Debate on Budget Policy Statement

That was one of the poorer and more confused speeches I have ever heard from the member for Waimakariri, and quite frankly I was pretty disappointed. I had higher hopes for the member. I see him in action on the Finance and Expenditure Committee, but I was very disappointed indeed in that speech. I think when he goes back and reads his Hansard tonight—because he will be the only person in New Zealand reading it—he will reflect on my comments and probably ring me in my office later on this evening with a personal apology.

Mr Cosgrove spent the entire time telling us, firstly, that National did not have policies; then he told us that National did have policies but that he did not like them. He went on to tell us that New Zealand is doing pretty well in the OECD. Well, I do not want to point out to the member that we are 20th in the world in the OECD—20th out of 30 places. We have gone up one place—we have gone past Spain, by a few thousand dollars. We are 20th and the Minister of Finance, Dr Michael Cullen himself, told the Finance and Expenditure Committee that we would have to go a long way before we ever went up from that number again—a long, long way. He said the void was so great.

Then the member rolled out Ralph Waters, the Chief Executive Officer of Fletcher Building, and his comments about corporate taxation. Ralph Waters is a very respected chief executive officer in New Zealand, and I think he has done a wonderful job with Fletcher Building, but I simply point out that if that is the best the member can roll out, then I suggest I should deliver to Mr Cosgrove’s office the OECD reports on New Zealand, the IMF reports on New Zealand, and about 3 miles of Treasury reports on New Zealand that counter all the comments he made.

The 2004 Budget will be an absolute disgrace for anyone caring about New Zealand, and for anyone wanting higher living standards for New Zealand, because it will deliver one thing, and one thing alone—that is, the tax-and-spend policies of the Labour Parties of old, because this is a desperate Government that is going to spend up big. It is in free fall in the polls. The Minister outlined the Government’s $2.1 billion of new spending. Will it be going to pro-growth initiatives? Will it be going on things to drive productivity in New Zealand? The Government itself admits that productivity is so poor it intends to set up a productivity commission, but the only reason it has not announced the commission is that no one can be found in the private sector who wants to stump up and go on it. That is how hopeless this Government has been. Government members are quiet because they know that that is the truth—I tell Mr Mallard that that is absolutely the truth—and they should go and have a look at why the productivity commission has not been rolled out.

This Government is going to spend a lot of money, that is for sure; but it will spend it on beneficiaries. This Government should be ashamed that, despite the economic growth that has taken place in this country, we have 300,000 New Zealanders out of work and on a benefit—in spite of the best conditions and in spite of themselves. That is how woeful it has been.

We are not going to see pro-growth policies on infrastructure. We are not going to see spending on infrastructure. What we did see was the Minister of Finance jacking up tax rates by 5c in the litre to pay for new roads in Auckland, because the Government wants to spend the money on dishing out more to beneficiaries. That is what the Future Directions package will deliver, and that member knows it very well. The financial markets are so worried that the Bank of New Zealand’s economist came out just 2 days ago and told the Minister in no uncertain terms what is likely to happen—that the Minister’s own over-spending to save this Government in free fall in the polls will be reflected in an increase in interest rates. That is what the financial markets think of this Budget.

I want to point for a moment to the issue of growth. The Government introduced the Budget Policy Statement by giving us some pro-growth statement we were meant to buy into. Let us look at the facts for just one moment. Growth in New Zealand between 1993 and 2003 on a per capita basis was at a rate of 2.4 percent. For every man, woman, and child, this country grew by 2.4 percent. Treasury’s forecast for the next 10 years is an average of less than 2 percent, and by year 10 it is 1.4 percent. Clayton Cosgrove had the audacity to come down here and tell us: “We are going to do better and be in the top half of the OECD.”, when his own Government has stopped printing the propaganda it used to print. His own Minister is banned from making promises about when we will get there, because he knows, as I know, that to get back into the top half of the OECD any time in the next 10 years will take a growth rate of 4.1 percent per capita. With policies like those of this Government, it does not have a hope in Hades of producing it—not a hope in hell of getting us back into the top half of the OECD, with those growth rates.

It is not just about the area of tax. Let us look at that area, and speak about it for a moment. The budget for the operating balance excluding revaluations and accounting changes will be around $6 billion—that is, 4 percent of GDP. But have we seen any comment at all about a tax refund for hard-working New Zealanders? No, there has not been a single one. Why should New Zealand families be worried about their tax bill?

💬 Clayton Cosgrove: Give us a quarter of a policy.

Let me point out to the member a little fact that may have eluded him, because he is so tied up in the Labour spin machine. Since 1999, in the 4 years this Government has been in power, every family in New Zealand has spent $2,600 a year more on tax. Every family is worse off because of the policies of this Government, so its members should not tell us they are doing a lot for hard-working families in New Zealand. This Government is doing nothing for those families. It is taking money from the working and productive sector, and buying votes to try to stay in power. That will not work, because the people of New Zealand have seen through the Government’s race-based policies and now they will see through its economic policies. It simply will not work.

For a moment I want to touch on the issue of the exchange rate, because it has been rising against the US dollar. It has caused concern for our exporters, and it was a major part of the Budget Policy Statement.

💬 Clayton Cosgrove: What would that member do?

We would not intervene. Let me tell members about the confused thinking the Minister of Finance, Dr Michael Cullen, has had. He came to the Finance and Expenditure Committee in November and told us he was not without options. The Minister of Finance signalled about five different positions during the course of the next 3 months, but last week came his crème de la crème statement: he told the country through the media that he would intervene through the exchange rate, and that he would do it with a policy similar to that of Australia. Clayton Cosgrove smiles. He knows how ridiculous that is, because he was there when Michael Cullen, while telling the select committee about the Budget Policy Statement, said that it was a hopeless policy, that it did not stop and change the direction, and that it would not do anything.

I want to point out just a small fact, because it may have missed the Minister’s attention. At the start of 2003—this relates to the very policy from Australia he wants to follow—Australia’s cash foreign exchange reserves were $30 billion. By the end of last year, in 12 months, they had risen to $40 billion. Australia stole $10 billion, smoothing and intervening—[Interruption] If Mr Peters wants to know why we would not get involved, it is because the mark-to-market loss for Australia was $3.7 billion last year. If New Zealand had had the same policy and the same amount of reserves we would have lost three-quarters of a billion dollars.

💬 Rt Hon Winston Peters: Which country does nothing?

I know that Winston Peters is a lot smarter than that. He can find ways to spend three-quarters of a billion dollars on hard-working New Zealanders in ways that would be better than giving it to the rich guys at the top end of town in foreign exchange markets. That is what the Government wants to do; it would be one of the most retrograde steps our country could see—when Michael Cullen thinks he is the next George Soros. He should focus on building a pro-growth economy for New Zealand, on lowering tax rates, on fixing the Resource Management Act, on fixing occupational health and safety legislation, on keeping Margaret Wilson out of anything that has to do with business, and on scrapping the Employment Relations Act.

It will be a very disappointing Budget, and a very expensive Budget, for New Zealand. When we look back—just as we were disappointed with Clayton Cosgrove’s speech—we will see that the people of New Zealand were very disappointed with Budget 2004.

If John Keys, the National spokesperson on finance, said that Mr Cosgrove’s speech was uninteresting, I would think the people of New Zealand who listened to that, if any did, would hear that the National Party’s response to the Budget Policy Statement and the state of the economy is just a joke.

💬 John Key: Why?

Here is one reason why. He said that this Government would find it hard to get New Zealand’s economy into the top 10 of the OECD. That is absolutely true, but here is the important fact that the National Party has to stare in the mirror about. This Government has had to stop the economy that we inherited from the National Party falling off the OECD tables. We were slipping down, and at least the member had the reasonableness to say that we had moved New Zealand’s economy up. We had to stop New Zealand’s economy falling off the edge of the world. That was the reality.

In the context of this Budget Policy Statement—which is, as the introduction states, to advance the Government’s policy programme in a whole range of areas; that is, health, education, growth, innovation, and so on, while maintaining appropriate levels of capital investment—in that context, what is the reality about the New Zealand economy now? Let us look at a few facts, and let them get in the way of our prejudice. Last year New Zealand was one of the best-performing and fastest-growing economies in the OECD.

💬 John Key: Why?

The member asks: “Why?”; he does not deny it, yet we have just heard his speech that said how terrible we all are, when in fact last year the economy of New Zealand was one of the fastest growing in the OECD.

💬 John Key: Why?

The first reason is that we have a Government that is interested in economic development. This Government is interested in economic development; the former National Government was interested in economic deconstruction. That is what actually happened.

I would hate to put the facts in the way of anyone’s prejudice, here, but the second thing is that when that annual growth rate is measured in each quarter for every single region of New Zealand, it shows that every region in New Zealand has registered positive growth for 18 consecutive quarters. There must be a really terrible Government to actually get every region in New Zealand growing for the whole time that it has been in Government, quarter on quarter, on quarter! Is that an accident? Did we just get lucky? We were lucky for 18 consecutive quarters. Gee whiz, does that mean that for 27 consecutive quarters the National Government was unlucky? It was unlucky for 27 quarters on end, and we got real lucky when we were here for 18 consecutive quarters. It does not make sense; nor does the member’s speech.

The unofficial unemployment rate—just to give the House some more good news—was 4.6 percent in the December 2003 quarter. That was up from 4.4 percent in the previous quarter, but it was still very favourable in terms of every other OECD economy.

I know we have been celebrating The Lord of the Rings, and I have to say that there is a bit of an irony in that. The front page of the Christchurch Press had a big celebratory thing in relation to the Oscars and The Lord of the Rings. It failed to mention, of course, in all of this celebratory stuff, that successive Governments and the people of New Zealand have paid a fortune for this—and that is fair enough; one could say one could write it off against all the image for New Zealand.

💬 Rt Hon Winston Peters: Subsidy!

