Budget Debate

This is a Budget about lost opportunity. I move, That all the words after “That” be omitted and the following inserted: “this House has no confidence in this Labour-led Government, which lacks the vision to lead New Zealand to a high growth, high income future, which will cause growing numbers of our children and grandchildren to seek better opportunities abroad, and which, having overtaxed hardworking New Zealanders for five long years, insults their intelligence with election year fiddling, while our future burns.” Over the last 10 years the New Zealand economy has grown at an average rate of 3.7 percent annually, substantially better growth than over the previous two decades. The astonishing thing is that in the second half of that period, coinciding with this Government’s term of office, when there was no drought and no Asian crisis, when the exchange rate reached its lowest level in history, when world interest rates reached the lowest point in decades, thus provoking a worldwide boom in property prices, when we have enjoyed the best prices for meat and dairy exports for a generation, and when we have enjoyed a boom in the construction industry caused by people flooding in after September 11, despite all those positive influences, growth was no faster in the second 5 years than in the first 5 years.

Even worse, despite that good growth, there was no increase in average after-tax, after-inflation household income over the last 5 years. Yes, average household incomes before tax went up, but after income tax they went up by slightly less than prices went up over the same period. So there has been no increase in average household incomes, after taking into account tax and inflation, over the last 5 years. It is no wonder industrial stoppages are breaking out all over the country. It is no wonder ordinary, hard-working New Zealanders feel that this Government simply does not care about them. It is no wonder 600 New Zealanders are queuing up to leave this country for Australia every week. Average after-tax wages in New Zealand were about $5,000 per year below average after-tax wages in Australia in 1999. By last year the gap was not $5,000 but almost $9,000 per year. That is the background to this debate.

What has today’s Budget done to reverse the dismal legacy of the last 5 years? Almost nothing. There have been trivial changes in the tax thresholds, to leave a little more in the hands of taxpayers—but not until 2008. We have waited for 6 years for the Government to recognise the need to adjust the tax thresholds, and now we must wait for another 3 years before the adjustments actually take place. Before the Budget, and following Peter Costello’s Budget in Australia last week, all New Zealanders who earn less than $100,000 per year paid more income tax than Australians on the same income. Today’s Budget will make little difference to that. Before today’s Budget thousands of Kiwi families on middle incomes faced the loss of 64c in the dollar when they earned additional money, and in some cases they lost 90c from each extra dollar earned, leaving them with little incentive to get more qualifications, work harder, or take a business risk. This Budget barely changes that appalling situation. Hard-working New Zealanders are still paying too much in tax, and only a National Government will change that. Yes, the Minister has made a few minor adjustments in the depreciation rates. However, those are not tax concessions, as he suggests, but simply a reflection of economic reality. Yes, the Minister has made a few other tax reductions, but for the most part they are sufficient only to offset the additional burden imposed by the carbon tax that this Government announced a few days ago. The Budget proposes a continued big increase in Government spending—an increase made at the expense of providing meaningful tax relief to hard-working New Zealanders.

But surely, the Government’s supporters will say, the proposal to encourage more savings will do something to encourage growth. Actually, no. There is no evidence that saving more would, by itself, encourage growth or deliver higher living standards. Some of the countries with the highest savings records in the world, such as Japan and Switzerland, have the lowest rates of economic growth at the moment, while some of the countries with a very poor savings record, like Australia and the United States, have much better growth rates. Yes, it would be a good thing if New Zealanders saved a bit more. That would make us a bit less dependent on the savings of other countries. But there is no evidence that schemes like the one proposed will make any material difference to our savings behaviour. That is well illustrated by the failure of a similar scheme in the UK to generate any appreciable increase in savings.

What we need to do to encourage more savings is to enable New Zealanders to earn higher incomes. This Budget does nothing to achieve that. It does nothing to drive improvements in future growth and nothing to narrow the gap in living standards between New Zealand and Australia. Growth in productivity here is assumed to average 1.5 percent a year. In Australia, it has recently been 2.5 percent a year. But even using the lower figure of 1.75 percent a year, which is currently assumed by the Australian Treasury, New Zealand living standards will never catch up with those in Australia unless we up our game. Indeed, we may not even average 1.5 percent in productivity growth. Last year, productivity growth per hour worked looks to have fallen—to have been negative—with output growth less than the increase in hours worked. The Budget is an opportunity lost in terms of encouraging improved living standards.

Of course, Budgets are also about allocating resources in the here and now to deal with current problems. How well does the Budget measure up in those terms? One of the most fundamental responsibilities of any Government is to protect the community from internal and external threats. The Government has recently been failing miserably in that regard. We have had the report on the 111 emergency call system. We have had mayors from all over the country calling out for more police. We have had evidence that the community has lost confidence in the police, who seem to be more preoccupied with revenue gathering than with crime fighting. The upgrade of the Orions has been deferred for nearly 6 years. The upgrade of the Hercules fleet has been deferred for nearly 6 years. We have seen a substantial failure in the biosecurity area to act on the conclusions of the 2002 reports, which pointed out the need to improve our defence against biosecurity risks. Looking forward, there will be a little more money for the police, but not much, and there is no evidence that the Government is getting to the core of the problem. The spending on defence and biosecurity is barely changing at all, and is certainly not going up as fast as GDP.

But, the Government will protest, we should look at how much extra spending is going into health. Yes, there is extra spending there, and yes, we must have a well-funded health system that meets the needs of our people. The National Party strongly agrees with that. But what has all the extra money actually bought? The latest figures we have for the year 2002-03 show that the number of taxpayer-funded surgical inpatient operations actually declined over the first 3 years of the Labour Government, from over 160,000 in its first full year to fewer than 158,000 in 2002-03. We know that waiting lists for surgery have continued to be far too long, with thousands of people waiting in pain, and often in fear, for operations that they should be able to have. We know that people have been removed from waiting lists by district health boards all over the country. Two thousand people were removed from the Counties-Manukau District Health Board waiting list, and almost 600 were removed from the Tairāwhiti District Health Board waiting list—all, no doubt, because the Minister is keen to window dress the numbers, in advance of this year’s election. We know that there has been a huge increase in spending on the health bureaucracy, with 21 district health boards, 78 primary health organisations, and an enormous increase in the Ministry of Health’s staff. We know that facilities for the very old, for those with dementia or Alzheimer’s disease, have been starved of resources to the point where 37 facilities have closed in the last 3 years alone. It seems clear that very little has been bought for the huge increase in Government spending on health—an increase that even the Minister of Finance concedes has been at a rate that simply cannot continue into the future.

The same is true in education. There has been a vast increase in Government spending on education, and only a shambles to show for it. National supports a well-funded education system that delivers high-quality education to all our children and to older New Zealanders who need to improve their skills. But what has this Government actually delivered? It has delivered a totally dysfunctional National Certificate of Educational Achievement system, which pupils do not understand, which parents do not understand, and which employers certainly do not understand. The chairman of the New Zealand Qualifications Authority has gone and the chief executive officer of the authority has gone, but where is the ministerial responsibility?

What about tertiary education? The Government has showered it with money, but the waste has been enormous. Let us think about the wānanga. Let us think about courses in homeopathy for pets. Let us think about the COOL IT course at the Christchurch Polytechnic. Let us think about courses in twilight golf, or the Māori singalong courses. Let us think about the $40 million a year spent on the Tertiary Education Commission bureaucracy. Hundreds of millions of dollars have been squandered on courses where 70 percent of those who enrol do not complete the course. What has happened is a huge increase in Government spending, with little of value to show for it.

There has been a complete collapse in productivity in the public sector. Treasury itself has concluded that the core public sector has expanded in a way that is totally unsustainable. The number employed in the core public sector has gone up by some 28 percent in the last 5 years. Treasury advises: “The available data suggests that the agencies that have experienced the most growth [in employment] are not necessarily those working in areas that closely align with the Government’s priorities.” That, of course, is bureaucratese for saying “Employment growth in the core public sector is completely out of control and bears no resemblance to what the Government should be doing.”

What a huge opportunity has been lost! The economic conditions are the best they have been for a generation, yet nothing has been achieved in terms of faster growth or increased productivity. Nothing has been achieved to encourage the 600 Kiwis who are leaving each week for Australia to stay in New Zealand, and to devote their skills and energy to building New Zealand’s future. This is a complacent Government that is riding a wave created by earlier Governments, and by international conditions for which it can take none of the credit. Yes, this Government has increased its spending on health and education, and those are priorities for National, also. But the way that Labour has spent the money has delivered very few benefits. There is a vast increase in bureaucracy, leading to a vast increase in compliance costs and a more intrusive State. Waiting lists are far too long, with thousands of people waiting anxiously. There is no measurable improvement in literacy or numeracy in our children. We have a totally shambolic secondary school education qualification, and vast waste in the tertiary education sector. The 111 emergency call system is completely dysfunctional, leading to a serious loss of public confidence in the police. This Budget, like all Dr Cullen’s previous Budgets, simply declines to compete with the rest of the world. This Budget embraces mediocrity. This Budget states to all parents and grandparents in New Zealand that their children and grandchildren will probably end up living overseas—and that that is OK.

Well, it is not OK! We do not have to accept mediocrity. We do not have to put up with a Government that treats New Zealanders’ incomes as its income, and that then squanders it on more mindless bureaucracy, leading to more mindless regulation and ever-more burdensome compliance costs. We do not have to put up with the destruction of educational standards. We do not have to put up with a health system that generates inflation but not operations. We do not have to put up with intergenerational welfare dependency at a time of strong international growth, or with a rising tax burden. We do not have to put up with a Government that has no idea what the word accountability means, or with a Government full of accident-prone Ministers and ex-Ministers—a ministerial “hall of fame” that is added to every few months. We are having the lifeblood drained out of our country, yet all we get is more money thrown at problems. That money represents the high tax burden that middle-income New Zealanders have had to shoulder as they fund everybody else. The steady outflow of New Zealanders shows one simple thing: Kiwis are choosing to sidestep that tax burden and the rampant political correctness of a Government whose values are wildly out of step with those of mainstream New Zealand.

Well, we do not have to put up with that much longer. Within months New Zealanders will have an opportunity to put an end to that nonsense. They can elect a Government that will put the priorities of mainstream New Zealanders at the centre of its policies, by providing tax relief to all hard-working New Zealanders, ensuring every child gets an education that is relevant and a qualification that is comprehensible, ending intergenerational welfare interdependency, treating all New Zealanders as equal before the law, and protecting our families and communities from those who would endanger us. New Zealanders will have an opportunity to elect a National Government.

There is only a two-word response to that speech: “He’s gone!” The only question is: is it before the election or the day after? I am told by those who were watching that speech on television that the National MPs were sitting there looking like a whole lot of lambs waiting for the abattoir—that is how pleasant it was.

Today the Leader of the Opposition told us that he admires the Australian Budget. Well, wait for it—I am told that the average worker got around $6 a week out of that Budget, and Aussies also got funding cuts in areas like health. What does that tell us about the National Party’s plans? Actually, the Leader of the Opposition admitted today that there was no room for big tax cuts without spending cuts, and that tells us the real agenda: tax cuts for the rich and their mates, and spending cuts for everybody else. [Interruption]

💬 Madam SPEAKER: Members are reminded to keep their interjections at a reasonable level.

I am very happy with the interjections—they are so helpful!

💬 Madam SPEAKER: The more that interjections come from one side of the Chamber, the more they will come from the other. Then the speech will not be heard either by members in this House or by others who are listening elsewhere. The convention is that any interjections should be made in an orderly fashion and not by barracking.

The Leader of the Opposition has had weeks to think about what he might say in his Budget debate speech and to get the figures right. He came up with a figure about average annual growth being 3.7 percent over the past 10 years. Well, a few quick calculations suggest that in the December years from 1990 to 1994 average annual growth was 1.7 percent, and 4 of those 5 years were under a National Government. Over the following 5 years, the average annual growth rate was 2.9 percent, under a National Government. Of course, in the last years since then, from December 1999 through to December 2004, the average annual growth was 3.9 percent, under a Labour Government.

This Budget is about working for New Zealanders. It is about working for families. It is about working for our older people. It is about working for our young people, for business, for workers—for all Kiwis. This Budget is about planning for the future, not dreaming of the past. This Budget is about taking New Zealand forward, not going backwards. The backwards crowd is over there. This Budget makes big investments in what matters to New Zealanders—most important, in business, job growth, savings, health and education, services for older citizens, support for families, and transport, police, and justice. This Budget works for New Zealand and New Zealanders. This Budget is possible because this Labour-Progressive Government, supported on confidence and supply by United Future, and often supported on policy by the Green Party, has provided strong, stable Government and run a strong economy.

This Government knows what matters to New Zealanders. What matters is keeping the economy growing, pushing up the value of what we produce and what we export, and making sure that the gains of economic success are felt in homes across the land. This Budget delivers for New Zealanders. This Budget delivers, because people in this Government understand what drives New Zealanders far more than a multimillionaire finance spokesman from the National Party will ever do.

I congratulate the Minister of Finance on the Budget. Michael Cullen and I came into politics for the same reasons. We wanted the living standards and the quality of life enjoyed by New Zealanders to be among the very best in the world. We are indeed the generation that benefited from the opportunity and security that the very first Labour Government put in place in this country. That helped us go all the way with our education, and it gave us the best possible start in life. The dream we have always had is to see the New Zealand of today deliver on the hopes and dreams that every family has for its kids, as our families had for us, and deliver the security that every family wants its older members, and its sick and disabled members, to have.

The reward of 5½ years in this Government has been to see the New Zealand economy turn round, and strengthen and grow. The last 5½ years have seen our economy grow at among the fastest rates in the OECD, and faster than those of our top trading partners, Australia, the United States, and Japan. Many businesses have benefited from that growth, and New Zealand overall has benefited from the success that they have had. This Budget, with its huge package of business tax breaks, will help our businesses to grow further and faster and increase the value of what they do. The business tax breaks in this Budget are worth over a quarter of a billion dollars in this coming year. Over the next 4 years business tax breaks, gross, are worth about $1.4 billion, and the net benefit, taking away the carbon tax due in 2 years’ time, will be over $700 million over those 4 years. These tax breaks are aimed at encouraging business growth, investment, and innovation in jobs, and that is good for New Zealand.

The last 5½ years have seen a spectacular growth in the number of jobs in this economy. There are more than a quarter of a million new jobs—around 264,000 new jobs—in the New Zealand economy, under a Labour Government. That is a very good result. Along with the new jobs has come a spectacular decline in unemployment. The average annual rate of unemployment in the March 1990 year was 7.4 percent. Today the average annual rate to March is 3.8 percent, which is almost half. For Māori and Pacific New Zealanders, unemployment is down by 52 percent.

