Debate on Budget Policy Statement

I move, That the House take note of the Budget Policy Statement 2003 and the report on it of the Finance and Expenditure Committee. This is the first Budget Policy Statement of the new parliamentary term, and it is the first I have engaged in as chairman of the committee. I start by thanking the committee for its work, which was in large part constructive. I also thank Mr Gordon Copeland, my able deputy chairman.

The Budget Policy Statement confirms the Government’s careful and prudential fiscal management. The Budget Policy Statement again continues what this Government did in its last term—to lay the building blocks for strong and sustainable economic growth and for a cohesive society. This is part of the Government’s focus, which centres on higher rates of sustainable economic growth. How will that be achieved? It will be achieved by doing something that the last National Government did not do. We will put money into and build a strong infrastructure. We will build and strengthen social capital. We will leverage off the talents of our population, the skills of our talented people in this country, and we will maintain and enhance the health, welfare, and well-being of our people through strong social services, better education, and stronger and better health-care.

I have to say that the work has already begun. Indeed, if members look at the Budget Policy Statement and the good news that is around, none of them can deny that this Budget Policy Statement is anything but positive. We have 120,000 new jobs in this economy, the lowest unemployment for 20 years, at 4.9 percent, and economic growth of 3.9 percent. Those are some of the best growth figures in the OECD, despite the international turmoil, the international instability, and the risks that we face. Economic growth is brought about by putting more people in jobs and by growing businesses, and that is what this Government is about.

That leads us to the positive Budget Policy Statement forecasts. I point members to this: the Budget Policy Statement forecasts higher than expected tax revenues, leading to an increase in the operating balance excluding revaluations and accounting charges of, on average, $1 billion per year, rising to 4 percent of gross domestic product (GDP) by 2006-07. We will use that tax revenue. We will redeploy that tax revenue, in priority, for the betterment of our people in this country—building infrastructure, building better transport systems, building better education and health services. We ought not to forget that for 9 years our infrastructure, our social services, our education, health, and welfare systems, were eroded and underfunded, and our people were degraded, by the National Government when it was in office.

If we look at other forecasts, we see that gross sovereign-issued debt is forecast to fall below 25 percent of GDP by 2006, and net debt, including the assets of the New Zealand Superannuation Fund is forecast to be 2.9 percent of GDP by 2007. Then we come to the forecast of a Budget surplus of $2.5 billion for the current year, climbing to $3.8 billion by 2003-04. That is more good news—more jobs, more growth, better value for people, a better economy, a better society, and a better environment.

However, there is pressure that comes with good news. Many commentators have identified that there is expenditure pressure. I am pleased to see, and I know that many New Zealand people and commentators are pleased to see, that the Minister of Finance has signalled that he does not want vast lurches in expenditure, because we have international risks. We have risks that could slow down our tax take, and we have risks that impact on economic growth. We will manage this economy in a prudential and sound way. We are tight fiscal managers. That is acknowledged by those polls that put us at near 50 percent, and that lot over there nearly down the drain.

I want to focus on the Budget Policy Statement and its priorities—a higher standard of living for our people through growth and innovation. We have put forward our growth and innovation framework, in contrast to that party, which put out a sort of election pamphlet that had no new vision, that had nothing in it except the tired old policies for which it was rejected in two elections, and for which it will be rejected again.

What is our innovation framework? What are the key areas that we identified? It is the building block for economic growth. We want to continue to build an open and competitive microeconomic environment, coupled with stability in terms of the macroeconomic environment. We want to improve skill levels. We want to enhance our innovation and our global connectivity. There are Budget priorities that are signalled in this Budget Policy Statement. We will improve New Zealand’s capacity to develop and retain skilled and talented New Zealanders, and encourage those with entrepreneurship to come to this country.

We are increasing investment in infrastructure. Take roading, which is very interesting: the policy of the previous Government, National—I am pleased to see that its policy has not changed—was designed to run down roading to the point where it could sell it. That is what National’s stated policy is. We have faced 9 years, a decade, of roading underfunding, which people in my constituency, in Waimakariri, pay for. We pay $1 billion a year, almost, around this country in road congestion charges, but that Government did nothing about it in 9 years.

💬 Ron Mark: It has been deferred for 2 years.

The “Little General”—I think he was called—from New Zealand First bleats; he was part of a Government that contributed to the lack of funding, and to no rebuilding of infrastructure in terms of roading. It took me 3 years to get the roads in Belfast in order. That member, when he was propping up a National Government, did nothing about it.

I want for a moment to compare our record with that of the previous Government. We proposed policy work in the health sector. Primary health-care policy is up, moving, being implemented. Why? Because it makes sense to keep people out of hospital. They do not need to go to hospital, because they can get to their primary health provider and get fixed up and stitched up, so they do not put pressure on the hospital. In education, early childhood has been signalled as a priority, and that is continued in this Budget Policy Statement, as is strengthening the capacity of our teachers and our tertiary sector. [Interruption] Well, there is “Spongy”; all I will say to that member over there is that at least members in this House, other than him, are toilet trained. He ought to breathe for a minute and consider—

The ASSISTANT SPEAKER (H V Ross Robertson): The member will desist from using—[Interruption] The member will withdraw.

I withdraw, Mr Assistant Speaker. I want to compare our record of stable, prudent, fiscal management with the record of that group over there. Dr Brash put out the financial blueprint of the National Party. On the one hand, Dr Brash said that he wanted smaller Government, smaller spending. On the same day, we had Katherine Rich coming out and saying that we were not putting enough money, at $10 million, into the TVNZ charter. On the same day, National called for spending in a whole series of areas. The fact is the only policies that the National Party hangs its hat on are the tired old ones for which it got rejected in the last election. National members want tax cuts. Who for? The rich. They want to abolish zoning. Did they not get rejected for that in the last election? Yes, they did. [Interruption] They do not like it when we rub salt into the wounds. They want to bring back bulk funding, Did they not get rejected for that in the last election and the election before that? All they have done, all they have learnt in the last 3½ years, is to roll out tired, rejected policies, which are the reason that people put them on that side of the House.

The ASSISTANT SPEAKER (H V Ross Robertson): Running commentaries are out of order—Speaker’s ruling 51/5.

I just want to turn for a minute to National’s semi - Opposition coalition partner, the ACT party; Mr Hide likes it when I have a bit of a dig. I tell Mr Hide to clean up his own act in his own house. He and Donna Awatere Huata have become the Bonnie and Clyde of the New Zealand Parliament. That member has exhibited ill discipline throughout his parliamentary career, and the recent example in the New Zealand Herald—we will not go into that, though—is just another example of his form that the people will judge him on. Whether it is his visit to Fiji, and his lack of will actually to stick up for and protect New Zealanders who were ripped off, or whether it is his own physical indiscipline in places like Waiheke Island, that member has form. The latest fiasco is on the front page of the Dominion Post today. That party has form, and that is being opened up. That is a good thing, because the people of New Zealand can judge it.

This is a sound document. I commend it to the House.

In the last 10 days we have seen the Labour Government abandon the economic goal that it set as its top priority, the heart of its strategy, back in 2001. Just as important, we have seen it abandoned in a way that reveals the true nature of the Prime Minister and the Government, which, in the polite language of Parliament, can only be characterised as “economy with the truth”. We have seen another block in a pattern of deception that goes back to the closing the gaps policy. That was once a flagship policy, but the Prime Minister suddenly decided that it would disappear—while the committee, the money, and the programme, still existed. Just recently we saw the revelation that at the same time that the Prime Minister was criticising statements I made about the SAS, she had decided months in advance to bring them back by the end of last year.

The tawdry display of semantic gymnastics that we have seen over the last week is a further example of this pattern of deception. Let us sort out some simple facts. Helen Clark set an economic goal, which was to lift New Zealand into the top half of the OECD on per capita income by 2011, and the only person who says that never happened is her. But we have a welter, a stack, of public documents that include that goal.

💬 Hon Member: And a graph.

And a graph—a famous graph. I will come back to that. So that is one fact; a goal was set. Then it turns out that the Prime Minister got some embarrassing advice after the goal was set. The embarrassing advice was from Treasury, which basically concluded that it could not be done—that it would need to be a very long-term goal. In fact, Treasury, on the basis of the policy, concluded this: “It appears more likely that New Zealand’s ranking among OECD countries will continue to fall.” No wonder she was worried about it. She had not taken advice, and Treasury said that it could not be done. The next really puzzling decision of this Prime Minister, who expects everyone to believe what she says, was that she never told anyone. She never told anyone that she had been advised that the goal could never be achieved. She never told her Ministers. She never told the Deputy Prime Minister—because he kept repeating it, as did his officials. She never told Dr Cullen. Why should we believe that? Something is wrong. If the Prime Minister discovers that a fundamental plank of a fundamental policy is totally unrealistic—

💬 David Benson-Pope: That member’s lost his marbles.

Does the member not believe her, either? No, he does not. She discovered that, and she did not tell her Minister of Finance and her Deputy Prime Minister—or she did but they thought they would just keep on saying it anyway, just like she said she would keep on saying it. So, having abandoned the goal, she did not tell anyone. We found out about this only because of a chance remark she made in reaction to some criticism from the knowledge wave conference. So the Government has abandoned its economic goal, and it has no replacement. I would like to hear from the Minister of Finance today as to what his goal is, because Treasury, members will remember, has said that New Zealand is likely to drop down the rankings. So even the goal of getting into the top half of the OECD at any time is regarded by the Government’s primary economic advisers as one it simply cannot achieve. So why does it not give that one away, as well? What did we see instead of Helen Clark owning up and fronting up? We saw all this nonsense.

💬 Jill Pettis: You’re just shaking dead rats.