Absolutely! Everyone is celebrating it. But on the front page of the Christchurch Press, right alongside all of what has cost hundreds of millions of dollars, there is a column attacking the $20,000 that was spent on Navman for an investment of $50 million—not a subsidy, but an investment. I had to run that past me again, because over here we are celebrating in full page after full page the hundreds of millions of New Zealand dollars going into a film—and that is good, and we are all celebrating the 11 Oscars; good on us. But $20,000 of investment in Navman to get a $50 million investment; I do not know—wake me up and smell the coffee! I cannot quite see or understand that.

In Christchurch last night I was at the premiere of the musical—and maybe members may eat their hearts out, but I was representing the Prime Minister—Once were Warriors. I tell members quite seriously that I will write a letter—and I was one who was probably pretty sceptical about how what I thought was a pretty violent film, which was a reflection of some elements in New Zealand society could be turned—

💬 Rt Hon Winston Peters: It’s a documentary.

But nevertheless, it was pretty harrowing. I found it pretty harrowing. I wondered how on earth a musical could be made out of that. I tell the House that that musical is the most impressive musical I have seen since I saw West Side Story as a kid. It is a West Side Story of New Zealand, written by New Zealanders. The music is written by New Zealanders, the whole thing is by New Zealanders, including its choreography, lyrics, and everything else. Apart from Tina Cross, who is magnificent, the musical is performed by at-risk street kids, Māori and Pākehā together. While the theme is about a very dysfunctional family, and all the rest of it, the thing that comes out of it is the incredible optimism of that story for the future—the cooperation, partnership, caring, and honesty of those kids and everything around them and what they did for New Zealand. I think that it almost should be a commitment on every parliamentarian in this House to see that show. I cannot believe that any member of Parliament could see that show and then talk about division between Māori and Pākehā in this country, or use any kind of racial division to gain some cheap political points. In that musical we have the best of New Zealand, and the worst, warts and all.

💬 Hon Trevor Mallard: Where’s it on?

It is in Christchurch. It is coming to Wellington and it is going to Auckland and Dunedin.

💬 Hon Trevor Mallard: The Minister might circulate the dates.

I will circulate the dates and I will write to every member of Parliament. Last night I spoke for a few minutes on behalf of the Prime Minister and said I would say in Parliament today that I would invite every member of the New Zealand Parliament to see that musical. They would not fail to be moved or extraordinarily proud. I was more proud—and I have to say this, and Peter Jackson can eat his heart out; he will not care anyway; it does not matter to him what I think—however, of that production last night than the Lord of the Rings. Fundamentally, that musical is about New Zealand. It is written by New Zealanders and is about us. It was written magnificently in the first instance, but the musical is tremendous. Jim Moriarty is a hero in New Zealand.

Here is the thing. I was giving that speech and in the middle of it the kids—and there were dozens of them—suddenly turned around and did the haka. I thought: “What have I said?”, but actually Jim Moriarty had just walked up the stairs and was coming in and they were paying tribute to him. He is an icon New Zealander. He is someone who has turned those kids around, and their heads are up. One of the VIP drivers said to me that he had been in with one of the Ministers to see the musical in rehearsal, and the kids were shaking hands with him and their heads were down. They could not look him in the eye. At the time the musical started, the kids had their heads up and when they shook people’s hands they were looking them in the eye.

I say that, because in a sense the Budget and all the stuff around it is about economics, fiscal balances, and everything else; however, the real New Zealand was in Christchurch last night. Those kids were the real New Zealand. They are the future of our country and I think that everything we do here should be done to empower those kids. Fundamentally, they are the future of New Zealand. By the year 2050, 40 percent of our workforce will be of Māori and Pacific Island extraction. If those kids fail, we fail. That is it. Last night they were getting education credits for their future as they went through that production. I recommend the musical to this House. I interpolate it in a speech in the Budget debate to remind members of the real New Zealand out there and how we have hope and optimism, and we have reason to be hopeful and optimistic after I saw what I saw last night. I hope that members can experience that too in due course.

If there was ever a time for leadership and vision to unite this country, it is now. Common cause is sought now. This is a budget policy debate about the forgotten people of New Zealand—the ordinary New Zealanders, and I will describe who they are. They are people trying to raise and educate their families in a hostile environment; they are people trying to survive in a low-wage economy as against the First World; they are people trying to survive old age on a low pension in a rising tide of prices, particularly in the urban sector. People in this country are trying to get cancer operations, cataract or hip operations, and they cannot. People are trying to grow exports that are desperately needed in this country’s economy, in a hostile environment of indifference, neglect, and misunderstanding.

Unfortunately this, too, is a case of a Government of sectional interests. It is not a Government for real New Zealanders or all New Zealand. This is a Government made up of people who believe that fiscal drag is a fashion statement and that fiscal updates were legalised along with prostitution.

Today members heard nothing whatsoever from the National Party. Mr Key made it very clear that National would do nothing whatsoever, and repeat the huge mistakes of Ruth Richardson between 1990 and 1993, when she took a party with the biggest majority in this country’s history to a hung Parliament on election night 3 years later. Mr Key has outlined the fact that National has learnt nothing, knows nothing, and will do nothing in an environment where every other First World economy would have Ministers of Finance and Opposition spokespeople who would understand the need for action.

We are concerned that there is nothing in the statement before the House today, and that fiscal updates have nothing in respect of an economic vision, or any plan for this country’s future. We are on a slide to the Third World and every member of this Parliament knows that. Any economist who knows anything about the international stage knows it as well. There is nothing here to arrest our slide into the Third World, because we are spending more overseas than we earn. The answer is not to be found in a mixture of massive immigration—that is National’s policy as well—it is not to be found in social engineering, and it is not to be found in political correctness. Through those disastrous policies, the Government has created a consumer-driven economy, and a consumptive economy, not a productive one, based on rising house prices, and a retail shopping frenzy.

The real economy is being strangled by a high dollar. I want to show members a graph of how things have been since 1986 until 2004. The graph shows the figures under National, all the way until New Zealand First got control of the Treasury benches back in 1996. There is the huge drop. That is why New Zealand had a massive economic recovery. It is all in the graphs. Labour gets back in power in 2001, and the graph is going through the roof again. The absolute tragedy—

💬 John Key: What did you do?

I shall tell Mr Key what I did. We changed the Budget Policy Statement in October 1996, and the dramatic turn-round began shortly after. The graph shows members what happened. However, there is Labour, supported by National, on an indifferent, apathetic policy that sees our dollar now going through the roof. The charts are all there. There are the alarm bells. It is 2003, and even then we could see the dollar going past 54c, and Labour did, and will do, nothing. For 14 long years, when Don Brash was in charge of that sort of policy at the Reserve Bank, he did absolutely nothing.

Of course, Don Brash is famous. All the problems of this country are based on Māori indulgence and demand upon the public purse! I shall ask members a question. Do they remember when the Bank of New Zealand was in a terrible mess and we bailed it out twice with billions of dollars? Don Brash was in charge of prudential supervision of the Reserve Bank in respect of the Bank of New Zealand. What did he do against those cheats and fraudsters? He did not even raise a finger, and he was in charge.

It is easy to blame Māori, but what about those friends of his, and financial backers of the National Party? That is his track record, and by his record, members will know him. Exporters are in meltdown. They are going to the wall. The floods of this country—

💬 Hon Trevor Mallard: I raise a point of order, Madam Speaker. I apologise to the member for interrupting. However, I have noted that the senior Opposition whip was on the phone, and other experienced members are not present. I think there is a clear implication in the member’s speech that there were financial reasons for the National Party not intervening in the Reserve Bank. That is a very serious accusation for the member to make—that, effectively, the National Party was taking money not to intervene as appropriate. I think that that should not be allowed to continue.

💬 Hon Richard Prebble: I think the point of order being raised by Mr Mallard ranks as about the worst a member could do. Mr Peters had made no such statements—a National Party person would have raised it if he had. Instead, we have a bogus point of order. The statements made by Mr Mallard are completely out of order. He has stood up, pretending to be supporting the National Party, then accusing the National Party of financial impropriety over the collapse of the BNZ. That is ludicrous because the BNZ collapsed under the Labour Government when Mr Mallard was in charge. I will certainly not reply by suggesting innuendos against that Labour Government, because I was a member of it, too. [Interruption] No. I am saying this very seriously. I am raising a very serious point of order.

💬 Madam DEPUTY SPEAKER: Please be seated.

💬 Hon Richard Prebble: No, I will not be seated. I have not finished my point of order, and I am entitled to do so.

💬 Madam DEPUTY SPEAKER: I have heard Mr Prebble’s point of order.

💬 Hon Richard Prebble: No, you have not heard my point of order, Madam Speaker. I wish to be heard upon it.

💬 Madam DEPUTY SPEAKER: Please be seated.

💬 Hon Richard Prebble: No. This is outrageous.

💬 Madam DEPUTY SPEAKER: Please be seated. I have heard your point of order.

💬 Hon Richard Prebble: You have not heard my point of order.

I tell Mr Prebble that I will warn him once only. I am on my feet and the member does not interrupt while I am speaking. I have heard the member’s point of order. I accept his point of order. I am ruling in that way. I believe that there was not a point of order, and I agree with the member.

💬 Hon Richard Prebble: I raise a point of order, Madam Speaker.

💬 Dail Jones: I raise a point of order, Madam Speaker.

I have ruled on this point of order. That is the finish of the point of order.

💬 Hon Richard Prebble: I am raising a new point of order.

If the member is raising a new point of order, he may raise the new point of order.

💬 Dail Jones: Who is getting the call? It should be my turn.

The Hon Richard Prebble.

💬 Hon Richard Prebble: My new point of order is that a member who breaks up a speech of this sort in that way not only should be asked to withdraw and apologise, but I believe should be again sent from the House.

💬 Dail Jones: That is exactly what I was going to say. As a member for New Zealand First, listening very carefully to what Mr Peters has to say, I believe there was nothing in the Rt Hon Winston Peters’ speech that came close to the comment being made by Mr Mallard. He has already been ejected from the House once today. I suggest that you eject him again, and for the rest of the day, after he has withdrawn and apologised. He is a disgrace to this Parliament.

💬 Hon Trevor Mallard: Notwithstanding the lack of orders to that effect, I withdraw and apologise.

💬 John Carter: I raise a point of order, Madam Speaker.

We have dealt with this point of order.

