Innovation Framework in 2002 the government established four private
sector taskforces to develop sector specific strategies. Within the 2003 Growth and Innovation
package there is provision for a $110 million contingency over four years to
enable the implementation of initiatives that the government undertakes in
response to the taskforces’ reports.
Business incubators are shaping up as
important sources of innovative new businesses so the government is again
increasing the support for them. Budget
2003 contains $6.4 million over four years to accelerate the work of the
existing 15 incubators and to facilitate the development of new ones.
Inevitably most of the businesses which
emerge out of these incubators will be small businesses. They will, therefore,
face many of the challenges that small businesses do.
Such businesses will be assisted by the
integration of Trade New Zealand and Industry New Zealand into New Zealand
Trade and Enterprise, the funding for which is provided in Budget 2003. New Zealand Trade and Enterprise will be
able to provide seamless support for such companies from start up to the time they
go global.
While international studies suggest
compliance costs for business are lower in New Zealand than in most other
developed countries there is still a lot that can be done. Budget 2003 provides funding for the
establishment of a Small Business Advisory Group drawn directly from the business
community. This group will work with
and advise the new Small and Medium Sized Enterprise Unit that has been
established in the Ministry of Economic Development.
Much work has already been done in the
tax area to make it fairer for SMEs.
Legislation has been passed to ensure fairer treatment for businesses
having tax payment problems; measures have been introduced to allow tax pooling
through commercial intermediaries and to make it easier to use payroll firms to
deal with PAYE.
In the course of development and due
for release for discussion over the coming months are a number of more
innovative measures to help small businesses.
The first of these will be a proposal
to align the payment date for provisional tax with that for GST, at least for
small and medium-sized businesses. This
will assist with cash management and reduce compliance costs. A further proposal to base provisional tax
on a percentage of GST turnover will add to this by allowing qualifying small
businesses to match tax with cash flow more closely.
The third proposal involves a
significant cost to the Government but with significant benefits to small
businesses. That is to subsidise the
cost of an employer engaging a payroll firm to manage the payroll and associated
tax obligations. The subsidy would be
for up to the first five employees. It
is possible the payroll firm would be able to take on other compliance costs as
well thus further assisting small businesses.
For new businesses a proposal to
provide an incentive to pay provisional tax in the first year of business
should help smooth the transition through the following year.
It will also be proposed to simplify
the multirate FBT calculation by removing the present complex mechanism that
involves taking account of the employee’s total remuneration at the threshold
of their marginal tax rate and by enabling FBT returns to be filed
electronically.
A range of other initiatives have begun
or are in train. These include the Department of Labour developing best
practice employment information; the development of a training and
accreditation scheme for councillors and commissioners involved in Resource
Management Act decision making; the launching of a business portal as a
web-based one stop shop to provide all relevant government information; an
e-commerce guide for SMEs with over 8,000 copies already distributed; and
simpler and more modern payment systems for road user charges.
The purpose of all these initiatives is
to assist businesses to meet the responsibilities of living in a well-ordered
and progressive society at minimal costs in terms of both time and money. It does need to be said, however, that some
compliance costs are an intrinsic part of living in such a society. Recent experiences with the building
industry show the dangers – and the costs to the public – of an unthinking
adherence to deregulation and front end cost minimisation.
Mr Speaker, the greatest need that
businesses have is for skilled and well-trained employees. Labour is now the most important input in
any modern economy and the quality and quantity of skills demanded continue to
rise. Educating for a successful,
innovative economy is, therefore, a crucial theme of Budget 2003. But education is also about the development
of each individual to his or her full potential and about the pursuit of values
that cannot be expressed in purely monetary terms.
Total education funding rises by $393
million to $8.2 billion for the 2003/04 year.
Further increases in out years are provided for as policies that start
early next year take full effect.
Our first priority is to reduce
inequalities in educational achievement by ensuring that all New Zealanders can
reach their potential, regardless of their background.
We have the foundations, including new
assessment systems, in place to do the work. Now we are shifting our focus to
strengthening our education system’s ability to deliver quality education,
better teaching, and better learning for students of every age.
We continue our commitment to
increasing participation in quality early childhood education with an extra $55
million in spending over the next four years.
This includes increased funding for early childhood centres and
initiatives to improve the supply of qualified teachers, in particular for
Māori and Pasifika communities.
Total education funding for early
childhood for the 2003/04 year rises to $421 million, an increase of 8 per cent
compared with the previous year.
Budget 2003 will also drive a concerted
approach to improve effective literacy teaching and learning in primary
schools. It is essential that all
children have the right foundations for success later in life, in education and
in the workplace.
$15 million
will be injected over four years, bringing total spending on literacy
initiatives to $25 million over that period.
Budget 2003 sees an additional $167
million over the next four years to fund extra teachers, over and above roll
requirements, in order to ease staffing and teacher workload pressures. From next year schools will be provided with
an additional 774 primary and secondary full time teacher equivalents, as part
of the ongoing implementation of schools staffing improvements.
An additional $22 million over four
years will fund existing initiatives to increase the supply of teachers,
bringing total investment in teacher supply to over $66 million. This
investment will increase recruitment and retention, particularly in
hard-to-staff areas or areas of subject shortages, as a bulge in student
numbers moves through the secondary school system.
Our second goal is to build an
education system that equips New Zealanders with 21st century skills.
To this end, we will be building the
capability of students, educators and institutions to take advantage of the
vast opportunities available through information communications technology.
A new investment of $42 million over
four years will enable schools to connect in a safe and secure environment so
they can effectively participate in the knowledge society. This initiative will help schools build their
information technology and networking infrastructure so they can connect easily
and efficiently to online resources.
This ICT investment is over and above the government’s investment in the
rollout of high speed, broadband internet access to rural and urban communities
nationwide by the end of 2004.
Budget 2003 continues the work of
previous budgets in putting in place a comprehensive reform of the tertiary
education system. Post-school learning
is undeniably important for its own sake, but also has pivotal role in
contributing to the skills and knowledge New Zealand needs for both its
economic and its social development.
The key decisions about the reform
process have now been made and the focus of this budget is to provide
predictability to the sector to enable it to concentrate on the goals of
excellence, relevance and access.
We are spending over half a billion
dollars to support excellence in the areas of both research and teaching.
Budget 2003 commits $422 million to
implement further increases to tuition subsidies in each of the next three
years in order to maintain and enhance the quality of teaching. For the first time, we are setting the
funding rates for the student component on a rolling triennial basis. This means that universities, polytechnics
and other providers will have much greater predictability about their tuition
income.
Tertiary education organisations’
ability to achieve excellence will also be assisted through an extra $58
million over four years in capital and operating funding to support innovation
and development, and in particular e-learning capability.
We are determined to make the workplace
a key site of learning. We have
committed $84 million over four years to give predictable multi-year funding
for the Industry Training sector and to reach our goal of having 150,000
trainees in place during 2005. From
there, we intend to work towards the even more ambitious goal of 250,000
trainees in 2007.
We will ensure that we have enough
people with the right skills, and we want to ensure that they use those skills
in New Zealand. This Government
recognises the need to address labour shortages and skill shortages in critical
vocations. Communities need to be assured
that critical skill gaps will be addressed.
From 2004, scholarships and research fellowships will provide financial
incentives to influence potential students, learners or recent graduates to
stay and work in vocations critical to the country. The Government is committing $23 million over four years to this
initiative.
The fee maxima policy, the details of
which are announced today, is an integral element of the government's objective
of ensuring that tertiary education remains affordable. It will provide some certainty and
predictability as to the future costs of tertiary education, while also
providing some flexibility to providers in terms of their fee-setting behaviour
and their future guaranteed income.
Improving the transition for young
people from school into employment or training is a government priority. This Government aims to have all 15 to 19
year olds engaged in appropriate education, training, work, or other activities
leading to long-term economic independence and well-being by 2007. A multifaceted approach is being taken that
recognises the individuality of our young people. More than $40 million extra
over the next four years will be spent to expand the Gateway programme,
increase the number of modern apprenticeships, provide additional
post-placement support services for youth trainees and pilot an individually
planned and managed approach to assist at risk youth with career planning.
Mr Speaker, equipping our people with
the skills necessary for success in the 21st century is a key part of the
government’s social development programme.
Realising the vision of New Zealand as
an innovative, knowledge based society begins and is nurtured in the home. The support, and expectations, of families
provide the base from which children and young people build successful and responsible
adult lives.
The Families Commission initiative
developed by the Labour Progressive coalition and United Future New Zealand is
intended to raise the profile of family and parenting issues.
This Budget also provides the first
steps towards improvements in family income assistance. This year we are improving support for low
income parents entering full time work by increasing the maximum number of
subsidised childcare hours from 37 hours per week to 50. The income thresholds
for Family Support, Child Tax Credit and Parental Tax Credit are to be
increased, making this assistance available to more families. While these are very modest steps, amounting
to some $59 million over four years, they signal this Government’s clear
intention to make improvements to benefit and tax based family income
assistance in the 2004 Budget, subject to the qualifications I made earlier.
In this Budget we are instituting two
new measures to protect the integrity of the social security system. New data matches with the Department of
Internal Affairs, ACC and Housing New Zealand will augment current data matches
with a range of agencies and ensure benefit accuracy. Payment accuracy will also be checked through early intervention
initiatives and new reviews of benefit entitlement carried out by additional
Work and Income benefit control staff.
Alongside ensuring benefits are
properly administered, Work and Income staff have a vital role assisting people
to move from benefit into sustainable employment. Our healthy labour market over the last year has helped Work and
Income to achieve record employment placement results.
Work and Income will be applying more
resources to employment services for job seekers. Work and Income clients will benefit from additional assistance
in areas such as more active work brokerage and support, industry based work
assessments and career coaching.
Employers will gain, as more people will be work ready to fill
employment needs and opportunities.
Some groups, however, still face
additional barriers to gaining employment.
In this year’s budget $21.2 million over four years is being made
available to help more refugees and migrants access job opportunities and for
more employers to tap into this skilled labour pool.
Housing and health are key aspects of
social development. Funding is provided
in Budget 2003 for an additional 318 state houses, to reconfigure 80 existing
houses, and to begin a major modernisation programme.
Funding is also provided for an
additional 77 community houses and for supporting the expansion of local
government and third sector housing.
Inevitably, the increases in Vote:
Health are very much larger. Total
health operational and capital spending rises from $8.63 billion in 2002/03 to
an estimated $9.61 billion in 2003/04.
The Health Funding Package, at present
an additional $400 million a year up to 2004/05, is rolled out a further year
to 2005/06 with an additional $535 million being provided in that year on top
of funding for the first year of the phase-out of asset testing for long-stay
geriatric care. This means that total
health spending is forecast to rise to $10.56 billion in 2005/06.
This continues a tendency over recent
years for increases in health spending to be well above the rate of growth in
nominal GDP. Operational health spending is projected to move from 5.4 per cent
of GDP in 1995/96 to 6.5 per cent in 2005/06.
District Health Boards, in particular,
need to ensure that they manage within these forecast spending limits. Some success is being achieved in winding
back DHB deficits but further efforts will be required. In particular, DHBs need to understand that
wage and salary increases must be met within their current forecast incomes.
As I indicated last year, the Health
Funding Package is to allow for certainty in planning. It does not represent the Government’s
opening offer on funding.
Within these very large amounts
particular attention is being paid to primary health care. In 2003/04, $165 million has been allocated
to primary care funding and this amount will grow significantly over the next
three years. There are more than one
million New Zealanders enrolled in Primary Health Organisations with more than
700,000 in Access PHOs that give them low patient fees.
Around $20 million of this extra
funding is allocated this year to allow PHOs to charge low patient fees for
young people aged between six and seventeen, to lower prescription charges to a
$3 maximum for children and young people and Access PHO users, and to roll out
the CarePlus programme.
Particular initiatives promoted by the
Progressive Party are those aimed against drugs, including funding for
community programmes to combat the use of cannabis and other illicit drugs, a
national drug information analyst, and a youth residential treatment centre to
serve the South Island.
Other programmes promoted by the
Progressive Party include measures to support families, carers, and whanau
following a suicide or serious suicide attempt and assistance to Youthline.
Mr Speaker, a primary duty of
government is to keep its citizens safe.
Budget 2003 commits $192 million operating funding and $64 million in
capital funding over the next four years on a range of initiatives to reduce
crime and the impacts of crime, improve the effectiveness of youth offending
interventions, implement public law and criminal law changes already agreed by
Cabinet, speed up Treaty of Waitangi negotiations processes, and maintain core
service levels.
There will be funding for an additional
50 Auckland-based police officers as well as a specialised Auckland DNA
collection squad. There will be funding
for two specialist police teams to deal with the rapid increase in
methamphetamine laboratories plus funding to boost the capacity to investigate
organised crime and terrorism.
Victim support organisations funding
will be increased, as will support for youth justice programmes and pilot
programmes with good prospects for success in reducing crime and improving
outcomes for young offenders.
Security at the border also receives
attention.
The Government is investing in
protecting New Zealand’s reputation as a safe trading partner through a
significant boost in the staffing and funding of the New Zealand Customs
Service. This investment is to provide
capability to inspect and x-ray high risk import and export shipments at all
New Zealand sea ports.
This year’s budget sees an increase in
Customs operating expenditure for trade security of almost $9 million and a
significant capital investment in x-ray technology, in the order of $15 to $25
million, which will be completed via a tendering process.
Up to 130 additional staff will be
employed.
Customs will take advantage of the
latest developments in mobile x-ray technology, so that it can be used at all
New Zealand sea ports. High risk cargo
for screening will be identified by Customs intelligence analysis of all
available data.
Customs has a central role in
responding to heightened international security concerns. The Service has a
long history of managing the flow of people, goods and craft into New Zealand
to protect the community.
Now, internationally, the expectation
is that countries will also take action to secure the export supply chain. We
must take action to ensure our vital export trade continues to flow as freely
as possible in the light of new international security demands.
Mr Speaker, New Zealand's identity as a
nation rests in large part on the preservation of our environment, the
promotion of our culture and heritage, and the full participation of its
indigenous people in the life of the nation.
Preserving our environment is no longer
just a matter of conservation as traditionally understood. It also encompasses
participating in the international effort to slow and halt the process of
climate change. Budget 2003 provides for the establishment of the Climate
Change Office, additional funding for the carbon monitoring system, developing
policy and incentives to help small and medium sized enterprises reduce
emissions, and the allocation of 4 million emission units to provide incentive
funding for emissions reduction projects.
Energy efficiency, a key element in the
climate change programme, is assisted by a doubling of the size of the Crown
Energy Efficiency loans scheme.
Biosecurity capability and new organism
enforcement is enhanced. Measures to achieve this include extra resources for
the enforcement of the new organisms component of the Hazardous Substances and
New Organisms Act, and additional funding of $2.5 million a year to allow the
Environmental Risk Management Authority to transfer hazardous substances to the
new central regime. Other initiatives will assist in sustainable resource use.
Budget 2003 continues the trend for the
last three years in providing substantial increases in funding for Vote: Arts,
Culture and Heritage. Over the next four years the extra funding totals $75.9
million. This includes $11.6 million for Creative New Zealand; $2 million for
the Royal New Zealand Ballet; and $8 million for the Historic Places Trust.
The Government is committed to ensuring
public service broadcasting is a key component of the country's cultural life
and a vital contributor to New Zealanders sense of national identity. The
additional funding for Television New Zealand and Radio New Zealand support
their mandates to improve the quality of public broadcasting, increase levels
of local content, and meet the needs of diverse audiences.
The Television New Zealand Act 2003
which came into effect on 1 March 2003 creates new objectives for Television
New Zealand. An extra $17 million over the next four years supports TVNZ in
giving effect to the Charter by adding depth and quality to its existing
programming and by adding programming intended to serve a greater range of New
Zealanders. An additional $8 million over four years to New Zealand On Air will
enable the agency to maintain levels of contestable funding for local
television programming.
An additional allocation of $14 million
over four years to Radio New Zealand will enable the public broadcaster to
establish FM broadcasting for National Radio and to maintain and enhance news and
other programming services at a level consistent with all aspects of the Radio
New Zealand Charter. The move to FM will ensure that RNZ is able to compete
successfully in the national and international marketplace, particularly in
attracting younger audiences.
Mr Speaker, significant improvements in
the position of Maori in New Zealand society have occurred over the last few
years. Substantial reductions in unemployment, very large growth in tertiary
education enrolments, and the government's programme of capability funding and
devolved services delivery have all contributed to this.
The Treaty settlement process has moved
to a stage where settlements are now occurring on a regular basis. The
settlements achieved under successive governments have sufficient variety to
provide useful precedents and benchmarks for those to come. To assist in the
process, funding has been provided for an additional negotiating team.
$6.5 million over three years is
allocated for a programme of public information on the Treaty of Waitangi. This
should assist both Pakeha and Maori in arriving at a better understanding of
the Treaty and its relevance to contemporary issues. At the same time the
Government has been refocusing capacity building funding to a more strategic
basis. This will enhance the integrity and credibility of government funding by
ensuring the management structure of government funded Maori organisations is
strengthened.
Work will continue on a commonsense
approach to facilitating collaboration between government agencies and Maori
community organisations. Solutions delivered by Maori for Maori are more likely
to be successful in achieving the desired outcomes.
Mr Speaker, this Government has
followed a consistent economic policy stance for the last three and a half
years. That has centred around the three pillars of stable and certain fiscal
policy, rebalancing and moving to the mainstream previously unbalanced
policies, and adopting a more active role for government in facilitating
economic growth. All require a more active role for government.
It is this Government's view that the
market alone will not provide the level of growth and innovation we need as a
nation. A small stringy country, 2000 kilometres from its nearest substantial
neighbour, cannot afford the luxury of ideological self-indulgence.
As we do not leave monetary policy
solely to the whims of the market nor can we afford to leave transport policy,
energy policy, innovation policy or almost any other key driver of high
economic growth. The rebalancing process continues in some of those areas as
forthcoming announcements in the energy sector will make clear.
This Government believes in making the
most of New Zealanders' new ideas by encouraging and supporting them from
conception through development to commercialisation. The Government cannot make
these things happen but it can do much more than we have been accustomed to to
help them happen.