The member is right: it is a dead rat. It is a dead rat that Labour members have to swallow, particularly the Minister of Finance, who has been left marooned by his own Prime Minister. He was left yesterday to paddle his canoe out of it by himself, when it was all her fault. So now we have found out that this is the kind of semantic ballet we get. We found out that Helen Clark said—I think it was Michael Cullen who said it—that she did not set the goal; it was talked about by other people, and she repeated it. That is one of the things we found out: she did not set the goal; it was talked about by other people, and she just picked it up. I believe that that tells us something. It tells us that they were never really sincere about it. Helen Clark never meant it. She wandered into a brand new country that she has never been to—a country called “economic policy”—and picked up the nearest little glossy bauble. Then she thought: “Right, I’m meant to be a centrist Government. I’d better talk about economic growth. What are they saying? Here it is. Heather put it in all the booklets and the publications.” But, of course, she never really meant it. Then we were given the excuse that it was actually the officials who set the goal by mistakenly repeating it in documents that the Prime Minister signed—documents that contained her little photo, airbrushed, a foreword, graphs, and her signature. So it is all the fault of the officials.

Just 3 months ago, Industry New Zealand, which is at the heart of the economic strategy, was still repeating the goal, because it had never been told. Then we were told this, and it is really good: “It wasn’t a formal goal.” The Prime Minister stood up in this Parliament and stated the goal in her speech—but that was not formal. What kind of nonsense do we have to put up with from a woman who cannot tell the truth? Of course it was formal. It was in the Prime Minister’s statement, presented to the House of Representatives of New Zealand in a speech required by the Standing Orders. And it was not formal! What does that tell us? That it was informal! So the goal was informal, everyone else talked about it, and it was only in the graphs, it was not in the text—it was informal. The formal goal was apparently in the document called Growing an Innovative New Zealand—the one, of course, that does include the graph, which tells us that the Prime Minister—

💬 Katherine Rich: They’re getting upset.

OK, so the Minister of Finance is going to get up and explain how all this fits together so neatly—

💬 Hon Tony Ryall: To three of his members.

—to three of his members, because the rest of them are so embarrassed about what they have seen happen over 10 days in this House. The Prime Minister and Dr Cullen have had to crawl out of the undergrowth and own up to the dirty little secret: they never meant it; when they found out it could not be done, they never told anyone; and their chief economic adviser has put up only one plausible scenario—that it can be achieved by 2049. That is in advice to the Government called “Climbing the OECD ladder: What does New Zealand have to do?”

💬 John Carter: Is that official?

It is informal advice, not formal. That is what we want to hear about in this debate. We want to hear what Dr Cullen’s economic goal now is. Otherwise, we can only conclude that the Government is busy but it does not know why. I think that that is now the case. The Government is busy but it does not know why. It has abandoned its goal. We have found out that at the heart of this Government is a moral rottenness about the truth, and I am so pleased that the public are now starting to see it.

There is a wonderful Kiwi phrase: “Get a life!”, and that is all I can say to that member. We are discussing a $40 billion-a-year Budget, the forecast for the next 3 years is $120 billion - odd, and all he can do is fail to acknowledge a very simple fact that I told him yesterday—that is, on 27 February 2002, in answer to an oral question from one of his own members—I think it might have been him—I pointed out that there was no goal in terms of a specific date because of the advice we had had from Treasury. So let us now pass on to some more important matters in life, because that was the speech of a dying man—a man who has to take his shirt off in a crowd to get noticed.

This year’s Budget will be presented on—[Interruption] I say to Dr Lockwood Smith: “Please don’t take your shirt off in front of me again. I still remember it from the mid-1980s!” This year’s Budget will be presented on 15 May. It will be the fourth Budget that I have presented as Minister of Finance. The Budget will be presented within the framework of higher living standards for all—which is what this debate is actually about, I say to Dr Lockwood Smith—through growth and innovation. It is about supporting a productive and cohesive society. It is about reducing crime and the impacts of crime. It is about investing for the future, and building infrastructure for New Zealand. I congratulate the Finance and Expenditure Committee on the lucid nature of the report it presented on the Budget Policy Statement. It incorporated a wide variety of views, and if one cared to read it I think one would see that it was laid out in a way that led to some interesting thoughts about where New Zealand is going.

The forecast within the Budget Policy Statement shows a surplus for this year of some $2.5 billion—though it seems now likely that that will be exceeded by the end of the year—and $3.8 billion for 2003-04. Those are very substantial surpluses, even allowing for the transfers that have to be made into the New Zealand Superannuation Fund over the coming 2 years. The Government is continuing to take a very cautious approach about large ongoing expenditure or revenue reduction programmes that would affect that operating surplus. The reasons for that should be clear to many. Firstly, and obviously, some economic slow-down in the rate of growth is anticipated this year, as a result of international circumstances, the increase in the dollar, the drought we have had on much of the East Coast, and a number of other factors. What is not clear is how much those surpluses may reduce under those situations. Clearly, the Budget Policy Statement incorporates within its forecast the assumption of a decline in the rate of growth over the coming year, but one of the things I have said to this House on many occasions is that revenue continues to run well ahead of forecast, and that leads to some concern and therefore some caution that, as economic growth slows, the slow-down in revenue could be higher than is anticipated.

It is not desirable to spend surpluses before we are sure that they are structural and not simply cyclical. Both the United States and the United Kingdom have made that fundamental mistake. Both countries are now reverting to forecasts of long-term operating deficits—a situation that this country has taken many, many years to get out of and one that we must not get back into because it is so hard to get out of. Plenty of people want to spend that money in advance, not least most of the members of the National Party, who call for increased spending in every area but for a reduction in the total. In the National Party, of course, the total is less than the sum of its parts when it comes to fiscal provision.

The Government has a clear programme about how to expand economic growth and how to transform this economy over time. It will take a long time to catch up to the top half of the OECD on economic measures, though on many social measures we are already securely within the top half of the OECD. It is on the issues of per capita gross domestic product (GDP) that we have fallen behind most obviously. The Government is addressing issues of innovation, investment in research and development, the commercialisation of that research and development, and the provision of venture capital funding. I expect to be making more announcements over the coming year in terms of the tax issues surrounding some of those matters relating to commercialisation of research and development.

We have a major reform programme in the area of tertiary education—the most significant reforms in tertiary education for many, many decades. The fact that many people do not understand those changes well, does not detract from the fact that they are enormously significant changes that are designed to shift the entire direction of the tertiary education system over time. We are putting more resources into early childhood education, which is crucial for addressing our real problem in education in New Zealand in terms of standards, which is our long tail. We perform well in the middle, and we perform well at the top—we are in the top three or four of the OECD in our achievements at those levels—but in the bottom areas we are worse than the bottom levels of many other countries. That is not good enough, particularly because that tail tends to have brown faces rather than white. So it is a social issue as much as an economic issue within New Zealand. We are addressing issues of attracting investment by reforming the Government’s own agencies in that respect, and in the Budget I will begin making announcements about how we are going to change the environment for savings. There is already before the House legislation to assist infrastructure development in terms of roading.

The public has a right to ask what the alternative is. The alternative is not in fact New Zealand First. No—as I said, three digits will become two by the time of the next election. The alternative is the blueprint—or the blue, as we prefer to call it—put out by the National Party. It is a document with not a single target, not a single date, and not a single detail about policy. It has nothing at all, except one clear statement: National is not going to lower the company tax rate—which has been the central National Party policy for all the last 3½ years. Suddenly it was denied. Unfortunately, National brought in a new person to go on the road to Damascus, and he decided to have a revelation on the way, in that respect. What National has, of course, is a policy of reducing the size of the Government, because we all know that countries with smaller Governments grow faster than countries with bigger Governments. Does Dr Lockwood Smith not agree? He cannot answer that question, but it was a pretty easy one—it was the first item of policy. If we look at the countries higher than us on the OECD, almost every one, except about two, the United States and Australia, have bigger Governments as a percentage of GDP than New Zealand does. They spend more on health, more on education, and far more on social welfare than New Zealand does, and that is true of all the European countries that are above us on the OECD tables. The evidence simply is not there.

National’s second policy is, of course, to reduce the burden of tax. But again, the fact is that our tax burden is below the average of the OECD, and particularly below that of nearly all the countries above us in the OECD. The countries that we have higher tax levels than, by and large, are the countries below us on the OECD tables—such as Turkey and Mexico. The National Party’s models are Turkey and Mexico, and looking at them, I can see why. It is always “tomorrow”, and it is always an early Christmas, as far as National is concerned. As Ralph Waters, an Australian businessman, has pointed out, in Australia there are worse depreciation provisions, there is a payroll tax, people have to pay for Medicare, there is a super tax, stamp duty, a capital gains tax, and a land tax, none of which exists in the New Zealand tax system for companies. Then that National Party document, in the most extraordinary statement I have seen for many years, states that National’s priority is to lower the tax at the top end of the income system. It seems clear that if National could afford to do only one thing in tax, it would lower the tax at the top end of the tax system, and do nothing for those at the bottom.

If we look at the reform programme of the last 20 years, what stands out? What stands out is the fact that this country has seen the highest growth in inequality of any developed country. The bottom deciles all lost real income between 1982 and 1998. The top decile gained 43 percent. If inequality is the engine of growth, we should have been moving like an express train by the end of the 1990s. We were not. It is simply an excuse for greed on the part of the National Party and its base support group. It has nothing to do with economic growth. It is all about how they reward themselves and their mates. It is not about how to make an economy grow faster, how to create a cohesive society, or how to create social capital, as Jim Bolger was once trying to create, within this country. Then, to improve the education system, National is going to abolish zoning. I have just said that our biggest problem is at the bottom end of the system—and very few primary schools have zoning. We have a fully competitive system in the primary sector, where kids can move from school to school and do move from school to school. Has that solved the problems of underachievement? No, it has not. Indeed, moving from school to school too much is one of the causes of underachievement amongst New Zealanders, particularly low-income New Zealanders, and it will continue. The National Party has no answers, no timetable, no solutions, and no hope.

There is some truth in what the Minister of Finance has said. However, this is a Government leading a country with no economic plan in real First-World terms, at all. If I were to ask any businessman or business woman in the main street of any city or town in this country: “What is this country’s export plan?”, they would not be able to give me an answer, because the Prime Minister and the Minister of Finance cannot. As a consequence, all the evidence surrounding this year’s Budget Policy Statement irrefutably points to a country in economic decline and down the ranks of the OECD countries. It is irrefutable; it is all there.