💬 John Carter: This is a new point of order. The fact is that other than you saying that you would rule in that way, a request has been made now by Mr Prebble, and stated more specifically by Mr Jones, that this is one of the most disgraceful points of order, particularly coming from a senior Cabinet Minister, that this House can have. All that has happened now is, having made the statement and denigrated the National Party, put it on record, the member now has just had a quiet “I withdraw and apologise.” That is not good enough. This needs to be dealt with quite severely, and the request and suggestion has been made to you that he be asked to leave the Chamber for the rest of the day, and I urge you to do so; otherwise this whole thing will lead to disorder. It is not appropriate and not acceptable in this Chamber.

The member has withdrawn and apologised. The matter is dealt with.

💬 Rt Hon WINSTON PETERS: As I was saying before I was so rudely interrupted, the future of this country and its people cannot be left to international currency speculators—those people worshipped and adored by the National Party and its bankers. Mr Key said he would do nothing. Mr Brash said he would do nothing. We, thoroughly exposed to currency fluctuations, have a Reserve Bank obsessed with Auckland house prices and inflation; and all of the rest of the economy in provincial New Zealand is paying for it.

💬 John Key: Name me one—

💬 Rt Hon WINSTON PETERS: I tell Mr Key that the official cash rate in America is today 1 percent. What is ours? Why, it is 5 percent. Let me tell the Government that New Zealand First would support any move to shelter the Kiwi dollar at a lower level, and still leave room for serious investment here. Most economies act against the highs and the lows of currency fluctuations. Look at this investigation by the Finance and Expenditure Committee of the Minister of Finance. Read the questions there from other members and see how inert and hopeless it is in the face of an exporters’ crisis.

💬 John Key: Name one country.

💬 Rt Hon WINSTON PETERS: Every country, except one—New Zealand. New Zealand is the unique one. [Interruption] I tell Mr Keys to get it right. Mr Keys said to name one country; I said every country does—but New Zealand.

💬 John Key: Name one that works.

💬 Rt Hon WINSTON PETERS: Now he changes the subject. Now he says to name one that works. Ireland, Taiwan, Singapore, Malaysia—there is a recovery, if ever I saw one. Mr Soros was shut out. I tell Mr Keys not to come back to New Zealand from the halcyon markets of other people’s money, and tell us who have run an economy how to run an economy. I tell members this: one half of the B team sneaked into Tauranga today.

💬 Hon Member: Who was that?

💬 Rt Hon WINSTON PETERS: I cannot say. He had a telephone-booth meeting, and tried to emulate the incumbent’s meeting in the Tauranga Red Square. The head economic puritan is not even speaking in this debate today. The B-team has swung back to the mad monetarism that nearly destroyed us in the 1980s and early 1990s. One half of the B team sneaked into Tauranga today, and had a telephone-booth meeting, so the B team is minus a B. I guess that makes them B-. They will be minus a whole lot of Bs before the next election is over. After listening to Labour and National today, it is obvious that there is only one party that is prepared to take a stand on behalf of all New Zealanders, and not just its narrow group of supporters.

I tell Mr Key that Mr Brash can go to the Rotary Club, he can bore New Zealanders witless, he can go around stirring up apathy—but make no bones, we know all about politics in this party, and within 6 months their charts and polls will be humbug. We all know that. This man cannot sustain that sort of inertia and boredom. The people of Tauranga deserve better—not someone who is an example—

💬 John Key: That’s a very true statement.

💬 Rt Hon WINSTON PETERS: All right. Here is my challenge to Mr Key and his colleagues. Mr Brash says National will put up a high-profile candidate in Tauranga. I tell them to go ahead and put Don Brash up. We will have a showdown. Come on—bring on Don Brash and we will see what the people of Tauranga think of Don Brash and his policies on age care, on 70 years for the retirement age, on reducing retirement funding payments, on privatising hospitals, on privatising schools, on user-pays in roading, and every mad monetarist ACT policy. The president of the ACT party described him—not my words—as the ninth ACT party member. The ACT party call him the ninth ACT party member. Great news! My challenge to the National Party is to send Don Brash along to Tauranga and see what happens. I tell members this: if I cannot beat a man whom Gary Knapp beat twice, I will resign. If I cannot beat a man whom Gary Knapp beat twice, I will give up—and rightly so.

Let me ask the question of National: is Don Brash coming to contest Tauranga? No. I say to stop bluffing the National supporters. As for the press gallery people, I tell them to stop wasting everybody’s time, because in 6 months’ time those of us who see politics like an instamatic picture know that as the picture emerges, National will be in the doldrums again.

I would like to begin by thanking all those organisations that made submissions to the Finance and Expenditure Committee on the Labour Government’s Budget Policy Statement. My gratitude even extends to Business New Zealand because, by and large, its submission serves to remind me that, given half a chance, it would take New Zealand in exactly the wrong direction in terms of where it should be going.

For example, Business New Zealand pointed out its opposition to four pieces of legislation passed in this term: the Local Government Act, ratification of the Kyoto Protocol, the Supreme Court Act, and the Land Transport Act. These were all supported by the Greens, and in two cases were passed only because of our votes. Business New Zealand’s call for a cut in the corporate tax rate to 20 percent fails to acknowledge both the obligation that the business community has to society, and the extensive services that the Government provides the business community with in return. It also conveniently ignores the corporate welfare that businesses receive through the support that the Government is obliged to provide low and middle income workers through, for example, the accommodation supplement, tax credits, family support, and childcare subsidies, because too many businesses do not pay their workers enough to live on.

There are even some things where the Greens and Business New Zealand share a common view. One in particular is our joint opposition to the New Zealand Superannuation Fund. We also broadly agree on the need for the Government to reduce its debt levels.

However, the Greens share a lot more in common with a number of other submitters. In particular I mention the Public Health Association, Barnardos, Caritas, the Save the Children Fund, Unicef, Action for Children and Youth Aotearoa, the Refugee and Migrant Service, the New Zealand University Students Association, the Downtown Community Ministry, and the National Council of Women. There was a consistent message coming through from those frontline organisations, which have to bear the brunt of the negative impacts of harsh Government policies. I am grateful that for several years they have balanced the pro - free market submissions of the business lobby, and have helped to pressure the Government to properly address child poverty in New Zealand. Like the Greens, they have high hopes that the Government has finally listened to their pleas, with Dr Cullen’s announcement that the centrepiece of this year’s Budget will be a Future Directions package that will, in his own words, “give priority to low- and middle-income families, enhancing their living standards and their ability to give their children real opportunity and security.”

Time and time again, we have said that a Budget surplus is not real if it is built on the backs of children living in poverty. It is an indictment on all of us, but particularly on Labour members, who, despite their history of standing up for the poor and the downtrodden, have taken 4 years to decide that the time is right to tackle seriously the fact that 30 percent of New Zealand’s children are living in poverty. It may be financially prudent to do as the Minister says and wait for good economic and fiscal conditions before increasing income support and incentives to move into paid work, as well as making housing more affordable, but it is socially irresponsible to have waited as long as this. It is also socially irresponsible and downright discriminatory to penalise children because of the income source of their parents or caregivers. Yet, despite the strong submissions from all the social service and welfare organisations that the child tax credit be available to all families below the appropriate income threshold, Dr Cullen remains determined to penalise the children of beneficiaries and superannuitants. That earned a rare unanimous rebuke from the multiparty Finance and Expenditure Committee. Not known for our unanimity, we all agreed that while we do support incentives to move people from welfare to employment, the Future Directions package should ensure that “… appropriate assistance is also made available to children who are dependent on a sole parent, superannuitant, or beneficiary,”.

The Greens are adamant that the Government must remove the discriminatory aspects of the family assistance packages. If Helen Clark were serious about funding services on a basis of need, then the one in four children in New Zealand whose parents or caregivers rely on a benefit or superannuation would no longer be excluded from the child tax credit. Michael Cullen repeated today that this Government is committed to needs-based regulation; this is his chance to make his rhetoric a reality. Although the payment is only a maximum of $15 a week per child, it could make a real difference to the quality of life and material well-being of those children. It would also lift the morale of those families who are dependent on the State. At the moment the message they get is that the Government thinks it is sufficient for single parents with one child to live on $231.53 a week, or $14,500 a year before tax, but if parents are in paid employment, it is OK for them to earn $30,000 and receive that tax credit—a tax credit that single parents on the benefit are not eligible for. We believe it is unconscionable that the Government deems that one child deserves a better start in life than another child, especially when we are talking about a quarter of this country’s children.

It also raises the concern that the Government will increase its targeting mechanisms in the Future Directions package. Make no mistake: the Greens are all for reducing the poverty trap so that beneficiaries do not face a drop in income when they enter or return to the workforce, but there are real problems with the targeted system currently in place. The evidence shows that the move to targeting has not increased the welfare of the poorest in our society but has instead enabled successive Governments to keep tax rates low for the well-off. Targeting mechanisms are costly to administer, as well, and they are often so complicated that many families in need do not apply. The current family support package has serious problems, with families incurring large debts because they underestimate their annual family income and, therefore, receive too much assistance. This estimation of income is particularly difficult for low-income parents who may work several jobs in a year because they are forced to undertake casual work.

That is why we are promoting a universal child benefit, and why we are looking for support from members in the House for Sue Bradford’s member’s bill, which is currently on the Order Paper. This universal benefit is similar to the old family benefit, which would have provided many of the MPs in this House with a real start to life by, in many cases, enabling their parents to buy their first family home. Several other countries have maintained universal benefits throughout the new-right period—even the United Kingdom. Its child benefit is worth approximately $47 per week for the first child.

As well as calling for the end to discrimination against children, the submission of the Public Health Association highlighted that about one-third of all hospital admissions could be avoided if more funding was specifically invested in health—that is, in preventing illness. We agree. We also support the concern of the association that avoidable hospital admissions of Māori are 60 percent higher than those of other New Zealanders, and that those of Pacific people are 70 percent higher. I asked the submitters whether those rates could be reduced if the health system adopted Dr Brash’s colour-blind approach. In a very thoughtful answer, Dr Gay Keating said that while focusing solely on socio-economic factors would have a significant impact on reducing admission rates, there was also an indisputable ethnic factor. In other words, Māori of the same socio-economic status as Pākehā are more likely to be admitted to hospital for illnesses that could be avoided. That puts paid to the rubbish coming from the National Opposition that ethnicity should not be a factor when addressing needs. If we are serious about ensuring equal opportunity, then whatever criteria that work must be applied to ensure that outcomes are fair.

