Appropriation (2010/11 Estimates) Bill, Appropriation (2009/10 Supplementary Estimates) Bill

First Reading

on behalf of the Minister of Finance: I move, That the Appropriation (2009/10 Supplementary Estimates) Bill be now read a first time.

After listening to the wonderful speech introducing Budget 2010 made by Mr English, followed by the supporting speech made by Mr Key, which explained the many exciting changes outlined in Budget 2010, I find myself posing the following question: how good is it for New Zealand to have a National-led Government? The answer is that it is fantastic. How good is it for us to have such a superb Prime Minister as Mr Key, and such an intelligent, far-sighted Minister of Finance as Mr English? The answer is that this country of ours has been crying out for their leadership for 9 long years.

I am so pleased to be standing before the House today and speaking about the Budget, because I believe this Budget is key—and I mean “Key”—to improving the lives of all New Zealanders. Let us consider in plain English what the changes will deliver to those who are working hard in this country. First and foremost, the Budget tax package helps tilt the economy in favour of productive investment, savings, and exports, and away from consumption, borrowing, and unsustainable Government spending—and we all know what that is about. That is essential to create jobs. The forecast is that 170,000 new jobs will be created over 4 years. [Interruption] I will say it again, I say to Mr Bennett: 170,000 new jobs over 4 years.

💬 Hone Harawira: One more time, please?

I will say it one more time: 170,000 new jobs over 4 years. That means higher incomes and opportunities for Kiwi families to get ahead in New Zealand.

The tax changes are sweeping. Seventy-three percent of income earners will now pay a top tax rate of 17.5 percent. Let me repeat that: 73 percent of income earners will now pay a top tax rate of 17.5 percent. That statistic makes a mockery of the outlandish and unreasonable statements of the Opposition that this Budget is designed to help the rich. It clearly is not. In fact, we can say that this Budget was done for the majority of people in the country.

Who will pay the cost of Budget 2010? Who will pay for these changes? Most of the extra cost will be borne by property owners, large foreign companies with interests in New Zealand, and people who previously used trusts to reduce their taxable income and gain access to Working for Families. Indeed, we have aligned the top tax rate with the trust tax rate to ensure that the highest-paid New Zealanders cannot structure their affairs to avoid paying the higher rates. This Budget is about helping hard-working New Zealanders and their families to get ahead. It is a once-in-a-generation opportunity to set the economy on the right track, to reward hard-working New Zealanders, to lift economic growth, and to aid us in getting back into surpluses earlier than was expected.

Is it not great for New Zealanders that Labour is not in charge? I do not say that nastily towards the individual members of the Opposition, but if they were in charge we would be languishing in deficits for decades, as they embarked on their fundamentally flawed philosophies of borrow and hope. It would have been a tragedy if they had continued in Government during the period of recession.

💬 Chester Borrows: We’d pay and our children would pay.

Well, there we are; quite right.

We want New Zealanders to stay in New Zealand. We want New Zealanders to get ahead through living here, working hard, and getting the rewards they deserve. We want Kiwi families to have financial security and higher take-home incomes. This Budget provides that opportunity. The tax changes will improve the lot of every single person. Coupled with a GST increase, we are encouraging savings and investment over consumption. For those New Zealanders who would be most affected by the GST changes, we are offering generous compensation by way of increased superannuation for a start—

💬 David Bennett: And tax cuts.

CHRIS AUCHINVOLE:—increased Working for Families payments, increased student allowances, increased benefits, and of course, as my colleague Mr Bennett says, most of all, increased tax cuts. The National-led Government is about improving the lot of everyone, and in particular that of the average worker. After Budget 2010 the average worker will be $15 a week better off, and the average household will be $25 a week better off. That is significant.

However, Budget 2010 is about much more than tax. It is about investing in the future. We are investing $321 million over 4 years into new science, research, and technology initiatives. We are investing an extra $2.1 billion in health priorities, including an extra $1.4 billion going to district health boards. Did we hear today from the Minister of Health? What did he say? Did he tell us that now a greater level of GDP is being spent in the country on health than ever before? I think that Minister deserves some applause, because, goodness me, if any portfolio has really been dynamically seized and dealt to, it is certainly health.

I was privileged to travel with the Minister of Health down the West Coast 2 weeks ago. We visited health facilities in Westport and Greymouth, and met the primary health organisation and other organisations. It was great to be with such a stimulating Minister, who takes his responsibilities so seriously.

💬 Dr Jackie Blue: And he wears wonderful ties and shirts.