In the last week the Prime Minister has admitted that she herself never really had a plan and that she has no idea where this country will be 10 years from now; and that is dramatically serious for this country. We saw a party come to power in 1984, and it is in power again now, and although Dr Cullen talks some sense, he refuses to acknowledge that every other First-World country has plans and policies and programmes to help its business people, and, in particular, its exporters, and we here in New Zealand have none. We can have all the knowledge wave conferences and talkfests, and all the flim-flam and ballyhoo we like, but this country is on a slide, and this Government has no plan to arrest it, because it is trapped by its own past. It does not, for example, like Australia, have 75 different policies and mechanisms to help its exporters. What do we have here? We have the export credit guarantee scheme. How many applicants have been successful? None.

We wonder why people rise in this House every day to argue about education and health and social welfare delivery, when we know full well that we do not have the economy to sustain the arguments being mounted every day on this issue. It is of paramount importance that the people out there who claim to be commentators, for goodness’ sake, understand that if we want to compare economies we have to compare New Zealand’s economy with like-sized economies elsewhere. How do we compare with Scandinavia? Well, we do not. How do we compare with Ireland? We do not. How do we compare with Singapore and Taiwan? We simply do not compare, and that is because we have had successive Governments—apart from a brief 2-year period—that are believers in the hands-off, laissez-faire approach, with a bit of social tinkering around the edges. As a consequence, the number of beneficiaries since 1984—and I notice Dr Cullen did not use 1984; he used 1982—

💬 David Cunliffe: This member was a National patsy finance Minister.

Oh, I see. That is not what he said back then, but, then again, Mr Cunliffe suffers from a malaise called “recognition hunger”. Do members notice how he loves to be seen around and near newspaper people, and near the photographers? He suffers from something called “recognition hunger”. I do not always agree with Richard Prebble, but the day we first saw him, Richard Prebble said: “This member will become the most hated member in Parliament, and particularly on his side.” Know what? He is—and all in the space of a very brief career.

But I come back to my point. All the evidence suggests that the economy is in permanent decline. Our dollar is rising disastrously. Our dollar, in an export-dependent economy, is rising disastrously. What does the Government do? It does nothing at all. I heard Don Brash say today that the dollar has risen more rapidly in the last 9 months than ever since it was floated in March 1985, where it started at US44c and ended at US72c. Our exporters went from a feast to a massive famine, and we are experiencing it all over again, as happened under National in the years 1994, 1995, and 1996, when the dollar rose by 26 percent. That was disastrous for exporters. What does this Labour Government do? Nothing whatsoever.

So we are an economy in decline—but I want to say this: our economy has one feature that is totally repugnant and unparalleled anywhere in the world. It is the propping up of an economy by a process of imported consumerism. In the 12 months to the end of January this year, 70,700 non-New Zealand permanent arrivals came to this country. I repeat: there were 70,700. I ask those Māori members opposite what on earth they think they are doing in allowing this to happen in their country. What on earth do they think they are doing being slapped around the ankles and the head—and the pants, no doubt—by the Prime Minister, and told to keep quiet? When will they rise and do something for their constituents on this matter? When will the so-called working-class representatives, who purport to be Labour members, do something about their membership, and stop this absolute abysmal fiasco of a so-called immigration policy? This policy of imported consumerism is a bubble that is bursting in front of us, as we speak, right now. That is why all the projections as to where this economy is going, have been rapidly modified—and dramatically downwards. We will not have the so-called services that the Minister of Finance prides himself on; all of which, I might add, came about for no reason at all to do with the present Government. In fact, the only reason that it was happening was a very, very export-sympathetic dollar—a low dollar. The Government is allowing it now to take off, disastrously.

The other day a Japanese student died in New Zealand. As it turns out—as the Minister of Immigration admitted when answering questions in the House—the person came here as a visitor in July 1997, and further investigation showed that seven of the other eight people who are subject to a court case came here on visitor permits. I know of no country so reckless in its approach towards immigration and visits from people abroad. Those people—all eight of them now—came here and filled out, at the airport or on the plane, a visitor tourist arrival card. That is all they did.

💬 David Cunliffe: This is supposed to be the Budget policy debate!

Oh, johnny-come-lately, the new boy on the block, says that this is a Budget policy debate. Why? Because I have struck a nerve, and it is hurting. We are going to get out amongst his so-called supporters, amongst blue-collar New Zealanders, and make them patently aware of the absolute scandal that is going on in their name by so-called people who put their personal ambitions and their future careers above all else. [Interruption] It is not rich coming from me. I am a person who was sacked from Cabinet twice, and I never shut up and I never apologised—did I? I never apologised, unlike the members opposite. When the Prime Minister says, “Jump”, they ask, “How high?”.

💬 Darren Hughes: Are you proud to have been sacked twice—laid off twice?

Yes, because it was a matter of principle. One of the issues was a failed economic plan, which the National Party was pursuing, and a scandalous issue to do with this country, in respect of Sealord’s.

Let me come to the point. There are eight people here who say they are visitors, and 6 years later they are still here. But this is my point: last week I asked the Minister of Immigration how many people came here as immigrants last year. Do members know what she said? She said: “I don’t know.” Lianne Dalziel is a byword for indolence, sloth, incompetence, and massive disinterest. She does not know.

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. You might have been slightly distracted at the time, but I think that the level of personal abuse, which was occurring just then, was certainly unparliamentary.

The words “incompetence”, “disinterest”, “inertia”, and “sloth” are all apt and acceptable descriptions of this Minister, according to the Standing Orders, and that member knows it.

The ASSISTANT SPEAKER (H V Ross Robertson): In recognition that this is an open and robust debate, I just ask the member to be careful with the use of parliamentary language.

Oh, no I will not! I am not going to stand by while 70,000 strangers come to this country and we are told by the Minister that that is the accurate figure. The reality is she has no idea, because those eight people—just a random eight people—do not enter the stats. They then applied for student permits, but where in their application procedure did they get on to our records and stats as long-term permanent arrivals? Well, they did not. So we asked the Minister how many overstayers we have. She said that we may have 14,000, or we may have 20,000. That is a byword for incompetence.

💬 David Cunliffe: Ha, ha!

He laughs now, but if there is a terrorist outbreak in this darn country, he will not be laughing then. We are looking at the guilty party. It is just plain irresponsible. Incompetence is what we are seeing every day in the House. The Minister has no idea whether 70,000 people arrived permanently, or 200,000, for that matter. She has no idea. But, worst of all, she admits it. I have never seen an administration with so many useless Ministers—just plain useless. The Minister of Māori Affairs every day drags the image of Māoridom right down to the gutter. It is not an image that Māori young people can be proud of. We have young Māori out there who look up to parliamentarians, yet that Minister would not survive in any other administration I have ever seen. Then there is Lianne Dalziel—totally incompetent.

We are here debating the Budget Policy Statement for this year, and I ask members to reflect on the fact that this process is set out in the Fiscal Responsibility Act and in the Standing Orders, so that the citizens of New Zealand can have a sense of where a Government is going, firstly, in terms of its own Budget and, secondly, in the sense of its economic policy. So the first thing that a Government would want to do is to be very clear about the goals that it is setting for the economy, and the second thing it would like to do is to be very clear about the plan it has for the economy. Now, I ask someone from the Government, when taking a call in this House, to explain what this Government’s economic goal is, because that is not clear to anyone on the Opposition side of the House. It certainly does not seem to be very clear to Helen Clark either, because it keeps changing. How would one feel if one was the organiser of or a contributor to the knowledge wave conferences? Government members went along to those conferences hyped up, and looking at how to achieve and put New Zealand in the top half of the OECD—

💬 Darren Hughes: Who’s gone to Waiheke?

I raise a point of order, Mr Speaker. It is quite OK for Mr Hughes to sit there and interject, but to do so continually is out of order. I think you should suggest to him that if he thinks he has a contribution to make to this debate, he should wait his turn and take the call.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the honourable member for bringing that to my attention. I have mentioned before that running commentaries are out of order, and I refer members to Speaker’s ruling 51/5(3). Could members please look at that.

Parliament is about debating the issues, and while a Government might not like the fact that it does not have a plan and has been shown to come up short on its economic goal, that means that in a parliamentary democracy Opposition members can stand in the House and point out those failings. I know that Dr Cullen does not like it, and we know that the Prime Minister, Helen Clark, does not like it. But it is certainly a bit wrong for them to send their back-bench members down here to try to shut down the debate.

Let us look at what has happened here. We see that Helen Clark wrote this in a foreword: “These results are greatly encouraging for our goal of economic transformation and a return to the top half of the OECD ratings by 2011.” That foreword has Helen Clark’s signature. When someone speaks like that as a Prime Minister, would members, business people, and the voters and citizens of New Zealand not think that that was the Government’s goal? The Prime Minister said that, and signed it. She then turned around a year later and said the goal she had set just a year ago was totally unrealistic. Imagine that! A Prime Minister sets a 10-year goal for the country, and a year later says that it is totally unrealistic.

💬 John Carter: She forgot she had said it.

Well, we have seen her do that before. Can members remember the last big goal that the Prime Minister articulated for our great nation? It was to close the gaps. Then Helen Clark realised that under her Government’s policies that was “totally unrealistic”, so no one was allowed to talk about it and the very phrase “closing the gaps” was verboten—it was not to be said by any member, and members will not hear that talked about any longer. [Interruption] I know that Tariana Turia will get a turn to take a call. She wants to sit there and chip away because she does not agree with democracy and this Parliament.

What happened then? Last December Dr Cullen was reported in Metro magazine as saying to Gilbert Wong that he happily confirmed that the Government’s economic growth goal remained to return New Zealand to the top half of the OECD in 10 years. That was in December last year.

💬 John Carter: Who said that?

Dr Michael Cullen, the Minister of Finance. I notice he has not stood up in this House and denied saying that. Last year the Minister of Finance happily confirmed that the Government’s goal was to return New Zealand to the top half of the OECD in 10 years. Now we know that is nonsense, but Michael Cullen said it, and the question is why he said it. It was because this Government is all about public relations and spin, not about policies, plans, and a proper approach.

Let us go back to what Helen Clark said at the opening of Parliament in February 2001. She said: “We can look ahead 10 years and see where we could be.”