I am glad that the Labour Government continues to recognise this reality, but I am surprised to have just listened to the Minister for Economic Development, Jim Anderton, refuse to acknowledge some home truths about the New Zealand economy. The Government’s accounts may look good, but the rest of the economy is struggling. Dr Cullen may feel like the king in his counting house, counting all his money—whether in cash or on paper—but, outside, people are feeling the squeeze. Workers, bosses, and farmers are all struggling, largely because of the high dollar. Jim Anderton, when he was in Opposition, used to highlight important economic indicators like the trade deficit, the current account deficit, and the national debt, but today there was not a word about those. I would like to offer a reality check to this House. This country’s national debt is now over $102 billion. Our current account deficit is forecast to rise to $7.3 billion this year, $8.5 billion next year, and $8.6 billion for the 3 years after that. The January trade deficit was $571 million—28 percent of exports. The trade deficit for the year was $3,622 million, the largest since records began in 1961.

The New Zealand economy is sick. The New Zealand economy is unsustainable. A cynical view is that the Future Directions package is more about trying to pump up a sagging economy and shore up Labour’s core support in the lead-up to the election, than a heartfelt commitment to helping the less well-off.

I rise to speak to the Budget Policy Statement for this year. It is a statement that is presented by the Government, looked at by a select committee, then debated. It is a matter of regret that we have stopped having debates in this House. What we get instead is a series of statements that are nothing to do with what was held before, and people do not even have the decency to at least debate what has been put forward.

I would like briefly to debate all the comments made in this debate. Mr Rod Donald from the Green Party put forward the proposition that we should take the $6 billion surplus and spend it all on children and, in particular, on benefits. He said that we should do that because—and he is quite right—there is a growing number of children who are in benefit families. It is a great shame that the Green Party does not take any interest in economics. If it did, its members would realise that people—even their supporters—respond to incentives. If we were to follow his advice, we would have more people in benefit-led families. As he just eloquently told us, those people who are on benefits do not enjoy a good standard of living; they actually end up in dependency. If the Greens ever do end up in power—and at the moment the Labour Party’s only prospect of being in Government is to be with that extreme-left group—we will have a New Zealand in which more and more New Zealanders are on benefits. Somehow, he tells us, that would be a sounder economy. It is a shame he does not know any of the history of the last 50 years. The countries that have followed the advice he suggests are in terrible shape.

Then we had Mr Peters making a vitriolic attack on Mr Brash. We discovered why: apparently, Mr Brash visited Tauranga. Well, so what? But then Mr Peters put forward a rather novel notion. He said that when he was Treasurer, he drove down the dollar. I thought to myself, I wonder who the Governor of the Reserve Bank was when the dollar reached 39c, and did that governor intervene? We all know that Don Brash was the governor at that point. When Mr Peters—who now tells us that Don Brash was a 14-year failure—was Treasurer, did he replace the Governor of the Reserve Bank? Did he make any changes to Reserve Bank policy? Of course he did not. That had to be one of the sillier speeches made by Mr Peters. The other statements that he put together showed that what might have had an influence on economic policy was his being economically illiterate.

We had a contribution from Mr Anderton, who told us that we should go to a musical—Once Were Warriors. No doubt, it is a moving musical. Of course, Mr Anderton apparently can watch the whole of that musical without realising that it was written by a Mr Alan Duff, and without realising that Mr Duff is making a protest against the sort of social welfarism that Mr Anderton and Mr Rod Donald put forward, and is pointing out that it has put Māori into a terrible poverty trap. Mr Anderton watched the whole musical and missed the entire point of the musical, the book, and the film!

💬 John Key: That was the real New Zealand.

And that was real New Zealand! Then we had contributions by Mr Key and by Clayton Cosgrove, who argued about the country’s economy. Let me try to make a contribution there. Mr Cosgrove said that the economy grew well last year—which is true—and took total credit for it. Then Mr Key said that perhaps there might be some other reasons, and pointed out something that Mr Cosgrove did not get around to mentioning—that one of the things the Budget Policy Statement does is project what growth there will be. I make the point to the whole House that the growth that the Government gets has been inherited. Where do those policies come from? If we look at the OECD, an independent source, we find that in December last year the OECD said that the economic growth in New Zealand at the moment goes all the way back to the reforms that happened in the 1980s and early 1990s—under Roger Douglas and Ruth Richardson. That was what the OECD stated, and I invite the member to read that report. I ask the same member whether he accepts the policy projections that are in that document. [Interruption] He does? That is progress. If he decides to read it—

💬 John Key: Growth to 1.5 percent.

Mr Key is absolutely right. Treasury predicts that economic growth will fall, and states that it will actually fall, under the policies introduced by this Government, to 1.5 percent. The Government cannot be happy with that. [Interruption] Well, I do not think the Minister has actually read the policy statement, because growth is the priority of his own Government. It sees its most important task as building the conditions for increasing New Zealand’s long-term sustainable rate of economic growth. The Government is failing in its own target of lifting economic growth.

How can that be? I suspect that it is because the policies this Government is introducing do not assist growth. Let us have a look at some of the policy statements. The most recent, a decision that is clearly productivity reducing, is to give everyone another week’s leave. Even Mr Cunliffe can work out that if we were to do that, it would affect productivity by 2 percent. That is a measure done by this Government. But lower production will also lower the utilisation of capital.

Then there is the question of tax rates. We have had a bit of debate about that. Our Minister of Finance likes to point out that the tax cuts under National did not result in an increase in productivity. Therefore, he says, tax cuts do not work. There might be another answer, might there not? Those two tax cuts made by National were targeted at lower-income families, something this Government says it will do, again. Given what we now know, tax cuts having been done twice, does anybody in the House think that such a tax cut, when the Government does it in the Budget, will improve productivity? Well, does it matter? This Government says that its No. 1 economic goal is to increase economic growth, yet it will introduce a tax cut that—as the Government itself knows—is the politics of redistribution, not the politics of growth.

It is worth asking the House why growth and prosperity are important. It is simply that—and it is something that even Mr Peters grasps—one cannot have a first-class education system or health system without a first-class economy. It is also worth noting that the $6 billion surplus—a huge amount of money—came from taxpayers. The vast majority of taxes in this country are paid by middle-income New Zealanders. If this Government really wants to get the economy going and to have some fairness, we should have a tax cut aimed at middle-income New Zealanders. I say to National that a tax of 30c in the dollar is a good move, but it will not cut it. We should look at what the McLeod report stated. The Government paid $1 million for it, and I understand that Dr Cullen threw it at the wall, asking why he had paid $1 million to get a report that he could have got free from the ACT party. That report told him that if he wants to improve the economy, he has to cut the taxes of the people who invest in and grow the economy, and a flat rate of tax is best.

I say to the Government that if it is serious about wanting to improve growth and productivity—and it knows it ought to—it should give that $6 billion of taxpayers’ money back to the people who own it, and they are the taxpayers. If one finds a purse full of dollars in the middle of the road, one gives it back to the owner. This Government finds itself with Treasury’s purse bursting with money. Why do we not give it back to the owners? The great advantage of that is we would get economic growth and prosperity, and the sort of New Zealand that most members of this House actually want to see.

I am delighted that the Budget Policy Statement signals that financial assistance for low and middle-income families, to enhance their living standards and improve opportunities and security for their children, will be the centrepiece of this year’s Budget. I was both surprised and delighted that when presenting evidence to the Finance and Expenditure Committee, the Minister of Finance, Dr Cullen, advised that once it is fully rolled out and implemented, this assistance would total more than $1 billion per annum.

Assistance at that level, if skilfully delivered, has the potential to make an enormously positive contribution to the income, and therefore to the welfare, of hundreds of thousands of New Zealand families. United Future is 1,000 percent behind the initiative. We cannot afford as a nation to continue blindly down a pathway that sees an estimated 20 to 25 percent of our children living in relative poverty. In my view, it should remain a central goal of our nation to put our children first. We need to ensure that each and every child in this country—regardless of ethnicity, the level of parental income, or even the source of that income—is provided with the opportunity to receive world-class health-care and educational opportunities during the transition from infancy to adulthood.

That goal should be at the top of the list, because it represents the cumulative aspiration of all of those who have come to New Zealand over the centuries—namely, that of a brighter future for their children. I see no reason why the total elimination of child poverty should not be achievable in New Zealand, and the Future Directions package will hopefully have that outcome. In addition to the benefits to children themselves, the package also represents an investment in the future of our country.

The Future Directions package may appear in the Budget as Government expenditure, but in reality it is a social and economic investment. I am hopeful that the package will take into account the number of children who are dependent on each family’s income, provide clear incentives to favour paid employment over welfare, and iron out the appalling mess that we inherited from the 1991 benefit cuts, in relation to effective marginal tax rates arising from a very badly-thought-through abatements regime.

The 1991 benefit cuts adopted a slash-and-burn approach, which has produced some woefully perverse outcomes. For example, in some circumstances, the optimal income point for a family arises when the breadwinner works 20 hours a week. A worker is not a single cent better off until he or she works 50 hours a week. Likewise, people re-entering the workforce find that in net terms—particularly when account is taken of costs arising from transport and clothing, etc.—they are worse off than if they had stayed on the benefit. Such anomalies and disincentives must not be allowed to continue.

I hope also that the package will include those people who are caring for children, but who are not, for one reason or another, actively involved in the paid workforce. For example, a group that has hitherto been neglected is grandparents raising grandchildren. If they are superannuitants, then even though they have taken on that responsibility for the sake of their grandchildren, they are ineligible for support from the Government. That needs to change.