There has also been a spectacular decline in the numbers on unemployment benefits and benefits overall. There are now 85,000 fewer people receiving an unemployment benefit than there were 5 years ago and, overall, the numbers of working-age people on benefits are down, at more than 100,000 lower than they were in 1999. Opposition parties talk about getting welfare numbers down; a Labour-Progressive Government actually does it, and will do it again. The story now about jobs is not that there are too few of them, but that we do not have enough workers and enough skills in the economy. That is why this Government is absolutely committed to moving people from benefits into work, to increasing the incomes for our families at work, to supporting our working families with children, and to upskilling our workforce.

This Budget sets another new, ever-higher target for Modern Apprenticeships. There will be 9,000 by December next year. Already we have over 7,700 young people in Modern Apprenticeships, and just this week the 1,000th apprentice completed the full apprenticeship. The funding for industry training overall is up again. It is now over 100 percent up on what was spent in 1999 by a National Government—a National Government that left New Zealand without the skills we needed for a modern economy and society.

This year’s Budget carries on with new funding for Working for Families. Already, on 1 April this year most families receiving family support received in the pocket another $25 a week for their first kiddie and $15 a week for each other child. This financial year, the new in-work payment starts for families working at least 30 hours a week for a couple, and 20 hours a week for a single parent. As well, this financial year, in this Budget, the family tax credit goes up, and the abatement thresholds for all forms of family assistance go up, as well. When Working for Families is fully in place by 1 April 2007, our families with children that are on $25,000 to $45,000 a year will, on average, be $95 to $100 a week better off. If I were a Kiwi family, I would grab that 95 to 100 bucks better off a week any day over a $6 Aussie tax cut. As well, of course, our families will benefit from the overall changes to the tax thresholds that the Minister of Finance has announced today.

Working for Families also includes the big improvements in both housing subsidies and support for our children in childcare and after-school care. Yesterday I had the privilege of going out to an out-of-school care programme for children in the Hutt Valley and announcing very big increases, because with the money in this Budget we will be able to fund another 100 out-of-school care programmes for our children. With this Budget we have again increased the thresholds for the eligibility of families for support for childcare and out-of-school care. More families will get it. Seventy percent of our families will get support for childcare costs and out-of-school care costs from this Budget.

I also want to say that the saving initiatives are incredibly positive for families and for our young people. The new KiwiSaver scheme in this Budget will give people a hand up to start saving, with $1,000 being paid into their accounts by this Labour-Progressive Government. We are making saving very easy. Workers will be placed in the scheme unless they opt out. KiwiSavers will be saving for their retirement and for their first home, if they want to. Those who are KiwiSavers for at least 3 years will qualify for a deposit subsidy for their first home of $1,000 from the Government for each year up to a maximum of 5 years when they buy their home. That is a big leg-up for Kiwi families aspiring to homeownership. Our Government believes in supporting Kiwis to be financially secure in their retirement, and we want to help more people buy their first home. Owning one’s own home has always been part of the Kiwi dream. Virtually everybody in this House has realised that dream—why not other Kiwis? That is what KiwiSaver is about.

The Budget continues the big investments the Government has been making in education overall. It provides more funding for early childhood education, more for schools—for teachers and operations grants—more for tertiary spending, and there is good news, too, for our tertiary students, with another $57 million over 4 years for student support. There are 500 new fees scholarships available from this Budget, paying up to $3,000 a year towards fees. Yes, students will be bonded to work in return, and that is only fair. We have also adjusted the parental income thresholds so that more of our students, again, are eligible for student allowances. We are allowing students to earn considerably more from their part-time work before their allowances are affected. And, very important for the sixth-year medical students, whom we are very keen to see stay in New Zealand, their trainee intern grants are going up by 10,000 bucks a year to over $26,700. That reduces their need to borrow and encourages them to stay and work in our country, not somebody else’s.

For older New Zealanders this Budget continues in the tradition of the last five Budgets, of making life better. From the time we were elected we have kept our word to older New Zealanders. In 2000 we reversed National’s cuts to superannuation and restored the agreed superannuation formula. In our first term we set up the New Zealand Superannuation Fund, so that New Zealand superannuation would always be secure for future generations. This year another $2.1 billion goes into that fund, taking the total invested close to $6.5 billion.

In our last Budget we announced the doubling of the number of orthopaedic operations that are to be done over a 4-year period, and we are on track to achieve that doubling. This Budget puts in place a 50 percent increase in the number of cataract operations per year, a goal to be reached in 3 years’ time. Last year around 8,000 cataract operations were done; in 3 years’ time, 12,000 cataract operations per year will be done. This matters to older citizens.

As well, this Budget sees the beginning of the phase-out of asset testing on older people in care, and this has been an issue of principle for our Government. Of course, it is expensive, but it will be done. From 1 July this year—barely 6 weeks away—the amount a single person in care can keep before asset testing starts rises from $15,000 to $150,000, and for a couple where one partner is in care, it is up from $30,000 to $150,000. Also in this Budget are big increases in funding for our older people in residential care, because we want the very best care for our older people that this country can pay for. We want better wages, training, and working conditions for our home-care and residential care workers. Also, older people will be the big winners from the huge improvements to our rates rebate scheme starting on 1 July next year. Up to 300,000 ratepayers will be able to have up to $500 per year deducted from their rates bill. Over 5½ years, this Government’s record for older citizens has been one of steady improvement. We do not make all the promises that minor parties make, because we know that we could not keep them. They know they could not keep them, either, but that does not stop them from making them.

Health spending overall is a huge winner in this Budget—up by close to $1 billion this year and over $4 billion over the next 4 years. Health is one of the most basic services that our people expect a Government to provide, and a Labour Government takes that responsibility very, very seriously. It is a matter of record that this Labour-led Government runs strong Budgets and a strong economy. Over six Budgets, we have run strong surpluses. We have invested in basics and in infrastructure. We have made big investments for the future in the Superannuation Fund and now in the savings initiatives.

This Labour Government, led by Helen Clark and Michael Cullen, will not return to the deficits and borrow-and-hope Budgets of past National Governments. The National Party has not learnt a thing from that experience of the past. It is promising billions more in tax cuts and spending. That is not only voodoo economics; it would also take New Zealand back to a failed past of failing public services, funding cuts, and misery for Kiwis.

New Zealand has done well under this Labour Government. Strong Budgets, investing in the future and in the basics, have been very critical to that success. I thank our partners who have supported us in this House for being able to run a strong, stable Government and economy. Only one message can come from this Budget: for a strong economy and for better living standards and services for New Zealand and New Zealanders, people should vote for a Labour-led Government.

I want to thank the Labour Party for that applause. There are four words to describe the last two speeches: “He’s gone; she’s going.” She said: “If I were a Kiwi family”—[Interruption] Well, is she not part of a Kiwi family? I want to say this—

💬 Hon David Cunliffe: Are you?

Yes, I am, and if that member wants to talk about the babysitter, I will right now.

I want to take a moment to update the House on developments in Tauranga and in the Bay of Plenty region. Having just returned from Tauranga, and having witnessed first-hand the devastation last night, I can report that the people of Tauranga have demonstrated their resilience and fighting spirit. Those from civil defence, the police, and the fire service, those health and Defence Force personnel, and those mayors, local authority officials, and others who have come from outside the district, have done an admirable job in assisting our region in its hour of need. I want to thank those people personally, and to reassure the House that every necessary step is being taken to address this state of emergency and to put the region back on a stable footing.

But now I return to the matter at hand. I move, That the amendment be amended by omitting all the words after the word “House” and inserting the following words: “has no confidence in the Labour minority Government and those who for 21 years have blindly supported failed, neo-Liberal policies and records with regret that the Government has failed to provide leadership and policy to enhance New Zealand’s export performance and per capita incomes, has failed to address New Zealand’s burgeoning balance of payments deficit, has failed to deal with escalating violent crime, has failed to provide sufficient numbers of police, has failed to deliver a first world health system, has failed to curb the burgeoning Treaty of Waitangi industry, has done nothing to stop excessive and unfocused immigration, and does nothing to lay the foundations for building a better, more prosperous nation for future generations.

In all my years in Parliament I have never forgotten a speech or a face, but after listening to the last three speeches I have decided that I am going to make an exception. We came here expecting to hear words of political wisdom, a blueprint for a dynamic future, and a fair deal for the elderly, but we just got the latest version of the spin doctor’s manual. This Budget has been an innocuous policy prescription for an ailing economy that is falling into decline through a visionless regime of warped priorities, a regime that will soon be leaving the Treasury benches. All the halls that are packed around New Zealand today tell me that.

New Zealanders are crying out for leadership and for a clear direction. They are crying out for a plan. They are tired of being led by aimless focus-group polling, the only intent of which is to keep Labour in power—power at all costs. So although today we are none the wiser as to what Dr Cullen actually wants to do, we now know that Labour’s focus-group polling is telling him the following, and that this is the problem with this short-sighted approach: it is all about token gestures, but there is no vision.

Where is the export plan that will underpin our long-term economic growth? Where are the incentives for innovation for our businesses, other than the driving of our brightest and best offshore? Where are the equity and fairness in the treatment of our senior citizens? Where is the genuine commitment to addressing our infrastructural needs? Where are the policies that will reverse the trend of importing welfare recipients while exporting our educated young? Where are the policies to control the consumption-driven economy that has focused and forced real wages down, and inflation and interest rates up? Where is the commitment to addressing the race relations issue, and does the Government really think a treaty roadshow will do that? Where are the policies that will stem the tide of more than 1,300 New Zealanders a year dying when on hospital waiting lists?

💬 Brent Catchpole: It’s a disgrace.

It is a disgrace. What we have is an orchestrated litany of election-year largesse derived from focus-group polls aimed at only one thing: getting Labour re-elected. Well, the halls that New Zealand First has been filling around New Zealand lately tell me that that will not work; New Zealanders will see it for what it is. I must say that it has been something short of the spectacle it was meant to be.

We have growth projections of 2.5 percent—the lowest for more than half a decade. We have net debt spiralling out of control. We have a current account deficit reaching epidemic proportions, with projections of a deficit of more than $11 billion in 2008. It is little wonder that the World Bank now ranks us at No. 40 for gross national income per head of population. There has been nothing in this, or in the last five Budgets, to reverse that.

It seems clear that Dr Cullen’s dark secret agenda over tax was so dark that no one could find it. The dark secret agenda, leaked all around the country in the last 3 days, was so dark no one knew where it was. Who would offer working-class New Zealanders a tax incentive of 67c—half a packet of chewing gum—in 3 years’ time? That is all it is. It is little wonder that Dr Cullen did not want to have his photo taken with the Budget.

If tax was meant to be the subject of a battle, though, in the last two or three speeches in this House between New Zealand’s economic heavyweights, then the public should be entitled to a refund. In National’s corner was someone more at home in a TaiBo class than in a heavyweight clash. He mimicked the motions of the instruction, but where was the menace? In the other corner was the Minister of Finance, whose Government carries so much baggage it was terribly difficult for him to get in a blow with any force at all. Most of the time today, Dr Cullen was here with his defences up.

However, I am pleased to tell New Zealanders that the real contender is here, and New Zealanders can be grateful that at least one political party is willing to stand up and fight for them. That knowledge is what is now filling halls in Wanganui, Palmerston North, Napier, New Plymouth, and all over this country.

This Budget is really about finding out who is the Government’s weakest link—and, boy, is that a tough task! The ploy has failed, because it is a very tough ask to find the Government’s weakest link. One thing is clear: the Prime Minister probably wishes that the Associate Minister of Education had put tennis balls in the mouths of all the tossers and tuggers in her caucus.

Where do we start to find this weakest link? We cannot go past the Minister of Education, Trevor Mallard. New Zealand must be the only developed nation in the world that tolerates such incompetence from its Minister of Education, and it is our children who are paying the price for that. Although we have had two resignations so far over the National Certificate of Educational Achievement debacles, there really must be one more person who should go. That person, despite having had numerous warnings that there were problems with the process he had overseen, tried to blame everybody—everywhere else—except himself. When he was warned that the system was failing, what did he do?

💬 Hon Members: Nothing.

Precisely—nothing! He tried to dodge that bullet by appointing an associate Minister to take the flack. That ploy failed, because it seems that Mr Benson-Pope was otherwise engaged. The mind boggles, and so, I imagine, do the eyes. That Minister of Education has put the futures of thousands of New Zealand children at risk. Is he the weakest link?

💬 Hon Members: Yes.

Should he go?

💬 Hon Members: Yes.

Everybody has said yes, and he should go. But wait, there is more.

We have a Mark II Minister of Immigration who has the same problem as the Mark I version—the giggler from Christchurch. The Minister of Immigration does not know who came here, why they came, or what they are doing here. His incompetence seems to know no bounds. For years now we have been warning him about immigration fraud, and what has he done?

💬 Hon Members: Nothing.

Precisely, he never does. The result is that now we have hordes of undesirables living in this country, a number of whom—mark my words—will no doubt become Iraqi versions of Zaoui. We have warned the Minister numerous times about fraudulent activities in the gaining of visas and permanent residency. That is the same Minister who was too frightened to front up to the media over the Iraqi issue; instead, he sent a public servant to do his dirty work. Such dishonourable meekness alone should warrant his removal. That Minister just does not know which Tom, Dick, Yusef, Ahmed, Sum, or Ying-Tong is actually here. We have passed on many of those cases, but—as the Prime Minister told the House—what did he do?

💬 Hon Members: Nothing.

Nothing. New Zealand First members copped all the abuse when we highlighted the dangers of this Government’s soft touch on open-door immigration policies. We were told that this Minister was going to review the immigration laws, but now we know what he was really up to.

💬 Hon Members: Nothing.

Precisely. The terms of this review, which he promised a year ago, have not even gone to Cabinet yet—after a year. Is he a weak link?

💬 Hon Members: Yes!

Should he go?

💬 Hon Members: Yes!

Precisely. But wait, there is more.

There is a Minister of Police who, although it is hard to believe, is probably more incompetent than the Minister of Immigration. Talk about trying to pass the buck! When for months New Zealand First’s Ron Mark raised the debacle of the 111 system, that Minister said that all was well. Last week we found out what we already knew—that all was not well. In fact, that system has totally failed.

When New Zealand First says that there needs to be many more police, that Minister says that the commissioner has all the police he needs. We know that that is not true, and it has not been true for years. New and more staff are needed urgently.

When we claimed that the police were sitting on the side of the road with their radios turned off, that Minister denied it. We now know that it was an all too-common practice, yet that Minister had the audacity to claim that morale was low in the police force because of Opposition attacks. That is what he said.