That is the path followed by every
small to medium-sized successful OECD economy over the last twenty years. New
Zealand is now in step. Budget 2003 shows an integrated, whole of government
approach to sustainable economic growth and innovation. It reinforces our
reputation for fiscal prudence and economic pragmatism. It offers certainty and
stability amidst a threatening, confused, and insecure world environment. And
for our people it offers the security and opportunity which is their right, by
birth or by adoption, as New Zealanders.
This is a nation founded in hope by all
who have come here over many hundreds of years. Some of us came yesterday, some
fifty years ago, some 150, and some a thousand. What unites us is that out of
those successive waves of people we are creating a unique multicultural nation
whose greatest asset, whose greatest source of future success, lies in the
skills and enterprise of our people.
After a long period of instability,
bitterness, and uncertainty we can now see more clearly the shape of our
future. As a nation we are building on the base of the great comparative
strengths in land-based industries that we have created. We are seeing emerge a
kaleidoscopic collection of niche high quality businesses which can compete on
equal terms in the international market.
To support this requires a society in
which all citizens are able to make a real commitment and receive a fair reward
for that commitment. A society of rapidly increasing inequality, of change
thrust upon people from above, a society characterised by mean-spiritedness,
bigotry, and sectional greed will not deliver economic success.
Each of this Government's budgets has
built carefully upon its predecessor as we seek to realise New Zealanders'
vision for our nation. This Budget is the fourth in a continuing story of
certainty, stability, and social and economic progress. I commend it to the
House.
Debate interrupted.
Hon Dr MICHAEL CULLEN (Minister of Finance): I hereby present the
Budget 2003 Speech, the Fiscal Strategy Report and Economic Fiscal Update (B.2)
and (B.3), the Estimates of Appropriations for the Government of New Zealand
for the year ending 30 June 2004 (B.5), and the Departmental Forecast Reports
and Statements of Intent 2003/2004. I move, That those papers be published.
Motion agreed to.
Debate resumed on the Appropriation
(2003/04 Estimates) Bill.
Hon BILL ENGLISH (Leader of the Opposition): I move, That all
the words after “That” be omitted and the following inserted: “this House has
no confidence in the Labour minority Government because it has abandoned the
task of lifting New Zealand’s long-term growth prospects, because it is
smothering our economic vitality in regulation and unworkable policy on energy
and transport infrastructure, because it is overtaxing families and businesses
to pay for welfare dependency, political correctness, and educational failure,
and because it has developed a culture of deceit around public accountability.”
There
is nothing like the prospect of a ministerial vacancy to get Government members
on their feet. One would not know that this Budget is the one that put on the
“sherry tax” and is setting aside $35 million for the America’s Cup. The real
problem with the Budget is that the Labour Government has given up the task of
lifting our economic prospects. It is not focused on the growth of the economy,
but on the growth of surpluses, welfare dependency, and bureaucracy. It is
probably best summed up by the Minister’s own words about what he is doing for
small business—the engine of the New Zealand economy. He said that the Small
Business Advisory Group “will work with and advise the new Small and Medium
Sized Enterprise Unit” in the Ministry of Economic Development. We are to have
a new group of advisers to advise the advisers, who advise the advisers to the
advisers to the minister about smart growth; and, of course, smart growth under
this Government means photo opportunities.
We
have had the best growth we will have for the decade, last year. New Zealand
has seen the benefits of good prices and a flexible economy. Labour has watched
others grow the cake, and now it is getting ready to divide the cake up. Two or
3 years ago it looked different. Two or 3 years ago the Government talked in
its Budgets about a partnership with business. It talked about transformation
of the economy. It talked about a growth goal, and a fiscal cap to stop the
Government spending too much. All of these have fallen away like a plane flying
along with the bits coming off it.
Labour
has retreated from economic growth as its primary goal. It has done so with a
lot of bad blood. After the Catching the Knowledge Wave conference, the Prime
Minister was profoundly irritated with the business view that she should do
what she said she would—that is, to put in place policies that promoted
economic growth—but she was not conscious at the time, nor was she conscious at
the time the Government signed up to the growth goal that it has now abandoned,
to put New Zealand in the top half of the OECD by 2011.
That
is why I referred to the culture of deception. That growth goal was all through
the public documents, but when we revealed to the House that the Government had
backed off it, does the House know what Government members decided to say? They
decided to say: “We never actually had a growth goal. It was informal, not
formal. Others talked about it, not us. It was in the graphs, not the text. It
was in the text I signed off, but I didn’t read the text, or the memo that drew
my attention to the text.”
We
then had the new excuse this week—that is, people were not conscious when they
made those decisions. We have had an outbreak of “Sars” in the Government—that is, “Selective Amnesiac Recall
Syndrome”. The fact is, the growth goal has gone, and the rhetoric in this
Budget is no longer about the Government’s ambition for New Zealand’s growth
rates; it is all about how it will spend it.
Let
us look at the economic outlook. The focus on the large surplus has crowded out
one simple fact—that is, the New Zealand economy is headed for a sharp
downturn. According to the forecasts in here, the growth rates will drop from
4.5 percent to 2.2 percent. If a few things go off the rails, then it will be
well under 2 percent. The further out we look, it does not get much better. It
gets up to 2.5 percent, and maybe 3 percent in the odd year.The Government can
increase the capacity of the economy, but almost every decision it makes, as
exemplified in this Budget, does otherwise—because Labour’s response is always
more rules, more tax, more bureaucrats, and more programmes. That is what
members heard in that speech—a long, long list of programmes.
There
were some pretty odd things. The Government has decided in the middle of an
energy crisis to give 17 times as much money to TVNZ for the charter as it will
give to energy efficiency. What we are seeing is not so much a blackout in the
economy as a steady dimming of the lights—the slow strangulation of certainty
and good incentives that encourage risk, investment, and success. This nation,
because it is small and distant, faces a continuous need to progress its
economic framework, but instead we have sclerosis developing in the arteries of
the economy. Let us take energy. What do we need? Well, there is plenty of fuel
for the energy that New Zealand needs. We need a national energy strategy
powered by an effective competitive market. We need to free up the Resource
Management Act, sort out the rules that paralyse with political correctness the
burning of coal and gas, and we need some technical changes to the market.
What
have we had? We have had 4 years of policy paralysis, the worst energy crisis
in decades, and suddenly Helen Clark has decided to talk about stand-by
generation. Now this is the dirty little secret of the Budget that members did
not hear today. Stand-by generation, by definition, will not be used under
normal circumstances. It will cost a lot. One cannot pay for it by selling
electricity, because it will not be used normally. How will it be paid for? By
tax! Will it be “Clark’s Energy Tax”, or “Hodgson’s Energy Tax”? I bet it will
be Hodgson’s. The proposal is a levy on the other generators. That will be
passed straight through to the consumer. I challenge the Prime Minister to tell
New Zealand today how the stand-by generation will be paid for if it is not
paid for by a tax payable by New Zealand consumers. Of course it will be!
Let
us go to roading—again, part of the lifeblood of the economy. What do we need?
We need a full tool kit, a lot of money, and some processes that will allow our
roading problems to be solved. We have to sort out the Resource Management Act.
We have to cut back on the layers of consultation. We need a legislative tool
kit, tolling, congestion pricing, public-private partnerships, and we need
economic rather than political priorities.
What
are we getting? Well, for all those Aucklanders, and people in the Bay of
Plenty, who have waited years, we are getting muddled compromises—no tools that
work, a ministerial veto, and no progress. Government members can laugh—but all
the people who supported the Government’s roading policy 6 months ago are now
against it. So instead of devising small-business advisory groups to the
advisers of the advisers of the advisers, why does the Government not just fix
the legislative structure for roading, and please would Government members keep
their sticky fingers off the Tranz Rail deal?
The
Government chased away Singapore Airlines, and it cost taxpayers $1 billion. I
tell the Prime Minister to please say nothing. She should not put her foot in
her mouth. I tell Dr Cullen to please not meet anyone related to this deal,
because the last ones he met left the country absolutely disillusioned.
What
about welfare? We have had 4 or 5 years of the strongest job growth in New
Zealand history. The welfare numbers have hardly moved, and the forecasts in
this Budget say they will increase. We have a number of people receiving
welfare income from the Government this week: twice the population of Hamilton
plus Hawera. What about the Government’s attitude? When one looks through the
Budget, the table that forecasts the number of beneficiaries has gone. There
are now no forecasts of those numbers. They are gone.
Do
members know what else has happened? Social welfare has disappeared. It is all
now paid for under Vote Social Development. So now it is a form of development,
to condemn people to a subsistence life for years on welfare, as social
development. No amount of weasel words from Steve Maharey or Helen Clark will
change the reality. New Zealand has a multigenerational hard-core problem of
welfare dependency. This Government is making it worse. We will break the
culture of welfare dependency.
Let
us get it in perspective. In the Budget, Dr Cullen talked about $78 million
over the next 4 years for job training. That is a big number. Do members know
that if they do the same calculation for welfare spending over the next 4 years
it increases by over $2 billion—$78 million dollars on job training, and $2
billion more by the same measure on welfare? That is a scandal.
Do
members know what they say? In his speech Mr Anderton talked about the
development of the economy and the need for people to fulfil their
potential—and the answer is a Ministry of Economic Development! He says that
the ministry was set up to spearhead the transformation of the economy. Well,
the Ministry of Social Development is spearheading the transformation of
people’s hopes and opportunities into welfare dependency.
Let
me come to the surplus. Who paid for this surplus of $4 billion, and rising in
the forecast to over $6 billion?
Hon Dr Michael Cullen: It’s too big!
Hon BILL ENGLISH: Yes, it is too big. That is exactly the answer. It was
paid for by families and businesses. The family who wanted to change the car
cannot, because Dr Cullen says that it is better piling up in his office. The
family who thought they might finally be able to afford insurance—one of the
single biggest markers of attaining security in this country—cannot, because
they are contributing to the $4 billion and $6 billion. So after Dr Cullen has
rattled through his programmes, those are the people who pay the bills—and they
pay with real money and real tax. They pay for every politically correct binge,
they pay every time the Prime Minister uses Air Force One, and they pay for
every new bureaucrat and every new programme. Then, as far as Labour is
concerned, with what is left over they get to pay for the groceries, fixing the
car, and school costs—and then they save for retirement. They thought they
would have the money to pay off their own debts, but that money is going to
Labour to pay off its political debts.
So
the Minister has simply gone too far. He is trying too hard to prove his
conservative economic credentials, and it is costing families and businesses
billions. The reason the surplus is rising to $6 billion is that with Dr Cullen’s
ideological weirdness he cannot abide handing any money back through lower
taxes. Even with a surplus at $6 billion, there is the “sherry tax”, and the
new levy, the “Clark energy tax”. He cannot abide handing money back.
Actually,
it is bad fiscal management as well. Fiscal policy is just getting too tight,
but he did not make that decision consciously. He is just stuck with it,
because he will not hand any back through tax. In that sense, it is a huge
transfer of wealth from the private sector to the public sector, and we can see
Government members salivating because, over the next 2 years, there is no
fiscal cap. That is why it has been removed. The Labour caucus is waiting for
the opportunity to stand it up. It has moved from talking about growing the
cake, to now getting on with the job of deciding how it will divide the cake
up.
Hon Member: Good idea.
Hon BILL ENGLISH: Good idea—there we go! Yes, that is exactly where it is—a
good idea to buy people’s votes with their own money! What sense does all that
make to the students of New Zealand? Those are the people who merited not one,
but two, credit card promises—one in each of the last two elections—that Labour
would reduce the costs of tertiary education. We have seen in that the classic
way this Government makes policy. It stepped in and decided that the best way
to do that was just to freeze the fees. Now, that defied economic reality, like
the need to pay more money to get high-quality international staff, but they
just froze the fees and took all the credit.
In
this Budget the Government lifts the fees maxima. That means someone going to
Otago to do a BA next year could be paying—is likely to be paying; is almost
certainly to be paying—about $900 a year more for that course. That was not in
the speech. Students will think that that is a broken promise. That is what
they will think. In fact, in Canterbury they have already figured it out, and
they are protesting as we speak.
But
what will we see next? We will hear Helen Clark say: “It’s not my responsibility.
The universities are putting your fees up.” That is what she will say: “I
wasn’t there. I never signed the memo”—
Hon Member: “I wasn’t conscious”.
Hon BILL ENGLISH: Well, Steve Maharey was not conscious; we can tell that
from how silly the policy is. But Helen Clark and Steve Maharey took
responsibility the day they froze the fees. If they wanted credit for freezing
the fees then, they are responsible now for the increase in those fees. I
invite Dr Cullen to explain the $6 billion surplus to those people.
I want to comment briefly on one of the
Government’s running sores, and that is the closing the gaps programme. What an
odd little phrase it is in the Budget, that we are now going to make the
spending more strategic. Is that politically strategic? I am sure that is the
case. No programme is more openly about cash for votes than the closing the
gaps programme. It is divisive because it is purely ethnically based. All the
things the Prime Minister said about the accountability for handing out $367
million have turned out to be wrong. None of the things she said would happen,
have happened, and the crowning glory of the closing the gaps programme that
costs $367 million is the self-evaluation. The people who spend the money
decide whether they spent it effectively.
That
really sums up the cynical approach that taxpayers can look forward to seeing
from this Government. It has now piled up $4 billion, $5 billion, and
eventually $6 billion surpluses in its accounts, and I am absolutely clear what
its intention is. It is not to hand the money back, although Dr Cullen has
signalled some money today for low and middle-income families. We certainly
support that, but why is that to be handed back next year? Why is it not this
year? Does he not know that those families are struggling this year? Does he
not know they are working hard this year? Does he not know that the costs of
sending a child to a free State school are going up this year? No—
Gerry Brownlee: He doesn’t care.
Hon BILL ENGLISH: He does not care, because it is not election year. The
Government has given up on growth. It has abandoned its growth target. It has
overtaxed families and businesses, and is now setting about the business of how
to divide up the $4 billion surplus among its own sector groups in the run-up
to the next election. This is one of the more cynical Budgets that this country
has seen in a long time.
Rt Hon HELEN CLARK (Prime Minister): That must surely be
his last Budget speech as leader of the National Party. That was the classic
recipe of spend more, tax less, and diminish the surplus—all in contradiction
to Don’s article in the Dominion Post this morning. He agreed with the
Minister of Finance that it was not time to blow all the surplus, and increase
spending and reduce taxes. He said, “were I finance minister, I would not do
so.”, so there we are. The Leader of the Opposition has had all year to prepare
a decent speech on fiscal issues and the economy, and all he has got is that
embarrassing stuff on energy: “Please don’t put in any extra stand-by
generation.”—he would prefer his cold shower, like he had at boarding school!
He
attacked the Government for having a long list of programmes; I am proud of
every one of those programmes, and I will go for programmes, over no policy,
any day of the week—programmes like getting school-leavers into work,
affordable health-care for young people, more houses for the needy, and more
police. They are the programmes that are the substance of this Government.
These
are uncertain times internationally, and, of course, the more uncertain they
are, the happier the National Party is. “Please, more misery!”, it cries;
“Please, more Sars!”. It wants more reduced growth in the OECD so that it can
moan on. We all know that there are external factors that impact on our
economy’s ability to grow, and there is no need to rehearse them here today. We
do not control those factors. What we must do is manage round them. That is
what creates the stability for business and for each of our communities, and that
is what people look to this Government for.
This
Government’s stewardship of the economy is very strong. I congratulate the
Minister of Finance on the Budget, and on the stability and certainty he has
brought to the management of the economy. The facts about the economy speak for
themselves. The growth that has been achieved under this Government is well
above OECD averages, and even next year’s Budget forecast of 2.2 will be twice
the OECD average. We are performing well when compared with our peers, because
other countries are in a worse position to cope with international
circumstances than we are.
In
the last few months we have seen unemployment reach a 15-year low, and it is
well below the OECD average. We have seen very strong net migration. This
Government wants the people with skills that are going to drive our economy,
and we will welcome them and treat them as Kiwis, as they should be treated.
The
operating balance has come in very, very strong, with over $4 billion projected
for 2002-03. There are good surpluses projected out ahead, and gross debt is at
its lowest level since the data on gross debt began more than 30 years ago.
Those are very, very strong economic figures, and they are what give the
Government the confidence to plan the partnerships for growth that it has, and
the steady improvement in social spending. This Budget is about steady
improvements in social spending—the community knows that, and that explains a
lot about the high, and continuing, level of support for this Government.
I
want to address some of the key areas in the Budget. I see the first 3 years of
this Government as having been about creating a stable platform, and
foundations for growth. When one comes to the second term, one begins to build
the house upon the foundations. One is never complacent. One keeps pushing
ahead with a vision of what this country can be. This country can be
prosperous. It is tolerant and inclusive, and it cares about its people, under
a Labour-Progressive Government. We thank United Future for the support it has
given us for this Budget, and it has real achievements in this Budget.
The
key areas that the Government singled out for pushing along growth through
innovation were in education and skills; innovation, research, and development;
business, industry, and export growth; and those enabling sectors that the
public-private sector task forces have been working on. This Budget follows
through on all those areas. Education spending is at phenomenal levels. It is
up by $393 million in this Budget. The spending for early childhood education,
which is the foundation of education, is up 8 percent this year. There is more
funding for literacy, teachers, the retention and recruitment of teachers, and
information and communications technology investment in our schools, and there
are big increases in support in the tertiary area.
I
want to draw special attention to an area that I know is of great interest to
young people, families, and the business community, and it is the investment
that is going into skills training. I compliment the Minister of Social
Services and Employment for his absolute dedication to that area, and to seeing
young people have the chance to get into a trade and technical training, which
provide the essential skills that build this country.
I
was privileged to be part of an announcement with him on Monday this week when
we saw two students from Wainuiomata College who were on the Gateway programme,
which is an initiative of this Government. They are two young people, of many,
who are involved with that project, which is being rolled out all over New
Zealand. It may be distressing to the Opposition, but there is enormous
expansion of the possibility for school students to be in that, to have 1 day a
week out of school to go to a workplace, and to start earning qualifications on
the programme. When one talks to the students, they say that without that
opportunity, they would not have stayed in school and would have probably been
drifting without having any work. Now they can see a career ahead. That is what
we want for those kids. We have something like 25,000 to 45,000 young people at
present who drift out of school and do not go on to work or further education.
We want those kids able to contribute to this economy, and that is what this
Budget enables them to do.
There
is an enormous amount of extra money going into the Modern Apprenticeships
scheme. We are aiming to increase the number of Modern Apprenticeships to some
7,000-odd over the next few years. That is another initiative of this
Government. There are tremendous goals and funding in place for the whole
industry training area. That is what will drive our economy for the future.