I want to make a statement about why I believe it is important that we look at this Future Directions package and give additional support to low and middle-income families in this country. The package is based on a fundamental principle of social justice—that people should be able to fittingly support themselves and their dependants from the wages they earn. That is a goal of social justice. We all know that people are paid as individuals—and that is right, because they are paid for the work they do. But it is also true that having earned a pay packet, some people look after just themselves, while others are faced with the necessity of supporting perhaps a spouse and one or more dependent children. Therefore, it is very important that we look at ways and means of ensuring that they also can achieve that goal of care for their dependants.

There was a speech earlier from the Hon Richard Prebble—and I think John Key mentioned it, too—about the need to cut income tax rates. Consistent with the principle I have outlined, I would like once again to commend to the House United Future’s policy concerning income splitting for families. That would reduce tax rates dramatically for people in the middle and higher-income brackets of New Zealand, but would do so based on the criterion they are in a partnership with another human being—a man and a woman raising children, which is the most important job that we can do on this earth.

New Zealand’s exporting capacity has now reached a most critical point. Our trade deficit for 2003 was three times higher than in 2002. Our trade deficit for January was the highest monthly total since 1986. The Budget Policy Statement forecasts an increase in the current account deficit from 3.9 percent of gross domestic product in 2003 to 6 percent by 2005.

A lot of print and airwave space has been so far taken up in discussing the rapid appreciation of the New Zealand dollar against the US dollar, and there has been an almost ad nauseam debate about whether there is anything either the Minister of Finance or the Governor of the Reserve Bank can do about it. A lot of this represents huff and puff. The reality is that the value of the US dollar reflects events in the USA, and any action the Government takes is unlikely to alter that reality.

Why do we not all accept that and concentrate on doing something constructive to rescue our perilous exporting situation? I believe there are a number of things that the Government can, and therefore should, do as a matter of urgency. These include abandoning the idea of recovering some $12 million in border security costs from exporters, providing accelerated depreciation allowances for tax purposes on all plant and machinery that is used principally to produce exports, and using a Buy New Zealand Made campaign to reduce imports. I am amazed that New Zealanders buy imported pet food, biscuits, barbeque fuel, cheese, coal, and even timber. Let us appeal to their patriotism and ask them to buy New Zealand made.

We need to continue our efforts to add value prior to export, particularly in products such as timber; to upskill and train people in international marketing; to end policy blockages that are unnecessarily forcing up the cost of electricity—and I particularly refer to the urgent need to overhaul the Conservation Act so that hydroelectricity schemes can go ahead—and to widen the scope of infrastructure bonds to fund such initiatives as irrigation on the Canterbury plains.

The Government also needs to continue to pursue vigorously the Doha round of trade liberalisation negotiations in agricultural products, and to conclude free-trade agreements with China, the USA, and others, as quickly as possible. Dr Michael Cullen has signalled that the Budget will address a number of these, and similar, issues. I urge the Government to make that a matter of priority. We must never overlook the fact that the continuance of our essential health and educational services—a point the Hon Richard Prebble has also made—is dependent on strong, productive, vigorous, and growing farming and business communities, and especially on the private sector’s exporting capacity.

Finally, I will say a few words about general taxation. United Future continues, in complete harmony with the business sector of this country, to argue for a reduction in the company tax rate from the present 33 percent to 30 percent—the rate that presently applies in Australia. Comparability with Australia is, however, only part of the equation. A more important goal, in my mind, is to encourage capital investment in productive enterprises within New Zealand. Our nation’s savings, such as they are, are still concentrated in owner-occupied and rental housing. People do need somewhere to live, but we have gone a long way beyond that basic requirement in New Zealand and have made housing a preferred investment for many New Zealanders.

However, priority needs to be given to the productive part of our economy, and a reduction in the corporate tax rate would, I believe, attract more investment and capital accumulation into our all-important productive sector. It would immediately lower the cost of capital for our companies by raising the after-tax return to investors. I continue to hope that the Government might yet begin to listen to United Future’s advocacy in that regard.

I should say to Mr Copeland as he takes his seat that the Government always listens very closely to all the good ideas that come from United Future. We are working on one together at the present time, in the form of the Families Commission. We are a listening Government.

The ASSISTANT SPEAKER (H V Ross Robertson): I am sorry to interrupt the Minister, but I remind members that running commentaries are out of order.

The report card for this Government that comes through from the Budget Policy Statement is very good. It tells us we have growth in the economy. We have companies doing things they could not do in the 1990s—that is, grow and employ people in their firms. On the social side we are able to report that in almost every measure we are better housed, better educated, healthier—one after another, we can tick off the social progress we are making, and it is reflected in this Budget Policy Statement.

Prior to this Government coming to power in 1999—I refer back to the period that people like Rodney Hide, a supposed economist, would tell us was the heyday of the kinds of policies he stands for—we were performing as an economy below the OECD average. We are often told this was just bad luck. It went on year after year after year, but the National Government was the unluckiest Government. Right through the 1990s, year after year, its luck just did not change. It seemed to not be able to get above that OECD average. With all the good things it was doing, nothing seemed to change. In 1999, National tells us, luck changed. National says that we were an extraordinarily lucky Government, and that if we really want to say why things have been so good, we should say that the 1980s and 1990s policies of Rogernomics, Ruthonomics, etc. were the policies that really laid the foundation for the growth. I have to say that that is just absolute nonsense.

In 1999, the thing that changed was the Government, and the changes were the changes in the policies the country followed. Instead of just running the kind of free-market, neo-liberal policies that someone like John Key wants to run, we had an interventionist Government that maintained an open trading market economy, but was prepared to do the things to make that economy profitable—employing people, growing firms, and growing the economy. That was the change. It was not luck, but a change to the kinds of policies that people on this side of the House had been arguing for, frankly, right through the 1980s Rogernomics era and through the 1990s.

There is one last statistic worth leaving with the House. People who argue against these policies say they want to return us to the top half of the OECD and that we would do it by returning to those very policies we have left behind. The fact of life is that the last time we were in the top half of the OECD was 1985. We introduced the kinds of policies these people wanted. We dropped below the OECD average and stayed there until we changed them again, and then we went above it. When we approach this kind of debate, let us talk about what works, not what is supposed to work. People like Mr Key are the kinds of theorists and academics who like to say: “By God, the model would work if we would just go further.” We should go a little further, says the academic Mr John Key, who is out of touch with the real world. He says: “If you just go a little further, you would get this kind of growth.” I am saying to him that he should stay in his cloistered, academic gown, hopelessly out of touch with the real economy. He should carry on doing that, and on this side of the House we will spend our time on policy that really works. We are in touch with reality.

One of the things that we were left with in 1999, as a result of the failed policies of people like Mr John Key, was a social deficit. One of the things that that National Government would not do was invest in social issues, because it said we should get the economy right first, and then all the social investment could take place. It was a case of “Drive the engine”—unfortunately the Government could not get out of first gear—“and once we have got up to full speed, we will start paying for health and education, and all those social investments.” Unfortunately, that Government not only failed to drive the economy but also left us with a social deficit in housing, health, and education. There was a lack of spending and investment.

The OECD said something very interesting the other day. We need to understand, it said, that if we do not have social development, we do not get economic development. In other words, it comes first, it said. We have to have a healthy, educated population. Otherwise, we do not have the foundation for the kind of modern economy we are trying to form. So what has this Government done? In the last 4 years we have begun to re-invest in social areas. We have invested in childcare, we have invested in early childhood education, and we have invested in schools, universities, and polytechs. We have invested in the health system, in housing, and in families. It has been for the last 4 years an absolute revelation for the country to finally have back a group of people who understand that investing in people is the first step towards getting the kind of future we want for this country. It has been signalled that in this Budget we will carry on with that pattern of investment in jobs, health, education, housing, families, and children. It will be another Budget for that.

Specifically, as Mr Copeland just pointed out, one of the major features of this Budget will run under the title of Future Directions—it will be called something different by the time we get there, but it is running under that title right now. The Ministry of Social Development has been leading that policy development for the last couple of years. Members will remember that during a previous term we said that in this term we would have a major focus on these kinds of issues, and we are going to do that in this particular Budget. I am delighted to hear United Future members, on the back of the discussion they had with Dr Cullen at the select committee, saying they fully support what they are hearing. They are hearing that four key things will happen in that package. One is that we will be having a look at the level of income of working families and other low-income families in this country. We are going to say to those families that it is time they got a share of what is going on in this country’s growing prosperity. We want to make sure they feel better off when they go to work, that there is money in their pocket, that they feel their kids are well fed, and that there is enough money coming into the house. We will begin addressing that issue in even greater clumps in this Budget. We have done it before with income-related rents. We have increased incomes, but in this Budget we intend to go further.

We intend to have a look at affordable housing. We have said that is our second bit. We want to make sure that we do have affordable housing, particularly in areas like Auckland and Nelson, where people have found a lot of housing pressure driving up the costs of housing. We want to address that kind of issue. We want, thirdly, to make work pay. It must pay people to take that step into work. It is not an ideological thing; it is a practical thing. If people go to work and find suddenly that the cost of transport, feeding the kids, and making sure someone is around to look after them after school takes up all their wages, they begin to drift back into the benefit system. Work must pay. It must put money in people’s pockets, and in this Budget we want to make sure we are doing something about that.

Fourthly, we have said we want to simplify the benefit system. When benefits were changed in 1991 and people’s incomes were reduced by about 30 percent and they were expected to live on that and could not—the food bank industry came from the cuts from Jenny Shipley and the National Party—even that Government could not sustain them, and it had to introduce other tiers of the benefit system. We now have a three-tiered, complicated mess of a benefit system that we want to begin seriously changing at this Budget time and over the next 3 years, so that we finish up with essentially a single benefit system with people having additions to their benefit for their specific circumstances. So we will see those changes start then. We are targeting this assistance. The National Party and the ACT party would like tax cuts. They want trickle-up. They want to give out the money in tax cuts—they want to tell people who are well off that they can have another $160 a week, and tell people who are getting an average income that they can have 19c a week. That is what we figured out Dr Brash was operating on. We are not going to do that. We are going to make sure this money is focused on low-income families so that they get the money, the kids get the money, and they get the money to go to work.