There have been precedents in this House for a Minister to resign in the light of such sustained poor performance. The threshold is normally set so that a resignation results from numerous and cumulative mistakes, from people dying as a result of ministerial incompetence, and from ministerial inaction leading to a crisis of public confidence. That Minister is guilty on all three counts. Is he a weak link?

💬 Hon Members: Yes!

Should he go?

💬 Hon Members: Yes!

But wait, there is more.

There is a Minister in this Government whose heart drips icicles. He is, of course, the heartless Minister of Finance, who is keeping our seniors on the breadline. He is the same Minister who told this House why he set the superannuation rate at or near 68 percent of the average wage for the first 3 years he was in office. He said it was because prior changes to calculating superannuation meant that superannuitants were being ripped off. The same Minister then told the House that he had always intended to rip off the elderly by lowering the rate to 65 percent, which means that all those previous gains boasted about by people like Jim Anderton and Labour Party members are now all lost. But the Minister of Finance has made it much worse, by allowing the rate to go below 65 percent for most of the year: last year, for three out of four quarters, the rate for our superannuitants was below 65 percent.

Such a callous attitude is why seniors are leaving Labour in hordes and coming to New Zealand First. We know it. There is a procession, which is turning into a parade. Is he a weak link?

💬 Hon Members: Yes!

Should he go?

💬 Hon Members: Yes!

But wait, there is more.

Deciding who is the weakest link, as I said, is a tough task. There is meant to be one individual in Parliament who should keep that type of incompetence in check. He is meant to stand up in Parliament and give the people of New Zealand a credible alternative. That is the man who now wants constantly to compare New Zealand’s performance with that of Australia. Yet when he had the chance to support the Australian model in the 1980s and the 1990s, he instead elected to follow the model of Roger Douglas and Ruth Richardson. He says now that Australia got it right—but he supported the neo-liberal experiment, and he has done so for these last 21 years. That is another story of a man now crying wolf. Sadly, he is failing on all counts so, in the case of the National Party leader, one must ask: is he a weak link?

💬 Hon Members: Yes!

Should he go?

💬 Hon Members: Yes!

And so say all National Party members.

But who is the real weak link? She is the one person who could single-handedly fix all of the aforementioned if she had the slightest concern for this country rather than for her own career. She is the same person who has made gay marriage and legalised prostitution higher priorities than the protection of jobs for New Zealanders. She is the same person who has allowed more than 1,300 people per year to die when on hospital waiting lists while she gallivants the globe for photo opportunities. This Prime Minister has countenanced and approved $170,000 per year to be spent on sex change operations, while all the time she has allowed hospital waiting lists to grow and grow, and has allowed over 1,300 people in New Zealand to die when on those lists.

She told the media that George Hawkins needed protecting because the Opposition were bullies. How is that for leadership? She spread all sorts of rumours about Dover Samuels to get him sacked, and now she claims everything is OK because he has a token job outside Cabinet. She signs every free-trade agreement on offer from every large Asian nation, with absolutely no regard for New Zealand workers. The Labour Party once used to believe in the New Zealand worker.

This is the queen of PC, who has consigned Māori to grievance mode and dependency, and who now complains when Māori turn on her. I could go on, but the voters know what we all know in this House. Is she the weakest link?

💬 Hon Members: Yes!

Should she go?

💬 Hon Members: Yes!

And after the next election, she will.

There is a party in Parliament that cares about New Zealand workers, that cares about our senior citizens, and that cares about our families. We would never talk about a Kiwi family as the Prime Minister just did. What a Freudian slip! There is a party in this House that believes our porous borders need tightening—and we do not need to engage in name-calling, as others do, to do it. There is a party that will derail the treaty grievance gravy train and promote harmony, rather than promote division through race-based policies. There is a party that believes that New Zealanders, both young and old, hope for and desire a better future. When the election is over, this party will begin the process of putting in place its policy programme for the future.

In the last few weeks New Zealand First members have been around this country. We saw almost 700 people in Wanganui and about 600 in New Plymouth; we know what is going on out there in heartland New Zealand. It has been a matter of some interest to find that at those meetings the National Party had been putting all sorts of stickers on people’s cars—its stickers at our meetings. I know it has stolen our policies, but now it is trying to steal our audiences. I ask Dr Brash what kind of leadership that is.

There is a party in this House that has stayed consistent to its principles and policies. It understands ordinary New Zealanders, and it knows they want direction and hope. It knows that New Zealand can be a great country again. We in New Zealand First say to those people out there in heartland New Zealand—who are stifled by rising interest rates, rising taxation on the roads, and rising currency rates that are damaging exporters and ruining forestry, fishing, farming, and provincial New Zealand—to hang on, because help is on its way.

In but a few weeks there will be an election, and we all know the tide has changed. If anyone believes that the election will be a two-horse race, then they know nothing about politics. This election will be a three-horse race when it comes to parties, and a two-horse race when it comes to leadership. We all know that, and the polls are saying it.

We in New Zealand First say to people out there—who are stifled by the costs that impact on their families and children, who are stifled by the lack of care and attention to the human needs of people in this country, who look abroad and know that one in four of our tertiary students goes overseas never to come back because overseas there is real opportunity, and who are anxious and concerned that so many young people have to go abroad to find meaningful work and First World salaries—to hang on, because help is on its way. Halls are filling up all over the country, because people have come to understand that.

The Budget 2005 is a sick joke on hard-working New Zealanders. I move, That the amendment to the amendment be amended by omitting all the words after the words “Labour Minority Government” and inserting the following words: “that has provided no vision or ambition for New Zealand, no 10-year plan for making New Zealand a freer, more prosperous and proud nation, and no policy for dropping the excessive tax burden on hardworking New Zealanders.”

This Budget has no vision for New Zealand. There is no view of New Zealand looking 10 years ahead and asking where we could be as a nation. This nation is rich in resources, rich in people and entrepreneurial effort, and rich in care for our neighbours and our loved ones. Where is the vision for New Zealand in this Budget? There is no vision. We look at the Budget 2005 and we ask where the ambition for our country is. Where is the ambition of getting into the top half of the OECD and, once we are there, of steadily rising up the league of nations in terms of output, wealth, and riches? There is no ambition in this Budget for New Zealand. We look at this Budget and ask where the plan is for the next 10 years. We do not see even a plan for tomorrow in this Budget.

I have never seen a Budget in my time with so little in it. It is clear to us that this Government has run out of ideas, has run out of energy, and—with the election upon us—has run out of time. We saw it, did we not? We heard it in the applause from the Labour Party caucus. Michael Cullen gave an election year Budget speech with historic surpluses. He managed to get only two and a half claps out of his caucus, and each one of those claps, including the half, had to be orchestrated. The caucus members could not be even bothered to clap and cheer when urged to by Jill Pettis, the whip. They could not be bothered—and why would they be?

What a wasted opportunity we have seen with 5 years of this Labour Government. The best economic conditions in my lifetime have been frittered away. The best opportunities for providing a base for New Zealand to grow its economy and to succeed as a nation have been frittered away. What is the forecast growth rate now? It is a piddling 2.3 percent for next year. For the year after that it is a piddling 2.5 percent. That is what Michael Cullen is predicting.

Why would we expect to get more growth than that, when we have a Government that views our economy simply as a cake to be carved up and redistributed? It does not see our economy as being real Kiwis going about their business—driving trucks, running small businesses, working on farms, and working in our factories—creating the wealth that, with this Budget, the Government will take from them and spend. How much does it spend? Core Government spending is $45 billion. That is the amount we are debating in this Budget. Where did each and every one of those dollars come from? They came out of the pockets of hard-working Kiwis, who worked for each and every one of those dollars, and Michael Cullen, Helen Clark, and the Labour Government have come along and taken that money from them.

Do members know what $45 billion would look like if it were stacked up? A bundle of $100 bills is about 1 centimetre high. That is $10,000. Three bundles, stacked up, is $30,000—that is Jonathan Hunt’s taxi bill for a year. That is a lot of money. To reach $1 million, the stack would need to be 1 metre high. A stack of $1 billion would need to be 1 kilometre high, and, of course, to get to $45 billion, the stack of $100 bills would need to be 45 kilometres high.

What did we hear about this Budget? We heard that there was “a deep, dark tax secret in this Budget”. Well, I went into the Budget lock-up and got all the documents. I went through them, hunting for that deep, dark tax secret, but I have to say that it must be so deep and so dark that I still have not found it. I was expecting Dr Cullen to stand up in this House and tell us what the deep, dark tax secret was—but we still did not hear it.

The Government takes that $45 billion from hard-working Kiwis, and then it talks about “tax cuts”. I can tell New Zealanders that there are no tax cuts in this Budget. For business, all we see is an adjustment to the depreciation schedules. That actually says the Government is overtaxing business now, because the depreciation schedules are wrong. That adjustment is done in order to correct the schedules, so that business is not so overtaxed, and then the Government comes along and says: “Oh, by the way, this is going to be paid for with the carbon tax.” When we project out 3 years, do people know what the total sum of the “tax cuts” for business will be a year? In 3 years’ time it will be less than $100 million—1 percent of the total tax paid that year by business. So it is definitely not a tax cut.

Then we come to United Future’s great contribution to this Budget. Now, we have learnt this about the Prime Minister—have we not—that we cannot trust her, that she is dishonest, and that we cannot trust her Ministers in this Parliament to give truthful answers. And now we learn that we cannot trust Michael Cullen when he delivers a Budget, because we learnt that about the tax cut United Future delivered.

The Government is to adjust the tax thresholds for inflation. What happens is that as inflation occurs, taxpayers are bumped up the tax rates. So the average worker who started out paying a top tax rate of 21c in the dollar in 1999 has been bumped up to paying 33c in the dollar, simply because of inflation. There will be adjustment for that, but people should realise this: the adjustment will not happen for 3 years. The adjustment is 6 years too late! Then, if we project out 3 years, where does the Government take the base year from? It is actually taken from 1 July this year.

When I picked up this Budget and looked for that deep, dark tax secret, I came to a table in the executive summary on page 10, which showed that most taxpayers on the marginal tax rate of 21c in the dollar would get a tax cut of $35. I thought: “Wow! That is pretty good—$35.” I thought that it was $35 a week, that $35 a week was not too bad, and that the ACT party would support a tax cut like that—because that is our policy. But then I read a bit further, and discovered that it is $35 a year. The great tax cut that has been put into that table is for $35 per year—which is not even 70c a week. A person could not buy a packet of chewing gum for the cost of the tax cut Michael Cullen is giving hard-working Kiwis.

Then I discovered another shocking thing: to receive that miserable 70c a week, people have to wait 3 years for the tax cut. So Michael Cullen is going to the election on a promise of: “Vote for me and I will give you a tax cut. You will get it in 3 years’ time, and it will be 70c a week. So in 3 year’s time you can buy an extra packet of gum, because that’s how generous I am, as Minister of Finance.”

The ACT party is the only party in this House that stands up for free enterprise, for private enterprise, for the market economy, for freedom, and for limited Government. We know what we need to do to make this economy grow and to provide for a prosperous and free nation—that is, limited Government, getting taxes down, and realising that every dollar we spend in this Budget is a dollar taken from a hard-working Kiwi.

It is not the money of the politicians in this House that we are spending. It is not Michael Cullen’s money. It is not Helen Clark’s money. It is the money of hard-working Kiwis, taken from them through tax. We should recognise that and spend that money wisely. It should not be spent on hip-hop tours, on wānanga courses that do not deliver, or on every PC cause that comes wafting through a Cabinet Minister’s office. No, we should spend that money wisely and well on the things that New Zealanders want and need from their Government—like the police. People should be able to expect that when they ring 111, the police will come. That money should be spent on basic infrastructure—roads—and on a proper defence force. So many of the things that this Government is spending money on, we could do for ourselves so much better.

Back in 1997 the Inland Revenue Department did a study of our tax system and found that we are massively overtaxed in New Zealand. Michael Cullen spent a million dollars of taxpayers’ money on the McLeod Tax Review, the results of which came out in 2001, and, horror of horrors—having used a million dollars of taxpayers’ money—the McLeod report came up with ACT’s tax policy, and Michael Cullen promptly rejected it. Michael Cullen thought that he could be smart and send ACT’s policy across to Treasury to be costed. We were overjoyed at that move, and we readily agreed. I have to say that the National Party did not agree to it—the problem was that it did not have any tax policy to send across. But the ACT party put its tax policy to Treasury, and what did we find? Treasury said that with our tax policy, the economy would grow by an extra 1 percent a year. So instead of looking at 2.3 percent or 2.5 percent, we would be looking at 3.3 percent and 3.5 percent—and that is just with ACT’s tax policy, let alone our policy of reducing red tape. Treasury said that, contrary to what Michael Cullen keeps claiming in this House, the ACT party policy was entirely affordable. It said that the surpluses were so large that the policy could be paid for out of those surpluses.

We see that in this year’s Budget that is also true, because the surplus is forecast to be sufficient to pay for the ACT party’s tax cuts. We know that in a recent National Business Review, 63 percent of New Zealanders said they wanted tax cuts. That is not bad when we consider that only 62 percent of New Zealanders pay tax. Sixty-three percent of New Zealanders want a tax cut, and 1 percent of New Zealanders who pay taxes said they are happy to pay them, but the rest of them said they want tax cuts.

What could have been done with tax in this Budget? Michael Cullen could have said: “Yes, I understand where wealth is generated. It is generated by hard-working Kiwi families, by small business and big business, and by investors and entrepreneurs. It is not created by the Government.” He could have said that he would, therefore, adopt ACT’s policy and allow entrepreneurs, investors, and workers to reap the rewards of their efforts. All he needed to do was to return that surplus to hard-working Kiwis and let them keep it, and our tax rate would be not a top rate of 39c in the dollar nor a second rate of 33c in the dollar, but would go down to 25c in the dollar at the top rate, immediately. We could have started doing that on 1 July in this Budget—easily. We could have had a top rate of tax of 25c in the dollar for every New Zealander.

What could we have done for business? Well, we could have done more that just tweak with depreciation schedules. We could have taken the company rate of tax, the business rate of tax, and the penalty we put on business in this House, from 33c in the dollar down to 25c in the dollar. We can imagine what that would do for investment, jobs, wage growth, and entrepreneurialism in this country. Then we could have taken that middle rate of 21c in the dollar and dropped it to 15c in the dollar. That is the opportunity that lies in this Budget, with the surplus. We could have had two tax rates: 25c in the dollar at the top, and 15c in the dollar all the way up to $38,000 a year. That is what we could have done with this Budget.