I
want to say a word about science and
innovation, because this Government started out 3½ years ago with New Zealand
having an appallingly low level of investment in science, by international
standards. Over the 3½ years, with some significant changes, we have made a
difference. The latest figures show that business spending on research and
development is up by almost a third. The Government spending is up around 14
percent, and the universities’ spending by 16 percent. Why is that important?
It is important because what will characterise First World affluent economies
in the 21st century will be the fact that they are the ones that can
create their own innovation rather than buying it in from others all the time.
We aim to be a nation of innovators, and we will back our innovators. The
Minister of Research, Science and Technology has been a driving force in
getting that investment up. He has done that by targeted spending by which the
Government supports more and more research and design in the private sector,
and also by an important change in the tax treatment of science. Those two
things together have produced that increase in gross domestic product that is
going into science.
This
Budget has more good news in that area. It has $140 million of new operational
funding in research, science, and technology over the next 4 years. This year,
the Government’s spending in that area will be up 6 percent. That is very
significant. In addition, one of the Minister’s priorities has been to support
the incubators, because bright young people are coming out of our universities
and our polytechnics with ideas that have commercial potential. They need to be
nurtured. The incubator programme went from nothing when we came into
Government, to around 15 today. There is more money in this Budget for those
business incubators to support young up-and-coming businesses and people.
Another
very important initiative concerns the need that new start-up businesses have
for access to capital. As a Government, we have put a lot of money aside and
formed joint ventures for early-stage capital, but there was still a gap, and
this Budget delivers $19 million over the next 4 years to invest in pre-seed
projects—those that are still in the very early incubator stages. The Minister
has correctly identified a very real area of opportunity to get more business
growth in the economy.
There
are very important changes on the way for small business generally as a result
of this Budget. The Minister of Finance’s speech referred to the significant
discussion document coming out in August that contains key tax proposals that
will help small business. That will be followed through with a major
small-business summit to be held in February next year. We are working very,
very hard on getting a more supportive environment for the small businesses of
New Zealand.
As
part of the growth and innovation framework, the Government identified those
four enabling sectors that can help drive growth. They are biotechnology,
information and communications technology, and two in the creative industries:
screen production and design. In this Budget, we have set aside $110 million in
the next 4 years to respond to the recommendations of those task forces to
build capability in those sectors, and they will make a significant
contribution to the growth of our economy. That is all contained in this
Budget.
On
the issue of improving New Zealand’s trade and export prospects, one area worth
singling out for mention right now is extra support to fund not only a range of
initiatives like the offshore export platforms, but also increased capacity for
the Ministry of Foreign Affairs and Trade, which contains our trade
negotiators, to get out and negotiate for New Zealand. The Uruguay round of the
World Trade Organization brought gains to this economy of about half a billion
dollars a year. We are expecting gains as big or bigger again out of the Doha
round if it succeeds, and we have a role in ensuring that it does succeed.
Social
spending continues to be very, very strong in this year’s Budget. Health
spending is running at high levels. The particular area of initiative this
year, as the Minister of Finance spelt out, is the support for primary
health-care. We now see 700,000 New Zealanders in primary health organisations,
which are offering lower health-care costs. That is a fantastic achievement.
This year, the Minister of Health is able to add to that with more funding that
will lower fees for 6 to 17-year-olds and lower prescription charges for
children, young people, and others in the primary health-care organisations. Of
course, the funding to charge for combating the meningococcal epidemic begins
this year, which is a very, very important priority.
In
the housing area, we have more than a quarter of a billion dollars budgeted
over the next 4 years for housing initiatives. That means an enormous amount to
the poor families of New Zealand. There will be more State houses—well over
3,000—on the way, and there will be modernisations and upgrades. There will be
a great deal of activity in the housing portfolio.
I want to say a word about the flagship
policy for United Future, the Families Commission. I hope everybody in this
House appreciates that the family is the basic building block of this society.
If our families are healthy, the society will be healthy, and I hope that that
commission will work with us and with all the community groups, to make sure we
have family policies we can be very, very proud of. I am confident that we can
do that ourselves. Some modest improvements have been able to be made this year
on lifting thresholds for family support, child tax credit, and parental tax
credit. We hope to be able to do more in that area next year, if and when we
are convinced that surpluses are structural rather than cyclical. There is also
an important change in lifting the number of subsidised childcare hours for
poor families, which helps get them back to work. The key initiative I will be
looking for next year is to see more in the welfare to work area.
Obviously,
I am proud of what has been able to be achieved in arts and culture. I do think the arts, culture, and heritage
define New Zealand as a nation, and I want to see what will be possible through
Creative New Zealand. Our ballet, our museums and galleries, and our Historic
Places Trust are very, very important for this society.
The
aim of this Government has been to see New Zealand rebuilt as a prosperous
country, an inclusive country, a tolerant country, and a confident country that
can hold its head up, knowing that it offers a standard of living and quality
of life unparalleled in the world. We have been a Government that has stood for
fairness, opportunity, security, the right to have a go, the chance for every
Kiwi to be able to work, to get an education, to build a business, and to
contribute through the social and community sectors. This Government is about participation,
inclusion, and the community moving ahead together. It is about security for
our young people, our old people, our sick people, and our disabled people. We
are a Government with a vision, and we have funded it in this Budget.
Mr SPEAKER:
I asked—and the Business Committee agreed—that there would be, not entirely no
interjections, but a reasonable amount of interjection. I want to have quiet so
the Rt Hon Winston Peters can start his speech in silence.
Rt Hon WINSTON PETERS (Leader—NZ First): Today marks the
slide of New Zealand into the Third World as an Asian colony. If we look at the
back of the Sunday Star-Times of 11
May, we will see that a world expert on inventions and manufacturing says that
if New Zealand does not learn to nurture its manufacturing base and stimulate
the creation of new and better products, it will become a Third World nation
reliant on other countries’ imports. That is the view of experts abroad, and
today we have a Budget that has had the press gallery, for the first time in my
career, half empty. The public gallery was filled with children, and even they
walked out.
Dr
Cullen spent all his time talking about Budget 2004, and forgot Budget 2003. He
clearly demonstrated that he is the latest victim of the Stockholm syndrome.
Treasury has demonstrably, palpably, captured him, and there he was today
parroting its mantra as though it were sound economic policy, alongside this
week’s Budget from Australia—a sound economy run by a decent Treasurer. And all
the time the United Future party did not applaud one word of his speech, and
when it came to the end its members did not rise.
I
want to amend the motion put by the leader of the National Party by adding the
words: “that this House also records that it has no confidence in this
Government’s ability to govern as it only ACTS the part, and even then only in
a shallow and hammish way.”
But
we believe that in the preparation of this Budget there have been some
Oscar-winning performances. The highly paid Cabinet cast only acts like Labour
Ministers: they say one thing in election year and do something entirely
different whilst in Government. It is time that these theatrical thespians
received the theatrical recognition they so richly deserve, and we have some
New Zealand First “Oscars”. In this case Oscar stands for “Obstinately
Self-serving, Carping, and Ridiculous”, when it comes to the interests of
ordinary New Zealanders. Today I want this House to recognise the failings of a
number of Ministers, and I propose to help it do so by the presentation of
these Oscars, which I have just had conveniently prepared. We want to
immortalise these Ministers for their failings and to induct them into New
Zealand’s parliamentary hall of shame, and these are the appropriate Oscars for
doing that.
The
first Oscar is for scriptwriting and acting: the best adaptation performance of
a responsible Budget. For this award, the academy has nominated Dr Cullen for
an outstanding performance in acting as a Labour Minister of Finance, yet
achieving a Budget surplus of $4 billion in the face of grave social service
stress and tension, and the starvation of extra funds for so many social
interests in this country. We have a Labour Minister of Finance with a Budget
surplus of $4 billion, and around him he has United Future, the Greens, and the
last rump of the Progressive party in this Parliament before it disappears in
the next election. And what did they get? Nothing at all! Never in the history
of politics have so many sold out for so little. Never in the history of
Western politics have so many sold out so often for so little. We have a $4
billion surplus while tens of thousands of people are thrown off hospital
waiting lists, while police are massively under-resourced, while the education
system is overloaded with costs—and, on top of that, is paying for foreigners
as well—and while the social services systems are enormously stressed. Through
his outstanding acting ability Michael Cullen has fooled everyone, including
his own party, that he is a Labour Cabinet Minister when he is really a closet
ACT supporter. Most of these Ministers are never present, so I have had to ask
my colleague Peter Brown to stand in and take his Oscar for him. Sadly, in the
interests of time, there will be no acceptance speeches. In fact, the
nomination for the Oscar for Dr Cullen came from his old mate Richard Prebble.
The
next one is for George Hawkins. He is up for an Oscar. In the preparation of
this Budget he got 50 extra police for Auckland. They are short of 135 police,
but he got 50 for Auckland—for the rest of the country, nothing. George
Hawkins, members will remember, starred in the 21st century saga
called “Leak House”. That was his last film. Now he has a lead role in
the movie he was made for: “Dumb and Dumber”. In this movie he is to
make, he does not have to act; he is an absolute natural. He is living proof
that anyone with half a mind to become a Cabinet Minister can become one. Whole
forests are destroyed and sacrificed while George Hawkins makes up more traffic
tickets. That is his law and order policy. To be fair, though, George Hawkins
is presiding over New Zealand’s real, and only real, growth industry.
R Doug Woolerton: What’s that?
Rt Hon WINSTON PETERS: Crime. So let us have one for George Hawkins.
Maybe my colleague should make an acceptance speech for him; he is not so good
at it himself.
The
Pan Asian Congress has nominated Lianne Dalziel for an Oscar for make-up
artistry. In only 4 years she has totally changed the face, the character, and
the sound of New Zealand through unlimited wholesale immigration. In only 4
years she has changed the whole character and shape of New Zealand with massive
immigration. Who did she ask? Nobody. Not one New Zealander was asked. Thanks
to Lianne Dalziel’s dramatic and uncontrolled performance, there are today
300,000 New Zealanders—or people who call themselves New Zealanders—who do not
speak English. Three hundred thousand! And the skills gap, which was the excuse
for all of this, is bigger than ever before. If people are qualified
professionals from Britain, New Zealand does not want them. If there are
qualified people from Britain who can speak English, New Zealand does not want
them. But if people are from the Middle East, cannot speak English, or are
suspected terrorists, we welcome them. That is the Government’s policy. If
people are overstayers and need medical treatment, they should go to Lianne
Dalziel. She will fix the problem. She will make them instant New Zealanders.
She will give them work permits even though they cannot work.
R Doug Woolerton: So they can lie in bed.
Rt Hon WINSTON PETERS: Yes, so they can lie in bed. She will give
them work permits in the face of tens of thousands—100,000—New Zealanders being
unemployed, and call them workers when nobody else is fooled in respect of
that. That is Lianne Dalziel. If New Zealanders who have paid taxes all their
lives need a hip or eye operation, then—bad luck—they have to go on the queue.
But overstayers, refugees, or terrorists being held in New Zealand prisons because
they should not be here in the first place, will go on the waiting lists above
all other New Zealanders, whether or not those New Zealanders have been here
for 1,000 years, 100 years, or 10 years, and whether or not they are taxpayers.
So this Oscar is for Lianne Dalziel. I am sorry she is not here, but perhaps my
colleague could take it for her.
The
nomination from the power companies is for “Blackout Pete Hodgson”. He gets it
for his starring role as the political Nero of New Zealand’s energy industry, “Fiddling
While the People Freeze”—and watch out for the ides of June, of July, and
of August and September this year. “Blackout Pete” blames everybody else,
although he has been in the job for 4 years.
And
we have the Al Gore re-election committee nomination for Helen Clark, for her
starring role as a political stuntman in the movie “Free Trade”. She has
shown that she is the only politician in the Western World who can talk on
foreign affairs with both her feet in her mouth, and, thanks to her brilliant
performance on the overseas stage, New Zealand now has only one staunch ally.
Can members guess who it is?
Hon Members: France.
Rt Hon WINSTON PETERS: France. As they say in the Tui advertisements:
“Yeah, right”. She also gets a second Oscar for doublespeak, for backtracking
on statements, for amnesia, for inexcusable denials, and for blaming everybody
else. So here is one for the Prime Minister.
Thousands
of people who have been dragged off hospital waiting lists have
enthusiastically nominated “Absent Annie” King for an Oscar. The mental health
system has also put in her name for a second nomination for “Passing the
Buck Over the Cuckoo’s Nest”. The present health system is sick, more and
more patients are being cut adrift from waiting lists, hospital staff are
falling apart under the stress of an overloaded system, and New Zealanders have
to wait in queues—or out of the queue, as the case may be—whilst this
Government treats everyone who is not a New Zealander and not a taxpayer first.
Every refugee or asylum seeker, whether or not they are genuine, and every
overstayer gets priority over all other New Zealanders, no matter how long
those New Zealanders have been paying taxes. Annette King has taken the habit
of hand-wringing to new heights. Whenever she is confronted by the media, she
says: “Oh, I’m really concerned about that.” She is like a badly trained used
car salesperson. There is plenty of pre-sales talk but no after-sales delivery
and no after-sales service.
I
have to say that there were other Oscar-winning performances from other
Ministers who came very, very close to an award. There were a lot of
nominations for Rick Barker. He was nominated by the Mongrel Mob for his
unforgettable part as a freedom fighter in the political hit “Home Alone
Detention”. Rick Barker came very close. During his performance as the
“Minister of Freedom” he threw open the doors of the prison system especially
for violent offenders, and left them open. The Labour Party and every
do-gooder, woolly liberal in New Zealand are saying to him: “Rick, we’re proud
of you.”, although everyone else thinks he may be a waste of space around the
Cabinet table.
Trevor
Mallard got a nomination for creating the movie “Red Education”.
Margaret Wilson—now, here is one—got a special commendation for creating the
longest political saga or soap opera in history entitled “The Treaty
Settlement Millennium”. This soap opera is going to run for at least
156,000 weekly episodes at the present rate of progress from this Minister. One
hundred and fifty-six thousand weeks are going to come before she gets over
there. Just as is so inimitable of her, in the Budget she had a propaganda
programme being costed out at $6.5 million to tell people about the treaty. But
here is the issue: neither she nor Helen Clark, or any other Labour Minister or
member—or anybody for that matter—can tell us what the principles of the Treaty
of Waitangi are. They are taking $6.5 million to tell the people, but how about
starting with them. They are taking $6.5 million, but they cannot tell anybody
what the principles of the treaty are.
There
used to be a movement in the United States 200 years ago called “Know
Nothingism” Well, its finest flower is over there—right there, today. Judith
Tizard gets a nomination for miming in her role as the “Minister of Auckland”.
Can anyone name one thing that Judith Tizard has done for Auckland? Come on,
guys! One thing—not five!
Rodney Hide: She came to Wellington.
Rt Hon WINSTON PETERS: That is not bad. Rodney Hide said she came to
Wellington. Parekura Horomia just beat out John Tamihere for his nomination. He
is the invisible Minister of Māori Affairs. Nobody understands his answers
or lines. No one knows what he is talking about, and nor does he. Parliament is
going to get an English interpreter to translate what he is saying in English.
John Tamihere got the award for the “lion on the marae and the lamb in
Parliament”. Mark Burton got the Arnold Schwarzenegger of New Zealand politics
award. Almost single-handedly he has destroyed the New Zealand armed forces.
But
I go back to the Budget. This is a good Budget for some people. We have to be
fair—this is a good Budget for some people. It is a good Budget as long as one
is not a pensioner on a fixed income, with soaring power bills. It is a good
Budget as long as one does not need an eye or hip operation, and as long as one
has not been dumped off the hospital waiting list. It is a great Budget as long
as one is not an exporter trying to cope with the rising New Zealand dollar. It
is a great Budget as long as one’s house does not suffer from leaky-building syndrome
and one does not expect someone to be accountable. It is a great Budget as long
as one does not mind a cold shower and long, cold winter nights. It is a good
Budget as long as one is not one of the New Zealanders squeezed out by
foreigners while trying to get a proper education for their children in their
schools of their choice. It is a great Budget as long as people do not mind
overseas companies taking all our resources and giving little in return. It is
a great Budget as long as people do not mind the rail and road systems being in
a total shambles. It is a good Budget as long as one is not a victim of crime,
desperately trying to get hold of a police officer. It is a great Budget as
long as people are not in that situation. It is a good Budget as long as one is
not a Māori living on a dirt floor in Northland and waiting for a job, a
treaty settlement, or even some electricity. It is a good Budget as long as one
is not in a family struggling to educate, clothe, and feed one’s children. It
is a great Budget if one is not a small business struggling with compliance
costs, soaring overheads, and bureaucratic red tape.
This
is, in fact, a bogus Budget for just about every other New Zealander. It tries
to portray New Zealand as a nation basking in the warm glow of prosperity.
Absolute nonsense! The facade of prosperity that the Budget seeks to contrive
rests on one factor alone—massive, consumptive immigration at a level that no
other First World country would even dream of contemplating. It is a bubble that
is going to burst. We are becoming a colony of Asia. We are; it is all there—I
ask members to walk down Queen Street in Auckland and tell me I am not
right—and never with any consent from the New Zealand people.
David Benson-Pope: Oh!
Rt Hon WINSTON PETERS: “Solar Dome” can make all the noises he likes.
David Benson-Pope: Pathetic!
Rt Hon WINSTON PETERS: I know the member is pathetic. He always has
been, but he need not tell us his problems.
Every
sound economist in New Zealand will explain what this bunch of actors
pretending to be a Labour Government cannot explain—that the only thing driving
this economy today is a level of immigration seven times that of Australia’s.
But it is a bubble that is going to burst, and all around New Zealand more and
more New Zealanders are becoming alarmed by what they see and hear. The
Government has shamelessly used a flood of immigration to generate a phoney
feel-good factor. An unprecedented and ongoing infusion of migrants has created
a superficial boom in consumption and housing expenditure, and Mr Cullen
admitted that in this Budget. He said in his Budget speech today, in effect,
that immigration was robust and house prices would keep going up. It is all
here in the Budget, and that is it.
I
have to say this. When we look at it, this is not the way the Labour Party used
to be—a party with concern for ordinary people, and a sense of nationalism in
terms of our interests. This party is a bunch of sell-outs It is a bunch of
internationalists. The biggest sell-out—Dr Cullen—has been captured by
Treasury. Members should read the speech he made when he first arrived in
Parliament.