💬 John Carter: Where was that said?

In Parliament. She went on to say: “If we embrace innovation wholeheartedly, we can be in the top half of the OECD, not falling to the bottom”. Helen Clark first of all said that she had not said that. When she discovered it in Hansard and realised that she had said it, she agreed that she had said it but added that she had not meant it, or had said it because she was advised that it was a good thing to say, and then, when she thought about it, she realised that the Government could not achieve it. Then we wonder why business people in New Zealand are saying to us that they do not know what this Government is trying to do! The very big, bold goal that Helen Clark came into this House to set has been deemed, a little over a year later, by her to be “totally unrealistic”.

Well, what has happened? Does it mean that we have not embraced innovation wholeheartedly? Helen Clark, the Prime Minister of New Zealand, a month later in 2001, went to Massey University. In a prepared speech, put out to all the media and reported around New Zealand, she stated: “Could we be in the top half of the OECD in 10 years, if we set our mind to it? I think we could.” She answered her own question. So she said it was possible to achieve that goal, and now she says that it is totally unrealistic. I would like a member of this Government to explain what its economic goal is. Could any Government member possibly explain why the Government should have any credibility when the big, bold goal that was talked about for a year is suddenly deemed unrealistic? So worried are Labour Party members by that that they denied leave in this House for a Metro article to be tabled. In that article Michael Cullen stated: “I can happily confirm to you that our goal is to get into the top half of the OECD within 10 years.”

What happened is this. In 2001 Treasury prepared a paper—[Interruption] I raise a point of order, Mr Speaker. I think the Government members should desist from that, but those guys will do anything to disrupt a speech.

The ASSISTANT SPEAKER (H V Ross Robertson): I just say to members that if they wish to have conversations, there is a right place for that. In the Chamber that can be seen as being unparliamentary and discourteous to the member who is speaking.

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. Just by way of explanation I noted that two or three members were on the verge of going to sleep because it was a very boring presentation.

The ASSISTANT SPEAKER (H V Ross Robertson): That is not a matter for a point of order.

I can tell Mr Mallard what is happening: those members are shutting their eyes in pain. That is what is happening in that Government. I saw Michael Cullen with his head back and eyes shut. He was wide awake, but he shut his eyes through Mr English’s speech. Why was that? It was because he knows that there is no answer to this Government setting a goal and abandoning it from the very top. Does the Government have a plan? No! Does it have a goal? No! Does it know where it is going? No! This is a failed administration, in terms of the economy. [Interruption]

I would like Mr Hughes, who has a lot to say, to stand up in the House, take a call, and explain why, in 2001, the Treasury said that the economy needs to grow by 4.6 percent to 7.2 percent per person per year. Helen Clark was still going around saying that we could do that. Dr Cullen still went around last year saying that we could do that. That is not 4.6 percent growth per year; that is 4.6 percent growth per person. Last year, when we had good growth—according to Mr Hughes—we only grew the economy by 2.5 percent per person. Even when the Government has a good time, by its own admission it is not even halfway to achieving that goal. What a useless, hopeless bunch those Government members are!

I ended my speech in last year’s Budget Policy Statement debate with a challenge to the Government. I said it was an indictment on the Labour-Alliance Government that low and middle income earners—those earning less than $38,000 per year—were, and are, being penalised if they are saving for their retirement through an employer-subsidised superannuation scheme. My challenge provoked a response, and I am pleased to say that it was a partially positive response, because Dr Cullen has finally agreed to stop penalising people who earn less than $38,000. That is one small step in the right direction, but, like so much about this Government, it does not go far enough. Dr Cullen admits that he cannot afford to give salary and wage workers earning less than $60,000 the 6 percent tax incentive that he is giving to those of us earning more than $60,000. I ask Government members how they can be part of a Government that is happy to justify rewarding workers who are already well off, but not those who are struggling. How much would it cost to do the right thing by New Zealand workers? The cost would only be $60-80 million per year—not a lot of money. It is not a big price, but it is too dear for Dr Cullen.

Why is that too costly? It is because Dr Cullen has to find $2,000 million per year, every year, for his “think big” superannuation scheme—the New Zealand Superannuation Fund—that is doomed to fail. Dr Cullen is handing that money—our taxes—over to private sector investment managers, and he wants them to invest it on the overseas sharemarket. Is that a smart move? No, it is dumb, dumb, dumb. That is not just because the markets are in free fall, not just because savvy investors like New Zealander Craig Heatley or international investor Warren Buffet are either getting out of shares or not buying any more, just at the same time as Cullen’s superannuation fund intends to buy them, and not just because the same investment strategy has already cost the Government Superannuation Fund over $300 million in the 14 months to December 2002—and I suspect it has cost it quite a chunk more since then—and not just because if the New Zealand Superannuation Fund took the same hit at its peak, it would lose over $6 billion in one fell swoop. It is simply not a smart move because the casino economy is not the right place in which to stake our future.

Instead, this Government should be putting its faith in the people of New Zealand, especially our young people. Now that would be loyal. Everyone has been talking about loyalty in the last couple of weeks. How about showing some loyalty to our own people, especially our young people? Will the Government show them that loyalty? Of course, it always does a little bit of that, but nowhere near enough. There are token gestures to keep the Government’s supporters happy, but no bold vision of how to put New Zealand on to an ecologically sustainable, economically self-reliant, and socially just footing. That is the challenge for this Government, and it is failing to meet it. It is failing not only at a time when it is pouring billions of dollars into its “think big” Superannuation Fund, but also at a time when it is running large Budget surpluses.

I say to this Government that a surplus is not real as long as a significant number of children are living in poverty. It is simply not acceptable that a Labour Government, with its history of standing up for the poor and downtrodden, is happy to crow about $2 billion operating surpluses when 30 percent of this country’s children are living in poverty. If members do not believe me, they should consider the submissions we received on the Budget Policy Statement. The Downtown Community Ministry, the National Council of Women of New Zealand, Presbyterian Support Services, Child Poverty Action Group, Barnardos New Zealand, the Family Planning Association, the United Nations Children’s Fund, and the Public Health Association of New Zealand all highlighted child poverty. All those submitters called for the Government to tackle child poverty now. They called on the Government to do that not in next year’s Budget but now, because that would be humane and because investing in our children today will lead to long-term savings in such areas as health, welfare, and the costs of crime. It is ironic that the Government says its key priorities for the 2003 Budget include supporting a productive and cohesive society, reducing crime and its impacts, and investing in the future, when it refuses to do the most obvious thing to achieve those goals: to look after this nation’s children.

Given that Dr Cullen has got around to doing half of what I challenged him to do last year, which was to help working New Zealanders to save for their retirement, I would like to offer him some suggestions for tackling child poverty. Even if he implemented only one of them, it would be a step in the right direction. I challenge Dr Cullen to introduce a universal child benefit. It would be a non – income-tested transferable payment to the primary caregiver, similar to the family benefit that my parents relied on when I was growing up, which was scrapped by the callous National Government in 1991. We would propose a payment of $15 per week for the first child and $10 per week for every subsequent child.

We also challenge this Government to review and reform its family assistance policies. International research has shown that family assistance plays a crucial role in reducing child poverty rates. We challenge this Government to extend paid parental leave to 14 weeks for all mothers in the workforce. We challenge it to end compulsory work testing for single parents on the domestic purposes benefit, and for partners of beneficiaries whose primary responsibility is caring for dependents. We challenge it to provide support and education programmes for parents. We challenge it to provide additional support for parents in the first year of each child’s life. Like most members in the House, I enjoyed Plunket visiting our home. It is time to increase the resources of programmes such as Plunket, in order to ensure that every child is seen regularly in his or her first months of life, because that is a very effective early warning strategy that solves a lot of problems that might otherwise arise later on.

In addition, we challenge the Government to introduce a tax-free threshold at the bottom of the income scale. That would have a direct impact on child poverty, by giving low-income families more money in their pockets and reducing the poverty trap. We challenge it to set benefit amounts at a level that is sufficient for all basic levels. That means some significant reforms to the benefit structure. I would like to refer specifically to the submission from the Downtown Community Ministry, which gives us the example of a couple on the unemployment benefit with two children. The current rules state that after they earn $80 per week, their benefit is severely abated. The Downtown Community Ministry stated: “For the first dollar they receive from part-time work, they have their accommodation supplement abated by 25 cents in the dollar. After $80 gross, their unemployment benefit is abated by 70 cents in the dollar. At the same time, they are being taxed at the secondary rate, making a combined effective marginal tax rate of 93 cents in the dollar.” Not even the rich have to pay that level of tax. The ministry went on to state: “As well, their family support may be abated, and if they were getting a special benefit, they would probably lose that as well.” It is not good enough, when we have the Labour Government putting $2 billion per year into the Superannuation Fund for my retirement and running Budget surpluses of $2 billion per year, to have families living in those circumstances. It is time that the Government tackled the child poverty issue.

It is also time that the Government did more about helping people to buy their own homes. I hear that is one of the drip-feed announcements today in the lead-up to the Budget. Let us do it right, rather than just tinkering with it. Home ownership is beneficial in many respects. It helps family stability, strengthens communities, and is the best way for people to save for their retirement. It is something that I believe every person in this House would support and certainly, as someone who had the assistance of a home ownership scheme when I bought my first home, I encourage this Government to at least reinstate the suspensory loan that used to exist to allow people to be able to buy their first homes. That would be a step in the right direction in so many respects.

So, also, would be investing more money in the prevention of illness. Another key submission was the one from the Public Health Association of New Zealand, which stated: “invest in health, not hospitals”. We entirely agree with that. According to our calculations, we would save around $200 million a year if we put more funds into preventing illness.

I begin by saying that I am pleased to note that the 2004-05 forecasts indicate that the Government will be able to make a full contribution to the New Zealand Superannuation Fund. United Future supports that fund. Pension payments to retired New Zealanders are of fundamental importance if all of our elderly, without exception, are to be provided with at least a basic standard of living. I do not think any of us in this House would wish to contemplate a future where even a minority of our elderly would be left without the financial means to meet basic necessities such as housing, heating, clothing, adequate food, and the like. If that is so, then I think it is a pity that this matter continues to be a political football, with other parties in this Parliament either sitting on the fence or expressing outright opposition to the fund, but without, in so far as I know, proposing a viable alternative.