For the average worker, that would be an increase in net take-home pay of 7 percent. That is what Michael Cullen could have given to the workers of New Zealand in this Budget. That is more than the unions are demanding and more than they are trying to get through industrial disruption. He could simply return the surplus to hard-working New Zealanders and there would be a 7 percent pay rise for every New Zealander.

In the ACT party we were a bit worried about this Budget. We thought that Michael Cullen would move to have a tax cut for every worker, as the surpluses were so large. But what we see here is a sick joke for every worker in New Zealand—70c a week in 3 years’ time. We know that Michael Cullen has delivered his last Budget, not with a bang but with a whimper; a whimper that his own caucus could not even rouse themselves to applaud.

There is one party in this House that does stand up for free enterprise and for hard-working families, and believes that they should keep more of the money they earn. That party is the ACT party.

That was a farewell speech from Rodney Hide, if ever I have heard one. Why does ACT not just accept that no one in his or her right mind would vote for a party that has such a blind faith in unfettered free markets? Kiwis know, all too well, the pain that ACT’s dog-eat-dog policies would cause. Ask anyone who is on the average wage, trying to save to buy his or her first home. That Kiwi dream has become a nightmare, because successive Governments have allowed the market to rule our society, rather than ensuring that society directs our economy.

Finally, after 6 years of Government, Labour is facing up to the fact that good, hard-working Kiwi families are not getting a fair go when it comes to homeownership. The Green Party has highlighted this issue for years, because home is not just where the heart is. A secure family home also provides a better environment in which to bring up children, and many other benefits to both individuals and societies flow from a high level of homeownership.

Homeownership rates have declined, from 74 percent in 1989 to 65 percent in 2004. Those figures tell only half the story. Obviously, a much higher percentage of young adults and those on low incomes are forced to rent because they cannot bridge the deposit gap. That gap has widened enormously in the 25 years since I started saving to buy my first home. In 1981, the average house price in New Zealand was $41,000 and the average wage was $12,600. When Labour took office in 1999, the average house price had increased more than fourfold, to $187,000, while the average wage had risen to $33,400. In the last 6 years of this Labour Government, house prices have rocketed to over $260,000 on average while wages have grown to only $39,000. Even relatively well-paid people in Auckland cannot afford to buy their own home. It is estimated that only 14 percent of Auckland households in the $44,000 to $55,000 income bracket can afford to service a 95 percent mortgage on an entry-level home.

As rent trends tend to follow house prices, they have also risen, making it even harder to save for a deposit. So how does today’s homeownership deposit subsidy measure up? It is definitely a big step in the right direction, and we congratulate the Government on that. But it is a 20th century solution to a 21st century problem. In many respects the subsidy is no different from what my generation could access in the 1980s. Why National axed that scheme and Labour took so long to replace it is something they will have to explain. But for now, the good news is that more people will be able to join the so-called “ownership society”, although not enough people who are on low incomes and benefits. However, we do applaud the additional $131 million provided for another 1,300 State houses over the next 4 years, but we also note that over $400 million is being spent on capital spending for defence. Perhaps those who cannot afford to buy a home should join the Army.

But the really bad news is that, for all its merit, the homeownership scheme does not tackle the root causes of the increasing unaffordability of the family home. Only 25 years ago the average wage represented 31 percent of the price of the average house. Today, the average wage accounts for only 15 percent of the price of that house. Doubling wages is not the solution. Instead, Labour must face up to the impact that foreign investment is having on the residential housing market and the increasing speculation in that market because of New Zealand’s tax structure. Until the Government shuts the door on foreign investors pumping capital into the residential housing market, inflating property prices as a result, and investigates a capital gains tax on all but the family home, to steer investment away from property and into productive activities, the cost of buying that first home will slip even further out of reach for struggling Kiwi families.

Speaking of homes, I would like to offer my condolences on behalf of the Green Party to all those people who have lost their homes or have had to leave them because of the torrential rain in the Bay of Plenty and the Coromandel. We would all like to hope that this is a one-in-150-year event, but such states of emergency are becoming increasingly common. Although the incidence of unusual floods, storms, droughts, and heatwaves cannot be proven to be directly attributable to global warming, they have all increased, and the pattern is consistent with that predicted by climate change models.

Even the Insurance Council of New Zealand has acknowledged the impact that global warming is having on extreme weather events. Unfortunately, some other parties in this House either refuse to accept the incontrovertible evidence or are not prepared to take the necessary steps to reduce our greenhouse gas emissions, or believe we should not act until everyone else does. I am talking about ACT, National, and New Zealand First. Along with United Future, those parties all voted against the Climate Change Response Bill. The Government passed that bill, and 15 others in this term of Parliament, only with the Greens’ support.

The Government’s policy on carbon credits has got wind power, the best new source of clean, renewable electricity, off the ground. Several wind farms are up and running, and many more are being built. Although there is much we disagree with in the Government’s energy policy, we congratulate it strongly on its efforts to support renewable energy. But we do challenge the Government to go much further, especially with solar water heating, energy efficiency, and conservation. We must all change our transport and energy habits of a lifetime if we are to survive this century. So the Greens want to see the carbon tax brought forward, to 1 April 2006, and an excise tax on diesel as the start of a comprehensive programme of ecological tax reform and as a key part of the transition to a sustainable energy future.

The Government is failing to apply its foresight on climate change to the closely related issue of peak oil. While on the one hand the Government realises that global warming is a problem, on the other hand it remains wedded to a fossil fuel - dependent economy. That was demonstrated today with an extra $300 million for roading. What is more, it is investing our taxes in drill-and-hope searches for oil and gas and praying that world oil prices will drop, instead of developing a plan to enable us to reduce our dependence on oil.

In last year’s Budget, Treasury took the trouble of providing a full page of advice on oil prices. It said that Brent crude spot prices would remain at about US$32 a barrel over the middle of 2004 before easing back towards their assumed equilibrium level of US$19 a barrel. When we questioned officials on where they got their price predictions from, they conceded that neither Treasury nor the ministry of energy had any capacity to predict future prices. Instead they admitted that they rely on consensus forecasts, which in turn are significantly influenced by the futures market. We asked whether they had ever heard of peak oil, and they revealed that they had not. Treasury devoted another page to oil prices in the December Economic and Fiscal Update. By then its tune had changed. Its prediction was for a gradual decline in prices to US$43 a barrel by March just past. Today Brent crude is selling for US$48 a barrel, and today’s Budget Economic and Fiscal Update states that spot prices of US$50 are expected to decline over the next 5 years to US$47. That is a long way from US$19.50.

Dr Cullen has claimed that the overriding theme of this year’s Budget is the need to play the long game, to ensure that our economic fundamentals remain strong. It is a great theme, but when it comes to transport and all the other economic activities that depend on oil, where is the plan to achieve it? Where is the announcement that the extra $100 million allocated to land transport each year for the next 3 years will all be spent on public transport, rail, and other sustainable options? It is going on roads instead. We will not motorway our way out of our transport problems. The Government knows that, to some extent. It has bought back the rail-track, but much of this still needs to be fixed. Beyond that, Wellington’s commuter rail network should be expanded—for example, by double-tracking where it is needed and electrifying the route north of Paraparaumu. Auckland needs rail services to the airport, linking to the south and the west as well as to the city. Christchurch needs a passenger rail service to Rolleston and Rangiora.

The Government should also be investigating the electrification of the gaps in the North Island main trunk as another step to reducing our dependence on fossil fuels and meeting our emission reduction targets. The benefits go beyond being kind to the environment. If we can get more freight off juggernaut trucks and back on the rail, where it belongs, then our roads will become safer. If we can provide fast, affordable public transport within and between our cities and towns we will reduce congestion on our roads, reduce frustration and road deaths, and increase productivity.

Thanks to the Greens we have a land transport strategy, and a new Act that makes it possible to build a much more balanced transport system with funding across rail, road, public transport, travel demand management, cycling, and coastal shipping. But that is not reflected in this Budget, which allocates even more hundreds of millions of dollars to accelerate road building, and nothing to the low-energy alternatives. It just shows the effect of Don Brash’s billboards in Auckland. It is disappointing that Dr Cullen does not have the spine to stand up to this sort of blatant populism.

Whether or not peak oil is upon us, the end of the cheap oil era certainly is. The challenge of the next 3 years is to ensure that real change actually happens on the ground. So far the signs are mixed. The framework exists to take us into a future in which mobility is not the preserve of the rich, as Don Brash and even Michael Cullen would seem to have it. The difference between the two doctors and the Greens is that they are looking back to a past that never existed, while we are looking to a future that is only possible if we take big strides to achieve it. The “it” I am talking about is environmental sustainability. None of the environmental initiatives in this Budget tackles the problem of industry being both poacher and gamekeeper, which has meant that non-binding measures such as the New Zealand waste strategy have failed to meet even their own very modest targets. The Government must lead in this area.

New Zealand’s economy is built on our environment. Our clean, green image is vital to the success of our primary producers, while our largest export industry, tourism, brands us “100% pure”. Yet despite depending on the environment for economic success as well as human survival, the Government constantly puts short-term economic growth ahead of long-term environmental sustainability. So does the Budget measure up on sustainability? Does it ensure that our environmental fundamentals are strong? Does it have a plan to ensure that we are living within resource limits and that demand does not outstrip supply, whether in fossil fuels or in water? Does it ensure that we are reversing the decline in quality of our air, our drinking water, and our rivers? Will Dr Cullen’s economy reduce our ecological footprint, or will it increase it? Quite simply, the Budget does not measure up on any of these counts. It falls well short on sustainability and self-reliance. In fact, it will have a negative environmental impact and make New Zealand even more dependent on what Dr Cullen admits is a weak global economy.

Perhaps Dr Cullen is finally waking up to the need for our economy to be more self-reliant. His admission today that we have a chronic current account deficit and high overseas debt sounded as if the king has finally looked out the window of his counting house to see that the peasants are struggling. While his self-proclaimed prudent fiscal management has led to record surpluses—that is, Government surpluses—our national economy has been going down the gurgler. When Dr Cullen took over as Treasurer, New Zealand had an annual trade deficit of just over $2,500 million and rising. For the 12 months to March this year it has worsened to an all-time record of $4,365 million.

The story is the same for the current account deficit. It was $4.8 billion and rising when Dr Cullen became Treasurer. For the 2004 calendar year it was a massive $9.385 billion, and it is predicted to rise even higher. That is why the Green Party opposes the Government’s free-trade and foreign investment policies and supports import controls and a strong Buy New Zealand Made campaign. That is also why we support the Government’s work-based savings scheme announced today. In fact, ever since we have been in Parliament we have called on the Government to provide working people with an incentive to save some extra for their own retirement, on top of their New Zealand superannuation entitlement. Our view is that while the Government should provide the bread and butter, it is up to people to make their own jam, with the help of a little sweetener from the Treasury coffers. Our reason for supporting a work-based savings scheme is not just that it is good for the individual saver; it is also, clearly, good for the whole economy. We are pleased to see that Dr Cullen has finally grasped the benefits of increasing savings as a way of reducing our growing dependence on foreign capital. An additional benefit from the scheme is that by encouraging saving, it will automatically reduce consumption of and, therefore, pressure on scarce resources.

We cannot say the same about the Government’s flawed plan to get parents to start saving for their kids’ tertiary education. That is a blatant quadruple whammy. The current generation of young working people is not only paying for its parents’ superannuation but, through the Cullen fund, also paying for part of its own superannuation, and, added to that, it has been paying for its own tertiary education. That alone is intergenerational theft on a grand scale, but now the Government wants to cap it off by making working people pay for their kids’ tertiary education, too. It is a no-brainer, which is why it is not in the Budget, but has instead been announced as a discussion document. As even the Dominion Post suggested last week, why does the Government simply not reduce tertiary fees and cut the size of student debt? The Green Party would go even further. We believe that full-time tertiary students should be paid a living allowance equivalent to the unemployment benefit. We also support the write-off of existing student debt, where graduates stay in New Zealand and contribute to our economy and society. If the Government is serious about having a world-class education system and making New Zealand a place where skilled people want to live, then it needs to send those people a very strong signal that they are valued. Right now, they are receiving exactly the opposite message.

We live in hope that Dr Cullen will make his goals consistent with his policies. After all, he is finally doing something about work-based savings. But perhaps one reason why he refuses to tackle the student debt burden is that the net debt targets in the Crown accounts are being achieved on the backs of young New Zealanders. Student loans appear on the Government’s books as an asset. In reality, the burden of student debt is a massive liability for our society, but in the Crown accounts the current debt of $7 billion helps the Government achieve its net debt target. Dr Cullen’s Budget surplus is also built on the backs of children growing up in poverty. Yes, Working for Families is helping and will help to reduce child poverty in New Zealand but, as we have said time and time again, it does not go far enough, fast enough. The fact that a coalition of Barnardos, Unicef, Save the Children, and Plunket have launched the Every Child Counts initiative to make children the centre of attention during the election campaign confirms that the Government is not doing enough to ensure every child gets the decent start in life that he or she deserves.

Children should be at the heart of the election policy debate because they are literally our future. It is morally indefensible that children are growing up in poverty in our wealthy country. It is also short-sighted economically. When children have a bad start in life, they are more likely to get into trouble and will not contribute as much to society as they should. We cannot afford that, because we depend on the current generation of children to produce the goods and services we want when we retire, and to create the wealth to pay the superannuation and health costs of our generation. In other words, we have a vested interest in ensuring that all children grow up to become healthy, productive citizens, because they are the best security that we could have in our old age. That is another reason why the Greens continue to oppose Dr Cullen’s superannuation fund. We believe that the money would be better invested in the health, housing, and education of our young people, and in the public infrastructure that I talked about at the beginning of my speech. It is time to future-proof our economy, strengthen our society, and protect our environment, rather than invest our taxes in the economies of our competitors.

We also have a responsibility to be good international citizens. It pains me to see that New Zealand is in the bottom half of the OECD when it comes to our contribution to overseas development assistance. My passion for politics developed when Norman Kirk was Prime Minister. He made me proud to be a Kiwi, not just because he sent a frigate to Mururoa but also because he lifted our contribution for aid and development to over 0.5 percent of GDP. Today it is half that level, despite successive Governments signing binding commitments internationally. As my colleague Keith Locke has pointed out, if the recently announced defence package had instead been invested in development assistance, New Zealand would have regained its international reputation by almost reaching the 0.7 percent target. While there is, of course, a place for a defence force, especially in peacekeeping, fisheries protection, and disaster relief roles, real peace comes from development, not out of the barrel of the gun.