Opposition Member: Why would you?
Rt Hon WINSTON PETERS: Oh yes, why would we? We might like a laugh.
We might see how someone can be captured by Treasury and surrounded by it. I
think it is a matter of Labour members’ psychological uncertainty as people.
They do not have what it takes to stand up to so-called peer pressure around
them. I could speak for much longer on this Budget, but I want to close by
saying that this is the worst Budget I have ever seen in this Parliament.
Hon RICHARD PREBBLE (Leader—ACT NZ): I did not catch the
member’s amendment in his contribution, but I thought he made an interesting
contribution, and if this were a charity debate he would have no doubt won.
Given the fact that there is nothing in the Budget, one might as well make it
up, which is exactly what Mr Peters did.
The
ACT party will oppose the Budget, fundamentally because of what is not in the
Budget rather than what is. This reminds me of a Sherlock Holmes story—the
significance of the dog was that it did not bark. The significance of this
Budget is what is not in it. If members look at the major issues facing New
Zealand, such as the energy crisis, they may ask what is in the Budget about
that? Not a thing. Now that we know that Dr Cullen is in charge of tackling the
energy crisis, it makes the situation more serious. There is nothing in the
Budget about matters like crime and health, and there is nothing in the Budget
to tackle the real issues facing this country.
Dr
Cullen has conceded in the Budget that growth in the New Zealand economy will
almost halve. Can we see anything to tackle that problem? On 10 April I wrote
Dr Cullen a letter, on behalf of the ACT Party, and said: “When you can see
what’s facing the nation, with the uncertain economic environment, and the fact
that we have lost the America’s Cup, Fonterra’s payout is going to be down,
there has been a drought, and now we have the Sars epidemic, it is clear that
the economy needs a boost. We would be prepared to vote for a Budget that had a
well-designed tax cut in it.” We did not ask for any ministerial positions in
return, we just said that the ACT party would vote for a well-designed tax cut.
We put that in writing and signed it. It is a matter of disappointment to
me—and I think a matter of great regret to the nation—that Dr Cullen has
ignored that possibility. We need to have a tax cut. We need it first for the
economy, because the best way to give the economy a boost is to cut taxes. We
also need it because when we read through the Budget, we see the surplus is
going to be $3.8 billion.
As
the Leader of the Opposition accurately pointed out, the thing that is wrong
with a surplus of $3.8 billion is that it is too much. That is a huge amount of
money, and it is overtaxation. The Government is going to tax ordinary New
Zealanders $4 billion more than it needs to, because the Government is
uncertain about the environment and says: “We need it.” I say to Dr Cullen:
“What do you mean ‘we’?”. That money comes from New Zealanders. Then he says he
wants to keep his balance sheet looking good. What about the balance sheet of
small New Zealand businesses? What about the balance sheet of the average
household? I say to Dr Cullen that the average household balance sheet has
never been in worse shape. New Zealanders have never owed more money on
mortgages and credit cards, any way we like to measure it—as a total amount or
as a percentage of their income. Why is that? It is because they are having to
pay an extra $4 billion.
I
will give the House an idea of how much that is. It is a mind-boggling figure.
Hon Member: Have you got the solution to that?
Hon RICHARD PREBBLE: I have, actually. I am glad the member has now
realised it is a problem, and I say to him that it works out at $50 per worker
per week. That is the amount of extra taxation.
In
the letter I wrote to Dr Cullen I said: “Look, if you want to be a Labour
Government and put it across the board to everyone, then we’ll vote for that,
because that would still be better than the Government taking extra taxation.”
I then said: “A much better idea would be to implement the McLeod tax report.”
Members opposite might have forgotten, but the Government commissioned a tax
review. Indeed, in his first Budget Dr Cullen pledged that we would have a
fairer tax system. The Government set up the McLeod tax review, which made it
clear that the preference would be a flatter tax system.
For $4 billion we could have a company tax
rate below Australia’s. We could give every worker in New Zealand a tax cut.
Indeed, the ACT party has put forward a 5-point tax plan. The first thing we
should do is balance the Budget and give back the surpluses. The second thing
we should do is abolish the risky Cullen superannuation scheme—heck, the
Government has already lost over $300 million out of the Government
superannuation scheme, and I now see that that has been subject to some sort of
insider trader fraud. It is very risky. The third thing we should do is cut
company tax rates to 25 percent.
Gordon Copeland: How are we going to pay for future pensions?
Hon RICHARD PREBBLE: I will help the member. The fundamental way we
can pay for future pensions to the United Future party is to have a strong
economy. We will not pay for future pensions by investing our money in overseas
equities in a gamble. If the Government is in charge one can absolutely
guarantee that it will lose it. How do we know? Because it has done it already,
and it will do it again. It learns nothing from its experiences.
Does
the United Future party not think that New Zealand businesses would grow if we
had a 25 percent tax rate? It seems very silent. The United Future party used
to be in favour of lower company taxes, but that was before it went to bed with
the Labour Party in return for a family commission with some sort of “PR-UN”
family, whereby it will advocate on behalf of homosexual couples. It comes as a
great shock to United Future supporters to discover that that is what a family
commission will mean on behalf of the United Future party.
The
next thing we could do with our $4 billion would be to lower the top tax rate
to 25c, lower the bottom rate to 18c, and give every New Zealand worker a tax
cut. I ask members opposite what is wrong with that. The Government would not
have to cut a single thing. It could have its Māori Television Service,
spend $34 million on America’s Cup races—
Hon Ken Shirley: I’d rather it didn’t.
Hon RICHARD PREBBLE: Of course, we would rather it did not, and so
would the country. However, if that is what the Government wanted to do, it
could still do that and have a tax cut, and one reason for that is fairness.
But
if that does not move it, I have this card. I know that the Government thought
it had collected up all of them, but does this card ring a bell with anyone? It
is a little credit card.
Rodney Hide: Who’s that woman on it?
Hon RICHARD PREBBLE: I do not know who it is. I cannot recognise
it. The computer-created picture is named Helen Clark, and the card states: “My
commitment to you. We will deliver.” It is signed, but I realise the Prime
Minister might not have been conscious when she signed this, and it might be
sort of like the paintings she is into, or the prediction that we will be in
the top half of the OECD. However, pledge No. 7 is “No rise in income tax for
95 percent of taxpayers.” I shall read that again. “No rise in income tax for
95 percent of taxpayers.” That is interesting. When one looks at this Budget
for what is not in it, one sees that, in fact, the Government has got it round
the wrong way. Now 95 percent of all taxpayers in New Zealand are paying higher
income tax, and why is that? The reason is that when there is inflation, the
Minister of Finance does not have to change the tax rates, he can just let
inflation do it for him.
Hon Ken Shirley: Fiscal drag.
Hon RICHARD PREBBLE: That is right. I remember when Sir Robert
Muldoon introduced us all to fiscal drag. Well, it has been brought to us again
by Michael Cullen.
I
asked the parliamentary library economic unit—which is a very good unit, and if
its staff are listening, I congratulate them on the excellent quality of their
work—what rates we would have to change the thresholds to in order for them to
be the way they were when they were first set up. The bottom threshold is
$9,500. In order to have that in the same, and real, terms, and in order for
the Government to honour its pledge of no rise in income tax for 95 percent of
all taxpayers, that threshold should have been lifted to $13,200 in this year’s
Budget, which is a 38 percent increase. The next threshold is at $38,000, and
that should have been lifted to $41,800, which is a 10 percent increase. The
Government’s new maximum tax rate above $60,000—which shows one how much
inflation has moved—has to be lifted to $65,000.
To
give members an idea of the implications of that, I point out that the number
of New Zealanders who are now paying the 39c tax rate—we were given a promise
that it was to be no more than 5 percent—is 270,000 full-time workers. That
means that 18 percent of the total full-time workforce is now paying the top
tax rate, yet even after the Labour Government was elected it repeated its
pledge that that would not happen.. Well, it most certainly has happened;
perhaps Helen Clark just was not conscious at the time.
I
believe that the reason the Government allows the increase in taxes is that it
thinks that people do not care about tax. I can tell the House that we know
that that is wrong, too. The ACT party decided to do a survey of businesses. We
surveyed 110,000 businesses and asked them whether they thought they were being
overtaxed. Ninety-seven percent said that they thought they were. We then asked
them which tax rate proposal they would prefer. They came back overwhelmingly
in favour of the McLeod tax report. I was stunned by the number of people who
replied to our tax survey, and I thought it was interesting that 85 percent
said they wanted to see a McLeod tax report. They wrote to us asking what the
point was of working under this Government, and commented that if they were
paying a lower rate of tax, they could grow, invest, and employ more New
Zealanders. We decided to survey households, and I started in west Auckland,
which is a Labour stronghold. I live in west Auckland in the good Labour suburb
of New Lynn. I know that the local member does not like to live there, but I am
happy to. [Interruption] David Cunliffe lives in St Mary’s Bay, but he
comes to visit us occasionally. He drives through and waves out of the window.
I decided to put out some surveys in the Labour Party electorate of west
Auckland, and we got a staggering reply from ordinary New Zealanders.
Ninety-three percent said they felt they were being overtaxed. Although a higher
percentage would have preferred a $50-a-week increase, the majority said they
thought we should follow the McLeod tax report, which shows that the New
Zealand electorate is much smarter than Dr Cullen thinks.
I
asked some other questions. I asked people whether they supported the Cullen
superannuation scheme, and 75 percent said they did not. We have to ask
ourselves why there is a difference between what people are saying in the
survey we have done and in the Labour Party’s overall poll. I guess there are a
couple of reasons. I suspect that some people who are on the taxpayer’s tit are
quite happy to go on seeing higher taxes. The people who are writing back to me
are the ordinary New Zealanders who are earning the money that Helen Clark
spends every time she goes off in “Air Force One” to see her European friends,
as she does every year.
But
there is a second reason. I asked a couple of other questions, which are not in
this Budget. For instance, there is very little in here about health. We asked
people whether they thought that health had been fixed, and there is some good
news for Government. The good news is that 3 percent of the people who replied
thought that it had been fixed. I asked people whether they thought that
education had been fixed, and the same 3 percent were confident there, too,
which might show a certain connection. Of the people who were surveyed, 88
percent were also very concerned about the levels of violent crime.
However,
we went further than that, we asked people what they thought about certain
types of expenditure. We asked them how they felt about the Government
financing the America’s Cup, and 73 percent thought that it was not a good use
of expenditure—and that was when we thought it was $5 million. We got a similar
answer to Māori Television. I say to the Government that if it thinks that
this sort of Budget, in which it goes on spending money on behalf of New
Zealanders, gives it the God-given right to spray out money on America’s Cup
campaigns, financing that by increases in pensioners’ sherry, then it is sadly
mistaken.
This
Budget is fundamentally unfair. It is unfair to working New Zealanders who are
paying that tax, and it is dangerous because it does nothing about the fact
that the economy is slowing down.
Hon David Carter: It’s halving.
Hon RICHARD PREBBLE: That is interesting. When we look at the
growth projection of 2.5 percent, and look at what the growth rate was in the
last decade after the failed policies of Roger Douglas and Ruth Richardson, we
find that it was 3.6 percent. I like some of those failed policies. I say to my
friends in the National Party that I was pleased to see Dr Brash’s statement. I
would like to think that he would go a bit further. The idea that, say, just a
30-percent cut in company tax will solve it is not right. Company tax is just a
withholding tax. We have to lower individual tax.
We
also have to do something about issues that are not tackled in this Budget.
There is nothing in this Budget about the Resource Management Act, accident
compensation, or the Occupational Safety and Health Service. This Government
has done nothing in the Budget about the issue of transport. The transport
issue in Auckland is costing $1 billion a year. When we go through the
Government’s transport figures we see that although it has increased the price
of petrol and road-user charges, the Government itself has taken the bulk of
that extra money—that is, the money needed to get Auckland moving again. The
money that is needed to have a decent infrastructure for the whole country has
not been spent.
What
we really have is a re-announcement of the health tax. When Mr Peters was
giving out the prizes I wanted to say to him that he should have given a prize
to Annette King. She is a sort of Pavlova—the one who retired repeatedly. She
has announced the $400 million extra spending in health 400 million times. It
is still the same amount of money, and, indeed, half of it is the catch-up for
the amount that she did not have in the previous 2 years. We then find out that
$165 million is going to primary health. We can guarantee that hospital waiting
lists will increase, but, actually, they do not because people get taken off
the hospital waiting lists and go on to the active review list. Any bureaucrat
who counts that list will be fired. It is the best-kept State secret in this
country’s history. No one knows how many people are on the active review
hospital waiting list, but we know that the real number must run to tens of
thousands of New Zealanders. Were they referred to in this Budget? No, they
were not.
As
I said, the real significance of Michael Cullen’s Budget is not what is in it,
but what is not in it. There are no tax cuts, nothing to get the economy
moving, and nothing to tackle the real problems facing New Zealand, such as the
fact that our traffic is snarled up, our lights are going out, and our growth
rate is being halved in the next year. Instead, we have a Government that is on
autopilot, and which thinks that with the help of United Future it will be able
to solve problems.
I
failed to mention earlier that the Government has taken out benefit numbers,
but I have a copy. I know that it is a State secret, but I would like United
Future to look at these figures. They show the number of domestic purposes
beneficiaries, the number of invalid beneficiaries, the number of sickness
beneficiaries, and the number of unemployment beneficiaries, and as a result of
this Budget, according to the Treasury’s predictions, those numbers will
increase. I would like to hear from Peter Dunne as to how his party could vote
for a Budget that will increase the number of people on benefits. That is not
what he said during the last election.
ROD DONALD (Co-Leader—Green): The Budget surplus is a fraud. It is built on
the backs of Kiwi kids living in poverty, hard-working low-income families who
need a tax break, and our young people who are shut out of affordable tertiary
education. New Zealand is paying a high price for Dr Cullen’s $4 billion Budget
surplus. Today’s Budget could have marked a turning point for the Government.
If Labour had cooperated with the Greens, this Budget would have contained
significant measures to future-proof the economy, strengthen our social fabric,
and protect our environment. It does not.
Of
course there are many good initiatives in the Budget, including several Green
projects that continue from the last term. But it is not a Budget that Labour
can be proud of. In fact, it is one that Don Brash or Bill English would dearly
have loved to deliver, despite all their rhetoric, because it might be damp
around the edges but it is tinder dry in the middle. That is why, on behalf of
the Green Party, I move, That the amendment to the amendment to the
amendment be amended by omitting all the words after “has no confidence” and
substituting the following words: “in the Labour-led minority Government
because of its failure to invest in achieving a self-reliant economy, its
refusal to properly nurture a just society and its unwillingness to seriously
protect the environment.”
The
Budget itself is a house of cards. It depends on the global casino economy
recovering. It depends on the release of genetically engineered (GE) organisms
in New Zealand not destroying our export markets. It depends on the high
exchange rate not crippling domestic manufacturing and not blowing out the
trade deficit even further. It depends on the Government Superannuation Fund’s
overseas investments not losing any more millions, and it depends on business
people believing that Michael Cullen is doing a better job than Don Brash or
Bill English would. The Government is safe on that last point. In our view,
National’s economic prescription is worse than Labour’s. That is why the Greens
have moved their own no-confidence amendment and will not be supporting
National’s amendment.
However,
every year our sense of frustration grows. I do not want to look back in 30
years’ time and try to explain to my children that I was in Parliament when we
failed to stop GE, when we ran out of Maui gas, when we watched the rail
network run into the ground, when we failed to meet the needs of poor families,
and when we did not invest in the young people whom every one of us will depend
on in our retirement.
What
will convince the Government to adopt our policies? It has taken a second
energy crisis in 2 years for energy efficiency and conservation, and renewable
wind and solar energy, even to begin to be taken seriously. It took a string of
biosecurity incursions for Green concerns about poor border control to be faced
up to. The Government is only now getting serious about buying back the
rail-track, more than 2 years after we first called on it to do so.
When
will the Government accept that the Green Party has the only realistic strategy
for future-proofing the economy, strengthening society, and protecting the
environment? Clearly not today. But I will place on record what we believe the
Government should be doing. The energy crisis is the most glaring example of
the failure of successive Governments to do their job. The energy crisis is a
crisis of leadership, a crisis of vision, a crisis of common sense, and a
crisis of determination. To quote a former colleague, it does not take “rocket
science” to know that Maui was going to run out. The 1973 gas contracts made
the decision to use the gas fast, to use it wastefully, to pay for it whether
or not we used it, and to use it all up in 30 years. The Greens have been
warning for those 30 years that using most of that gas for electricity
generation rather than as a direct fuel, was wasteful. Two-thirds of all the
energy value of the gas burnt at Huntly goes up the stack or into the Waikato
River. Now that it is running out, a mere 2 years earlier than was always
expected, there is no plan to fill the gap.
For
30 years we have been promoting the use of gas for heat. We have been promoting
insulation of homes and water heaters, solar heating for domestic hot water,
wind generation for electricity, industrial motors properly sized to their
load, wood-waste fired boilers in the forestry industry, and a whole host of
other measures. The 1975 Values Party manifesto called for an expanded Ministry
of Energy Resources to coordinate the use of all energy sources and bring down
a comprehensive energy policy aimed at preventing further increase in energy
consumption, increasing the efficiency of energy use, minimising the
consumption of non-renewable resources and environmental disturbance, and
discouraging high energy intensive industries. Imagine where we would be today
if we had had MMP then and the Greens had got into Government and been able to
implement that policy. We would certainly not be facing an energy crisis, and
old people would not be worrying about freezing in the dark this winter.
Thank
goodness we did get into Parliament and Jeanette Fitzsimons was able to
introduce the Energy Efficiency and Conservation Bill. When National was in
power it certainly was not interested in the energy-efficiency standards in the
national strategy. Max Bradford even described the bill as “a huge and massive
step back to a Stalinist approach to central planning.” At least Labour had the
good sense to pass the bill and agreed to the Green’s Budget bid for an extra
$3 million in funding for the Energy Efficiency and Conservation Authority.