I had a personal preference for compulsory private superannuation, but as we all know, 92.5 percent of New Zealanders rejected that option by referendum. Given that reality, I agree with Dr Cullen that the Government would stand accused of negligence were it not to address now the reality of our demographics and the enormously expensive future costs involved in the provision of a basic standard of living for future retirees.

However, despite the positive features of the Budget Policy Statement, I continue to have concerns in a number of areas. The first of those concerns the balance sheet of the nation as distinct from the balance sheet of the Crown. I understand that during the Great Depression of the 1930s the Crown’s balance sheet was positive and its Budget was balanced. That historical example suggests therefore that we should not be lulled into a sense of complacency, simply on the basis that the Crown’s own books are in good shape.

I want to spend a moment just examining the balance sheet of our nation. In terms of net external liabilities, our net debts—something around $80 billion—New Zealand is the most indebted nation in the OECD. That level of indebtedness is nudging towards 65 percent of our gross domestic product (GDP). The Reserve Bank has told me and the Finance and Expenditure Committee that that level of debt is “very high in comparison to other OECD countries”. So, should we be concerned? I think the answer is yes, at least in the sense that the owner of a freehold house is patently in a much better financial position than the owner of a house with a significant mortgage. In our case we are, by analogy, a nation with a significant mortgage.

If people have a mortgage, the first call on their income is its servicing by way of interest and capital repayment. The same is true for a nation. A significant first call on our national income has to be paid overseas to service both the interest on that $80 billion—around $4.8 billion per annum if I strike an average interest rate of 6 percent—and the repayment eventually of that $80 billion in capital. Those figures remain the same regardless of the fact that, as is now the case in New Zealand, most of that debt is owed by the private sector rather than by the Crown.

Of course, if I knew with certainty that the bulk of that debt had been borrowed by businesses as part of a well-thought-through gearing strategy to increase the wealth of the nation, the high level of debt might, of itself, be a positive rather than a negative for New Zealand. However, the Reserve Bank tells me that $23 billion, in net terms, worth of that private sector borrowing from overseas sources has gone into non–revenue-producing assets such as private cars and housing. To that extent, the “mortgage on the house” analogy is therefore a reality, and, obviously, New Zealand’s net worth would be better if that debt could be paid off.

There is another aspect that should also be mentioned. Since New Zealand has net external liabilities of $80 billion, obviously there is ample scope for the New Zealand Superannuation Fund to be invested predominantly into this country. Commentators have said that the New Zealand market is too small, but how can that possibly be the case if we have already borrowed $80 billion worth of debt from overseas whilst, at the moment, the Government Superannuation Fund and the New Zealand Superannuation Fund combined have assets of around only $6 billion or so?

Furthermore, as the borrower always pays interest at a higher level than the lender, with the difference becoming the banker’s margin, then we increase the nation’s financial risk if in net terms we are borrowing in order to lend. That is the road to poverty, not prosperity.

We can, of course, also improve the balance sheet of the nation and our net indebtedness by encouraging a higher level of private savings. I believe that front-end incentives will need to be given to change our present low-savings culture. The Minister has voiced his doubts about whether that would be effective. He said in the House recently that the question is not whether people want them, but whether they would work. In response, I point out that they are a feature of all the other OECD nations where the savings level is appreciably higher than in New Zealand. I believe that the only other exception is Portugal.

Also, I can say that it was tax incentives that tipped the balance for me in my 20s, as a young husband and father, in favour of joining my company’s superannuation scheme. Joining the scheme involved considerable financial sacrifice as I had, in order to attract the employer’s contributions, to pay in 5 percent of my gross salary. I would not have done so but for the tax rebate that was then available.

The Government Actuary’s report for the year ended June 2002 indicates that the percentage of people in the labour force who belong to employer superannuation schemes has dropped from 22.6 percent in 1990 to 14.6 percent 11 years later. I do not believe that we will see those trends reversed without front-end incentives. I hope that the Minister’s doubts can be resolved in favour of boosting private savings by front-end tax incentives.

I believe that we must look carefully at the issues I am raising. The Budget Policy Statement forecasts a net cumulative increase in the current account deficit of $31.5 billion to 2007—money that the Crown will need to borrow. That will further increase the debt on both the Crown’s and the nation’s balance sheet. Between 2004 and 2007 the cumulative increase in the current account deficit will be around 6 percent higher than GDP growth over that same period—a worrying trend, indeed. That alone would see New Zealand’s net debt balloon to 71 percent of GDP. If at the same time private borrowing continues to grow at a faster rate than GDP—and that has certainly been the case in recent years—we will see net debt well over 80 percent by 2007, which is just 5 years away.

The Reserve Bank has drawn attention to the fact that the high level of external private sector debt, in conjunction with a relatively low level of financial assets, heightens New Zealand’s vulnerability to adverse events, whether of an external or an internal origin, notwithstanding the many positive features of the macroeconomic policy framework and the economy. Those warnings were given to us by the former Governor of the Reserve Bank, Dr Donald Brash, in a speech that he made on 25 January 2002. Now, if the Reserve Bank was worried in 2002 when our debt level was about 65 percent of GDP, how much more should we be concerned when, on the basis of this Budget Policy Statement, we are heading towards an 80 percent net debt ratio by 2007. In my view, that should signal that the policy changes I have mentioned should be made sooner rather than later.

Secondly, I want to mention child poverty in New Zealand. I believe that this year, rather than next, the Government should move to adjust family support and family tax credit payments for inflation since 1998. I have some sympathy with the minority view expressed by the Green Party. However, I must say that I am delighted to note that the Budget Policy Statement includes the setting up of the Families Commission. Really, it is time we stopped pretending that the State can somehow be a surrogate father, and we need to begin to rebuild New Zealand families and communities so that the financial surplus, which we are forecasting, can then be worn as a badge of honour. It cannot, at the moment, when so many New Zealand children are worse off now than they were in 1998.

The Budget Policy Statement is a requirement of the Fiscal Responsibility Act. It is one of the very good policies put in place in the 1990s, which, I am pleased to see, the present Government has continued to have in place. It does not really stop a Government from doing anything it wants to do, so it is not anti-democratic in any sense. However, it does require the Government to be quite transparent and honest about what it is doing, and what its intentions are. It provides a very important discipline on Governments. A Government cannot introduce a policy and say that it costs only $10 million, if in fact it will cost $50 million, $100 million, or $200 million in the next 2 or 3 years. This statement is a very important policy, and I am delighted that this Government is continuing to issue such statements.

In the document the key priorities of the Government, over the next little while, are set out, and I want to speak to two of them today. The first one—in fact, the one listed first on page 5 of the document—states: “A key focus for the Government is building the conditions for enhancing New Zealand’s sustainable economic growth rate and moving back into the top half of the OECD in terms of per capita income.” It does not state when that objective will be achieved, and, as my colleague Mr Bill English said recently, it is not at all clear that on present policies they will move up at any point, although 2049 may be a possibility.

But I want to report that every single submitter from the business sector who appeared before the Finance and Expenditure Committee to comment on this statement, expressed grave concern that the Government’s policy fell a long way short of delivering on its own announced goal of raising living standards and the trend growth rate in New Zealand, to get New Zealand back to the top half of the OECD. They wanted to see some attempt to reduce the company tax rate, and to flatten the personal tax scale—as the Government’s own specialist tax advisors, the McLeod committee, recommended. They wanted to see a serious attempt made to reduce the costs of excessive regulation in areas like the Resource Management Act, and so on. But there is no indication at all, either in this statement or, indeed, in other documents put out by the Government, that it has anything planned in this area at all.

The Minister of Finance has suggested that if he can reduce taxes next year, those tax cuts will be used again to redistribute wealth, rather than create more wealth—as if the income tax structure were not already very progressive indeed. I said in this House last night that a person earning $25,000 a year with a dependent spouse and two children under the age of 13, pays less than $27 a year in income tax, after family tax credit, and so on, is allowed for. Someone earning four times as much, on $100,000 by contrast, with the same family circumstances, is paying more than 1,000 times as much—not four times as much, not 40 times as much, but more than 1,000 times as much. So the tax structure is currently penalising the people who are most likely to invest, to take business risk, and so on. The Minister proposes to exacerbate that situation in any tax cuts he can afford next year.

Is it any wonder that the Government has abandoned its own goal, and reneged on its commitment to get New Zealand back into the top half of the OECD by 2011? The growth projections underlying the December Economic and Fiscal Update are for steadily reducing growth over the next decade. The highest growth rate in the decade projected by Treasury in this document, is the growth rate in this year—the year we are now in.

💬 David Cunliffe: They are not forecasts.

Well, I think I know the difference between a forecast and a projection. I have been working in this territory for a while. Certainly they are not forecasts of what will happen this year, next year, or the year after, but Treasury is saying that at this stage there is no evidence at all that per capita growth can exceed 1.5 percent per annum. The reason that growth is projected to decline is that the workforce is expected to grow at a slower rate, so that we get about 3.something growth this year, and a 2.1 percent growth at the end of 10 years. There is no evidence at all of an increase in the trend growth in productivity, and, frankly, at 1.5 percent, we will not climb up the OECD ladder very quickly.

The second key priority in this document, which I want to speak about briefly, is to support a productive and cohesive society. That is also, clearly, a very important objective indeed. Well, at the Finance and Expenditure Committee we had a number of submitters before the committee expressing concern, as Mr Donald has said, about the increase in child poverty. What does the Budget Policy Statement do about that? The statement is based on the assumption that there will be a steady increase, from this point on, in the number of those on a benefit. In 1975 those on the domestic purposes benefit numbered 17,231. In 2002 that number had increased by 532 percent to 108,980, and the Budget Policy Statement is based on the assumption that there will be an additional 4,000 people on that benefit in 2007.