Three years ago the Green Party voted for the Budget, despite Labour passing legislation to lift the moratorium on genetic engineering earlier in that same week. Because we had a confidence and supply agreement with that Government, we supported that Budget. In this term, the Government does not have our confidence because it has refused to countenance the protection that we believe New Zealanders deserve from genetically engineered crops and animals. Fortunately, our strong public stance against GE means that we can still claim victory in that New Zealand is still GE free. Bearing in mind that fact and the fact that there are many measures in the Budget that we do support, I will not be moving a no-confidence motion in the Government this year. We will also vote against the no-confidence motions moved by the other parties—as we have always done—and, for the first time since the last election, we will abstain on voting on the Budget itself. That signals both that we are willing to work with Labour and our belief that the Budget still does not measure up where it counts. We look forward to ensuring that next year’s Budget does measure up and does give Kiwis—both the feathered species and the human species—the future that they deserve.

At the commencement of my speech this afternoon, may I pay tribute to those people in the Coromandel and Bay of Plenty area who are suffering considerable hardship at the moment as a result of the torrential rain, and who, I suspect, will have a focus that is far more close to home than the events in this Chamber this afternoon. Our thoughts are with them. I hope that the Government extends the provision that it made in the wake of both the major floods last year and the tsunami event at the end of the year of matching the relief contributions made by individuals on a dollar for dollar basis. That was a United Future initiative at the time of the major floods in February of last year that we were pleased to see the Government carry through in subsequent adverse events, and I hope that the same initiative applies when it comes to reconstruction after the events occurring in the Bay of Plenty over the last few days.

Taking part in a Budget debate today is somewhat surreal, because in recent weeks this Chamber has become a place where trivia has reigned. There have been accusations about Iraqis wandering around this country and Ministers’ obsessions with tennis balls, and that one member of Parliament apparently does not care for his cats, and that has been the standard of debate in this Parliament. So for members to come here today and debate a Budget is actually a welcome change. I suspect that most New Zealanders—whatever they may think of the Budget—will at least be relieved to see that we are taking things seriously for a change, and not indulging in the mindless trivia that has characterised this place over the last few weeks.

I want to make these few points.

💬 Stephen Franks: No one else mentioned cats!

The member says that no one else has mentioned cats, which really heightens the fact that he gets so upset about it—it shows his obsession is not with reality, but with a very strange world of fiction.

In 2002, on the last Budget before Parliament adjourned for the election of that year, in my speech to the House I bemoaned the fact that the Budget contained no references at all to any aspect of family policy affecting New Zealanders. As a result of the confidence and supply agreement that United Future entered into with the present Government after the last election, we saw 15 family-specific policies introduced in the 2003 Budget, we saw the Working for Families package introduced in last year’s Budget, and today we see over $300 million of initiatives promoted by United Future taking their place in this year’s Budget. What we have seen in 3 years is a restoration of the interests of the families of New Zealand to the centre stage of political consideration in this country. While others have mocked and delved into the trivia, this party has got on quietly, determinedly, and deliberately, and has achieved, on behalf of the families of New Zealand, significant change in that respect.

I welcome the breaking of the logjam regarding tax thresholds that has been announced in today’s Budget. And I pay an immediate tribute to my colleague Gordon Copeland for his persistence in pushing that issue and persuading the Minister—who acknowledged it in his speech this afternoon—of the wisdom of moving in that respect. It is a case, sadly, of too little too late, but it is a positive start. I observe in passing that the last time there was a movement in tax thresholds in this country was during the term of the National-United coalition, and I was the Minister of Revenue at that time. I also observe, when people talk about tax cuts—and I was reminded of this during the Leader of the Opposition’s speech—that the last time that tax cuts were put in place in New Zealand was during the term of the National-United Government in 1996, only to see the National Party, in 1997, vote to overturn those tax cuts as part of its coalition deal with New Zealand First. I was the only member to vote for the tax cuts in 1996, and for their retention in 1997. So I find the bleating calls today for tax cuts from those who had the opportunity to implement them, then overturned them, somewhat unrealistic and a little too much to take. I think that people should remember that as this tax debate unfolds during the course of this year.

What we want to see is steady progress made on the issue of tax thresholds. The situation we have at the moment is that people whom we would regard as good, decent, upper-middle income earners now find themselves shifted into the top tax bracket, and as a consequence the benefit that accrues to them from other income support measures is severely diminished, and the incentive for them to do that little bit more to work harder to earn more is severely compromised. This is an issue that has only just started to fester, but I am pleased to see the limited progress that this Budget introduces in that regard.

I want to move on from there to the broader concept that has been debated over recent times—the so-called ownership society, which some seem to have discovered and embraced as a new mantra. But, in fact, it has been a tenet of the Kiwi dream for generations. It used to be called a property-owning democracy. Then I think we referred to opportunity for all. The reality is that the Kiwi dream over a long period of years has been steadily shattered by a whole range of mechanisms, some beyond our immediate control. I welcome the moves towards an establishment of the workplace savings scheme. When I was briefed on this by the Minister of Finance he did tell me that it had a rather slick title. I thought something a little more imaginative than KiwiSaver might have been that title, but we will leave that be. But the real thrust of this, apart from the message that it sends to people about the ability to save, the attractiveness of saving, and the need to save for their futures, is the contribution that it makes to homeownership. The fact that it will be possible for the average family to take up to $10,000 out of the scheme as a deposit for their first home is long overdue, desperately welcomed, and will be a very positive incentive to many young families today who are struggling, and who are worried about how they are going to get over things like their student loan debt, and some of the other responsibilities they have to bear. At least, they will have the opportunity of buying that first home. I was thinking, during the speech made by the previous member, what it felt like to me when I was able to become a homeowner for the first time. It is a sense of ownership and participation in one’s community and one’s society. It is a sense of belonging, and it is an opportunity we should not deny our fellow citizens in the way that we have done in recent years.

I welcome the fact that the Government is going to introduce a special scholarship scheme for 500 people—as an initial start, I hope—of up to $3,000 per annum. They will be bonded to work in New Zealand after graduation for the number of years they were on that scholarship. This proposal has two important aspects to it. The first is that it will reduce the cost of tertiary education to those students. The second is that it will stop what has been a deliberative and unfortunate trend in this country over the last decade of our tertiary institutions becoming less places of excellence and scholarship and far more export processing factories, sending the biggest number of graduates overseas that they can, simply because that is where the opportunities are to pay back their student loans.

This is a step in the right direction, and I hope that it is one that can be expanded upon in the future. It is absurd that we face shortages in key areas of our economy, and are importing people from overseas at the same time as we are exporting our own graduates in this area. I believe that a scheme like this, small as it is to start with but expanded in the years to come, provides not just the block to stop that but also the incentive for many of our young people who are casting about worrying about their futures. It is also a signal for the solidity of families. Many parents today, faced with the prospect of funding a child’s tertiary education, worry desperately—perhaps a little selfishly, but understandably so—about that child’s future. Where will he or she go? Will that family be flung apart because its children are on the other side of the world earning their futures, not because they necessarily want to be there, but because that is where they see their opportunities lying?

In that respect I have to pick up the point made by the previous speaker about the voluntary savings scheme that we have promoted and that the Government has put out a discussion paper on. I have to profoundly disagree with his narrow-minded logic. This is a voluntary proposal for people who have the opportunity to put a little bit aside as time goes by towards the education of a child when he or she reaches the age of 18, or perhaps homeownership or superannuation a little further down the track. What is wrong with people who have the opportunity and the ability to be able to behave in this way being able to do so? If I hear correctly the rhetoric of the member opposite, he is saying people of opportunity should not be able to exercise that opportunity because others do not have it. That is simply absurd, and I think that all we are saying here is that we are giving people a chance. I would have thought that the lines of John Lennon would have had some resonance with the member opposite, given his nostalgia for the 1970s. We should give people a chance, and we should not penalise them if they want to take up that chance. That is what that scheme is about and I think that it has huge potential—not immediately, but in the longer term for all New Zealanders. It is part of helping build an ownership society of which we can all feel proud.

The Budget continues the trend of the last few Budgets of significant investments in the public health system. While there will be many who will say that that is a good and positive thing, and something to be lauded, I want to sound a huge note of caution about that continued level of investment. I believe, from statements I have seen, that the Minister of Finance shares the caution I am about to express. The graph for expenditure in the public health system is a rapidly increasing line. Frankly, it is beyond our ability as a country to sustain it at the level that has occurred in recent years. That is because the demand for health services is becoming infinite. We need to throw away some of the ideological shackles that currently prevent our addressing this issue as we ought to.

I keep saying to audiences that we must never forget that New Zealand is three-quarters the size of Sydney, and Sydney is only a medium-sized city by international standards. But, unlike Sydney, we are trying to run national health, national education, national defence, and national policing systems on the income of that 4 million - plus population. We cannot afford to continue to do so and at the same time ensure a reasonable standard of living for our people.

We also cannot afford to continue to run essentially two parallel health systems, a public system and a private system, with that quaint notion of ne’er the twain shall meet. There needs to be closer integration. There needs to be much more effective working together. I have been very disappointed, when asking questions of the Minister of Health over recent months about this issue, to see the blinkers come down in an almost unwilling inability to recognise that there is even an issue there. Meanwhile, New Zealand patients face day in and day out, week in and week out, the absurd situation of going to see their specialist for non-acute surgery and being told to go on the waiting list, but if they pop up to his clinic, he could do it next week. We have a mismatch of resources, and a small country of our size cannot afford that to continue. I am not opposing the increases in funding for public health announced in this Budget; I am simply warning that they are unsustainable, and without an integrated system we will get to the point in the not too distant future of the potential collapse of both, to the detriment of all New Zealanders.

While I am talking about health, I want to make a few comments about the Government’s drug-buying agency, Pharmac. I have been extremely critical of that agency and remain so. I believe that it has lost the plot. Its focus originally was on ensuring that we got the best deal for the taxpayer in terms of the cost of pharmaceuticals that were being obtained. It is now moving into areas of public education. It is even conducting a survey, for the most spurious of reasons, of voluntary health organisations, asking them about their links to pharmaceutical companies. That organisation is out of control. It has lost the plot. In previous years it has actually done a good job of controlling pharmaceutical benefit expenditure. It is time it went back to its knitting and it is time that the Minister stopped sitting on her hands, pushing things Pharmac’s way, and accepted her responsibility.

But it is also time we developed a national medicines policy whereby pharmaceuticals, hospital care, voluntary care, outpatient care, primary care, and so on were all laid out on a continuum so that we could see where the interactions were and what the future might hold. At the moment we have no idea. Last year, when I raised the issue with the Prime Minister, the Minister of Health, and, ultimately, Pharmac, the answer I got was: “Are you not happy with the way things are at the moment?”. The point I was making was: what is the thinking over the next 5, 10, or 20 years, as technical knowledge increases, as public knowledge increases, and as demand increases? What is our strategy? The really sad thing is that no one whom I have spoken to can tell me, because there is none. Meanwhile, we are surveying voluntary agencies about their relationships with pharmaceutical companies. If Pharmac wanted a critical, long-term role, it would address the issues I am focusing on, not the spurious, ideologically driven, politically correct nonsense that it is indulging in at the moment.

I will make a comment about law and order. I want to demonstrate two very important points. This party has always taken the view that a decent and constructive law and order policy has to be based on being tough on crime, but also on being tough on the causes of crime. I draw to the House’s attention two strands of this Budget that demonstrate that point very well. We welcome the increase in police staff—there will be 245 new staff, I think; a combination of sworn and non-sworn. It is not enough, but it is a start, and we welcome the resources that have been dedicated to that. I also welcome the $4.4 million that my colleague Marc Alexander has secured for a special programme to help recently released prisoners integrate back into the community, and to make sure they get work opportunities so that they will not become recidivist offenders and return into the system. It is about being tough on crime, it is about upfront detection and enforcement, and at the same time it is about being tough on the causes of crime, to prevent the next generation of criminals coming through. The policy has to be balanced and constructive in that regard.

This Budget is the last Budget before the general election. It is the last Budget of this phase of the confidence and supply agreement between Labour and United Future. I believe that it demonstrates two things. Firstly, it shows that political stability can achieve results. United Future has contributed to that in measure—we are the only small party to have survived the distance under MMP. Secondly, it shows, when one looks at the initiatives in this Budget and over previous Budgets, that a small party, determined to be constructive, and unfailingly positive in its outlook, can have a significant impact on the course of policy. I am proud of the fingerprints that United Future has over today’s Budget.

The Progressive Party supports this Budget because it is both a pro-business and a pro - personal well-being Budget that will make New Zealand a fairer place to live for all New Zealanders. The driving force for the Progressive Party and its involvement in this and previous coalition Governments has been, first, to develop the full employment economy, and, secondly, to win social justice for our communities, our regions, and the whole country after years of neglect from hands-off Governments. We believe that we cannot have a successful national economy unless we have successful regional economies; we cannot have a First World health or education service, or even a decent infrastructure and environmental system, unless we have a First World economy.

But what I want to touch on, in the few minutes I have, is the credibility of the leader of the National Party. I was not really going to talk about that—I had a very positive speech prepared. But, to be honest, the fact is that the only claim to leadership that the leader of the National Party, Don Brash, has left is in terms of economic credibility. He constantly compares the New Zealand economy and tax system, for example, with those of Australia. I just point out that if he has any economic credibility, he should stick to the facts of economics. The first thing is that in the 30 years between 1970 and 1999 New Zealand lost 30 percent of per capita income against Australia, by comparison. That is a fact. The loss averaged 1 percent per year. Which Government was in power for most of that time? The truth is that National was. Labour was there, as well—and I was part of it for 5 years—but most of the time it was National. So how come we lost 1 percent per year per capita income against Australia during that period?

In the last 5 years—from 1999 to 2005—New Zealand has gained 1 percent per year per capita income against Australia. That is a gain of 5 percent in the 5 years that this coalition Government has been in existence, versus a loss of 30 percent in the 30 years prior to that. That is a fact, and Dr Brash has not mentioned that. Evidently, those are not the sorts of facts he wants to deal with.

He deals with tax. I will run through a few facts about the tax system in Australia versus that of New Zealand. It is a hard issue, and people dodge it because they are not too sure, but here it is. Australia’s highest personal tax rate is 47 percent; New Zealand’s is 39 percent. Is that mentioned by Dr Brash, with his economic credibility? No, it is not mentioned. It is not convenient. The extra tax in Australia for Medicare ranges from 1.5 percent to 3 percent; there are no extra health taxes in New Zealand. That is not mentioned by Dr Brash, because it is not convenient to do so. If there is no private health-care, and family income is above a certain level, there is a health tax to pay.