That is where we are going to put our money, and I know what New Zealanders will want. How would the country pay for what Dr Brash wants—tax cuts? I guess one of the things he has told us already is that it will be superannuation cuts. He has already signalled heavily to older New Zealanders that superannuation cuts are coming. He has already warned people that if they are under 50 they should get ready for these kinds of cuts. They will happen. People should not trust the National Party. They have to find money from somewhere, they are saying, to be able to pay for these tax cuts for the rich, and they will take it out of superannuation. But, by extension, it is coming out of social services—the old place. People should look for it to come out of health, education, and all the other areas of large spending and investment by this Government.

We have a clear choice now. They have demonstrated on that side of the House what they do when they are in. They create a social deficit. We have spent 4 years beginning to restore that, and we have made a very real difference. New Zealanders can look at this Budget Policy Statement and know this Government will do even more for investing in people. Dr Brash has told them his intention is to do less.

At least, with that single clap after that speech, we can arrive at the conclusion that not all members on the Labour benches are mad, and we can be glad about that. New Zealanders certainly know that we cannot afford this Labour Government. For a start, I think the Minister should take another call and explain to the people of Christchurch why the Canterbury District Health Board is going to close wards. New Zealanders nowadays cannot afford to get sick, because if they do they will not get treatment. I would like the next speaker from the Government side of the House to explain to the public why they should have to feel so vulnerable. I have just received an email from the spouse of a seriously ill man—which I may forward to the Minister and ask her to explain—who wrote to me, stating that the Auckland District Health Board has delayed her husband’s surgery four times. Our cancer patients are being sent to Australia for treatment. The Canterbury health board has just announced that due to a shortage of funding, it will close wards. New Zealand’s health service is very sick because of this Government’s mismanagement. We were told a few weeks ago by one of the district health boards—I think in Auckland—that a patient suffering from gallstones had to have four attacks, suffering much pain and blacking out twice, before being able to have the gallstones removed. Those are Third World health standards. The Minister of Health should take a call and explain that to New Zealanders. They are worrying themselves sick—and they had better not get sick, because this Government has mismanaged the health service.

However, I want to address the Budget Policy Statement. It is with some sadness that I take part in this debate, because this is the last time that the Budget Policy Statement will be presented in its current form. I am very sceptical about this Labour Government, which has introduced a public finance bill stating that in future the Budget Policy Statement will concentrate only on the priorities of the upcoming Budget. It will actually divorce the Budget Policy Statement from the fiscal strategy outlook, although they have usually been presented together. The Fiscal Strategy Report will detail high-level, long-term fiscal strategy, which means that in future the Budget Policy Statement will concentrate only on the next 12 months’ spending. Now that the longer-term financial position of the Government’s accounts will not be presented at the same time as the Budget Policy Statement, people will just concentrate on where the Government is going to spend the money, without having a framework of reference, in terms of a longer time-span, as to how that will affect the overall financial situation.

I would like to remind the public of why the Minister of Finance wants to remove the fiscal strategy outlook from the Budget Policy Statement. On page 4 of the statement that we are currently debating he states: “Spending in the 2004 Budget is expected to be greater than forecast in the Fiscal Strategy Report 2003, with $2.1 billion of new operating spending committed for 2004/5, rising to $3.3 billion in future years.” Basically, in future, by removing that longer-term outlook, the Government will just concentrate on and continue with its tax-and-spend philosophy. By and large, I think the public resigns itself to the fact that the Government is a tax-and-spend Government. However, this Labour Government should also be very careful if it wants to continue to tax and spend, because for a start it has to have profitable businesses and individuals in employment to derive the taxation revenue from. For the remainder of my speech, I want to concentrate on the profitability of our small-business sector, mainly because, right now, the Labour Government is on a roadshow that champions and celebrates small business in New Zealand.

Let me share the statistics with the public. Eighty-seven percent of businesses in New Zealand are small, which means that they employ five staff or fewer. I would like to share with the public what the Hon John Tamihere had to say about those small businesses while on the Labour’s roadshow with that sector. Apparently, even the Hon John Tamihere has heard that small businesses’ concerns fall into four areas: the Holidays Act, taxation, the Employment Relations Act, and compliance costs. When I explore each of those areas and how the Labour Government has performed in it, I think the public will really appreciate how out of touch this Labour Government is with business.

For a start, small businesses say they object to the policy of 4 weeks’ annual leave. John Tamihere said in his speech that the Labour Government was unable to deliver on that particular promise and would back away from introducing 4 weeks’ leave, but that it would do the next-best thing: it would specify the year of its introduction. Small businesses say they do not want the 4 weeks’ leave provisions, so the Labour Government says it will do the next-best thing, and tell them when 4 weeks’ leave will be introduced.

The next thing that small businesses ask for is a cut in taxation, and the Hon John Tamihere, once again, says the Government cannot deliver a cut in taxation, so it will deliver the next-best thing. Can members guess what that is? The Government proposes giving businesses a subsidy so they can have their payroll tax prepared by an agent, thereby introducing welfare into the business sector. So, instead of the Government saying it will make it simpler for businesses to pay the tax, it says no, it will subside businesses by paying them to employ somebody to do the job.

The other thing that the small-business sector complains about is the Employment Relations Act. At least the Hon John Tamihere is honest, compared with the rest of the Labour bench. When, as Minister for Small Business, he was asked in the House what support he had received from small business for the Employment Relations Law Reform Bill, he said there had been none. But the Government is still going to go for that legislation—

💬 Judith Collins: At least he’s honest.

At least he is honest, as my very good colleague reminds us.

Lastly, when small businesses complain to the Government about high compliance costs, can members guess what its response to the sector is? The Government’s response is to say that it will set up a tool on the website called the “Employment Agreement Builder”. When small businesses complain that they do not have the time to get on with their business, the Government tells them not to worry about that because it will give them a software package they can log on to that will take them through the procedure, so they will know how to comply. That shows just how out of touch this Labour Government is with the business sector. It has absolutely no idea about how to encourage and help small businesses to grow into medium-sized business, and then into big businesses, so that they can actually pay a fair share of tax. We all know that this Government believes in a tax-and-spend philosophy, but even if we believe in that we have to make sure we have individuals who earn good money and businesses that are profitable. One does not kill the goose just to get the golden eggs in a one-off situation.

There is nothing to celebrate in this Budget Policy Statement. I hope that the next Labour speaker who gets up will explain why the Government is not listening to small business.

I will gladly deal with economic matters in this speech. It seems strange to me that National often ignores the economy and chooses to attack the Government on race issues, instead. I reflect on why that is. Why is it that the self-appointed economic guru, Dr Brash, seldom deals with matters of our economy? Why is that? It is because I know, this House knows, and most of the public know, that our economy is performing well. Dr Brash knows that our economy is prospering under the wise stewardship of this Government. I am not one of those people who say we do not face challenges. We are facing challenges as a consequence of the drop in the exchange rate of the US dollar. The US dollar has been plummeting, and that does make the situation difficult for exporters. We acknowledge that. [Interruption] The fact that it is the US dollar that is plummeting is obvious to those people, like Mr Key, who wish to take an interest in the matter. The exchange rate of the New Zealand dollar has not increased as steeply against either the euro or the British pound as it has against the US dollar. So the challenge posed by the exchange rate of our dollar is real, but it has not hurt significant parts of the economy such as inbound tourism, for example, which is one of the strongest contributors to our economy now. Inbound tourism is at record numbers.

Why is it that Dr Brash does not focus on the economy but instead attacks the Government on race issues? It is because our economy, under the wise stewardship of Dr Cullen, has become one of the strongest in the OECD. We run a Budget surplus. We prudently collect more from taxes than we spend—that is a good idea, is it not; no one could disagree with that—and that is even after we put away about $2 billion per annum to fund future superannuation payments. We have even been able to reduce Government debt while doing that. Gross Government debt was 36 percent of gross domestic product (GDP) when we took over in 1999. It is now down to 28 percent of GDP, and still dropping. The Budget Policy Statement shows that it is projected to drop to close to 20 percent of GDP over the forecast period. The projection for net debt is even better, but does Dr Brash talk about that? No, he does not, because it is factual and it is good news.

What about unemployment? Does Dr Brash talk about that? Not much. Unemployment has dropped to less than 5 percent of the workforce. Does he celebrate that? Our unemployment rate is the lowest in 16 years, and is one of the best in the OECD. Does Dr Brash give us any credit for that? No, he does not. What about economic growth? In recent years, the growth rate in New Zealand has been amongst the best in the OECD.

💬 John Key: Relative.

Relative to the rest of the OECD. Is that not good enough for the member?

The ASSISTANT SPEAKER (H V Ross Robertson): I am sorry to interrupt the member. While interjections are permitted, I cannot let members drown out the speaker. I can hardly hear him. I refer members to Speaker’s ruling 56/1. Interjections should be rare, reasonable, and relevant. They should not be like a running commentary, and that is what we are getting at the moment.

💬 Rodney Hide: I raise a point of order, Mr Speaker. I accept fully your ruling, but I think also that the member should be discussing the Budget Policy Statement and not speaking entirely about Dr Don Brash. I know that he and the Government are running scared, particularly in Otago, about the success of the National Party, but we are here to hear about the Budget Policy Statement, and not what a great job Don Brash is doing.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the member for that.

It is interesting that when the facts are put before Parliament, there is a harangue from the Opposition benches as those members try to drown out the simple facts recorded in the Budget Policy Statement. In terms of growth, we heard Mr Prebble tell us before that the Budget Policy Statement projected growth of 1.5 percent per annum. I say to Mr Prebble that that is wrong. I point him to table 1.1 on page 15 of the December Economic and Fiscal Update. Mr Prebble did not actually have to read very far through the document to get the right figures. He obviously did not bother to do that, and he made up a figure. He says the figure is 1.5 percent. The projection is 2.8 percent for this year, rising to 3.4 percent in 2006 and 2007, and 3 percent in 2008. The figure of 1.5 percent does not appear. I am looking at table 1.1 on page 15.