But
that is a fraction of the investment we need to make to achieve the permanent
savings and renewable energy targets we are capable of. One would think that in
the middle of an energy crisis the Government would be pouring resources into
solving the problem. It thinks it is, but it has its priorities wrong. Today’s
Budget provides only $12 million to the Energy Efficiency and Conservation
Authority for efficiency and renewables, while State-owned Meridian Energy
plans to spend a hundred times that—$1.2 billion for a power generation scheme
that will destroy the Lower Waitaki River. In the time it would take to build
this leviathan, the Government could help develop the New Zealand – based solar
wind and energy-efficiency industries to deliver the same energy as Project
Aqua. The energy crisis not only highlights the failure of the market model and
the refusal of successive Governments to plan, regulate, and invest properly,
it also highlights the culture of waste that has permeated society. Investment
and waste are two sides of the same coin. Do one to avoid the other, and we
actually make a profit.
When
Jeanette Fitzsimons’ bill was introduced in 1998 the Parliamentary Commissioner
for the Environment said: “There is significant risk to the New Zealand economy
and our way of life if energy efficiency is not improved. Addressing energy
efficiency across all sectors has the potential to bring substantial cost
savings to the Government, businesses, and the public, and reduce impact on the
environment.” We still have not learnt that lesson. And we still have not
learnt the lesson about biosecurity. Despite the painted apple moth and a host
of other biosecurity incursions in recent years, the Ministry of Agriculture
and Forestry inspects only 24 percent of the sea containers arriving at our
wharves. By the ministry’s own statistics 39 percent of containers are
contaminated in some way, which means approximately 60,000 contaminated
containers are opened, without any sort of inspection, and their contents let
loose on our environment. The Government said it would cost $60 million a year
for a 100 percent inspection of containers. So far it has spent $90 million on
painted apple moth eradication alone.
Threats
to our biosecurity are one of the hidden costs of free trade. The more goods we
import, the greater the threat to our economy and exports. A Reserve Bank and
Treasury report earlier this year on the macroeconomic impacts of a
foot-and-mouth disease outbreak should be a wake-up call for the Government and
all New Zealanders. As Federated Farmers President, Tom Lambie, said: “The
reality of 20,000 job losses and a $10 billion drop in GDP reinforces the need
for Government to ensure that biosecurity is resourced to the same level as
other security agencies. It isn’t.”
There
is the very real possibility that if a Government fails to extend the GE
moratorium, due to be lifted in October, the very thing Tom Lambie is concerned
about will happen because of a deliberate move by Government, rather than by
accident. Unfortunately, Labour is determined to force GE on New Zealanders,
despite research given to the Government showing that under realistic
conditions there are more likely to be negative effects for the economy rather
than positive effects from GE release.
Yesterday
we learnt that the Government’s determination knows no bounds. It is actually
backing a United States case to the World Trade Organization to force the
European Union to lift its moratorium on GE products. If ever there was a case
of shooting oneself in the foot, this is it. Not only has Helen Clark
undermined her relationships with European leaders but the Government—perhaps
unconsciously—is destroying our marketing advantage in Europe by, on the one
hand, helping the US increase access to our second-largest market, and, on the
other hand, degrading our clean, green image, which is exactly why European
consumers like our products.
Wisdom
appears to be in short supply. If the Government were a wise investor it would
invest in the children of New Zealand. Unfortunately, it is not wise. After 4
years of a Labour Government, 30 percent of our children still live in poverty.
Despite the Government’s claim that its key priorities include supporting a
productive and cohesive society, reducing crime and the impacts of crime, and
investing for the future, Dr Cullen says children will have to wait until next
year.
A
Budget surplus is not real if it means that children have to do without the
basics of life. If those children grow up in impoverished conditions, the State
will pay in the next 10, 15, 20 years, and beyond. Poverty costs. If families
cannot afford food for a basic healthy diet, health-care services, and healthy
accommodation, the country will pay in lower educational attainment, higher
health costs from hospitalisations and additional health-care later, higher
unemployment, and higher crime. Children from most deprived areas are more than
twice as likely to be admitted to hospitals than those from less deprived
areas. So we applaud the Government’s moves to improve access to primary
health-care, but the Government is still treating the symptoms and not the
underlying structural problems.
Families
do not have enough income. The Government should have targeted family support
packages this year, and not wait a further year. The cost of $28 million for a
Families Commission will not send one child to school with warm clothing and a
decent breakfast inside him or her. Research from the Child Poverty Action
Group shows that since 1986 the poorest one-child family in New Zealand has had
a rise of only $5 a week in family support. Adjusting for inflation, that
family should now be receiving $74 a week; instead, it receives $47.
This
Budget is woefully inadequate in redressing this appalling situation. Yes, it
includes $34 million over 4 years but this increases the income thresholds for
family support by less than $500. Adjusting family support to reflect cost of
living changes since its implementation would have cost $250 million—just 6
percent of the surplus. The Government should not stop there. It could even
afford to implement Green Party policy to restore the family benefit as a
universal child allowance, at a cost of about $600 million a year.
The
irony will not be lost on people of all political persuasions that, while the
Government is putting off providing proper funding to ensure that children are
brought up decently to become the healthy, well-educated, and productive adults
we need to secure our future, the Government is determined to gamble that
future on the casino economy. Dr Cullen’s “super fund” will have $1.9 billion
sitting in it by the end of June, and this Budget will add another $1.9 billion
to that sum.
Instead
of investing that money wisely in New Zealand and New Zealanders, the
Government has instructed the guardians of the “super fund” to play the
overseas sharemarket. We already know, from bitter experience of the Government
Superannuation Fund, that that is an extremely risky gamble. Since Dr Cullen
required that fund to be invested off shore in October 2001, it has accumulated
net losses of $233 million, and the shares it bought are worth 35 percent less
than their purchase price. The pro-market zealots tell me that the share price
will recover, but I am not convinced that dead cats bounce. In any case, it was
not prudent to stake $1.5 billion at a time when the sharemarket was going
through its period of significant volatility.
Even
if the sharemarket recovers, the Government Superannuation Fund will need to
earn 9.6 percent after tax for the next 8½ years to achieve its investment
target of 6.5 percent over the decade. Even if the sharemarket were booming
instead of busting, we would challenge the wisdom of the Government strategy.
Our opposition to the “Cullen fund” is backed up by an OECD study, which
concludes that private capital appears to be more productive than public
capital in the short term, but that the converse is generally true when a
long-run perspective is taken.
While
the Green Party is pleased that the Government has increased funding for
tertiary subsidies by 3 percent, this will not address the significant funding
shortage in the area, nor give any comfort to students wanting lower fees and
an affordable education. Student debt has grown by $2.5 billion since Labour
has been in office. At the end of March this year the debt was $5.4 billion.
Women graduating today with a bachelor’s degree can expect to spend the next 28
years paying off their debt. What does that do for family life?
The
Green Party wants to see fees reduced to $1,500. We want to see the
reintroduction of universal student allowances. We want to see tertiary
institutions funded at an appropriate level to attract and retain quality
staff. We know that this is an expensive item, but we fully believe that it
will be paid back in full from higher levels of productivity and increased tax
revenues from graduates who want to stay and work in New Zealand. The Green
Party supported the introduction of the fee maxima, but at the same time it
warned the Government that it could not use it as a mechanism to squeeze
tertiary institutions financially so that they would have to lower quality. We
believed—perhaps foolishly—that the Government would deliver on its promise to
students to make education affordable, and we are very disappointed.
It
is time for the Government to face up to its commitment to our young people and
invest more in tertiary education, reduce fees, fund tertiary institutions at a
reasonable rate, and provide all students with a living allowance. Almost 50 percent
of children from the lower socio-economic group leave school without a
qualification. These children will not be equipped to provide the level of
skills and expertise that an innovative economy needs. The Government is
providing more funding for industry and innovation but, for the sake of our
future, families need more support now so that they can contribute to this
vision the Government has. We applaud the Government’s additional funding for
teaching in New Zealand. This helps, but again, it does not help families that
are still paying for their children’s education through so-called voluntary
donations and fees. It costs $30 million a year for a free State education. But
we need to do more than invest in our young people. We need to make sure New Zealand
is a place that they will want to live in.
The
Government says all the right things about sustainable development on the
international stage, but back home there is an enormous gulf between rhetoric
and reality. There is no doubt that we are living beyond our natural income,
and consuming our environmental capital. There is no doubt that the economy is
a subset of society, and that both depend on the environment, but persuading
the Government—both elected and bureaucratic—to acknowledge and act on that
reality seems well nigh impossible.
A
Green Budget would begin the vital task of aligning economic and fiscal
incentives with ecological imperatives. Ecological tax reform is a simple idea.
It shifts taxes off work and enterprise and on to waste, pollution, and scarce
resources. Those who waste and those who pollute pay more, while clean business
pays less, and everyone pays less income tax. It is common sense if we want a
sustainable economy, and it is happening now in many European countries. In New
Zealand we have yet to begin any serious attempt at ecological tax reform, and
this Budget does nothing to change that. The Government’s only commitment in
that area is a carbon tax, which is set so far in the future that many in
business still hope they can lobby their way out of facing up to climate change
for a few more years.
Our
tax policy is to remove all income tax on the first $5,000 of income for
everyone. Low-income people will feel the benefit most, but everyone will get
something. We will gradually replace the lost income tax through eco-taxes,
starting with taxing climate change and carbon monoxide emissions, and ensuring
that diesel users pay their fair share for the health costs of their emissions.
This is part of our broader approach to a shift to measuring our success as a
nation, rather than as a business. Gross domestic product tells us nothing
about whether what we are growing is adding to, or subtracting from, our
well-being. As part of the Green’s Budget packages agreed with Labour last term,
work was begun on broadening our national accounts. We are a long way from
measuring sustainable national income yet, but we have to do that if we are to
have any meaningful concept of growth and development that is real.
The
Greens are working with the Government to bring New Zealand into the mainstream
of international transport thinking. Years of obsessions with cars and trucks
alone have brought our largest city to a standstill, and our national rail
system to the brink of collapse, and it has created serious health problems
among adults and children. Make no mistake: until Labour was elected, New
Zealand had some of the most extreme road-focused transport policies in the
developed world. The transport objectives agreed by the Greens and the Government
focus on economic development, safety and ability, and on public health and the
environment. They are extraordinarily well balanced and sane. Although the
allocation of funds is still focused on roading, it has begun to reflect
broader thinking. Cooperation with the Government on transport highlights that
we can work together where we have a common cause, even though we have
fundamental differences in other areas.
We
are pleased to note that the Government recognises the merits of Green Budget
initiatives from the previous term by continuing to fund several ongoing
projects in this Budget. However, no Budget speech would be complete without me
mentioning at least one of those fundamental differences—trade policy. The
Government’s fixation on free trade is the root cause of the $1.87 billion
trade deficit for the year to March. Instead of investing over $30 million in
Team New Zealand, the Government should be promoting import substitution for a
Buy New Zealand Made campaign. It is time we showed some loyalty to our own
country.
Hon PETER DUNNE (Leader—United Future): I was intrigued that
the speaker who has just preceded me stated in the closing moments of his
speech that the Greens could work constructively with the Government on matters
of common cause, and then moved a vote of no confidence in it. That is the sort
of constructive engagement that I do not think any responsible Government would
welcome or deserve.
The
spark of excitement that most New Zealanders feel when they return home after a
period overseas, at finally being back in the best little country in the world,
sums up the vision that United Future has for this nation. That vision is
founded upon a couple of core principles. Firstly, that every child deserves
the best start in life, regardless of his or her circumstances, and, secondly,
that when we build strong families in this country, we build strong
communities, and, from that, a strong nation.
Last
year, when the Budget was introduced—and I am sure the Minister will recall
this—I was critical in my Budget speech of the fact that the word “family” did
not appear once. What a change 12 months makes; what a change there has been
this year. There is a renewed emphasis, which we welcome, on families as the
cornerstone of our society, and on recognising not just the economic
contribution that families make, but also their social contribution, and the
fact that they are the glue that will hold this country together.
It
is important that we get a Families Commission established to advocate for
their issues, to ensure that their concerns are represented, and to ensure that
we are starting to implement policies that will, over time, turn round the $6.5
billion cost to our economy each year of family breakdown. In that context, $28
million over 4 years is a very astute investment, and we are delighted that it
has come to fruition. We have enjoyed working with the Government to bring that
about. But there are other measures in this Budget that will also start the
process of assisting our families to develop, to feel strong, and thus to
contribute to a good and growing nation.
I
welcome the indexation of family support and child and parental tax credits
that the Budget will introduce from April next year. Members may well say—and
some might dare suggest—that that could have been done a long time ago. The
reality is that it was not done, but it is being done now, and it will be an
ongoing and positive step for many New Zealand families, who will welcome it.
I
am delighted to see the establishment of a special parenting education
programme, which is budgeted at $11 million. It never ceases to amaze me that,
with every new technical device one acquires, there comes a huge kit on how to
use it. The most basic function of any adult in this country is to be a parent,
yet there is very little in the way of back-up and support for them. One is
assumed to know it all. A programme of this type will be an important start in
that direction. That is good, and it will help to achieve our overall
objective.
There
is better funding for pre-school education programmes. How many times have we
heard experts say that the dollars invested early in a child’s life pay a
considerable return later on? That is why pre-school education is important.
That is why giving every child the best opportunity to get access to early
childhood education is important, and we welcome the steps that the Budget
contains in that regard.
It
is also important that people have the opportunity of living in safe and secure
communities. The work that my colleague Marc Alexander has been able to do with
Phil Goff to get good victims rights legislation in place, and get good support
in this Budget for the organisations that work with victims and support their
efforts, will contribute to safer communities. This will send a more important
and powerful signal that the corner has been turned from the times when all the
rights were with the offenders and the victims continued to suffer long after
the crime perpetrated on them had been committed. That is a welcome step and it
will contribute to safer and stronger communities in the future.
The
Minister signalled one other aspect of the Budget well in advance—and it almost
became a repetitive mantra in the days beforehand—when he talked about
certainty and stability. I say to the House that every business, every social
group, every school, and every organisation I talk to in New Zealand says that,
in a time where the only certainty worldwide is uncertainty, the thing they
crave and need to make their plans for their future is certain and stable
direction. That comes from the top, down.
It
is important that we have a system of Government that is certain and stable,
and that delivers predictable outcomes. That is why we entered into a
confidence and supply agreement with the Labour-led Government. We wanted to
ensure that the wish expressed by New Zealanders at election time could be
carried through for a full 3-year term and that we were not going to get a
repetition of the circumstances that occurred between 1996-99 and 1999-02 where
things suddenly evaporated, because it is important for this country that
people have certainty and stability.
It
is important for our democratic tradition that the people’s choice of MMP be
made to work. This party is committed to doing that, and we have demonstrated
over the 10 months since the election that we are able to make a positive
contribution in that regard and work productively for the benefit of this
country.
I
contrast that with the previous speech from the Green co-leader, and I contrast
it with the experience of New Zealand First in Government. Small parties had a
bad name. People wanted small parties to exercise their influence, but not to
be the tail wagging the dog or throw their toys out of the cot when they did not
get their own way. We have engaged with the Government. We have not always
agreed. We have had some public disagreements, and we will continue to do so,
but we work on the basis of good faith and no surprises. We work constructively
and positively and, by and large, we are delivering the stable Government that
New Zealanders seek and deserve. We will continue to play our part in
continuing to achieve that, and I see this Budget as very important in that
respect.
This
afternoon, the Prime Minister herself acknowledged the contribution we have
made, and I am grateful for that. My colleagues have enjoyed the relationship
that we have established thus far, but I say to the Labour Party that we have a
few more things we will be asking for over the next 2 years and beyond. Already
we have made a difference. The Families Commission would not be on its way to
becoming a reality were it not for United Future. There have been small but
significant changes made to the Resource Management Act in the last week—and there
is more change to come—that this House had shown itself incapable of embracing
over the last 4 or 5 years, for a variety of reasons. We were able to provide
the initiative to get those changes moving ahead.
Last
year the changes to Television New Zealand and Broadcasting Communications
Ltd—the splitting of the two into separate organisations—came as a result of
discussions we had, originally with the Minister of Finance and then with the
Minister of Broadcasting, and brought into play a situation that most people in
this House wanted but could not quite see a majority for establishing. That
will be to the benefit of all New Zealanders in the years ahead. That
demonstrates the role that a small party—not seeking to overplay its hand but
seeking to play the game constructively and positively—can achieve working
alongside a larger partner. This Budget is the start of that process.
Earlier
this week, the Minister made a comment that is highly relevant in respect of
Budgets. He said that, essentially, there were two parliamentary occasions only
in the current environment: the Prime Minister’s statement at the beginning of
the year, setting out the Government’s goals for the parliamentary year ahead;
and the Budget, where the Minister effectively reports on the achievement of
those goals over the last 12 months, and then puts some figures to the goals
that have been projected for the 12 months ahead.
That
is a far cry from the days when people—and members of this House used to do
it—went out on Budget day to stock up on petrol, alcohol, and all sorts of
things, just in case an excise bill was to be rushed through and passed by
midnight on that evening, and when New Zealanders literally clung to their
radios or hung around their television sets in awe—and, in some cases, in dead
fear—of what the Minister of Finance might unleash upon them that evening. We
have seen cases in the past where whole industries were wiped out overnight by
Budget announcements. I think of the caravan and boat industries in the early
1980s as a classic example.
Those
days have gone. Thanks to the Fiscal Responsibility Act and the Public Finance
Act, which were the efforts of successive Governments, we now have a far more
stable and predictable environment. I do not think there should be criticism of
any Minister of Finance for delivering a Budget speech that is largely
predictable. That is the basis on which most of us live our lives. We actually
seek certainty and direction. We want to have some absolutes. We do not like
drama. We had an Oscar-type speech a little earlier this afternoon from the
leader of New Zealand First. It was great entertainment, it was hilarious, but
it did not make any substantive contribution whatsoever to the policy debate or
to the sum total of human knowledge in this country. It was probably forgotten
as soon as it was delivered. People would have had a laugh and moved on with
the reality of their daily lives.
That
is the point that escapes a lot of people. In today’s world that certainty of
direction, where we are able to make our own plans, confident that Government
will not come along in the middle of the night and overturn them, is what most
people want. They want to be able to get on. They want to know the norms within
which they can operate. They do not want the intruding hand of Government
screwing the scrum or tipping them over before they have got very far along the
path.
This
Budget is a further step in the direction of recognising the opportunities and
the rights that people expect in that regard. But it is important not to become
complacent. It is important not to see a Budget as an end in itself—just as a
mechanical document or a set of figures—because without vision the people
perish. I forget who said that, but it has been said many times. Without hope,
there is no chance of a future.