Nine percent of salary in Australia is compulsorily paid toward superannuation. How much is compulsorily paid toward superannuation in New Zealand—apart from in tax, of course, which is compulsory? In New Zealand, superannuation comes out of the general tax rate. There is no 9 percent surcharge. Why does Dr Brash, the economic credibility guru, not mention that? He would have New Zealanders believe that when people go to Australia they get some sort of free ride through the tax system. In fact, they do not. In Australia there is a means-tested superannuation payment, as we used to have in New Zealand. Members will remember all the crusading about getting rid of the surcharge, and all the rest of it; well, in Australia there is one, and in New Zealand there is not. Why does Dr Brash not mention that? If people go to Australia, their income will be means-tested before they can receive superannuation. There is no mention of that.

In Australia there is a thing called stamp duty. On a house purchase it equates to 6.5 percent of the price. Is there a stamp duty in New Zealand?

💬 Darren Hughes: No.

No, there is not. Why is that not mentioned by Dr Brash? He knows all about economics, but he does not mention it. He continually puts down New Zealand when he compares our system with the Australian system, and he will not mention the facts that do not support that thesis. Australia has a land tax of 1.5 percent. There used to be one in New Zealand but there is not any more as it has been abolished. Does Dr Brash mention that? No. He said the tax system in New Zealand is a lot worse and more complex than the Australian system. It is not. It is simpler and cheaper.

What about driving around Sydney and Melbourne? Sydney and Melbourne have pretty good infrastructure. I was there a few weeks ago for the Government, at a leadership conference, and I saw the brilliant infrastructure. But guess what? It is tolled, and it costs the average motorist in Sydney and Melbourne about $50 to $100 a week. I am not totally against tolls, but we need to have the facts. If motorists pay tolls to have decent infrastructure, it costs. In Sydney and Melbourne it costs $50 to $100 a week, for the average motorist. Where did Dr Brash mention that in his speech in which he said how bad New Zealand was versus Australia? This Government has put in $1.9 billion to help the Auckland infrastructure. The cost will not be tolled; it will come from general taxation. In Sydney and Melbourne, residents are paying $50 to $100 a week in tolls. Dr Brash made no mention of that.

The company tax advantage for Australia versus New Zealand is an absolute myth. The top rate is 33c in the dollar in New Zealand and 30c in the dollar in Australia. That sounds all right. But what about the fact that when the corporate tax rate was reduced in Australia, a revenue-neutral change in depreciation was introduced, which covered all of the income the Government lost in the tax reduction?

💬 Darren Hughes: What? But that is the opposite of what we do.

Exactly, but it was not mentioned by Dr Brash. If he does not understand that, then he does not have any economic credibility. If he does understand it, why does he not tell us?

Australia has a payroll tax. Does New Zealand have a payroll tax? No. How much is the payroll tax in Australia? It is 6 percent.

💬 Hon Paul Swain: They never talk about that.

No, they do not. Apparently, New Zealand has a terrible, complex, hopeless, expensive tax system, but I am only starting on all the taxes that Australia has. “Mr Economic Credibility” tells us how bad our system is compared with Australia’s, but he does not mention any of these at all. Why not? Would that not be fair? I do not mind comparing apples with apples. We have New Zealanders leaving New Zealand for Australia. We have always had them leaving and they are leaving now, so that is a fair point, and if National wants to argue it, we can argue it. But what about all of these taxes that he does not mention? He says that New Zealand is a terrible place and Australia is not.

How much tax did the Australian federal Treasury get from the corporates over there? The latest figure we have got is $38.4 billion. But that is not the worst of it. The payroll tax is collected at the state level, and that is another $10.275 billion. That tax is always conveniently not mentioned when comparing New Zealand and Australian corporate tax rates.

If someone wants to run the country on the basis of economic credibility, and wants to compare New Zealand with our nearest neighbour, let us at least have the facts on the table. I do not mind having a tax debate with Don Brash on Australia versus New Zealand. I have got all these facts. And there are more. For example, the corporate tax rate in Australia is 15 percent of GDP. In New Zealand it is 11 percent. The Business Council of Australia says that the simple fact is that Australia’s total corporate tax rate is the second-highest in the developed world. We know that New Zealand’s is lower, so why does Don Brash not tell us that? He tells everyone to go to Australia because it is better, when in fact it is miles worse.

I could go on, because I have more, but in the end this Budget is a Budget for New Zealand’s future. The cumulative effect of what the Labour-Progressive Government has done in the last 6 years has lifted New Zealand from falling off the planet in terms of economic development. We now have the lowest unemployment in the OECD, apart from South Korea with its dynamic economy, as is shown in the latest figures. We have the highest rate of economic growth in the OECD, and it is 5 percent better than Australia’s. If the Opposition cannot be loyal to New Zealand and defend it, let it at least tell the truth about New Zealand. That would make a change.

Thankfully, I was not in the Chamber when Dr Brash made his address to the nation.

💬 Hon Paul Swain: You were lucky.

My friend and colleague Mr Swain says that I was lucky. But I have since read some of the speech and some of the reports. Mr Anderton touched on the issue of leaders in this country being loyal to Kiwis and to our country, and that is something that Dr Brash and his party could take a lot from. This is a good-news Budget. I know that the National Party will not like it, because soon—within the next few months—we will have an election. Again, as the Budget does every year, this Budget provides a solid platform—it is our sixth Budget, and it builds on five others—for this nation. I am proud of the Budget, and I say to the National Party that I look forward with relish to going around my constituency and to joining other MPs around the country. I look forward to standing up on the campaign stump, in the halls, the schools, and the hospitals, to talk about our record as a progressive, positive Government that builds growth and backs Kiwis—our schoolteachers, our health professionals, and our entrepreneurs. I look forward to fronting up with our record and comparing it with the economic vandalism that occurred in the 1990s under the crew that is now in Opposition.

Let us get real and look at some of the facts. There is $4.9 billion for Vote Health. In respect of defence funding, new money is there. We can all remember when the previous National Government came into office. I am sure Mr Mapp and Mr Power recall National’s legacy with regard to Vote Defence, because Mr Power was at one point the defence spokesperson. He may recall that when National left office, its legacy—[Interruption] I am sorry. Mr John Carter is the defence spokesperson now. I forgot that. Mr Carter may recall that National’s legacy was to make the biggest cut in the vote for defence spending in the history of this country. Of course, as the National members go around the country to the odd RSA—if the odd RSA member will speak to them—they will not be reminding people of National’s record in office.

💬 Darren Hughes: Amnesia!

It is convenient amnesia. Mr Carter looks at me like a possum stuck in the headlights. I challenge Mr Carter to go down to his local RSA, or to mine, and to have a debate about defence with me. Whereas we have provided $410 million in this Budget for defence and have put more money into defence every year that we have been in Government, National will have to stand up on the stump in the election campaign and say its record was to make the biggest defence cuts in the history of this nation. If Mr Carter is honest, he will say that on the campaign stump. But we will wait and see about that.

This Budget is also about backing our teachers, backing our health professionals, and backing ordinary Kiwis. I am proud of the KiwiSaver workplace savings package of $1,000 grants for people who want to opt in and save for their future—for their retirement. We have one of the worst private savings figures in the OECD. This Government has put up a package that will give Kiwis a contribution of $1,000 and an incentive to save for their retirement and future. I heard Mr Hide earlier accuse this Government of a lack of ideas and a lack of vision. Well, there are our ideas and vision. The KiwiSaver workplace savings package is our vision. That is one of our ideas.

I challenge Mr Hide and the National Opposition to get up, propose an alternative Budget, and give us some policies, finally, after 2½ years—nigh on 3 years—of nothing. I say to the Opposition members that they are rudderless and have no vision. Their only policy, which they prattle on about, is Dr Brash’s tax cuts. What do tax cuts mean for ordinary Kiwis on middle and low incomes? They mean a big tax cut for Dr Brash, on his salary—and, I might say, for every MP in this House. There is very, very little for most middle and low income Kiwis, and there is virtually nothing for somebody on $38,000 a year. I hope Dr Brash goes with that policy. I hope he joins me on the campaign stump and puts that one up to ordinary middle-class and working-class Kiwis, because I will be quite happy to present what we are doing with our Working for Families package, which is putting money into the pockets of working middle and low income Kiwis, as compared with Don Brash’s tax cut for his rich mates. I will stand up and we will have a debate about that.

There is another good idea in this Budget: new support for first home buyers, including a home deposit subsidy of up to $5,000 and easier access to mortgage insurance. Well, there is an idea. Of course, those members sit over there on the Opposition side of the Chamber and cringe. Again, I say to Mr Carter, Mr Mapp, and the other member from the “C team” over there that we will look forward to running that one up the flagpole to see whether Kiwis will back it. I suspect they will. What are the biggest assets that Kiwis have in the course of their lives? Generally, those assets are their homes and their cars. The Kiwi dream has always been to own one’s own home. So what does this Government do? It stands up and says that it will back Kiwis because we are proud of them. It wants to stand with them and ensure that they have a future—ensure that they realise their dream of having their own home. What do members on the Opposition side of the House say? They say zip—they say nothing. What is their answer to that? What is Mr Mapp’s answer to that? He does not have one. No one over there in the Opposition has a policy idea. Those members are rudderless.

💬 Dr Wayne Mapp: Tax cuts!

Yeah, tax cuts for Mr Mapp’s mates! If someone is on 100 grand a year, as Mr Mapp is, that person and his or her mates will do well. I repeat to Mr Mapp that if someone is on $38,000, under the Don Brash tax-cut scheme he or she will get zip.

💬 Mark Peck: What do they get?

Zip. Zero. I would rather back getting families into their own homes through this budget package than I would the sort of bereft, visionless, rudderless crew that is over there on the Opposition benches.

Let us look at education. There will be $297 million to lift quality education, with relevance to tertiary education as well. We are increasing the investment in early childhood education by $152 million over 4 years, and we are continuing to implement our commitment that teachers will get better pay and that the total investment in our schools operationally is increased. That is what we are doing. We have laid out our platform. Those are just some of the things in the Budget. We have moved the personal tax thresholds. I think that that is appropriate. That is our policy—our idea. That is what we are implementing. We are putting $45 million into industry and trade training. Who abolished the Apprenticeship Act?

💬 Hon Ruth Dyson: National.

When did National do that? It was in 1995 or 1998, and I think the Minister responsible was Lockwood Smith.

💬 Hon Paul Swain: Bill Birch.

It was Bill Birch. Why did National abolish apprenticeships? That sold out every young person in this country who wanted to get a start in a trade. What did National do? It put pressure on the commerce sector and on small and medium sized enterprises. Who needs skilled staff? Why do we have a skills shortage now? That can be laid at National’s door. That is National’s legacy; it abolished apprenticeships. What did we do? We introduced the Modern Apprenticeships scheme.

💬 Darren Hughes: 9,000.

We have 9,000 young apprentices on the go now, as my colleague reminds me. Young people are now coming out of their time and going into jobs as plumbers, sparkies, or carpenters. We did not sell them out. Every member of the National Party sold out a young person who wanted to start in a trade. I recall in 1999, when I stood as a candidate and was knocking on doors, that a constituent said to me: “My wife and I have put aside $20,000 that we have saved, and we will go down to the local mechanic and plead with him that we will pay it to him if he will put our son through an apprenticeship.” That was National’s legacy. That was the legacy of Lockwood Smith and Bill Birch. I say to the National Party and to Opposition members that they are rudderless, have no vision, and have no answer to any of New Zealand’s problems.

Don Brash gets up and says that Australia is better than New Zealand. He says that the United States and Britain are better than New Zealand. He says he backs every other country except this place. I say that that is a lack of loyalty to Kiwis. It is a lack of commitment to our young people, to every middle-class and working-class family, to every teacher and nurse, and to every entrepreneur who struggles every day to grow a business and employ people. That is called a sell-out.

I look forward to the election campaign with relish. Unlike some of the Opposition members, I go around the schools in my electorate every week. I talk to health professionals, teachers, and others. I will stand up to put our proposals to the voters, and will match them against those of the Opposition. I say to Mr Carter that this is our record over the last 6 years. That crew over there in National will have to stand up and say what its record and legacy are. The National members have a record of 9 long years of economic vandalism. These are our proposals in the Budget, and this is our vision—a sixth Budget, which builds on growth, which is patriotic, which builds our country, and which hits every area and every pressure point in order to look after our people. That is what I am proud of. That is what I will take to the country. I look forward with relish to putting the skewer into the Opposition.

Obviously, that speech was not written by the member’s good friend John Tamihere, because if it had been it would have some substance to it—although we would then not know whether to believe it.

Once upon a time, a guy called Nordmeyer brought down a thing called the “black Budget”.

This is a grey one.

No, no. This Budget has no colour. This is called a “blank Budget”, not a “black Budget”. This Budget has no firepower, at all—absolutely none. There we were, talking about the fact that there would be tax cuts and that all sorts of promises had been made, but what did we get? We got 70c in 3 years’ time—that is, half a tomato, a scrambled egg, and the rasher from a bit of bacon. That is what we will get in 3 years’ time out of these tax cuts. We will be really hungry by then. What a joke! In 3 years that is enough to adjust for inflation, if we are lucky.

We expected to hear a bit about waiting lists in the health sector. But, oh, no—you’ve got to be joking! There was nothing of that. We thought we might hear a bit about increasing standards in education, and what happened? Nothing. We drew a blank there, too. The other area I thought the Government would at least want to look at was the police, for goodness’ sake! One would have thought that the Government, given all the problems it has had in the last little while, would want to look at the police. Well, I must have missed it, because I was sure there would be something there. But, no, the Budget has nothing for the police. There we go—another blank.

I want to focus my time on the matter of defence. The way in which this Government has addressed defence is an absolute disgrace. It has a tree-hugging, pinko, lefty attitude—a philosophy of isolationism. In the whole of this whole Budget are two paragraphs about defence, and that is when defence is in crisis. Let us look at the second paragraph: “This long-term strategic funding initiative follows a systematic approach by this government to restore the capability of our Defence Force, which was left to run down during the 1990s, resulting in ageing equipment and infrastructure and personnel shortages.” Well, if there were personnel shortages at the end of the 1990s, what do we call them now? Two thousand fewer people are employed by defence now than in 1990. The House needs to understand that defence now has fewer personnel. In fact, only two areas in the bureaucracy of this country now employ fewer people than in the 1990s. One is the police and the other is defence. Everywhere else there are more people. Fewer people are employed in defence, but this Budget talks about a rundown “resulting in ageing equipment and infrastructure and personnel shortages”. The people they do employ are very good people, I have to say, and an absolute credit to our country. They are a real credit to our nation, but this Government does not give them support.