Mr Prebble’s making up of figures is comparable to Dr Brash’s selective memory when quoting historical figures. Dr Brash keeps going on about how a gap has arisen between the fortunes of New Zealand and Australia in OECD per capita GDP figures. He has talked about the gap, and last year—and I have mentioned this before—around the time of the Budget he said: “The rate of growth was too slow to narrow the large gap in living standards between New Zealand and Australia that emerged during the 1970s and 1980s.” Those are his words, not mine, and I am quoting from an article that he authored in the Dominion Post. The reality is that Dr Brash misses out the 1990s, which is pretty strange. When one is looking back from the year 2004, it is pretty strange to look at the 1970s and 1980s but to forget about the 1990s. The reason Dr Brash does that is that the statistics do not make out his case; they show the opposite of that. In the 1980s Australia was ranked 10th in the OECD’s per capita rankings, and New Zealand was ranked at 18. At the end of that decade, under the wise stewardship of Labour, New Zealand had gone back one place, and Australia had charged back six places. During the 1990s, the decade of Dr Brash’s stewardship of the Reserve Bank and of the National Party’s stewardship of the Government, Australia went forward four places, while New Zealand went back one place. It is no wonder that Dr Brash ignores the 1990s.

In the Labour Party we have a different philosophy from that of National and ACT. We think that issues of income distribution and economic efficiency cannot be separated. The National and ACT members do not care whether there is a great disparity between high-income earners and low-income earners. We do care about that. That is a matter of basic philosophy where we differ from National and ACT. We do not think that the economy performs as well when there are those great income disparities. We think that social cohesiveness and equality of opportunity are important to our overall economic prosperity and to our personal security. If we share income around we all prosper. If we concentrate income and wealth, as National and ACT did in the 1990s and would do again, the top 10 percent prospers but the economy as a whole suffers. That is why we focus on need, not privilege, and why the Budget will again do that this year. It will focus on need, not privilege. What would National and ACT members on the Opposition side of the House do if they became the Government? They are saying they would have one standard of citizenship, but we all know that they really mean tax cuts for the rich.

In contrast with National and ACT, Labour believes in policy that is based on needs, not privilege. If we look at what is signalled in this Budget Policy Statement, we can see we are seeing that through, because of the increased support that is signalled this year for the likes of family support. We will actually be giving an effective tax break to low to middle income families. That is where a responsible Government should apply the Budget surplus, and that is where it will be applied, because we focus on needs, not on privilege and tax cuts for the rich.

I will deal with another issue that Pansy Wong has just referred to, and that is the concern about compliance costs. Compliance costs have been a thorny old issue that National members have rattled on about for the last 2 or 3 years. But, again, on that issue they have been shown to overplay their hand. Survey after survey by international bodies that are independent of New Zealand and recognised for their rigour all say that New Zealand runs a very unregulated, low - compliance cost economy. The latest survey out this week is the World Bank survey. It is a survey of 130 countries—not one or two. Now, where does New Zealand rank in compliance costs in those 130 countries?

💬 Judith Collins: That’s historical.

Oh, that is historical, I hear. Well, we are not getting any assistance from the Opposition benches now. Where were we ranked? No. 1. We had the lowest compliance costs of those 130 countries. Was that a one-off freak event? No, it was not. The Wall Street Journal recently commissioned a similar study. What was the answer in that study? Again, New Zealand was right up there, at the top, with one of the lowest levels of regulation and compliance costs. One would think members on the Opposition side of the House would celebrate that. No, they do not; they try to deny reality. Just as they try to ignore the reality of the 1990s, when, under their stewardship, the gap arose between Australia’s and New Zealand’s well-being and wealth, they now try to say that those international surveys are rubbish.

The electorate is on to National and ACT. How do I know that? I had a letter given to me recently by a concerned constituent. National had written to the person to beg for money, as usual. The letter states that National has plans to tackle areas like reducing the gap in living standards between New Zealand and Australia. The constituent sent that letter to me because that person was aware of how misleading that statement was. That gap arose under National because of National’s policies, and we will fix it.

Just before I call the next member, I tell members I have been advised that the next speech is to be shared fifty-fifty. There will be 5 minutes for National and 5 minutes for New Zealand First. I will ring the bell at 4 minutes.

That was a most amusing speech from the soon-to-be former MP for Otago, because once Katherine Rich goes in there he will be out.

This year’s Budget will be known as the vote-buying Budget. Labour is in a desperate situation. Its caucus is in disarray. Its Ministers are talking about joining other parties. It has to look to its old foe, Winston Peters, to try to help it out in question time against the National Party—and he is always happy to help out. Its race-based rhetoric is being thrown to the winds, its Ministers have contorted themselves inside and out through U-turn after U-turn—and having listened through Mr Parker’s speech, boy, we can see U-turn following U-turn.

What is the Prime Minister doing? What is she going to do for ordinary New Zealanders in this Budget? This Government’s Prime Minister is going to try to show that not only are she and her Government gay-friendly but now they are traditional family - friendly, as well. Not only is she atheist-friendly but now her Labour-voting bishops in the Anglican and Catholic churches are rushing to show she is also God-fearing - friendly, as well. My goodness, she is friendly! She is rushing to appease the anti-immigration vote and enlisting New Zealand First to help out—and bringing in their ridiculous new policies—and at the same time she is rushing to appease the migrant vote, particularly the migrant women’s vote.

How has this self-proclaimed popular and competent Prime Minister tried to achieve that? I will tell members. She employed in her electorate office a person whose job is described by the Labour Party as an ethnic coordinator.

💬 Hon Brian Donnelly: A what?

An ethnic coordinator. I thought New Zealand First would like to hear that. That is the same electorate office that supposedly sent the—

💬 Hon David Cunliffe: I raise a point of order, Mr Speaker. While there is a tradition that these debates are relatively wide ranging, it is quite clear that many of the matters recently raised by the member have absolutely no bearing on the Budget Policy Statement, at all.

The ASSISTANT SPEAKER (H V Ross Robertson): That is a debatable matter, but I would ask the member to come to the point.

Speaking to the point of order, I just mention that this point is about the Budget and, of course, about the use of Parliamentary Service taxpayers’ money in the Budget.

That is the same electorate office that supposedly sent the “guinea-pig” letter—not once, not twice, but three times to the parliamentary office of Lianne Dalziel.

The ethnic coordinator is Farida Sultana. She worked in Helen Clark’s electorate office, signing up migrant women to the Labour Party. It is alleged she was setting up a migrant women’s Labour Party branch at the same time as running the Shakti migrant women’s centre, and merging the two. I want to know whether that sort of behaviour will be acceptable under this Budget. Has this woman, working in Helen Clark’s office, been setting up a migrant women’s branch of the Labour Party, and has she been paid by the taxpayer through the Parliamentary Service? This House is entitled to know. Ms Sultana has told the media they can check with the Parliamentary Service, but of course the service has refused to answer the media because of privacy issues.

It is because of Helen Clark’s own knowledge of her staff member’s purpose that she has done her very best to keep her friend, Ms Sultana, out of the limelight. This is the same Ms Sultana who has now come out and said that her group was the conduit for the “guinea-pig” letter—that it is her organisation, with its access to the Mangere Refugee Resettlement Centre, that somehow got the letter. But Ms Sultana would have us believe that not only did she pass the letter to Helen Clark’s electorate office but that somehow she got it from the girl’s lawyer. Now we are expected to believe that not only do pigs fly but guinea pigs do, too. The lawyer never did have that letter. We know that.

The plot gets murkier. Now we have not one, not two, but three of Helen Clark’s office staff involved, and all the time the Prime Minister wants us to believe she did not know what they were doing. That is not one, not two, but three people employed by the Prime Minister’s electorate office—three of her closest friends—who are involved in this matter. Helen Clark is up to her eyeballs in it, just as she was up to her eyeballs in this Government’s money-for-race schemes, just as she was up to her eyeballs in the Prostitution Reform Bill, and just as she is up to her eyeballs in plans to take taxpayers’ hard-earned money and spend it up in trying to keep this Labour Government in power.

I seek leave of the House to table a copy of the Labour 2003 directory showing that Ms Sultana is a member of Helen Clark’s staff.

Is there any objection to that course of action—

💬 Hon Mark Burton: Could I please clarify something? I am seeking clarification as to whether that document has a list of phone numbers, as well.

💬 JUDITH COLLINS: It does.

💬 Hon Mark Burton: Well, I object to that.

The ASSISTANT SPEAKER (H V Ross Robertson): I will put the question again. Is there any objection to that course of action being taken? There is objection.

I raise a point of order, Mr Speaker. There has become an unfortunate tendency for Ministers of this Government to address the Speaker while sitting in their chairs and engaging in conversations across the House. That is not the proper way to do it. We saw that behaviour from the Hon Trevor Mallard during question time today, and we have just seen it from the Hon Mark Burton. The proper way to address the Chair is to stand and take a point of order—not to shout out a series of questions or give advice, as we have just seen. I say that it brings the House into disrepute, because we stand here with some respect for the Speaker’s Chair. You should make it quite plain to the Hon Mark Burton that if he wants to address the Speaker in the House he is to stand and take a point of order, or else move across and speak to the Speaker, not lounge around in his chair making comments.

The ASSISTANT SPEAKER (H V Ross Robertson): The member has made his point.

Hon MARK BURTON (Deputy Leader of the House): I raise a point of order, Mr Speaker. I was seeking clarification before, but it was quite inappropriate that I did not rise to my feet. I was working on some papers on my desk and I should have put them aside, stood properly, and sought to get your attention in the appropriate manner. I apologise to you. You did not raise it with me, as is your right, rather than the right of another member from the floor, but I happily apologise to you, and indeed to the House, for not showing proper respect.

In speaking to the Budget Policy Statement, I want to make the point that Governments have a responsibility to ensure that the taxes extracted from its citizens are used wisely, efficiently, and effectively. New Zealanders do not so much mind being taxed, but they hate to see their taxes wasted and going down the gurgler for no good purpose. That is what New Zealanders hate. Therefore it is the ultimate irony that the Associate Minister of Revenue, Trevor Mallard, has joint responsibility with Michael Cullen to ensure there is no wastage in Government expenditure. It is Trevor Mallard who, in his other portfolio as Minister of Education, has squandered literally hundreds of millions of taxpayers’ dollars through sheer mismanagement.