Hon Jim Anderton: The Old Testament.
Hon PETER DUNNE: It is in the Old Testament. I defer to my colleague.
Hon Jim Anderton: You should know that.
Hon PETER DUNNE: Divinity was never a particular strength of mine, I say to
Mr Anderton. I feel more comfortable with my colleague here who said it was
Adam Smith, but never mind.
What
is important now for this country in moving forward is that we do use the
strong economic base we enjoy—and I endorse the comments of Dr Cullen and,
ironically, Dr Brash that this is not the time to be spending surpluses—to
create some hope, to create some direction, and to start to focus on some of
the issues we need to address over the next few years. I want to suggest a few
of those at this point.
A
lot has been said about the tax burden on New Zealanders, and my colleague
Gordon Copeland, I imagine, will say more about that a little later in this
debate. I think there is an opportunity now, prudently to pick up the message
that is contained in this Budget of beginning to index certain of our transfer
payments, and to start to look at a way in which we can cut back on the
insidious bracket creep that is now returning to our income tax structure. I
think we do need to look at some modest form of indexation of tax rates. Of
course that will be costly, but I believe we are in a position where we can
start, over the years ahead, to work in that direction. That is certainly
something we will be pushing for.
Much
has been made in this debate and elsewhere, and will continue to be made, of
the infrastructure crisis this country is facing in roading, energy, rail, and
a whole range of areas. One of the things we think ought to happen—and my
colleague Larry Baldock has stressed this from time to time and on many
occasions—is that we need to start to invest more in infrastructure, through
progressively transferring some of the excise gained on fuel from the
consolidated account into a dedicated roading account. That measure has
widespread support. Organisations like the Automobile Association and others
have campaigned on it for years. It is now time to give that idea the serious
attention it deserves, because every day every one of us who travels over our
roads or uses our rail system—or even, dare I say it, uses our
airlines—recognises the failure of infrastructure in this country. I had the
experience recently of getting on an Air New Zealand aircraft, all ready to go
from Wellington, except two key components were missing. It was the middle of
the afternoon, and there were no pilots. That, surely, is the definition of an
airline on the way to the Third World, let alone a merger with anyone else.
That is the sort of thing we need to start to address.
The
New Zealand environment is one of those things that New Zealanders who return
home, or even people who live here, feel passionate and strong about. It is one
of the great things about being a Kiwi. That clean, green image permeates all
of us. But the problem we have at the moment is a Department of Conservation
that sees the environment, not as a treasure to be enjoyed by all New
Zealanders, but as some preserve to be locked up and shut off from us, in case
we dare use it—we might upset the apple cart. The treasure of the New Zealand
environment is the ability of New Zealanders to get out and enjoy it. The
treasure of the New Zealand environment is to recognise the balance between
sustainable development and our traditional environmental strengths. I think we
have to redouble our efforts in the years ahead, to look at certainly
redressing the imbalance that there is at the moment, but also using the
millions of dollars we invest in conservation to ensure that all New Zealanders
have an opportunity to get out there and enjoy the environment we are
conserving.
It
has always struck me as absurd that we say, “No, you can’t actually go to
Kapiti Island without a permit, or even to Matiu-Somes Island in Wellington
Harbour. We’re conserving them for future generations.” The current generation
would not mind the chance to use a little bit of them, and in that respect I
want to pay a passing tribute to the Karori Wildlife Sanctuary here in
Wellington, which is striking that balance properly. This is an issue that will
be more prevalent in years to come in other parts of the country, as well.
I
want to speak about another issue, and that is the question of our overall
security. I have talked about law and order and I have talked about the
security of our environment, but the security of our world requires that any
country, regardless of its circumstances, has access to adequate defence. I
know there is controversial debate at the moment about whether having defence
forces means we are prepared for war, but the reality is that a small country
like this cannot ever hope to defend itself. In fact, many larger countries
cannot hope to defend themselves either. That brings into focus the need for a
better integration and more positive use of defence forces.
I
say that if the Europeans, who have spent most of the last several hundred
years fighting each other, can now come together in the European Union and
under the leadership of NATO, surely Australia and New Zealand, two of the
allegedly closest countries, culturally, in the world, ought to be able to come
to some agreement on an integrated approach to defence and foreign policy. I am
not talking about subjugating the foreign policy of either country to the whim
of the other. I am talking about a much more positive integration of our forces
on matters where we agree, in order to be able to operate effectively. We do it
now in an ad hoc way. We did it very effectively in East Timor. Just as we have
closer economic relations with Australia, maybe there will be an opportunity
over the next few years to start to forge closer defence relations with
Australia.
I
conclude on this point. All the things that each member who speaks in this
debate over the next week wishes for this country have to be paid for, and the
only way we can do that is to build a sound, secure, and stable economy. This
Budget is a step in that direction. The recognition that it gives to the role
of families as bedrock, as a starting point for our country, is a very
important add-on because it recognises the contribution that every single New
Zealander has the capacity to make. In that respect, I think the message from
this Budget is clear. The Government will support people in their
opportunities. It will not ride heavily on their backs, but it will say that
when we get strong, functioning families we will get strong, functioning
communities, and the combination of those will be a nation of which all of us
can be proud and that will play its role, constructively and positively, in an
increasingly uncertain and indeterminate world. If we achieve that, we will
have made huge progress as a nation.
Hon JIM ANDERTON (Minister for Economic Development): I congratulate the
leader of United Future on that constructive contribution to the debate. A
little less congratulation goes to the leader of the National Party, who warned
us in his speech that the coalition Government was getting ready to spend up
and said what a terrible thing that would be. Then he said we should spend all
the surplus now. I was a bit confused by the message. I think that indicates
that Bill English will not be with us for very long.
I
have just returned from Europe, and I can say to this House that the European
tiger economies, Ireland, and the Scandinavian countries, Finland, Sweden, and
Denmark, all indicated to me, from their Finance Ministers down, up, and
sideways, that they would very much like to have the growth rate that New
Zealand has had in recent years, the future outlook that we have, and the
performance of the New Zealand economy. Sometimes I wish that the Opposition
politicians—and we have all been there—did not wallow so much in wishful
thinking about how bad they hope the economy will become, so that they can have
some kind of an opportunity. We should all be celebrating the fact that our
economy has done extraordinarily well in world terms, and that our people have
benefited as a result.
We
are often accused of somehow being lucky. I do not know how one makes oneself
lucky, but we are accused of being lucky. It is funny how lucky one becomes
when one actually has good policies and works hard at implementing them. It is
a bit like Gary Player, who when he was once told how lucky he was with his
putting after winning the PGA title in America, said the more he practised, the
more lucky he was. We are practising at being a good Government.
I
want, firstly, to congratulate Dr Cullen. I watched the Opposition members’
faces during his speech, and I put myself in those members’ position. I almost
felt a bit sorry for them, because I saw on their faces the expression of
people who were hearing about a very forward-looking, constructive programme
for this country—one set of policy developments after another—and it must have
really felt like a nail in the coffin every time one of those positive policies
came across. I can sort of understand that, and if the National Party members
contributed a bit more in a constructive way to debate and progress in this
country, one could almost feel sorry for them—but I have not gone quite as far
as that yet.
I
begin by congratulating Dr Cullen on yet another highly positive and
constructive Budget—his fourth on behalf of the centre-left coalition that was
elected in 1999. My party, the Progressives, seeks above all else to be part of
a Government that facilitates job creation. We want New Zealand to be a place where
every young person, with no exceptions, is in work, training, or education,
because that is central to our goal of both economic and social well-being. If
people listened to that Budget speech carefully, they would have heard that the
goal of this coalition, supported by United Future, is to have every young
person who leaves school in a job, work, or training by 2007. I would hope that
it would happen faster than that, but the fact that we can talk about that with
credibility shows how far we have come from the period when young people in
this country were leaving school in despair, because they had no chance of any
future. In region after region—in the north, I say to John Carter—it is exactly
the same. Now young people right throughout this country know there is a future
in their own land, and they feel good about that—as I do, on their behalf.
The
best way of ensuring that the dividends for New Zealand will be there to pay
for the investment and better job opportunities and employment growth is, first,
to ensure that the Government’s finances are in order. That is important for
both domestic and international credibility. The Budget of 2003 shows that Dr
Cullen is more than delivering on the fiscal front. No one can reasonably
doubt—they can unreasonably doubt, but they cannot reasonably doubt—his sound
handling of the Government’s finances. Dr Cullen’s management of the economy
and the sound state of the Government’s finances are the reasons that this
coalition can also take so many other measures to improve social well-being.
I
always say to people around the regions of New Zealand that we cannot have a
first-class social welfare system, education system, and health system unless
we have a world-class economy. The economy has been central to what Dr Cullen
and this coalition Government have been about over the last 4 years or so. In
my view, I would have to go back—and people might say “I would say that,
wouldn’t I?”—to the 1935-49 Labour Government to find a Government that has
been as progressive as this coalition has been, in terms of the future of this
country. I think that is the quality of the Government that this country has
been offered.
National
Party members can smile at that, but they should look at their poll figures to
see what New Zealanders think about it. New Zealanders actually agree with us,
and it is easy to see why they do. I am proud to be—and I wish some of my
former colleagues would be proud to be—part of a progressive Government that is
delivering. If those people had had enough patience, they would be sitting
around the Cabinet table in Government, delivering things to the people of New
Zealand. That is why I think I am here and why some of my former colleagues are
not, as a matter of fact—if members want to go down that road.
This
Budget builds on the framework established to support and promote future
economic development. It encourages the development of new ideas and
commercialisation. It is light years since the people of the Manawatu could
come to a function like the launching of the biotech centre in the Manawatu, to
take advantage of all the biotechnology scientists we have in that region, and
have a plan to commercialise all the good ideas that are developed through
research and development. When did that ever happen under a former
administration? The answer is that it did not happen. Now we have region after
region contributing to the well-being of this country. When under any former
Government was every single region in New Zealand in a positive growth mode?
That has not happened since Adam played halfback for the Israelis, actually.
Here it is, quarter on quarter on quarter, and year on year, with the regions
of New Zealand now delivering.
Budget
2003 reflects a whole-of-Government approach to sustainable economic development
and innovation. Measures in many portfolios focus on improvement in skills and
talent, our international connections, and our innovative capacity. There is a
growth and innovation package of nearly $400 million over the next 4 years to
support sound and smart investment in strategic industries.
I
read an article in the New Zealand Herald
this morning that stated Jim Anderton was a hands-on, sleeves-rolled-up
Minister of Economic Development, but that one business failure overwhelmed 99
business successes. I could not believe that. Let us just think about it. What
an extraordinarily negative culture that is. People sit an exam and get 99
marks out of 100, but the one mark they do not get overwhelms the 99 they did
get. How does that work? What kind of negative philosophy does that represent?
It is about time we actually celebrated success in this country, and we have a
lot of it to celebrate.
We are combining the existing economic,
industry, and regional development funding of $112 million with the Trade New
Zealand funding of $65 million and with growth and innovation framework funding
to lift New Zealand’s development path. In nation after nation that I visited
recently, there was an important emphasis on new technology, on business
development, and on growth in the regions. The OECD, on investigating what New
Zealand is doing, has said that Industry New Zealand and the Ministry of
Economic Development are at the cutting edge of world-class standards, in terms
of the development of our economy.
I would
challenge the Opposition parties who criticise the context and content of this
Budget to say that they would change the way in which we are doing things and
would change the way in which we have a growth rate that is well above the OECD
average. [Interruption] As I said before the leader of New Zealand First
came into the House, there are countries around the world—countries that we
have looked up to, in terms of their economic performance over the years—that
are in envy of New Zealand’s performance in the last 3 or 4 years.
Rt Hon Winston Peters: What’s the research and development tax in
Australia?
Hon JIM ANDERTON: The member should go to Germany and see what that is
like. He should go to Scandinavia and see what those countries are facing. We
are doing extraordinarily well.
Budget
2003 allocates funding for our World Trade Organization negotiations. It has
funding for a range of initiatives, including increased funding for business
incubators, and for adding weight to the strong portfolios in business,
industry, and regional assistance programmes. The regions of New Zealand are in
the best heart that I as a member of Parliament, in my political career of
nearly 39 years, have ever seen. The regions of New Zealand have a Government
that, for the first time, stands with them in partnership. They know that. They
appreciate what is going on, and they will never elect people who will not
stand with them in the way that this Government has done and will continue to
do.
CLAYTON COSGROVE (NZ Labour—Waimakariri): I rise in support of
this Budget. I must say that I was struck by that extraordinary speech by the
Leader of the Opposition. I did not think that in my life that I would ever
hear a Tory Leader of the Opposition attack a Labour Government for being a tight,
prudent, fiscal manager. I did not think I would ever see that day. History has
been made in this Parliament, because a Leader of the Opposition—a National
Party leader—has accused this Labour Government of doing that. Normally
National members have accused us, throughout our history as the Labour Party,
of taxing and spending. Now they say we are too prudent. They are saying that
the Minister of Finance, Dr Cullen, is too prudent and has too tight a hand on
the reins, and that a $4 billion surplus is just too good and too much. That is
incredible.
This
Budget shows a stark contrast between this Government and the Opposition. We
have a Budget of certainty, a Budget and a Government of stability, and a
Minister of Finance who engages in fiscal prudence, all in an international
environment of world volatility and uncertainty, politically and economically.
Every line item in this Budget—this is the stark difference between the
parties, and it hurts the National Party—and every financial commitment is a knife
in the heart of the National Party. We can see that written on the faces of the
National members today. Their heads are down. They are the party of progress,
the party that was born to rule, and after two major election defeats they have
not become used to being in Opposition.
The
Budget provides evidence of this Government’s commitment to our people. This
Budget strengthens the social contract between this Government and our people.
It strengthens the social contract that says we are willing to encourage
innovators and entrepreneurs, and will assist those who are down on their luck.
This Government is a sound custodian of our country’s economy, and it will
continue to build a sound platform from which our citizens and their families
can enhance their lives. The Budget highlights show how we are to do that. I
know that the National Party is disappointed with the Budget highlights.
National members are craving and clawing for anything negative that they can
try to ram down the throats of the people.
We
have a $4 billion surplus. We have an additional $140 million over 4 years,
plus $12 million of capital for research, science, and technology. We have $73
million over 4 years to promote trade. There is more investment in skills
training, so that 5,000 of our young people will be on Modern Apprenticeships.
Total
spending on education will increase by $393 million to $8.2 billion over
2003-04. There are taxation-smoothing initiatives that will help to grow our
small and medium enterprises. Unlike the National Party, we know that our small
to medium sized enterprises provide 85 percent to 90 percent of our jobs. This
Budget is a sound Budget; it is a certain and stable Budget. It is a prudent
Budget, and I suspect that the Minister of Finance has been a bit tight on the
reins. Why do I say that? It is because he knows that we live in uncertain
times, and because he wants to ensure that the surpluses are locked in in a
sustainable way for our country.
We
have a 4.4 percent growth rate and the lowest unemployment for 15 years. I want
to contrast those achievements and this Government’s performance with what we
have from members on the Opposition side of the House. As I watched Mr
English’s speech, I noticed two reactions from the Opposition members. I have
never seen Gerry Brownlee look so happy, and I have never seen Don Brash cringe
so much. Don Brash is actually a tight fiscal manager—that is how he likes to
portray himself. He portrays himself as a tightwad who is tight on the purse,
spends nothing, drops taxes, and holds back on expenditure. Yet Mr English said
that the Government was too tight. Mr Brownlee, who is like piggy in the
middle, was the happiest man today, especially given the leadership problems
that National faces. Then we heard the extraordinary statement that Mr English
was against more power generation.
If
we compare this country’s statistics with Australia’s, we can see that we are
in a sound position. I compare our record with that of the National Party. Over
there on the Opposition benches is a National Party that has no real purpose.
It is a party with no heart and no pulse—dead. The walking dead of the National
Party are over on the Opposition side of the House, and they are politically
bereft of any ideas.
I say to the National Party that we have
written a Budget today. If that party has any policy, it should put up an
alternative Budget. The National members are self-confessed economic geniuses,
so they should put up an alternative Budget. If they have ideas for this
country, let them articulate them. If they have new policy, let them put it on
the table and promote it, and then we can do what the people of New Zealand
want us to do. When we have some proposals and some policy from the Opposition
to match against our Budget, we can have a debate. We can have a contest of
ideas and challenge each other’s logic—and, in some cases, intelligence—so that
we get the best from a policy debate.
But
there is a problem with that: we have only one side, this Government, that puts
up policy and a Budget, and we do not get anything from the hollowed-out party
that purports to be an Opposition. Those members are the walking dead. They
have no pulse. The political paramedics have been in, in two elections, and
disposed of them. The body bags are out, and the body count, judging by the
leadership issue, is going up. That is interesting. National is a party of lazy
people, who will not put up policy or counterarguments. Don Brash in
yesterday’s Dominion Post proposed
three policies: cutting benefits, switching the emphasis in health to private
hospitals, and doing away with school zoning. Those are all policies that the
National Party was rejected on, in two elections. The National Party, the party
of mediocrity, has put up three tired old alternatives to our Budget.
National
members talk about layabouts and bludgers. Don Brash wants those so-called—and
I do not like the term—layabouts and bludgers to line up and do some real work.
But when National members talk about layabouts, bludgers, and lazy folk, they should
look at their own number. None of National’s spokespeople, including Mr Key and
Mr Carter from the C team, and a couple of others—I see two of them here in the
House—have put up any proposals. They have been in Opposition for how long? For
3½ years. How long has it been since we had an election? Have we had one policy
idea, or one alternative Budget? National members say they have a plan for
assisting people in this country. They say they have a plan for this economy,
but they will not put it up. What do we hear from them? The best thing that
they can do, as they did yesterday, is to complain about interjections.
I
am proud of this Budget. I challenge members of the Opposition to put up or
shut up. We see what has happened in the polls. We see, as a Government, that
people believe in the direction that we are taking this country. Let us look at
the achievements—the spending on education, trade training, and health. There
are spending rises of $711 million next year, to $9.6 billion. Do we have a health
policy from the Opposition? There is not one policy. There are three tired old
policies, released by the great doctor. Those three policies—benefit cuts, the
promotion of private hospitals, and school zoning—were all rejected in two
elections. I say to National Party members that if they want to engage with
people, they should go out into the streets and listen to folk. They should say
to people that there are people of talent in this country who are doing very
well, that there are people of talent—[Interruption]
The ASSISTANT SPEAKER (H V Ross Robertson): Order!