What about infrastructure? What has this Government done for infrastructure in defence? Absolutely nothing! The Government goes on to complain about ageing equipment, but what has changed since this Government came to power? The Hercules are 5 years older and the Orions are 5 years older. We do not have any F16s; they were cancelled. We do not have a third frigate, so we do not have a complete Navy. Oh, hang on—the Government bought some LAV111s for the Army—[Interruption] No, no. They are machines—absolutely—for the Army. There are 105 of them, but only 18 can be driven. The rest are parked-up, because the Army does not have enough crew. So that is the situation with new equipment. And the light operational vehicles, the replacement Land Rover—[Interruption] No, no. The Army bought them but then could not drive them, because their gearboxes broke down. This is a Government that has absolutely collapsed our Defence Force—completely. As a nation, it has left us defenceless.

But let us get away from equipment. Equipment is an important part of defence, but more important is the philosophy, the ideology, of a Government—or, in our case, of a respected Opposition. The stark difference between National and Labour is that National believes in collective security. This nation, up to the end of 1990, was always part of a collective security with other nations that were our friends and allies. But what has this Government done? It has taken us down the path of isolationism. It has taken away our ability to be part of a collective defence. It has taken away our ability to train properly with our Australian friends and allies. We cannot be part of that training, and we are not allowed information. We are not allowed on the decks of frigates, because Australia has equipment we are not allowed to know about, and it receives intelligence that we are not allowed to know about, either. So our guys, our naval representatives, go over there, get on a ship, and ask whether they can participate. They are told they can go aboard for training, but then they are asked whether they would mind going out of the room they are in, because they cannot be privy to certain information. Why is that? It is because of the standing of our nation, and it is because of what this Labour Government has done to our Defence Force.

This Government has taken us down a path of isolationism, and it has not restructured our defence capability, at all. National was going to have a complete defence capability; this Government has absolutely destroyed it. We do not have proper defence with regard to our Air Force, we do not have a proper defence structure in our Navy, and our Army does not have enough resources—it certainly does not have enough personnel. As well, the Government has done nothing at all to address the changed environment since September 11. We are left defenceless.

This Government goes on about the fact that it cannot recruit and retain defence staff. Is it any wonder? People join the Defence Force to represent their country, not just in peacekeeping, although that is an important part, but also, when necessary, in defending our country—to be part of defending our shores. New Zealanders have always done that absolutely well, and with honour and valour. The problem is that this Government has an attitude to defence that is isolationist. As a consequence, people are not attracted to the defence forces. Basically, the Government has turned our Defence Force into a home guard. It is an absolute disgrace.

A National Government will, after the next election, return us to a collective security. We will make sure that we have a defence structure that allows us to be part of a collective security that puts back honour and integrity of our nation. We will be a respected part of a collective security and not be seen as bludgers, like these people are. If we talk to Australian politicians, they will say that they see New Zealand as being a bludger. I feel ashamed whenever I talk to our Australian counterparts. I feel absolutely ashamed, because this Labour Government’s ideology has, unfortunately, turned a once-proud nation, with people who made a commitment—and our current troops do; they are great people—into an isolationist country that does not play its role. The Australians know it, and our friends and allies know it. As a consequence, we are seen to be bludgers. That will stop after the next election. We will make sure that we do the things that are expected of us as a nation. We will not pretend, like that lot, to put in $4.6 billion, which is all smoke and mirrors. It is an absolute joke. It is a tragedy.

Quite honestly, the Government has not put any extra funding into defence at all. Just like the Budget, it is a blank, and having blanks in defence just does not work. It does nothing. That is what this Government has done to us. It has left our defence forces with blanks.

It is very sad to see that once highly regarded former Government whip, in the same way that it is sad to see the state of the National Party that he belongs to—a party that was also once highly regarded. John Carter asked what the education improvements and health improvements in the Budget were. He must have become so used to turning off when his leader speaks that he tuned out when the Budget was read. I am not surprised that John Carter tunes out when Don Brash speaks. Dr Brash’s most recent embarrassment was when we had the foot-and-mouth scare—which was, fortunately, a hoax—on Waiheke Island. Jim Sutton and Helen Clark did exactly the right thing. They made the information public, so that the people on Waiheke Island and the rest of the farming community across the whole country were absolutely aware of the threat that had been posed to us, and of what the Government was doing about it. Don Brash said that they should have kept quiet about it—that they should have said nothing. What an outrage to assume that a Government should keep quiet about such a major threat to our economy as a possible foot-and-mouth scandal!

John Carter did another thing that his current leader Don Brash frequently does, which is to bad-mouth our country. I think that is an outrage. We have the best country in the world. We are all doing everything we can—on the Government side of the House, at least—to provide better opportunities and a fairer go for everyday, hard-working New Zealanders, so that they can build a stronger stake in our great country. And National’s former whip is attacking our country in Parliament. Frankly, it beggars belief that that sort of behaviour is tolerated in the current major party of opposition.

Let me give the House a couple of points about education that John Carter clearly missed in the Budget. The operations grant for schools has increased by 15 percent over the last 5 years. That is an increase per pupil, in every school in New Zealand, of $348. John Carter would have that reversed, with the provision of bulk funding and incentives for individual teachers. Well, I look forward to National candidates going up and down the country and telling teachers that National will no longer respect and value the integrity of their profession, and will start to give them demerit points. That will go down a treat!

John Carter also failed to comment on the significant increases in health spending. As the Minister for Senior Citizens, I want to mention two of them that I have been very proud of and which have made older New Zealanders very, very happy. We have put in enough money to double the number of hip replacements that are publicly funded over the 4 years from the date of that announcement last year. We have doubled the number of hip replacements, and we all know that the majority of hip replacements are performed on older New Zealanders. It is a very good thing that fewer New Zealanders will now have to wait for that operation. In this Budget we announced over $17 million more in funding so that we can fund cataract operations for 7,500 New Zealanders, and we know, again, that it is primarily older New Zealanders who will benefit from that increase.

Those are just a couple of the reasons that this Budget, the sixth Budget presented to the House by the Hon Dr Cullen, makes me feel very proud to be Labour and makes me feel very enthusiastic about this year’s election campaign. We have had a very strong and credible fiscal record for the last 5½ years. We can take that record to the country and show that we are committed to sound economic management, but we know that the purpose of having sound economic management is so that more and more New Zealanders can be included and offered an opportunity to participate in our country. The Budget is fair, in the same way that the Government is fair. We are helping more New Zealanders to build a stake in their country.

One of my other portfolios is that of disability issues, and for disabled New Zealanders this Budget provides more very good news about the commitment that this Government has to removing the barriers to their participation, particularly in employment and education. I want to compare briefly one Budget initiative with an initiative of the previous National Government. I remember when Nick Smith had responsibility for the special-education portfolio.

💬 Government Member: Who?

It is a bit like having to ask: “Who?”. Thank goodness that memory is fading. But Nick Smith gave a block of money for very high-needs students who were leaving school and going into vocational services. Just over 200 students were in that category. Until then, they had had no funding. It was good news that he gave them funding, but do members know what was attached to that funding? A time limit! Were those students suddenly going to stop having very high needs? Would they suddenly be able to carry on with their vocational services programme, with no support? No, they would not. It was time-limited, politically motivated funding to ease the concerns of their families, without letting them know that exactly the same problem would come up in another 3 years. We put a stop to that time-limited funding, and in this year’s Budget we have increased the funding by nearly $10 million, so that another 350 school leavers with very high needs can get the support they need to go into the vocational services programme. That gives them a better chance to get into employment after they have left school, and it will be very warmly welcomed by those young people and their families.

We have put a lot of focus on providing better support for people who are on the sickness benefit or invalids benefit. The previous National Government ignored those people. They got a benefit—they got their cheque in the mail—and that was it. Well, actually, the people who are on benefits want to be given support, an opportunity to retrain, and an opportunity to meet employers. They want to know about jobs. They want some practical assistance to enable them to move off a benefit and into a job. That is what this Government is providing them with—particularly the people who have been classified as invalids and told that they will never work, and that they should just get their benefit and stay home. Some people will never be able to work, and we give an absolute commitment to ensure that those people have the social security support they need. But anyone who is able to work, and who wants to work, must be given the support to do so. In this Budget we have invested over $27 million over the next 4 years, specifically to help people who are on a sickness benefit or an invalids benefit to get into work.

There are initiatives such as ensuring those beneficiaries can meet with an employer and look at the workplace, to assess whether they need specialist equipment or other workplace modifications. An additional 1,000 people will be able to move into employment, either part-time or full-time, depending on their disability, because of that extra funding. There is an ongoing funding commitment through the out-years for 1,500 additional people to be able to get that support. The biggest opportunity that we, as a Government, can give New Zealanders is to remove the barriers that are in their way and stand between them and a job. If they are able to get a job, they will have the self-esteem, the respect, and the earning power that they cannot get when receiving a benefit. They can then move into a much more confident and contributing position in our community. That is what I hear at every meeting of disabled people around the country. They say we should continue to help them to get work.

Another great lot of benefits have been provided in this Budget for the senior citizens of New Zealand. I go to Grey Power meetings most weeks. I have the pleasure of being the Minister for Senior Citizens, and I enjoy travelling all around the country. In fact, when I became Minister for Senior Citizens I made the commitment to Grey Power that if any branch invited me to a meeting, I would go. Frankly, I made that commitment before I found out that there were 78 Grey Power branches around the country. But I have honoured that commitment in the same way that our Government has honoured its commitment to the senior citizens of New Zealand, made in its manifestos in 1999 and 2002. This year we have delivered an increase in the rates rebate threshold. The increase in the amount that people can receive will be a huge support, as will be the additional funding for the provision of the programme targeting elder abuse and elder neglect. My colleague Darren Hughes from Horowhenua has been a very strong supporter of that programme, and he will make sure that it is available to older people in the Horowhenua electorate.

The Budget is packed full of good news. But particularly for the disabled New Zealanders whom I represent and for senior citizens, it is a Budget that I know they will be celebrating. They know that we have presented this Budget in a considered way, by working with them to develop the priorities in a way that ensures we maintain our reputation of strong fiscal management. This Budget is one that puts us in a very strong position as a major country in the Pacific, leading into the future.

Listen to those members gloat! Boy, do they think they have done something worthwhile for this country! They are gloating all over the place. Let me tell those members over there that this is a “Shakespearean” Budget—Much Ado About Nothing.

💬 Clayton Cosgrove: Very good!

They like it. When Dr Cullen began to talk about the savings scheme I thought that finally, after something like 10 or 11 years of New Zealand First harping on about savings, the Government had listened and had developed an idea. Well, the Government has listened, and it has developed an idea, but it has got it wrong.

💬 Clayton Cosgrove: The speech was good until now.

Would the member give his savings to the Inland Revenue Department?

💬 Mark Peck: Yes.

Oh, that member would, but he is leaving.

Then I thought: “How do poor people afford to save if they do not get any consideration?”. Then, in the next move, Dr Cullen almost blunted my attack. He said that he was going to raise the tax thresholds. I thought that he had solved the problem—there is a savings scheme, and he is raising the tax thresholds. I thought: “If he does that annually, those people will get a few bob in their pocket, and most of them will save it.” But then what did we find out? The thresholds are rising by peanuts, and the change will not come into effect until 2008. The lowest-paid, the people in the $9,500 tax bracket, will move up to the appropriate level—$10,000 or something a year—and they will get back, from tax, the grand income of 67c a week, and it is to be indexed to inflation every 3 years.

Petrol, cigarette, and alcohol prices are indexed to inflation every year—it takes immediate effect. Such provisions are usually brought in under urgency. This measure will take effect in 2008 and will be indexed every 3 years. How fair is that? The higher-income guys, like those sitting opposite, will get something like $10 or $11 a week—15 times as much as poorer people. How can those members say in clear conscience that they represent the working people of this country? The fact is that they do not. The tax threshold should be raised now. There is not one political party that would vote against that. I think that even United Future would support the tax threshold being adjusted now. Those members are silent. I think it is because they are somewhat embarrassed at having rolled over and agreed to take that measure 3 years hence. If the Government were sincere about raising the threshold, it should be—[Interruption] Oh, the member is awake. Would the member vote for raising the tax threshold now?

💬 Murray Smith: Yes.

He would? Why did the member’s party not give a bit of stick to the Government and get it done now, immediately after the Budget?

💬 Murray Smith: We wanted it up 13 percent.

And what happened? That member’s party rolled over and got less than that in 3 years’ time. I have to say to those members that I do not know how they can sit there and—

💬 Murray Smith: What did New Zealand First get out of the Budget?

New Zealand First will get quite a lot out of the next Budget, because we will improve on this no end.

💬 Murray Smith: What about this one?

I say to the honourable member that we are not prepared to sacrifice our principles to get a peanut. The member’s party has sacrificed its principles to get a peanut.

Let us look at roading. When Dr Cullen started talking about roading, I thought: “Oh, this is a move in the right direction.”—but what did he say? I have his exact words here. He said: “All the increase in excise duty that came into force on 1 April is going into the Land Transport Fund.” That is what the Customs and Excise (Motor Spirits) Amendment Bill was about. When did that bill go through—March or February? What big news is that?

💬 Hon Paul Swain: It’s reinforcement!

The Government is just saying that it will do what it said it would do—as if it does not always say what it will do. Then Dr Cullen said he will add another $100 million a year. Are Government members not aware that if we improved roading in this country our economic well-being would go up soundly almost overnight?

💬 Hon Paul Swain: Tick the box, Pete.

I will tick the box, but it will not be that member’s box. I think the Government could have done better in addressing the roading problems in this country. We have gridlock all over the place, and the Government does nothing. This is, again, peanuts.

Then I looked at spending on health care. Many of the members opposite have made a lot of noise about the amount of money going into health care, but if we look at spending as a percentage of GDP, we see that it has been reasonably constant over a number of years. This Budget has changed nothing. As a percentage of GDP, compared with other countries of equivalent size, the amount is not high enough. So Government members who rant about putting extra money into health care are really not giving New Zealanders the true picture. In actual fact, the Government is barely keeping pace with the increase in GDP. So what do we give the Government on that score? Well, it was a poor try. I think there was some comment in the Budget speech about looking after the employment of New Zealanders.

💬 Clayton Cosgrove: That’s right.

Yes, just as the Government is doing in the fishing industry, and just as it is doing with fruit pickers! It is bringing in anybody who will work in the fishing industry or in fruit picking for less money than the average Kiwi. [Interruption] Let me tell that member—because I think he has a bit of a conscience—about another area of concern, and that is the way we treat Filipino nurses who come to this country. They are lower-paid than their counterparts. This is another issue. I can see that the Minister is taking note now. He is thinking: “Oh, my goodness! New Zealand First has found another case.”

💬 Hon Paul Swain: When does it end?

I can tell the Minister it will end after the next election when we have a greater say in the future of this country. The Government is undermining the working conditions of the average New Zealander. It is not undermining my working conditions, because mine are very similar to those of the honourable members opposite, so they—

💬 Clayton Cosgrove: You are joking.