In 1975 those on the invalids benefit numbered 9,414. In 2002 that number had increased by 586 percent to 64,603. The Budget Policy Statement is based on the assumption that there will be an additional 17,000 people on the invalids benefit by 2007. We have had no great war involving New Zealand since 1975, we have had a decline in the road toll since 1975, but we have had a 586 percent increase in those on the invalids benefit—in 27 years—and we are projecting, in this Budget Policy Statement, a further substantial rise in the number of people on that benefit.

In 1975 those on the unemployment benefit numbered 2,894. In 2002 that number had increased by over 4,000 percent to 123,067, and the Budget Policy Statement is based on the assumption that there will be an additional 9,000 people on that benefit in 2007.

💬 Ron Mark: They are all Labour voters.

That may explain it. The story is similar for the sickness benefit, though I will not read out all the numbers. The total number of people on those four benefits—invalids benefit, sickness benefit, domestic purposes benefit, and unemployment benefit—has increased from 37,369 in 1975, to 333,262 in 2002. It is projected to rise further to 371,000 people of working age by 2007. These figures do not include national superannuitants; they include just the people on those four benefits. It seems to me that there is something fundamentally wrong in a system that creates that number of additional beneficiaries, particularly at a time when the economy has been very buoyant indeed. It has been very buoyant not, may I say, from any particular policy that this Government has put in place, but because of the reforms of the 1980s and 1990s, the very low exchange rate we had until recently, and, of course, good export prices. I ask members how that increase in people on benefits is supporting a productive and cohesive society.

I must say, without being too personal about it, that I have not been able to take Donald Brash all that seriously since he came to Wellington to take up the position of Governor of the Reserve Bank and advised people not to buy a house in Wellington because it was not a good long-term strategy. I suspect that since he has been here he has decided that that was not quite the advice people should follow.

💬 Dr Don Brash: I raise a point of order, Mr Speaker. Mr Anderton is quoting me quite incorrectly. He is perpetrating a myth that is wrong. It is important that he desists from that clearly irrelevant comment in the context of the Budget Policy Statement.

The ASSISTANT SPEAKER (H V Ross Robertson): That is not a point of order. It is a debatable issue.

Michael Cullen’s fourth Budget Policy Statement is another excellent summary of the Labour-Progressive coalition Government’s progress so far in improving the quality of life of all New Zealanders. One of its greatest values, however, is that it highlights how the excellent management of the Government’s books will allow us to make further progress to improve the quality of life of all New Zealanders in this and coming years, on a very firm financial basis. I know that it is not usual for non-Government parties in Opposition to congratulate the Minister of Finance or the coalition Government on anything much, but I think there is something for all of us to celebrate in this Budget Policy Statement.

The Labour and Progressive members are proud of the Government’s record in steadily improving opportunities for New Zealanders to participate fully in their own society. The Progressives above all else seek a Government that facilitates job creation. We want to see a society where every young person is in work, training, or education. We need to see the already very sound financial position of the Government made even stronger, because we know that this is the best way of ensuring that the dividends will be there to pay for the investment we need in better job opportunities, and improvement in the quality of health and education services in this country. I have to acknowledge that in the past, under a variety of Governments, these have been underfunded and therefore are inadequate to meet the expectations of a First World country like New Zealand.

The sound handling of the Government’s finances, outlined in this Budget Policy Statement, has made it possible for us to have, among other things, a growing economy where New Zealand’s rate of economic growth, and therefore its ability to create meaningful work, education, or training opportunities for our people, have been at a level above the OECD average over the last 3 years. The OECD has forecast that New Zealand will continue to outpace the OECD average over the next 3 years. I thought that would be a cause for celebration for all New Zealanders. I know that when in Opposition one has to hope that the country becomes miserable so that an Opposition party has the chance of becoming the Government, but in truth the country is not miserable. Things are doing very well. Sometimes I think it would be much more credible of the Opposition to say so, because everyone knows it.

We do not outperform the OECD average unless we have a jobs-friendly Government—a Government that encourages people’s natural innovative and creative ideas. We have more people in real jobs than in the last 15 years. There are 15,500 fewer people on the main unemployment benefit than a year ago, and 123,000 more jobs today than there were in December 1999 when we first came into Government. We are expanding opportunities for people to gain high skills in the workplace. We intend to have over 6,000 young people in Modern Apprenticeships by the end of this year—a 100 percent increase over the level last year, and a 6,000 percent increase on what there was previously, because there were none.

But it is true that any Government can temporarily boost spending on training, education, and job creation. For example, the third National Government from 1975 to 1984 had a big idea based on increased spending, which ended in tears because it was not based on sound economic development foundations. The challenge for this Government has been to improve social well-being, at the same time as we improve economic opportunity. We believe that that can be achieved only through intelligent partnership with all the sectors of the communities of New Zealand. Partnerships between Government and industry—[Interruption] I tell the member for Rodney that this Government has a better relationship with mainstream business, manufacturers, and creative, innovative industry than any Government in my time on this planet. We want partnerships in the community, because Governments do not create all the problems, and they do not solve them all, and partnerships within the Government, because coalition Governments are better-quality Governments. The partnerships between Ministers and this Government, both in the last 3 years and this term, are as good as I have ever known them to be in my experience in politics.

What this Government’s Budget Policy Statement shows, however, is that we have those partnerships today, and they are working positively for the social and economic well-being of all New Zealanders. I want Opposition parties to dwell just for a moment on one important thing in this Budget Policy Statement. Net core Crown debt, after taking into account the accumulated assets of the New Zealand Superannuation Fund, is forecast by Treasury to fall to just 2.9 percent of GDP by 30 June 2007, based on current policy settings. That is down from around 20 percent of GDP when the centre-left first took office in late 1999. I would have thought that the National Party and ACT would be cheering all that. But no, there was not a word from Dr Brash. I would imagine that in any forecast he made as the previous Governor of the Reserve Bank he would have looked at that and said it was an impossible target, yet we have actually met it. We are doing better than anyone could ever have thought.

I can accept that the ACT party and the National Party, which recently adopted ACT’s key policies and values, might disagree with the new spending on education and training, or the development of work being done in the regions of New Zealand to get industries and firms working together, in a more coherent fashion than ever, to meet common challenges. I can also accept that ACT and National would much rather sell off taxpayer assets because they have a non-negotiable principle, which is that taxpayers should not own anything in this country—not even strategic assets like the national airline. But surely even Opposition parties can accept for themselves some happiness at the Government’s overall fiscal stance, as outlined in this Budget Policy Statement.

Mr Speaker, you would be hard pressed to count on the fingers of one hand the number of OECD nations with Governments running as healthy and as strong a position as this Government is. The Budget Policy Statement is a progressive document highlighting a Government committed to investment in the country’s productive capacity in training and education, doing so with an eye to the known future costs of superannuation, and all the while maintaining one of the most prudent sets of debt and operating positions in the OECD. There are political implications in all this. It means that respectable and intelligent stances are available to Opposition parties to engage constructively with this minority Government to advance legislation through the House. It should be clear to most people now that the New Zealand Labour Party, and I say this as a minor coalition partner, is going to be the far-largest single party in this Parliament for many years to come.

💬 Ron Mark: Here we go.

National Party members disagree with that. They will be lucky to be here next time, with the rate of progress they have been making. The challenge of the other six parties here is to engage constructively with Labour-led Governments for years to come and to produce the best laws and policies for New Zealand’s future. I am personally delighted with the fact that that is happening already. We hold only 54 seats in this Parliament together, which means that no law can pass without the support of at least one non-Government party. In fact, of the 17 laws that have been enacted since the July election last year, no fewer than 13 have been supported by more than one Opposition party. Seven laws have been enacted with the support of more than two Opposition parties. This shows that this Parliament is working, under MMP. There is a positive role to play for every non-Government party, showing that there is an opportunity to engage constructively across the floor of this House to support progressive legislation. It is also a sign, in my view, of the underlying confidence by the whole of the Parliament in the Minister of Finance of this coalition Government and his responsible and far-sighted fiscal management. A word or two of congratulations would not go astray from those who in the past could only have dreamt of the fiscal position that this Government is now in, on behalf of New Zealand.

Page 1 of the Budget Policy Statement sets out the Government’s priorities. The very first priority, on page 1, is “Increasing our sustainable rate of economic growth”. There is nothing wrong with that priority. It makes a lot of sense. The only problem is: who can deliver it? I think most members of this Parliament would accept that only business can deliver an increase in our sustainable growth. I think that most people, unless they are communists, would accept that it is not Governments that deliver economic growth; it is business. So if we accept that argument—that it is business—we need to take some notice of what business says. Business leaders came to the Finance and Expenditure Committee and told us that they agreed with that goal, that priority, but they said that current policies are not consistent with it. Other business leaders said that there is no sign of policies to support that priority. That is what business is telling us.

This Labour Government says that growth is its priority, and we have just heard Jim Anderton rabbiting on about how his policies, in partnership with business, are going to deliver it. So how come business people come to the select committee and say: “Your policies won’t deliver it.”? Clearly, this Labour Government is not listening. One business leader told the select committee that it seems that their submissions go down a black hole. Last year, I remember that Business New Zealand came to the select committee, also on the Budget Policy Statement a year ago, and said, and I quote it exactly: “No other Government on this planet serious about growth is implementing these policies.” This Labour Government can ignore that if it likes. It can say: “Oh well, the people who come along to the select committee do not represent New Zealand business.” Business New Zealand represents something like 70,000 businesses, and I do not know how many tens of thousands Federated Farmers represents. The Business Roundtable certainly represents most of the bigger businesses.

The New Zealand Herald conducted a survey of 120 chief executives of business late last year. Of that 120, three thought that this Labour Government had a credible long-term growth strategy—three out of 120! Yet Jim Anderton says we should be applauding the Government for its growth policies. Business in New Zealand does not believe that the Government has a credible growth strategy. Treasury does not believe that the Government has a credible growth strategy. Treasury’s projections in this Budget Policy Statement show economic growth declining over the next decade, not going up.