CLAYTON COSGROVE: I do not need your protection, Mr Assistant Speaker. I
appreciate it, but I relish interjections from that member. I appreciate your
concern, but I say let the Opposition bring him on. Every time that member
opens his mouth, he puts the sword right into his own side again. He would be
better advised to take a call and tell us what the National Party’s health
policy is. But will he do that? No, because that party does not have one, and
that speaks volumes.
I
invite National Party members to celebrate the success of this country—to go
out and say to people that we have a few issues, but we are doing well as a
country. Sure, we can always do better. But I say that for 3½ years we have
been a Government of doers and builders, not an economic vandal as National was
in the 1990s. Under the previous National Government unemployment averaged 8.1
percent for 9 years. What is it today? It is 4.9 percent—the lowest it has been
in 15 years. National was the economic vandal of the 1990s. I relish these
debates, because every time we can put the sword into members on the Opposition
side of the House we show them up as the economic vandals that they were. They
are not builders. National, the great party of progress still feels it is born
to rule, but people are crying out for a strong Opposition so that we can test
ideas in an intelligent way. I challenge and invite those members to put up
some policy ideas or to shut up. This is a good Budget, and it will be
supported.
Hon DAVID CARTER (NZ National): I guess that
contribution from the new junior member for Waimakariri says it all. I expect
that Dr Cullen would have said to those members in caucus: “Go in and talk
positively about our good Budget.” But did that member mention one positive
initiative? He spent his whole 10 minutes on a tirade against a lack of
alternatives from the National Party. I say to that member to get out of bed a
bit earlier and read the Dominion Post in
the morning. He should have a look at page B5 of today’s Dominion Post, where Dr Don Brash has a quite sizable article
outlining what he would have done if he had been Minister of Finance.
I
will pick up on one or two things. Clayton Cosgrove says that there is no
policy and no alternatives. In respect of one option, Don Brash suggests that,
on the tax side of the ledger, we could move towards a flatter tax structure.
On the spending side, he suggests we could do a lot more to promote economic
growth. I think that when people analyse this Budget today, they will realise
that it will go down in history as the Budget that halved New Zealand’s growth
rate. Dr Cullen himself—
Clayton Cosgrove: No wonder you got sacked as finance Minister.
Hon DAVID CARTER: The member tries to say I am wrong. Dr Cullen himself
said—
The ASSISTANT SPEAKER (H V Ross Robertson): I am sorry to interrupt the honourable member.
I say to the member on my right that he cannot use the word “you” across the
Chamber.
Hon DAVID CARTER: I raise a point of order, Mr Speaker. If the member is
going to continue to interject, would you at least ask him to move to his
correct seat at the back of the House.
The ASSISTANT SPEAKER (H V Ross Robertson): Would the member please continue. That only
applies if the member has moved near in order to facilitate interjection, but
he is not doing that at the moment. I will be the judge of that.
Hon DAVID CARTER: I hope that remains.
Rodney Hide: I raise a point of order, Mr Speaker. The Standing Order
provides that a person cannot change his or her seat to facilitate an
interjection. That is precisely what Clayton Cosgrove has done. Speakers in the
past have certainly upheld it against members of the Opposition if they have
done that. I do not understand why Clayton Cosgrove, who is trying to pretend
he is in Cabinet, should be allowed to advance his position and interject.
The ASSISTANT SPEAKER (H V Ross Robertson): No, I refer the member to Speaker’s ruling
53/2. Mr Cosgrove has been sitting in that seat for quite some time. He did not
move purposely to facilitate interjection. I have made the ruling and I thank
the member.
Hon DAVID CARTER: Before Mr Cosgrove winds up again, I ask him to look at
pages 2 and 3 of Dr Cullen’s speech, where he himself says that growth this
year—2003—will be 4.4 percent, and growth next year will be 2.2 percent. I know
that the member is not bright, but I suggest that he gets his calculator out,
as it will clearly demonstrate that growth will halve next year because of the
Budget and policy of Labour. That is very serious. Damien O’Connor laughs about
that. He finds it quite satisfactory for our growth rate to halve in 12 months,
and he laughs about it. He should go back to his electorate and laugh in the
faces of his constituents, who will see their standard of living continue to
decline. More and more West Coasters are leaving the West Coast.
Hon Damien O'Connor: They’re not.
Hon DAVID CARTER: They are. The population continues to decline, and that
is why the boundaries of that electorate continue to move north.
We
used to hear a lot in previous Budgets about a partnership with business. I
recall Dr Cullen’s first Budget talked about working with business to do
something about growing our economy. I tell him to start working with business
and advance policies that will actually help. When we look in this Budget to
see what he has actually done to help, we find, and I quote him: “Budget 2003
provides funding for the establishment of a Small Business Advisory Group drawn
directly from the business community.” He goes on to make a huge promise to
business; he says that in February 2004—wait for it—we will have a summit of
small to medium sized enterprises.
Hon John Tamihere: Yes.
Hon DAVID CARTER: John Tamihere says “Yes’. He will be asked to go, and so
will Stephen Tindall, Hugh Fletcher, and all those other well-known—[Interruption]
They will go. They will be there. It will be another talkfest. However, I
remind members that Dr Cullen’s first Budget called together such a group—the
Alan Dunn compliance cost report.
Rodney Hide: What happened then?
Hon DAVID CARTER: They came back with a book about that thick, with 100
recommendations that would help business. It was totally ignored, and got the
same treatment the McLeod tax review got. The Government should stop talking
rhetoric about helping business, and get on to it.
I
certainly have a message for United Future as it lines up to support this
Budget. I know that it knew at the last election all the challenges that faced
New Zealand. Its members used to talk about lifting New Zealand back into the
top half of the OECD. They used to talk quite genuinely about raising the
living standards of all New Zealanders. Yet, when we come to vote on this
Budget, they will go into the Ayes lobby. They will happily support a Budget
that halves New Zealand’s growth rate. I remember the promise from United
Future: “We’re going to do something about health waiting lists. There is no
mention in the Budget of reducing health waiting lists.
Ron Mark: They’ve just cut the waiting lists.
Hon DAVID CARTER: I am glad that Mr Mark noted that. In Christchurch the
board did a marvellous job in cutting the health waiting list. Suddenly, it
took 7,200 people off the waiting list.
John Carter: Who?
Hon DAVID CARTER: The Canterbury District Health Board took 7,200 people
off the waiting list and said there was no money for operations. Annette King
said “We’re cutting the waiting list.”, and United Future is prepared to
believe that. Well, the waiting list can be easily reduced if the numbers are
just cut off—if we do not give people an operation, and. tell them they will
feel better tomorrow. That is pretty easy to do.
What
about law and order? Remember all those passionate speeches on television from
Peter Dunne about a safe society and law and order? I looked at what we get for
law and order, and I saw that we get 50 additional police, and a DNA mobile
squad with a budget of $2 million a year.
I
listened to Mr Dunne’s contribution. He said that after the election New
Zealanders wanted his party to support the Government. I say to United Future,
and to Mr Dunne, that he is in absolute fantasy land if he thinks he is
delivering to New Zealanders. I just remind Mr Dunne, who congratulated Michael
Cullen because the Budget had been delivered without surprises, that only a
week ago we sat in this House under extraordinary urgency and passed a tax
bill. Mr Anderton and Mr Dunne tend to forget about that. It raised $18
million.
Hon John Tamihere: Come on, get a bit of passion into it.
Hon DAVID CARTER: I will give a bit of passion. I have come across a letter
signed by Mr Jim Anderton. Mr Tamihere will know about this one. It is
addressed to a Mr Philip Gregan, Chief Executive, New Zealand Winegrowers. The
letter is about a report Taxing Harm, which talked about the possibility
of increased taxes on sherry. Mr Anderton had this to say: “The ministerial
action group would certainly not raise taxes without the fullest consultation
with the industry.” I am not sure whether Jim Anderton, MP for Wigram and leader
of the Progressive party, was really conscious.
I
am running out of time and I want to catch up on one or two things that are
very serious, including the issue of biosecurity. There have been 24 breaches
of our biosecurity borders this calendar year. I was hopeful that there would
be something for biosecurity. I found a little press release from the Hon Jim
Sutton.
Rodney Hide: Who?
Hon DAVID CARTER: The Hon Jim Sutton. He used to sit over there. He has
issued this press release—but not as Minister of Agriculture, so the farmers
have again been missed out completely. As Minister for Biosecurity he has
issued a small press release announcing $2.5 million for passenger aircraft and
mail clearance over the next 4 years. That is $600,000 a year for biosecurity.
Mr Sutton should compare that with the $18 million a year the Government has
just grabbed off the poor sherry drinkers, after no consultation.
This
Budget does nothing to lift our growth rates. As Mr Cullen said, and as Mr
Cosgrove now agrees, growth will halve. There is no attempt to fix the growth
rate and lift the sustainable growth rate of New Zealand, nothing for our
infrastructural problems, and nothing to address the power crisis. This is a
very sad Budget.
RODNEY HIDE (ACT NZ): I raise a point of order, Mr Speaker. I beg
your indulgence, because I think you have given the House a mistaken
interpretation of Speaker Harrison’s ruling 53/2. You said that it was OK to
interject from one’s seat as long as one had moved there for another purpose.
However, if you read the ruling you will see that it states: “. . . A member
may move to such a position for another reason, but if the member then embarks
on a series of interjections it would be reasonable to assume that the original
purpose had been overtaken by the desire to interject. The member would then be
breaking the convention and should return to the member’s seat or desist from
interjecting.” The member has stopped interjecting, so that has been taken care
of. But I was concerned that some people assume that as long as they moved to a
better seat before they started to interject, it would be OK.
The ASSISTANT SPEAKER (H V Ross Robertson): I thank the honourable member. Each case is
judged on its merits. I have judged accordingly.
MARK PECK (NZ Labour—Invercargill): From the preceding
speech I cannot tell whether that member supports the amendments of the Leader
of the Opposition, or the Green Party’s amendment to the amendment. Indeed, I
am not certain what that Opposition member believes. However, I can say to him
that Jim Sutton did sit on that side of the House, and it is precisely because
of the Budgets of the good doctor that he is now sitting on this side of the
House and doing a marvellous job as Minister for Trade Negotiations.
I
wish to do two things in my speech today. Firstly, I want to talk a little bit
about trade and issues in the Budget around that. Secondly, I want to talk a
bit about the Budget itself. I want to give the answer to the myth that the
National Party has no policy, because it does. I want to go through what some
of that policy is as we look at this Budget. First of all, I want to comment on
the issue of trade. We have been harangued by the Greens to essentially give up
on trade and put all of our superannuation contributions into New Zealand. I
remind Green members that if we were to do that sort of thing in New Zealand,
we would certainly set ourselves a recipe for going back considerable centuries
in terms of our economic growth. In fact, we would not have economic growth; we
would have a huge economic decline, as well over one-third of our economy comes
from trade. Members of the extreme left who have taken part in this particular
debate simply do not understand that unless borders are open and people are
able to trade, the lowest paid in the world are consigned to abject poverty.
Over half the world’s population lives on less than US$2 a day, and consigning
those people to Trade Aid shops keeps them in poverty. For a country like New
Zealand, open borders are very important.
It
is time that Green members came into the real world. If they understood about
gross domestic product (GDP), they would understand that one of the factors in
GDP is net exports. The only economies in the world that do not run a net
export account in their GDP are places like North Korea. If those members want
New Zealand to be like North Korea, then we must stop trading. The economic
principle is that trade can make us all better off. I suggest the Greens have a
seminar on that and start to learn about it.
Secondly,
I want to look at the Budget. David Carter regaled us—frankly, I cannot
understand why he was put up as the first speaker following the Leader of the
Opposition—
Clayton Cosgrove: Where’s Don Brash?
MARK PECK: Where is Don Brash? That will be a speech of some
interest.
The ASSISTANT SPEAKER (H V Ross Robertson): Order!
MARK PECK: I withdraw and apologise. I meant to ask why Don Brash
had not taken a speech at this point.
We
will hear two things from Opposition spokespersons: they want us to spend more,
and they want us to spend it now. But Don Brash will tell us that the recipe is
considerably different. It will be fascinating to follow the debate. However, I
want to pick up on something David Carter said—that is, why do we not speak
about the Budget? It is a good Budget. One knows it is a good Budget when the
Opposition is as flat as it is. The only speaker who gave any life to the
debate at all was Winston Peters. At least he managed to handle the debate with
a considerable amount of humour by awarding Oscars. He even had one or two on
the other side of the House clapping him at the end of his presentation.
Listening to Bill English, one did get the impression that it was over.
We
have economic growth at 4.4 percent, and Dr Cullen was quite clear in talking
about the world economy and the issues that will lead to a downturn in economic
growth this year. We cannot do much about Sars (severe acute respiratory
system), or about conflict in the rest of the world, but we are in a robust
position to be able to come through that period of time. Just recently, I was
able to hand out an export incentive award to Henley Industries in
Invercargill. That particular company is a design-build company developing
conveyer belt technology for the food industry and new oxidation pond
technology to improve water quality.
That is innovation. That company does
something in Southland that nobody else does. It had a go at going from being a
design-build company into production. It will have to employ new workers. John
Key is inanely interjecting. He should look at the fact that this is a company
that managed to pull itself up by its bootstraps. It was struggling and about
ready to go down, but it took a punt on design-build, and through its own
efforts managed to create new products in a niche that nobody else in Southland
has filled. In the process, it developed new jobs for Southlanders. That is
something I thought John Key would have welcomed—a “pure market” approach. The
Government did help with something that that company could not afford, and that
is patenting intellectual property so that particular advantage is held in New
Zealanders’ hands for 20 years. That is a very good use.
But
I want to caution my side of the House against thinking that the National Party
does not have a policy. It does; it is a policy that has been around for some
time, and it is the policy of its spokesperson, Don Brash. I recently reread
Don Brash’s speech to the Catching the Knowledge Wave conference on 2 August
2001, where he sets out a very clear prescription for a pure “more market”
approach to the economy. Dr Brash’s view is a very simple view: there should be
no Government unless it is about protecting the privilege of the wealthy, and
unless it is about property laws. It is as simple as that.
Dr
Brash does, in fact, believe that the Government has a role to invest in
education, because that saves the wealthy having to support their sons and
daughters when they go on to higher education. Dr Brash believes in an army and
a strong police force. Why does he believe in those things? He believes them
because they are about protecting the property rights of the wealthy. He does
not believe in income support for those a little down on their luck. Indeed, he
talks about drug tests for those on benefits. Now a drug test for a beneficiary
costs $25 a test, so for about 1,000 people to be drug tested, one is talking
millions of dollars. He would appropriate money to drug test beneficiaries, but
he would put a cap on the amount of time they could be on the benefit. Don
Brash would also say that there should not be a minimum wage in the economy,
because that causes unemployment. What Dr Brash forgets is that there is a huge
debate about the Phillips Curve, which is about the trade-off between unemployment
and economic growth. Decent societies do not let people fall to the floor.
I
want to tell my colleague the Hon Dr Michael Cullen that he has done a superb
Budget in that respect. It is about spending the surplus and spending it
wisely, because we are investing in the capital of this nation, and in the
people of this nation. What sold the Budget for me was watching the faces of
the Opposition as Dr Cullen delivered the Budget. They know that they no longer
have any place in the middle ground of economic debate. They know that the only
way they will now get themselves a political niche is to move further to the
right. That landscape has been taken by Rodney Hide, and he holds it—
Rodney Hide: All the time!
MARK PECK: Yes, on his own, and he holds it well. This Budget sets
out an agenda for further incremental improvement over time, and as we get
through the tough year coming up, the Government has already signalled much
more for those who need a hand-up and the ability to contribute to society. It is
a good Budget; it is fiscally prudent. The numbers add up, and it sets the
agenda for an ongoing period of reform into the future. I know that the good
doctor will write many more Budgets in the future.
RON MARK (NZ First): It
would be nice to be able to say that it gives me great pleasure to rise and
speak in this Budget debate, but I guess for the men and women who patrol our
streets at night there is very little in this Budget to give them pleasure. In
recognition of those people, I am wearing a police tie here in the Chamber
today to demonstrate New Zealand First’s commitment to the police force, and
the focus we are giving in their support to scrutinising this Government’s
books. New Zealand First takes the policing of our nation personally. It is not
about politics, it is quite personal, because people like myself, our deputy
leader, Peter Brown, and our president, Doug Woolerton, all have siblings in
the police force. We have a lot of family in the police force, and we hear
first hand, off the ground, the problems they are facing.
For
a start, I will congratulate a couple of people on the Labour benches on
receiving their Oscars. The first one is Rick Barker. He was nominated by the
Mongrel Mob for his unforgettable part as a freedom-fighter in the political
hit “Home Alone Detention”, and for the outstanding performance in his
portfolio that saw people released onto the streets after being sentenced to
jail for violent crimes. As a reward, he got promoted. Boy, some of us do not
understand how things work over on that side of the House. I can name a number
of people who deserve the job far more than that hapless character, but he has
an Oscar, and he should take it home to show his folks.
The
other award is the one that Winston Peters gave Lianne Dalziel, who keeps her
head in the sand and ignores one of the major problems facing the police force
today—a problem recognised by everybody except her, her Government, and her
Minister of Police. That Minister got an amazing award from Winston Peters for—actually,
I think he should have got his award for outstripping the growth performance of
the Minister of Finance. George Hawkins, along with the Minister of Justice,
has produced higher growth figures in crime than the Minister of Finance has
managed to achieve with his much-lauded economic control.
Here
is the real tragedy: despite the crime figures we are seeing, and the increase
in violent crime in particular, nowhere in this Budget do I see anything to
address a problem that is growing in Auckland, and is now being talked about on
the streets of Auckland. What is the dilemma that is facing our bobbies on the
beat? It is escalating immigrant crime, and it is the side effect of an
open-door immigration policy that lets every Tom, Dick, Harry, and Osama bin
Laden into the country. People over that side of the Chamber put their hands
over their ears and eyes and say: “Oh, racists! Xenophobes! You are just
whipping up public fear.” They should open the New Zealand Herald of 10 May and look at what the police are
saying. For God’s sake, I just wish that this Minister of Police, this Minister
of Finance, this Prime Minister, and this Minister of Immigration would read a
paper! If they talked to the police,
what would they hear? For the benefit of those who do not listen, the article
states: “Asian students in Auckland are falling victim to kidnap and extortion
crimes at the rate of one a week. … Police believe this is the tip of the
iceberg and say many more similar crimes are not being reported by Asians, who tend
to shy away from dealing with the authorities for cultural reasons.” But some
say that that is not happening! “Detective Inspector Gavin Jones, the Auckland
city district crimes manager, yesterday linked a rise in kidnappings to the
growing number of Asians in the city.” Hello! Is anybody listening out there?