I am not joking. I am just telling members to take note of what is happening to working people in this country. If we allow wholesale immigration into this country, and if we allow fishing people to come here, jump ship, and take jobs here, there, and everywhere, and undermine the conditions of the working person, then we are doing this country a huge disservice.

Finally, there is nothing in this Budget about electricity and the concerns people have about electricity. We are coming into winter, and it will be darn cold in many areas of this country. Poor people, people on fixed incomes, and pensioners—the member who spoke before me raved on about their concerns—will have a really tough time. The further south we go in this country, to places like Dunedin, the more we find that elderly people are staying in bed all day, simply because they cannot afford the power for heating. What has the Government done? It had a good opportunity to address investment in the electricity industry. New Zealand First wants three things, and I hope members opposite take note of them. We want security of supply, we want more investment in the industry, and we want reasonable prices, particularly for people on fixed incomes. New Zealand First is determined to deliver on that, if nothing else. Come the next election, we will see that people’s concern about electricity is a huge election issue.

Madam Speaker—[Interruption] I notice that Simon Power is interjecting before I even start. Let me take the interjection away from him—yes, this member is gone. This is my last Budget speech. I will not be making another one—well, not in the next little while, anyway.

I recall back in 1999, when we were heading into a general election and it was Budget time. If I am not mistaken, it was the Rt Hon William Francis Birch presenting his last Budget, and the Opposition benches just could not be kept quiet. There were so many members making comments about shock, horror, what a terrible Budget it was, and what a lack of opportunity it was. But now the Opposition members in the House are as quiet as church mice.

The test of a good Budget is how it is received on the day. I am sure that Dr Cullen will be delighted if the headlines in tomorrow morning’s papers are “Boring Budget”. I am sure that he will be delighted about that, because it is an indication that, once again, the Minister of Finance and the Minister of Revenue has got it right. He has put together a Budget that will build on the incremental changes that we have had in this nation over the last 6 years. As anybody with a skerrick of economic understanding knows, whatever is actually going on in the rebuilding of the economy has its own multiplier. We are starting to see that in terms of the effect on employment and household incomes, and we are starting to see the effects of the Working for Families package in the area of the economy where people have been most disadvantaged—the low paid and those on low incomes.

I was at a meeting this afternoon, prior to the Budget, and a young woman came up to me and said that she was really quite pleased with the Working for Families package and with how it had affected her life. She has a young child. She wants to spend more time with her young child, but she had to work 30 hours per week to get enough income to be able to look after her child and meet her responsibilities. It meant that she was unable to spend the amount of time that she wanted to with her young child. But the Working for Families package means that she can have an additional 6 hours with her child. She works 24 hours per week now. She has reduced her hours. She is being paid more than she was being paid for 30 hours, and it has not cost her employer a cent—not one cent. Now, there is a return for that particular parent in that she is investing in her own child’s future by being there for her child. There is a return to the nation in that, by doing this, many of the social problems that we lament in this House from day to day will be assuaged by virtue of the fact that somebody cared enough to look after a little one.

This is a good Budget. It is an extraordinarily good Budget; it is a Labour Budget. It maintains a strong and credible fiscal stance. The Minister has been very clear indeed about New Zealand’s financial and fiscal position. He has made it extraordinarily clear that there is no wriggle room left after this Budget, and that what has been delivered through this Budget and through the surpluses is that those particular cash surpluses become cash deficits next year. So any Government that now wants to talk about maintaining the services that this Government has put into effect cannot do so by bringing in tax cuts. It is up to the National Party to now ask: “What is the National Party going to do in order to give the tax cuts to the rich?”, because those members are not talking about doing anything for those on low to middle incomes, or about fairness across the range of incomes. Those members are talking about tax relief at the top end. That is what they are talking about, and they really do not understand what they are talking about. They like to fudge Australia into the debate, and they conveniently forget to tell people that the top rate of marginal tax in Australia is 47c. They conveniently forget to tell people that Australian employers have a payroll tax. Do we have a payroll tax in New Zealand?

💬 Government Members: No.

No, I did not think that we did. Those members conveniently forget to say those things, because it does not suit their argument one bit. I want to know whether the Opposition spokesperson on education—and I see that he is here—will cut the 2,700 extra teachers in schools. Will he do that?

💬 Clayton Cosgrove: Silence.

There is silence. He knows that he cannot answer, because nobody on his side of the House—

💬 Hon Bill English: No, we’re going to win your seat.

I do not think so. What the member does not know is that some of his colleagues have been talking to me about the National Party polling in Invercargill. They should not have told me, but I do know that Eric Roy is substantially down the list. I also know how many people turned up when Don Brash went to Invercargill to speak at a secondary school there. There were four. Four people turned up—three were from Southland Girls High School and one from Verdon College. Now, no political leader worth his or her salt would have been dumb enough to do that—not one would have been dumb enough to do that. I tell that member that if he had announced even a couple of days before that he was going, he would have got five people there. But I am afraid that his own leader could attract only four people.

💬 Clayton Cosgrove: Which phone box?

Well, 400 chairs were set out in the auditorium, so something is not so good in the State of Denmark in the Invercargill branch of the National Party if it can turn out only four people, from a captive audience no less. The students were at the school, and they did not bother going. Mind you, who would bother going to hear Don Brash talk about his corned beef sandwiches? I mean, really, it is no wonder. I also want to know whether National members would cut the extra 3,300 nurses that we have employed.

💬 Clayton Cosgrove: Silence.

There is silence again. Mind you, there is no health spokesperson on that side of the Chamber. The Opposition spokesperson on health has been sidelined. She now sits behind Bill English, waiting for her turn and for Don Brash to lose the election, so that she can get back on to the front bench as part of the dream team of Simon Power and—who is that finance spokesperson?

💬 Clayton Cosgrove: Rich or Key?

John Key. Katherine Rich will be there, John Key will be there, and Simon Power. There is no room for Bill English. Will they cut the 950 extra medical staff?

💬 Clayton Cosgrove: Silence again.

There is silence again. What about the 1,250 extra non-clinical support staff? Is National going to cut them? There is silence again.

This is the point. In 1999, after the National Party Budget, Labour members were on that side of the House and we were right into those National members. We were into them in hunks. There is not a peep out of them now. Are they going to cut the 820 extra prison officers? Are they going to cut the 1,080 extra police we have employed? And there is more money in the Budget for police today. There is silence again. It is no wonder they are silent—they do not have an agenda. They cannot even sit comfortably with themselves, much less put together a policy that this nation would take seriously.

It all comes home. Craig McNair’s leader, Winston Peters, is going to be the Prime Minister in any alternative Government that would come from that side of the House. Don Brash is not up to it. In fact, he actually wants to go to places that he thinks are better. He probably does want to go to the United States. He would love to go, and we will help him. We will make sure that he loses the election, and then his better half can take him there and the National Party can get on and restore its own problems.

I want to say this much in concluding. I have been proud to be part—even so much as it has been from a humble back-bencher’s perspective—of a Government that has seen, and can actually bring about, the sort of social and economic change that this nation has needed, and do it incrementally. Because, if it is going to last, it has to be sustainable in the out-years, and that is the issue. Every programme costs money. It is easy enough to fund programmes in the initial stage, but maintaining that funding over time is the challenge. As we see the rebuilding of this nation, and the fact that people can now take part in their own communities again, in the way that I talked about in relation to that young woman, it is a credit to Dr Cullen, and it is a credit to the Prime Minister and Cabinet. I think it is a great Budget and I support it.

Madam Speaker—[Interruption] For the member’s benefit, I think it is a poor Budget, and I do not support it. I think that is the view that most New Zealanders will take. Labour is making the mistake of thinking that New Zealanders see a lolly-scramble as a replacement for an economic strategy. Of course, they do not.

The people of New Zealand who are taking much notice of what was said today are the same people who are concerned that when their fixed-term mortgage comes up, and the rate changes, they will be paying a 2 percent higher interest rate. They are the same people who are concerned about the values expressed by this Government that undermine the things they hold dear. When they heard Dr Cullen saying: “I will index the thresholds in 3 years’ time.”, they started laughing because they thought: “How stupid does he think we are?”. Somehow this man, who has misjudged the fiscal situation quite badly, is telling mainstream, middle New Zealand that the one dividend they will get from this strong fiscal situation over 5 or 6 years is an increase in the tax thresholds in 3 years’ time. I have had the calls already to my office saying: “Why does he think I’ll be grateful for 27c a week in 3 years’ time?”. My response is: “Now you’ve found out how stupid he thinks you are—that somehow you’re going to be grateful for that.” That will be the symbol of this Budget. “Dr Cullen has promised to give you a $500 shift in a tax threshold, which you won’t actually collect until 2009.” That will sum up this Budget.

Dr Cullen also engaged in verbal gymnastics over the deficit. What is interesting is that that somehow encapsulates the slipperiness of the Labour Government. Having come into office as the Minister of Finance, Dr Cullen said that he would change the definition of the deficit. Of course, Labour’s back bench did not understand what he was doing, but he did change it. He changed it to what is called the “operating balance excluding revaluations and account changes”. The operating balance excluding revaluations and accounting changes was useful; it was a more technically correct accounting measure. Economically speaking, it was not much different from the measure that was there before, but Dr Cullen ran with it in five of his six Budgets.

But when he figured out that it was killing him politically—that it was showing to New Zealand that Labour was opposed to tax cuts in any circumstances—he suddenly decided to change the measure of the deficit. New Zealanders are still laughing about that. No one believes it, because it is economically wrong. He is, in fact, trying to wind New Zealand’s budgeting system back to the mid-1980s when his own party—quite rightly—changed it, because it was wrong. If cash accounting was the way to run a country, that is what we would be doing, but we have had bipartisan agreement for 15 years that it is the wrong way. Suddenly, Dr Cullen decides to change the measure of the deficit because it does not suit him! That is utter nonsense. It is intellectually dishonest, it is political chicanery, and middle New Zealand will take no notice of it whatsoever. They know that Dr Cullen’s definition is as sensible as saying that Mr and Mrs Smith are running a cash deficit, because they do not have the money in their pocket to buy a new house. That is what he is saying. That is the kind of deficit those MPs are signed up to; it is economic nonsense. It makes no sense at all—particularly when he keeps saying that this is all about the long-term framework.

The reason one does not run cash deficits is that it takes no account of future assets and liabilities, and ability to fund the assets and meet the liabilities. So it is a nonsense. It was a disgrace that the Minister of Finance should expect us to take it seriously. He expected us to take seriously his new definition of the Budget balance, but it just will not work. The public will not say: “Oh! Dr Cullen has suddenly run out of money!” when he has been showering them with dollars from the sky through the rest of the Budget. That simply will not work and it is a result of Dr Cullen’s misjudgment.

What he should have done was come to the House and say that he got it wrong, that he was overtaxing us, that he could give us quite a lot of it back, and that here were the significant personal income tax cuts that he believed should be made. Instead, he succumbed to media and public pressure that his surpluses were too big, and tried to make it look like he was being clever, when, in fact, he was simply wrong.

I now pass on to education. Well, what a joke in education! The last Minister of Education standing, Trevor Mallard, is now the biggest political liability this Government has—an even bigger liability than Michael Cullen will turn out to be. The great thing is that Trevor Mallard is the best operator in Labour’s caucus. Is that not wonderful? He is the man who managed to upset the whole of middle New Zealand by putting $20 million into Te Wānanga o Aotearoa, then upset all the Māori voters by attacking the wānanga. He managed to upset everybody—that is political finesse, if ever one saw it. But what has he done today? I shall tell members what he has done today.

There is an increase of a total of $19.8 million in the operations grant for every school in New Zealand this year—not for 4 years, but per year. Or, if we calculate it a bit differently, it is a bit over $20 million. That is the increase for 2,700 schools. Let us call it $20 million. Can members guess what the increase is for the Ministry of Education?

💬 Lindsay Tisch: No, what is it?

It is $24 million. So the Ministry of Education is getting a bigger increase than every school in New Zealand.

If anything sums up the priorities of this Government, this is it: more for bureaucrats, less for kids. [Interruption] I will repeat it: more for bureaucrats, less for kids. That is Labour. There is a big, fat Ministry of Education, and schools are starving for money. Every Labour member knows that that is the case in his or her electorate. I invite those members to go back to their electorates and say that they have done exactly what parents want. They can say that they have put more into the Ministry of Education than into schools, because they think kids do better by having more bureaucrats, and that spending $2.6 million more on policy advice will teach children to read. That is better! Schools are laying off support staff to feed some fat bureaucrat at the Ministry of Education. It is a disgrace. It shows that Labour does not value our children. It has wrecked our qualifications system because it does not give a stuff about teenagers, their aspirations, and their need for a decent qualification. Now the Government is starving schools of cash so that it can feed its fat bureaucrat mates in Wellington Central, so that they will vote for Labour.

I look forward to campaigning on education. I am happy to go to any of those Government members’ electorates to have a public debate about why we should put money into schools instead of doing what Labour has done, which is to put it into the fat Ministry of Education.

In response to this excellent, balanced, foresighted Budget, the public wants to know one thing: where is National’s policy? Where is John Key? We endured 20 minutes of Don Brash being uncomfortable. We heard from John Carter—that speech was scintillating! Now we have had the soufflé that cannot rise twice.

💬 Darren Hughes: He couldn’t rise once, actually.

He did not do too well the first time—that is why the National caucus is the size that it is.

Where is John Key? I know where he is. He is out the back, sweating. He is sweating because he knows that he does not have room for his favourite tax cut without cutting the 1,000 new police, the 400 new teachers, the $450 million of defence spending, and the $1,000 for every Kiwi who wants to become a KiwiSaver. He is saying: “Oh my God! I promised a tax cut in addition to the $1.4 billion worth of tax cuts in this Budget for business.” It has suddenly dawned on him, because he is probably honest enough to know, that he does not have any room. This Budget is already spending all the cash there is for Kiwi families and Kiwi mums and dads.

This is a Labour Budget, this is a good Budget, this is a Cullen Budget—and this is a balanced, prudent, far-sighted, and superb Labour Government.

The National Opposition has said that there is no growth. That is a bit rich coming from a party that in the first 5 years of the 1990s, presided over growth of below 2 percent, when ours has averaged about 4 percent. Those members have said that there is no tax relief, but this is the single biggest business tax cut in the 6 years that Labour has been in Government.

Opposition members say that we are not doing enough for industry, but this Budget contains a package that includes a digital strategy that will lift the products of our information and communications technology sector to world standards.

Debate interrupted.

The House adjourned at 6 p.m