The business sector told the select committee that if this Government wants to increase our sustainable growth rate, it has to do something about reducing the Government’s spending ratio. Business pointed out that no country of a kind similar to New Zealand has ever sustained 4 percent growth while carrying a tax burden like New Zealand currently carries. No country of our kind has ever done it. But Dr Michael Cullen is far more clever than the collective wisdom of the world! Dr Cullen thinks he can defy gravity. In fact, at the select committee Dr Cullen was questioned about not just that concern but other concerns that were expressed—the need to reduce the regulatory burden on New Zealand businesses, and the need to reduce compliance costs. Business New Zealand pointed out to the select committee that as it looks ahead it sees that Government policies, just next year, are going to impose an additional $43,000 in compliance costs on the average New Zealand business.

Do members know what Dr Cullen said to the select committee when he was confronted with those concerns? I quote from the report of the Finance and Expenditure Committee of March 2003. Dr Cullen said: “It is important to recognise that Business New Zealand is an interested pressure group, just like the PPTA or any other organisation. Their job is to say, ‘Our group should get more money. You have set the law in such a way that it completely fails us.’ In the same way that the PPTA tell us that we do not pay them enough money, Business New Zealand say that, in effect, we do not pay them enough money by way of lowering their taxation.” I am quoting directly from page 18 of the select committee report.

Let us put aside his insult to Business New Zealand by saying that it is like the PPTA. That quote from Dr Cullen shows that he thinks all business income in New Zealand is Government money. He and his Labour Party mates think that the amount of money they do not take off by way of taxation is Government payment to business. I quote him directly. He said: “Business New Zealand say that, in effect, we do not pay them enough money by way of lowering their taxation.” It speaks volumes when the Minister of Finance says that we do not pay them enough money by way of lowering their taxation. Dr Cullen thinks that all the money in the economy is owned by the Government and that the Government deigns to leave some of it with business and not tax it all.

This Government is a bunch of unreconstructed socialists. They know the rhetoric. Dr Cullen and Helen Clark have been around this place for a long time. They know the rhetoric to give the impression, the perception, that they are business friendly and pro-business. Dr Cullen’s statement speaks volumes. He thinks that lowering taxation is the same as the Government paying businesses. It is not just New Zealand businesses that say that the policies are not going to raise our rate of growth. The most recent OECD analysis on the New Zealand economy says that the Labour Government’s policies are not helpful to growth.

So how can Cullen, Anderton, and the like stand in this Parliament and try to tell us that their partnerships with business will increase our sustainable rate of growth? I suppose that Dr Cullen, that smart alec, thinks he knows better than the whole OECD. That brilliant former history lecturer knows better than all the OECD economists! It is interesting that Dr Cullen has said that New Zealand’s tax burden is not that high. In fact, he claimed that most of the OECD countries carry a higher tax burden. I draw to his attention the latest addition of The Economist. It shows a table that relates to the direct tax burden on industrial workers with a family. Do members know where New Zealand ranks in the OECD for direct tax burden on working families? It is one area where we do rank in the top half of the OECD. We are sixth highest in the OECD for direct tax burden on working families, and under Labour it has gone up. It has gone up more than any other country in the OECD, other than the Czech Republic.

Labour members think that sending Jim Anderton around the country for his little photo opportunity on grant handouts will increase our sustainable rate of growth, and Dr Cullen talks about improving our investment agencies to attract more investment. That is like trying to make NZL82 go faster by changing the uniforms of the crew.

The “third wayism” crap from this Government, to quote John Tamihere, is just that. The Government is trying to hoodwink New Zealanders. It is trying to hide its socialist redistributive, anti-growth policies and dress them up in the fancy jargon of partnership. John Tamihere sitting opposite knows that it is just “third way-ism”, “State-ism” garbage that is damaging not just to the future growth of New Zealand but to Māori, as well. That is why Helen Clark is now trying to distance herself from the growth goal.

It is rather sad to see a member who once showed promise as a young Minister being pushed further and further away from the front bench by his own colleagues but, having listened to his speech, I understand exactly why that is. Lockwood Smith is nothing more than a trained parrot for the Business Roundtable and Business New Zealand. He gets up in the House and rattles off their submissions, like the organisations themselves before the Finance and Expenditure Committee. Guess what, Dr Smith—times have moved on. The recipes of the 1990s have been tried, and they failed. That is why he is on that side of the Chamber, and we are on this side. I will prove that case in my remarks today.

I welcome the opportunity to speak in the Budget Policy Statement debate today. As the quality of debate in, and submissions to, the Finance and Expenditure Committee indicated, the Budget Policy Statement is indeed a useful part of the Government’s accountability framework, under the Fiscal Responsibility Act. As Dr Brash said, that is a matter of bipartisan agreement in this House.

In saying that, there are three key points that stand out from the report of the Finance and Expenditure Committee. First, that progress of the economy in the last year was not just good; it was outstanding. It was underpinned by sound and prudent fiscal management by this Government. Second, we are turning round the social deficit of the 1990s. No, the job is not finished yet. There is much more to do. Third, there are external risks of a deepening recession, which means we have to manage extremely carefully in the years ahead.

I turn first to the economic results. The Budget Policy Statement shows higher than expected tax revenues, with the Government’s operating balance rising, on average, by $1 billion a year, to a 4 percent of gross domestic product (GDP) surplus by 2007. That is an outstanding result. It has not been matched in 20 years in this country. Let us pinch ourselves—no, we are not dreaming. [Interruption] No, I do not want Dr Smith to pinch me. Gross sovereign issue debt is predicted to fall below 25 percent of GDP by 2006, and net debt is predicted to fall below 2.9 percent of GDP by 2007. We are very nearly in credit as a Government, for the first time since Vogel borrowed for the railways. The Government has new operating spending of $1 billion a year, and it is focusing on reducing social inequality and crime, and investing in our future.

Contrast that performance with that of Dr “Back to the Future” Brash. Bizarrely, in his remarks he appeared to confuse the technical growth assumptions in the Budget Policy Statement documents with forecasting. Of all people, he should know better. Just because a technical assumption of 2 to 3 percent is in the document, it does not mean we will not do better. What it means is that, unlike the Opposition, this Government does not count its chickens before they are hatched. National cannot get its act together. On the same day that Don Brash called for smaller Government, Katherine Rich bemoaned the fact that we were spending only $10 million on the Television New Zealand charter, Nick Smith demanded more for State housing, and Murray McCully wanted more for the America’s Cup. The day before, Roger Sowry wanted a superhighway from Auckland to Wellington.

💬 Darren Hughes: A successful member of Parliament.

He is a very successful member of Parliament. He lost twice to Judy Keall, and once to my esteemed colleague Mr Hughes.

ACT, on the other hand, is so busy imploding, that Rodney Hide is talking to his counsellor while we are having this debate. As the New Zealand Herald says, Richard Prebble has many, many problems, of which Rodney Hide is but one.

More than anything, Don Brash stands for the failed policies of the 1990s. Let us recall what they are. First, it is indisputable that real incomes fell for those at the bottom of the heap. Second, there was growing inequality. Third, there was gross, grinding poverty for the children of the poor. Let us look at some facts. In 1989 there were 120,000 people on the unemployment benefit. By 1998 there were 152,000—the numbers were up by 25 percent. In 1989 the Labour Government spent less than $1 billion on the dole. By the end of the National era, $1.5 billion was being spent. We may conclude from that that the worst thing a Government can do is to deny people the opportunity to work—not only does that take away their dignity, but also it results in a Government spending a lot on unemployment benefits.

Here are some more facts. When we took office the unemployment rate was 6.5 percent. Now it is under 5 percent. There are now 123,000 people in jobs who previously did not have them. New Zealand has growing inequality. In 1988-9, under National, the eightieth percentile of income earners earned two and a half times more than that of the bottom twenty. In 1999, after a decade of a National Government, the eightieth percentile of income earners were earning three and a half times more than that of the bottom twenty. That is indisputable. Data supplied by the Ministry of Social Development and by Statistics New Zealand shows that National widened inequality, like Robin Hood in reverse—taking from the poor to give to the rich. [Interruption] I raise a point of order, Madam Speaker. I do not care if New Zealand First is a circus within its own caucus, but I resent it here in the House.

💬 Ron Mark: I raise a point of order, Madam Speaker.

💬 Madam DEPUTY SPEAKER: I am on my feet, Mr Mark. I am dealing with the point of order. The member will withdraw that last remark. It was unnecessary.

I withdraw and apologise. I raise a point of order, Madam Speaker. The point is that the continuous banter and conversation on the far side of the House is interrupting the flow of the debate.

💬 Madam DEPUTY SPEAKER: There has been banter on both sides of the House. If the member wants less banter, that has to apply on both sides.

💬 Rodney Hide: I raise a point of order, Madam Speaker.

💬 Madam DEPUTY SPEAKER: Mr Hide, I have attended to the point of order that has been raised. If this relates to the same point of order, I have dealt with it.

💬 Rodney Hide: I raise a point of order, Madam Speaker. It is not the same point of order. What we look for in this House is some consistency from the Chair. It is very, very important. I will describe for you exactly what has happened here. Mr Cunliffe was on his feet giving a speech, when he interrupted his own speech to raise a point of order. The point of order he raised was not a point of order. Mr Cunliffe could have raised a point of order to say, “The member is making too much noise, and interrupting my speech.”, and that would have been perfectly in order. However, Mr Cunliffe interrupted his own speech with a point of order to hurl some gratuitous abuse at New Zealand First. Funnily enough, it was the sort of abuse that he could have made in his speech, without raising a point of order. You have said to me today that if a point of order is raised it has to be a serious point of order. The member’s point of order cannot be allowed to stand in this House. The member interrupted his own speech, and raised a point of order to abuse another party. My point is that it is not enough for the member to withdraw and apologise to New Zealand First. He has to apologise to the House.

💬 Madam DEPUTY SPEAKER: It is up to me as Chair to deal with the point of order. I have dealt with it.

💬 Ron Mark: I raise a point of order, Madam Speaker. I offer an apology to the young member on that side of the House, though I do not have any need to. The point is that I was engaged in a private discussion with an Opposition colleague, which had no bearing whatsoever on the sensitivies that that young man may be carrying for whatever reason. To call a point of order in the manner that he did was unnecessary. If he has taken any offence whatsoever, and if it has prompted a knee-jerk response from the Labour whip, I apologise for talking loudly and for interrupting his speech. However, if he comes back with the sorts of comments that he made, he should expect precisely the treatment he got.