He said extortion—
Government Member: No one!
RON MARK: Well, the Government is not listening. He said
extortion-type crimes amongst students were a big issue for Auckland police:
“Reported kidnappings in the district have risen in the past three years”—that
is Labour’s term of Government—“from three, to 10, to 23 so far this year.” And
there is more: “Mr Jones said kidnapping was a ‘crime more commonly committed
by Asians on Asians’.”
We
are talking about a rising immigrant crime wave. The police are in the front
line dealing with it, and where in this Budget is George Hawkins’ focus? He is
out to ticket everyone going to church. He has determined that the police will
rake in $90.6 million in traffic fines. I was astounded that a quota sales
system was not set up like the Ministry of Fisheries one, where we would tender
out the quota on the road, put out the old net, and trawl them in. George Hawkins would tender a quota for big
trucks, a quota for little nannies going to church, and a quota for parents
going to footy on a Saturday, so that they could hook in all that money.
What
sort of money is this Government, in its lousy Budget, giving the police to
deal with this rising immigrant crime wave? It is $17.49 million over and above
the amount last year. That is pathetic; that is lousy; that is cheap. But oh
no, he sits there, and the Minister of Finance reads out, very seriously, that
the Government is putting in another $10 million to establish funding for two
specialist teams that will concentrate on methamphetamine. Hello! What a
surprise, New Zealand—the teams already exist! They are not new; they have been
operating for years; they are the AOS and the STG. That is baloney; that is
flim-flam. It might well be that some money from that lousy $17 million
increase is being slipped off to one side to prop up a task that has been going
on, but it is nothing new. It is smoke and mirrors. I would give George another
Oscar for acting that one out.
The ASSISTANT SPEAKER (H V Ross Robertson): According to Speaker’s ruling 6/1
(Supplement), the member must not refer to another member by his first name.
Please use his full name or portfolio.
RON MARK: I would give George Hawkins another Oscar, and another one
because he is known. But this is deception—those teams already exist. The
Minister of Finance has just told us that they are new teams; they are not.
Where
is the police focus going to be? It is certainly not going to be on relieving
the pressure on those new New Zealanders who came to this country thinking that
it was a safe society. It absolutely astounds me that this Government is
saying: “Oh, we are going to focus on safety in the community, and we welcome
in all these new New Zealanders. They are going to help build our economy, but
we don’t give a stuff if they get kidnapped, murdered, maimed, bashed up, and
chopped up with meat cleavers, because immigrant crime does not exist. Just
because we are getting more immigrants in here, doesn’t mean that this new
crime profile actually exists.”
Well,
it does exist. It has not been addressed in this Budget, at all. It is more of
the same: “Hear no evil, see no evil, pretend it will go away.” But it will
only get worse—as the police officers in Auckland have already been brave
enough to say. The crime has almost become a standing joke at the Auckland
District Court, where last month, after dealing with his third such offender in
a week, a judge asked if it were “Chinese kidnapping season”.
Dail Jones: That’s a judge!
RON MARK: That is a judge. I have seen nothing from this Government
to address that problem. Its own statistics—and it took a long time to get
those out—show that the only figures it keeps on ethnicities are on Māori.
Get that, John Tamihere! Definite statistics are kept on the following ethnic
groups: not known, other, Māori, Indian, and Negro. Why is that? This
Government does not keep definite statistics on Filipinos or Koreans, and I do
not understand that. When I went searching through places of birth, the
statistics showed that the violent crime statistics of people born in China
have rocketed by 297 percent in 5 years.
Hon Member: How much?
RON MARK: By 297 percent in 5 years! If members look at the statistics
of people born in Hong Kong, they will see that theirs have rocketed by 100
percent in 5 years. If we contrast those locations with Northland, we see only
a 13.9 percent increase in violent crime. Kiwi increases are way down,
immigrant crimes are rocketing, and this Budget completely ignores the problem.
The money going into that vote will be used for fishing for traffic tickets on
the road as Mum and Dad go to footy on a Saturday. That is wrong.
Ninety-two
percent of people in this country told this Government to focus on violent
crime, serious crime, and tougher law-and-order legislation. What do we have
instead? We have Rick Barker letting violent criminals out into the street on
deferred sentences, and he did not even know he had done it. That member has
had 4—coming up 5, and going on 6—years, and we have not seen anything, despite
9 years of promises about what he would do when he got here. The situation has
only got worse, and it is not going to get better with a Budget for the police
like this one.
DAVID CUNLIFFE (NZ Labour—New Lynn): Would the real
National Party economic policy please stand up? Is it that of Don Brash, who is
backing Michael Cullen’s Budget of fiscal prudence and fiscal headroom, or is
it that of Bill English, who says, “The surplus is too big”? Why do the two of
them not get together and actually talk about it, so that they may agree on a
single policy? We know why they do not: they hate each other. Don Brash is
still learning politics 101, and he has not read up to the page that states one
should not white-ant one’s leader if one does not have the numbers. Don Brash
announced he was running against Bill English, while Bill English was still
shoring up his last gasp of votes.
How
did Bill English do it? He did it by playing the race card again—by promising
to axe the Māori seats, and, in the process, kissing goodbye to the very
last Māori vote that National might ever have had. But Bill English cannot
count. Otherwise, he would have known that by 2020 one-third of our workforce
will be Māori or Pacific Islander. If we do not have an inclusive social
policy, and an inclusive economic vision that brings those constituencies along
and gives every New Zealander the opportunity to be the best that he or she can
be, then this nation will be the poorer for it. But that does not matter to Mr
English. He just wants to keep his job away from Don Brash, Gerry Brownlee,
Simon Power, or any other National MP who can smell a political vacuum when he
or she is in one.
The
message to Bill English is that when one is in a hole, one should stop
digging—but he did not do that. He said the Government “had abandoned the
growth strategy”, but Mr English was wrong again. There has been 4.4 percent
growth, which is one of the very best rates in the OECD. By definition, we are
on track to be in the top half of the OECD, because we were at the top of the
league table this year. At 4.9 percent, we have one of the lowest unemployment
rates in the OECD. There have been over 100,000 new jobs created in the last
year—that is 100,000 people who are not receiving the dole and who are paying
taxes. Success breeds success. That is why there is a $4 billion surplus on the
Operating Balance Excluding Revaluations and Accounting Changes in this Budget.
With the accrual basis, we need to take out some paper re-evaluations for the
Government Superannuation Fund and the Accident Compensation Corporation, but
that still leaves a healthy $1.3 billion surplus. Don Brash agrees with Michael
Cullen, saying he should not spend it but save it, because there are rainy days
on the horizon.
But
members should understand this. Even in doing that and in bringing forward the
full superannuation contribution, we have gross debt down to 23 percent of
gross domestic product. That is below our own target of 30 percent, and is
below the National Party’s target of 25 percent. For the first time in our
history since Prime Minister Vogel first borrowed money to build the railways,
we project that by 2008 the Crown will be a net creditor, with no net debt at
all.
Bill
English says the Budget does nothing to promote growth—that is rubbish. But
members should not believe me; they should believe this. There will be $140
million over 4 years, excluding capital, for research, science, and technology.
There will be $110 million over 4 years to implement the task force
recommendations for biotechnology, information and communications technology,
and the creative industries. There will be $73 million over 4 years to promote
overseas trade. There will be $19 million for pre-seed business start-ups, and
$6.4 million for new business incubators. The Government is putting its fiscal
punch where its strategy is.
The
growth strategy is not just about seed funding for new technology and new
ventures. The Treasurer and Minister of Finance, Dr Cullen, has announced today
a major review of the State-owned enterprises portfolio. Because of the
State-owned enterprises’ size and strategic significance, he said we need them
to contribute to the growth objectives by giving optimal returns on taxpayers’
funds. In short, if we are not to privatise them—and we are not—we had better
ensure that they are well managed in the taxpayers’ interests. We also need to
integrate the balance sheets of the State-owned enterprises portfolio into the
Crown’s capital budgeting process. As the Minister notes, the long-term hold
review will not alter the fundamentals of the State-Owned Enterprises Act, nor
will it impinge on operational matters that are the preserve of the boards’
governance processes. This is a project whose time has come.
I
am a relatively new member of this House, and it fascinates me that at about
this time every year, in the Budget process, an enormous amount of time and
energy goes into the new spending. In effect, that is the last 1 percent or 2
percent of what the Government spends. I am very supportive of the Minister of
Finance’s plans to have a value-for-money exercise run, which looks at the
other 98 percent of the money that we spend, on a rolling basis, throughout the
year. I believe that is a very, very sensible thing to do. It will ensure that
the taxpayers’ investment is always spent wisely, and that the returns on that
investment are monitored wisely. I was in a select committee meeting today
where I heard about some very good work that is being done in the Department of
Child, Youth and Family Services, and I commend that work to the House.
It
is also very important to recognise that the growth and innovation framework is
not just about the three key enabling sectors that we have prioritised. It is
part of an ongoing drive to modernise not only the economy but also the
Government’s own machinery. That is why we have brought through the review of
the centre, which looks at managing for outcomes, not outputs—at getting the
job done that we really want to get done, and not just making and counting
widgets. It also speaks to the whole-of-Government approach that we are taking,
to make sure that departments talk to each other about what they are trying to
do, that they work as a team, and that they work in partnership with, and not
against, each other. That is why we are talking about devolution—and I
recognise my colleague the Hon John Tamihere here. We recognise that the
devolution of Government services is sometimes to the community sector,
sometimes to the private sector, and sometimes to the local government sector.
The point is that the closer to the beneficiary of a policy the decision is
made, the more likely it is to be a good decision—a practical, common-sense,
down-on-the-ground decision.
That
is why we want to modernise and streamline the State sector, so that it is
fast, flexible, and responsive to genuine human need. That is a 21st
century type of smart Government in the public interest. It is neither the
old-fashioned bureaucratic statist model of the 1960s nor the do-nothing,
hands-off, we-don’t-care model of the 1990s, which saw the gap between the rich
and the poor in this country widen ever more.
This
Budget has a cool head and a warm heart. It maintains strong fiscal discipline
and at the same time feeds into a monetary framework that allows interest rates
to come down in order to boost growth. It is a Budget that runs healthy
surpluses, recognising the threats on the international horizon of severe acute
respiratory syndrome (Sars), international instability, and high exchange
rates. It gives the Minister of Finance fiscal headroom to tackle the problems
of the year ahead, as he needs to do. But this Budget is more than that. It
spends over $500 million per year on new health-care services and puts $167
million into new teachers for our children, in order to reduce class sizes. It
is a Budget with a social heart that will see us building hundreds of new State
houses. As a west Auckland MP, I can only commend that; the waiting lists for
State houses are huge and growing.
I
am very, very proud to be a member of a Government that has preserved its
fiscal cool head and its social warm heart, and I commend to the House the
fourth Budget of the Hon Dr Michael Cullen, who will go down in history as one
of the very best Ministers of Finance that this country has ever seen.
GORDON COPELAND (United Future): I welcome the
announcement in today’s Budget that family support and child support tax
credits will be adjusted for inflation from 1 April 2004. However, I want to
mention that the present rates were set in 1998, and United Future would have
preferred to see a movement for inflation from that time, but I welcome the
announcement, confirmed today, that those questions will be addressed very
seriously by the Government in next year’s Budget. I also welcome the reduction
in tax rates on employer-funded superannuation schemes.
I
revert for a moment to families. There are a couple of comments I would like to
make about what is in the Budget. Firstly, I welcome the $11 million that has
been set aside for a safe and positive parenting programme, but I question the
method of that programme’s delivery. The Budget states that it will be done via
a media campaign. I would very much prefer the Government to issue vouchers to
parents so that they could go along and attend positive parenting courses,
which would be provided by the great number of community and voluntary
organisations in this country that already have very good programmes in place,
and, indeed, would encourage other organisations to develop new and innovative
programmes, because it is a very important area.
One
of the key parts of United Future policy, which I am sure we will not see
advanced in the term of this Government but which, nevertheless, we want to
keep on the radar screen, is income-splitting for couples who are raising
children. Wherever I go in this country, I find people coming to me and saying
that they voted for United Future because of our income-splitting policy. There
are many, many families in this country where one of the parents has taken time
out from the workforce—sometimes for just a short time—to raise his or her
children. In those cases, the other parent is paying quite a high rate of tax.
It would be much fairer and more beneficial if they were able to split that
single income fairly and pay reduced tax rates.
I
also say that, while I welcome the reduction in tax rates on employer
contributions to superannuation funds, we need to go much further in that area.
At the present time we are actually discouraging private superannuation
savings. There is a maxim of public policy that says, if one discourages
something there will be less of it, and if one encourages something there will
be more of it. We need to do more to encourage private savings, for
superannuation purposes. I believe we should do that by providing a front-end
incentive, which would be a tax rebate on the first $2,000 saved by a person
each year. We also need, as the Budget has signalled, to straighten out the
anomaly we have at the moment, whereby the income earned by a superannuation
fund is taxed at a rate that is much higher than the marginal tax rate of many
of its members.
I must say, too, that I would have preferred
to see the Government take this opportunity to make some fundamental changes to
the tax system. Earlier this week we saw the Australian Government reduce taxes
for the average Australian, and, as far as I know, the sky has not fallen in
across the Tasman.
With
the surpluses this Budget has delivered—and I applaud those—we could have
helped ease the tax burden on families and businesses. Changes that I will
continue to push for include an adjustment to the present tax bands for
inflation since 1 April 2000. This would have given all taxpayers a reduction
of somewhere between $1.16 and $16 per week. Failure to make that adjustment
amounts to an increase in taxation, something that the Government specifically
pledged it would not do. In the longer term I would also like to see the tax
bands shifted in the direction of a flatter set of tax rates.
I
also want to continue to advocate that the company tax rate be lowered
immediately, from 33c to 30c. This would give immediate benefit to the
approximately 65,000 companies in New Zealand that form the bedrock of our
economy. Tax reduction at that level would be an immediate spur to new
investment and the creation of new jobs. It would make New Zealand business
competitive internationally and attract overseas investment to this country. At
the moment, New Zealand businesses are hampered by the fact that their capital
costs are higher than in many overseas jurisdictions, including our nearest
neighbour, Australia, where interest rates are currently 0.75 percent less, and
have been 1 percent less for most of the last 10 months or so.
The
major difference, though, between what United Future perhaps would have done in
this Budget and what the Government is doing, is to do with the ideology that
governs Government expenditure. Were we the Government, we would want to
encourage the private provision of tertiary education, health services,
prisons, and roading, so that we had a mixture of private and public provision
in those areas. I believe that would mean that all New Zealand taxpayers would
get more bang for their buck. We would have better outcomes, it would save the
taxpayer money, and I believe that the resulting competition would be healthy
for all concerned. It is a pity, in my view, that the State provision of those
things is core Labour Party policy, because I think common sense would say that
we could achieve a lot better outcomes by shifting the base a little.
I
would also like to talk specifically, if I may, about some balance sheet issues
tonight. The Budget indicates that Government debt is well inside the target
the Government has set for itself, and of course I applaud that. But it does
mean that there is capacity to borrow money specifically for roading and other
transport infrastructure developments. New Zealand has a triple A rating at
Government level, and roads typically have a 60-year life. For example, the
road between here and the Hutt Valley is well over 60 years old. This is the
perfect situation whereby the Crown, using its high credit rating, which would
give it a very, very competitive interest rate, should be planning to borrow so
that we can get ahead and build the roads we need, particularly in Auckland
where gridlocking is costing the country $1 billion.
I
also want to comment on the Land Transport Management Bill. I believe that in
that bill we should leave open all the possible options and scenarios for
funding roading. It makes no sense to me that we should hamstring ourselves and
say yes, it can be done one way but no, it cannot be done another way. We have
given local government in this country a power of general competency, yet for
some reason this House does not seem to be prepared to give Parliament itself,
if one likes, a power of general competency—in other words, that we can look at
common-sense solutions and innovative funding solutions for getting on with
roading and infrastructure development, and we badly need to do that.
The
other thing about this Budget that troubles me is that it forecasts an increase
in our already quite large balance of payments deficit, of $26 billion over the
next 4 years. That is an average of $6.5 billion per annum. That is a worry
because New Zealand is already an indebted country. We are indebted at this
stage to the tune of about $70 billion—not, of course, from Government
borrowing, which is very low, but through private borrowing.
If we look at the balance sheet of the
nation, we see that it is like having a massive mortgage on a house, and we
need to address that, because far too much of the income we earn here has to go
off shore to service that very, very high level of overseas debt. In that
situation too, it is wrong for the New Zealand Superannuation Fund to
contemplate investing so much of its money overseas. I go back to the analogy.
If one has a mortgage on one’s house, most investment advisers will say that
the first thing one should do is pay down the mortgage. We have a big mortgage
on this nation’s balance sheet, and we should be paying it down. My specific
suggestion is that the Government should lend the New Zealand Superannuation
Fund guardians the money that is going into the fund at the 10-year Government
stock rate, then let them use their investment expertise to try to cap that—to
try to make something more for the Government. But it is fundamental that we
look at reducing our debt. [Interruption] It would just change the whole
way in which they invest those funds.
The
last thing I would like to mention has to do with population growth. United
Future believes that we should be deliberately growing the population of this
country to add at least 0.5 percent per annum to gross domestic product growth.
More people means more productivity. It means that there will be people around
to actually pay pensions. When I hear people railing against immigration, I
think to myself sometimes: “Well, who do you expect to pay your pensions?”. We
have a real problem in New Zealand—that is, that many of our young, bright
people go and live in Australia. That will have a great effect on New Zealand’s
demographics, in terms of the number of elderly, as we move forward. Therefore,
in United Future’s view we have no option but to offset that with positive net
immigration, aimed at a target figure and against some policy settings.
Debate
interrupted.
The House adjourned at 5.57 p.m.