Let us just take industrial relations. In 1997 and 1998 the National - New Zealand First team had long drawn-out negotiations—reasonably bitter—with the Post Primary Teachers Association and the New Zealand Educational Institute, yet not one day’s learning was lost through strike action relating to those negotiations. I have to ask this House: how many days were lost when Trevor Mallard negotiated with a Labour-leaning Post Primary Teachers Association?

But here is the rub. The situation was handled so badly that when those teachers went on strike, many of them still got paid. I kid you not! The Minister now has to bring special legislation forward to ensure that this will not happen again this year.

But what was the result? The Government ended up by paying secondary teachers a whole lot more than they were claiming in the first place, and far, far more than they were prepared to settle for. It reminds one of the ASB Goldstein advertisement where he ends up paying more than the sales girl was asking and still claiming: “I’m the man.” Members should watch that advertisement and think: “Trevor Mallard”. Over the years, that fiasco will cost taxpayers hundreds of millions of dollars, and we have ended up with an industrial mess over qualifications of monumental proportions. It is so bad that the Minister anticipates industrial action from both primary and secondary teachers in the salary rounds that take place this year—hence the rush for the legislation.

What about his handling of the school network reviews? In order to curry favour with the unions before the 1999 elections, he offered gold-plated staffing schedules for small primary schools. In doing so, he clearly put them in the sights of Treasury because of their disproportionate per-pupil costs—hence the mad rush to close down as many schools as possible in the earliest possible time frame.

But Trevor Mallard does not do anything by halves. If he is going to stuff up, then he will stuff up big time. Not content to look at areas where there were smaller schools with unsustainable rolls, Trevor Mallard decided to hit provincial towns and cities. He wanted to consult with parents eyeball-to-eyeball, as I did in Oamaru in 1998. But when I came away from the anger that existed because parents felt predetermined decisions had been made, that anger had been quelled. In Trevor Mallard’s case all he did was to stir things up wherever he went. Between 1996 and 1999, 95 schools were shut. There was not one march on Parliament, yet in these particular rounds we have already seen two marches on Parliament—one from south Taranaki and one from the Upper Hutt communities—on two separate occasions.

Trevor Mallard bit off more than he could chew, or the system could accommodate. It took some time for reality to sink in, but finally he realised he was going too far, too fast. I will give him credit for that. He announced he would back up a bit and slow the process down. That was the wise thing to do. Some fine-tuning of the current review decisions could have been made, but then what did he do? He announced a moratorium. What happened to all his fine speeches about eradicating wastage? Suddenly, wastage of taxpayers’ money became all right because of two unfavourable polls, but, worse, he set up an expectation from schools that had been through the process that they had been given a stay of execution. After all the enormously expensive work through the network process, what has he done? He has actually set the process backwards so that most of those schools now hope for a reversal.

If his decisions were the right ones 2 weeks ago, why are they not the right ones now? The Minister has got himself into a real mess, but—and this is the unfortunate situation—like the secondary schools teacher situation, he will spend whatever is necessary to extricate himself from that mess.

I want to do something unusual in this debate and actually talk about the Budget Policy Statement, and the report from the select committee, of which I am a member. I would like people who bothered to read it to look at page 7, headed “Corporate Taxation”. The committee sought some information, which I will table at the end of this speech, about the level of subsidy that Government makes to business by way of wage subsidy—and I use that term loosely, because in many respects it is a subsidy to low and medium-income earners. Seven hundred and sixty three million dollars of subsidy has been identified by Treasury as the amount of money that Government spent in the year 2002-03.

💬 Jill Pettis: How many million?

Seven hundred and sixty three million dollars. That is a large amount of money, and it is important that businesses in New Zealand know it is of enormous direct benefit to them. Seven hundred and sixty three million dollars is spent on programmes such as family support, which cost $330 million in that financial year; a child tax credit of $143 million; paid parental leave costs, which at that point were $56.5 million; a family tax credit of $15.6 million, and parental-tax credits of $11.7 million.

That is a total of $557 million administered by the Inland Revenue Department for low-income earners who work for New Zealand businesses. New Zealand businesses, therefore, are not met with the challenge of paying a wage that meets the costs of living for a substantial number of New Zealand workers. So when we get submissions from employer peak bodies—religiously each time and identical—they do not go back and consult their members, as they demand when employment relations law is before Parliament. They trot them off the word processor and say: “We must have tax cuts, and we must have less Government spending.”

But in that debate, do we ever hear from those employer peak organisations—and I am deliberately talking about them and not the average hard-working New Zealand business person—about what the Government spends in subsidising the wages of New Zealand workers? No, we never hear that from those business commentators—people who do not employ anybody, but work for employer organisations. It is time we did. It is time those people were challenged when they just turn up to a select committee and chant the mantra: “Tax cuts and lower Government spending.”

Another $205 million is administered by Work and Income by way of direct wage subsidies, and that is a good thing. I have been meeting small-business people in my electorate, who tell me they are very pleased with the people they have employed in the past, using those wage subsidies—people who have gone on to perform magnificently in their businesses and are key and crucial members of their staff. Those people might never have got those jobs if it were not for the initial wage subsidy.

An accommodation supplement is also paid to wage earners who cannot afford to pay the rent or the mortgage out of their wage packet. That tells us there is an enormous level of subsidy, and I am not complaining about it. It is very necessary, and it is of major assistance to New Zealand business, so I celebrate it. I very much enjoyed the opportunity to have a little discussion in the select committee about that very important issue.

I repeat again—$763 million in the financial year 2002-03. In the Budget Policy Statement, the Minister of Finance and this Government have signalled that we can expect that figure to be even larger once this Budget is put through later this year. I challenge some of those business leaders to get up and say whether that is the Government spending they want cut, and will they meet the real cost for those workers to live in New Zealand, pay the rent, and bring up their children? I think not. I do not think we will see the Business Roundtable, Business New Zealand, and that strange organisation in Auckland called the Employers and Manufacturers Association, demanding that we cut those wage subsidies that taxpayers pay.

But we need to hear the view of ordinary business. I know from my discussions that ordinary business greatly appreciates the fact that it can get assistance with childcare for their employees, for people with a disability who require some assistance to get into a job. Ordinary business people greatly appreciate that an employer can turn to the Government for that sort of assistance. They know there is an awful lot more money being spent by Government than the $763 million I have just isolated here. If we look into the area of industry development, promotion of New Zealand business overseas, tourism, training, and the Modern Apprenticeships scheme, we will see that all of those things are of major and direct benefit to New Zealand business. It is time we started to look at that and say: “Is it a good thing or a bad thing?”.

I have not heard a single Opposition speaker talk about those issues. They are all into the scurrilous nonsense we heard from the likes of Judith Collins. If Don Brash is the anaesthetist, then she is in training to be the mortician, but she has none of the warmth and kindliness of the morticians I have met.

However, I digress. I want to get back to this very business-friendly Government and its Budget Policy Statement, and the things that are of direct benefit to business. I will say it again—the $763 million is of direct benefit to business, and we are talking a couple of years ago, compared to what it will be later this year.

We have to face up to some of the submitters and, as a country, be able to say that it is not right, that it is not good enough for New Zealand workers to be paid a wage that would keep them in poverty; that it is not good enough that we have businesses that actually rely on the taxpayer to prop up the wages they pay. Somewhere down the track we will have to face up to that reality, because the taxpayer is paying three-quarters of a billion dollars in direct wage subsidy. I guess that if one did the figures—and we hear a lot about getting the corporate tax rate down from 33c to 30c—that is probably $763 million more than businesses would get from that reduction in tax.

Let us have that debate with the Opposition parties, and see which way they go. But no, Opposition members have had their chance in the last 2 hours to debate economic policy and what they believe in. We heard from the very renowned assistant spokesperson on finance, Mr Key, whom I have a lot of respect for, because he is somebody who knows about business. But we heard nothing about National Party policy. Has it got any? No, not on that stuff, not on business, and not on the economy. A bit of slagging-off goes on, but did we hear one piece of policy from the National Party? I did not hear any.

💬 John Key: It’s your Budget.

That is absolutely correct, but when a party is in Opposition, it is paid by the taxpayer to come up with alternatives. That lot over there have no alternatives. They would have trouble criticising some of this policy—like the child tax credit. Did not the National Party have something to do with the introduction of that? Will it continue with it?

Pansy Wong spoke about the terrible thing of allowing workers 4 weeks’ holiday. Would the National Party take that off workers? Mr Key says yes—National will take away the fourth week of annual holiday when it gets into power. It will do it in the first week probably. When it last had a chance back in 1990, it took away pay equity in the first week. National will not be giving people 11 weeks to submit on an industrial relations amendment bill. It did not do that with the Employment Contracts Act. It slammed that legislation through so fast that people were barely able to blink, let alone make a decent submission on it. National has a very short memory when it comes to those sorts of things.

I remind members in this debate that there is a very good report from the committee dealing with some important issues. Those submitters who want tax cuts and lower Government spending had better tell New Zealanders what that means in reality. It is like the National Party saying it is terrible that the Government is putting money aside for superannuation, but will it tell elderly New Zealanders that it will put the age up to 70 and cut the level of superannuation? It will not, so how will Dr Brash fund it when he cuts tax? Will he raise the age of eligibility, or will he cut the level? We do not hear any of that from the National Party, because it wants to pretend that that is not its policy, but we know it is.

As Mr Mark pointed out, National will privatise anything and everything that has not already been privatised. The National Party is devoid of policy on the economy, and does not want to debate. It sloganises and carries on, but the reality is that this Government puts an awful lot of cash into the hands of business. It does that in many, many ways and I congratulate it on doing so. It is a good way to relieve pressure on business, but it also makes sure that New Zealanders can have a decent standard of living.

I seek leave to table a letter from Dr Michael Cullen, Minister of Finance, dated 27 February to the Finance and Expenditure Committee, outlining the figures I spoke about in my speech during the debate.

Document, by leave, laid on the Table of the House.

Motion agreed to.