💬 Madam DEPUTY SPEAKER: The matter has been dealt with.

It is good to see that the balanced member opposite has a chip on both shoulders.

💬 Ron Mark: I withdraw my apology.

💬 Madam DEPUTY SPEAKER: The member will stand and withdraw that remark.

I withdraw and apologise. It is a fact that between 1982 and 1998 the disposable income of the richest 10 percent of households grew by 43 percent. In the same period, income for the poorest 10 percent dropped by 5 percent. The conclusion is that, under National, the rich got richer, the poor got poorer, the gap got wider, and we all stagnated. But enough of numbers. What does all that mean for real people in real communities in New Zealand?

According to the Ministry of Social Development’s Centre for Social Research and Evaluation, the poorest 28 percent of the population experienced some or all the following. They could not afford fresh fruit and vegetables to put on the table. Shame! They stayed in bed to keep warm, because they could not afford heating. Shame! They put off going to the doctor, and therefore got sicker. Shame! They lacked the following “luxuries”—telephones, washing machines, winter coats, decent shoes, a decent bed to sleep in, books for their children, and raincoats for the children to go to school in, let alone a bike. Those members opposite may think this is funny, because they have never lived in that kind of environment. However, many, many people in this country live that kind of life. That is the legacy of the 1990s.

💬 Ron Mark: Have you been to west Auckland?

I have been in Wellington today. What a strange question from that member. That member has been shuffled around from electorate to electorate for the last 20 years and is trying to find one that will have him for pre-selection. That is rich!

The Opposition attacked closing the gaps, but when one looks at the numbers, one sees that Labour’s policies are not based on race; they are based on real need. The fact is that Māori and Pasifika are 40 percent more likely to live in overcrowded housing, so of course income-related rents benefit them more than others. Are there issues to be managed as we balance the demands of fiscal prudence with the reality of the social deficit? Yes, of course there are. The world economic downturn is deepening in the face of an imminent war in Iraq that, sadly, nobody seems to want. Oil prices are up above US$33 a barrel. The US dollar is sliding in the face of the biggest budget deficit since Ronald Reagan. In the face of that, the Kiwi dollar is up above US60c, and Deutsche Bank predicts the current account deficit will deteriorate. That is but one of the risks we have to balance. That is why members opposite would do well to note that of the $2.2 billion of extra tax receipts we are getting this year, we are spending very little of it. We are paying off an extra billion of debt, and we are putting much of the rest aside against the future needs of this possible downturn. That is why this Government is prudent and sound, and is managing its way through the rocky waters of the international scene.

To quote a phrase used by a very highly respected New Zealander—a young Māori leader who forged his way in Auckland running a great trust delivering social services—what could one say about the Government speeches today, in particular its fiscal policy? I could use three words. “Dumb, dumb, dumb.” I could go further and quote that same member again and say that this Government should stop “b-essing” the public, because nobody believes it. It is simple. Why do we say that? Let us turn to the great Budget Policy Statement that everybody on that side of the House is lauding and applauding themselves over. I tell Mr Cunliffe that there is an old saying in Māoridom: “The kumara never tells you how sweet it is.” The member should think about it. He may catch on sooner or later. But if one is really so good, one does not need to tell the nation; the nation will tell one. But the nation is not saying that. The nation is saying that there are things wrong.

If we look at the Budget Policy Statement and the trumpeting of the great surplus, what do we see? It states that Dr Michael Cullen notes that tax revenues have been larger than predicted in forecasts but the reason for this is unclear at the moment. That is what the report states. Hello! We have a man in charge of a national Budget, and the best he can say is: “We’ve got lots of money, but we don’t know how we got it.” That is the sort of philosophy that people on that side criticised Māori trusts and Māori incorporations for. That is the sort of thing for which members over there got stuck into people like Tuku Morgan and continued to get stuck into people for not running their business affairs—and what do they say? “The tax revenues have been larger than predicted in forecasts, and the reason is unclear at the moment.” !

I shall tell members why it is unclear. This Government does not want to accept that it is the heaviest-taxing party to ever come on to the Government benches. How will I prove that statement? Let us look at a couple of things. What is one of the first taxes that went up? It was tobacco. Who does that hit? It hits working-class New Zealanders. What is the next one that went up? It was petrol. Who does that hit? It hits working-class New Zealanders. What is the next one that went up? That one hits Māori, because apparently so many of them are going into Ngawha jail that they need this. Court charges jumped in some cases by over 200 percent. Then the Government implemented all that legislation. It is all in the Budget Policy Statement. It was told; it does not want to know; it does not want to listen, because the great experimentalists—the “spa pool socialists” over there—do not want to listen to anybody else, except themselves.

The Government has increased compliance costs on taxpayers and business through the Local Government Act, the Health and Safety in Employment Act that it passed, and the Resource Management Act. It has increased it by ratifying the Kyoto Protocol. It has increased accident compensation levies and there is a whole raft of business categories where the Government has whacked up taxes. Does anyone remember that pledge card—that little credit card with the airbrushed photo of the Prime Minister? It is the one where her teeth are straight and she looks like a stand-in for Cindy Crawford. Does anyone remember that?

💬 Georgina Beyer: Cheap shot!

Others in Christchurch say that the election was won on an airbrush, not a hairbrush. That is not a cheap shot; that is reality. Members should look at the hoardings. What did it state on that pledge card? The detail stated “No tax increases.” How is it that we have this huge Budget surplus, climbing to $3.8 billion this fiscal year and $2.5 billion last year? The Minister said: “For reasons that are unclear at the moment”. It is very clear to New Zealanders who go to the supermarket to buy their groceries. It is very clear to working-class New Zealanders, whose real income is on the record as having fallen—not increased—under this Government. It is really clear to Ukrainian labourers who have been brought in under a scam to undercut the labour market.

Jim Anderton stood in this House and told us that the Modern Apprenticeships scheme is working. If the Modern Apprenticeships scheme is working so well, why, amongst all the unemployed people in this country, are no people being trained to work on dairy farms and to milk cows? Why is that? It is because the Government does not want to do that. It wants to bring in cheap labour from the Ukraine and pay them $20,500 a year. Then it will approve the taking of $120 a week out of those people’s wages to pay some shyster in Christchurch for organising the transaction. That is a Labour Government!

John Tamihere—God bless his cotton socks—spoke the truth. How do I know that he spoke the truth? Even now within days, if one wants evidence of how stuffed up this Government’s economic policy is, one should simply pick up every newspaper every day and read the headlines. What does this say? “MPs repeat Tamihere call”. These are Labour MPs in a select committee saying that what John says about taking money from the beneficiaries and paying their bills for them is a smart idea. Is this new? No.

I raised this with the Minister of Housing, Mark Gosche—Steve Maharey is the Acting Minister—2 years ago. Landlords in Christchurch were saying beneficiaries were fraudulently taking the accommodation supplement and using it for other purposes, and running up rents that they were not paying. Mr Tamihere knew this problem years ago—almost a decade ago—and moved in his private capacity to resolve the issue. He stood here, speaking from the heart, and said that what is happening with the fiscal policies and strategies of this Government is dumb, dumb, dumb; and all he gets is told to sit down and shut up, or his job is on the line. Then there are the sycophantic few who know he speaks the truth, who stand up and spiel that sort of garbage across the House at us, and expect us to accept it.

Labour’s fiscal policy is dumb, dumb, dumb. What more evidence do I need? Let us look at the police. What are the headlines for the police today? We have the police so well resourced that they now have a backlog of 700 years of leave! Why? Because there are not enough police to allow people to take their leave when they should. What does that do to families? Stress, stress, stress! Is that a caring, sharing Labour Government with a Budget surplus of $2.5 billion? All the nodding puppets sit in Cabinet for fear of Auntie Helen dumping on them, and nod their heads and say that yes, they will hold the money, they will not give money to the police, and they will run with being understaffed. The bottom line is that we need more police on the beat.

💬 Rodney Hide: I raise a point of order, Madam Speaker. I am sorry to interrupt my colleague Mr Ron Mark, but is it acceptable in this House to refer to the Prime Minister as Auntie Helen?

💬 Madam DEPUTY SPEAKER: No. The member should refer to all members by their correct name.

That is right. That is acceptable. Let us look where money is blown. The “Burns unit”: we saw a headline the other day about the “Burns unit”—that Labour Party candidate from Nelson-Marlborough way. I understand that $300,000 to $400,000 has been blown in that area, and that unit has fallen apart. What is it, at the end of the day? It is a unit that Goebbels would have been proud of. It is a propaganda unit designed to sell the message that this Government’s strategic plan is working. Rubbish! It does not.

Mental health is another area. There is another article on the front page—pull out the paper—“Tiger mauls man who scaled fence”. The second paragraph says that a 29-year-old Wellington man who had a history of psychiatric illness suffered severe lacerations. Psychiatric illness—we talk about a man who has been in the charge of the Wellington Hospital mental health unit. Who is responsible for the care in the community programme? Helen Clark is—the Prime Minister. Do we see them owning up to that? That member knows that the biggest workload that MPs face in their electorates is what—accident compensation, mental health? Why is that? Because the money is not being spent in those areas.

Let me take another headline. We will go further here, and take any one that comes—“Lone officer for some prisons”. Why will we now have single officers on duty alone at night in prisons? Because this “Scrooge McDuck” Government will not fund as required. So Labour has a $2.5 billion surplus, and is boasting of how wonderfully it is doing. Labour is telling the nation that it has the biggest heart of any political party going, that it is managing the economy well. Yet it has one man in there who knows the truth—it is dumb, dumb, dumb.

I could go on—and I shall, because I have the time to do so. But look at the press release today from Pita Paraone about the wastage of money in—where are we talking about—Northland hospital?

💬 Hon Member: Ngawha.

Yes. Well, we could go to Ngawha. This is about the appointment of a second chief executive to a Taranaki public health bureaucracy. We have already got one in the job. We have another one there. But look at Ngawha—that has to be the crowning glory. From $40 million to $140 million— a total waste of money. It is irresponsible economic management.

Motion agreed to.