Well, yes, he does wear wonderful ties and shirts. Yes, he really does.

We are investing an extra $1.4 billion into district health boards. An extra $1.4 billion will be injected into better schooling and early childhood education. Savings across the tertiary sector will allow for the purchase of 1,735 additional full-time places at universities, and 3,173 extra full-time places at polytechs and institutes of technology, in response to demand. The Government is pouring money into expanding the Job Ops scheme and the Housing Innovation Fund, and into prisons, State highways, and more.

This Government is a caring, responsible, sensible, visionary Government. New Zealanders voted at the last election because they believed we had ideas that would advance the nation. Budget 2010 was produced on one of those days that the public will remember, because they could see many of our ideas and values coming together. We can see that what we are delivering is a better New Zealand for everyone.

I must say that one of the most heartening aspects of the Budget is that it goes a long way towards reasserting the opportunity for New Zealanders to make their own way and determine their own futures, independent of where they might have been born, what their training might have been earlier in life, and what their life experience might have been. The Budget gives opportunities. It is an egalitarian Budget, and we are an egalitarian country. We lost that for 9 long years, but now, with National, we are getting it back. That means a better New Zealand for the wonderful people of the West Coast - Tasman electorate—a resilient group of people, who will seize those opportunities with two hands. I am very, very proud to be serving them as their MP. That is why I am also proud to be a member of Parliament in the National-led Government. Thank you.

There is much to commend in this Budget. One only needs to look at the reductions in marginal tax rates, which will drive incentives for New Zealanders to work, save, and get ahead. However, I will talk about the figures buried deep in this Budget that no one wants to talk about. I will talk about the $907 million—almost $1 billion—appropriated in this Budget for the emissions trading scheme. That figure ignores the $378 million that this Government will take in from selling permits. In essence, $1.2 billion is being allocated to foresters in the current year. In less than a month, this Government will usher in the most comprehensive emissions trading scheme in the world. We will expose our farmers and our exporters to costs that none of our major trading partners incur. We will lead the world on climate change, we will lead the world with our emissions trading scheme, and we will do it despite the fact that John Key promised at the last election that he would not be a leader on climate change but a fast follower.

This Government, for all its good work, is prepared to put at risk people’s jobs and their livelihoods, and it is prepared to do that at a time when our recovery is still very fragile. From 1 July, in less than a month, all New Zealanders will pay more for their electricity, their heating, their petrol, and their food—everything that we consume. There will be massive windfall profits to electricity generators. Despite the fact that some 70 percent of the electricity that we consume is generated from renewable sources, over 80 percent of the time New Zealanders will pay a price for electricity based on the more expensive coal or gas option. We are doing that at a time when our gross emissions of carbon dioxide per capita are actually less than they were in 1990. As individual New Zealanders, our gross emissions are less per capita. That says nothing about the carbon sequestered by forests; of course, if we allow for that, the reduction in our emissions on a per capita basis is even greater.

This is the most comprehensive emissions trading scheme that a country can have. How do I know that? Well, Dr Nick Smith, the Minister for Climate Change Issues, said so to this very House. On 24 September, just last year, at the first reading of the bill modifying the previous Labour Government’s emissions trading scheme, he said: “The emissions trading scheme will be the first of any country outside Europe, and on 1 July 2010 will be the most comprehensive by including transport, industrial, and energy emissions.” So by his very acknowledgment, the Minister for Climate Change Issues is acknowledging that New Zealand’s emissions trading scheme is the most comprehensive—and so much has happened since National made those amendments 6 months ago. It might suit Dr Smith and his party colleagues to play down that fact, but that is the reality.

It was not enough to say that on 24 September; Dr Smith repeated those remarks on 24 November, 2 months later. Once again, he asserted that the emissions trading scheme that this Parliament passed into law was the most comprehensive in the world. We will impose costs on our farmers and our exporters, and they are the very backbone of our economy. Where is that money going? That is the question most New Zealanders want to know the answer to. As I travel up and down the country holding public meetings on this subject, I am asked time and time again where the money is going. Where is it going? The answer is that $1.1 billion worth of emissions credits is to be allocated in the current year. Of that $1.1 billion, $400 million is allocated for compensation to pre-1990 foresters. That is for losses that we cannot even calculate right now. We do not even know what losses, if any, those people have suffered, because we have no post-Kyoto agreement; we have no international agreement beyond 2012, and, with the failure of the Copenhagen talks, I suspect the chance of having one has dropped substantially in the last 6 months. Even if we were to have one, there is a real chance that there would be a change in the rules. So we are about to pay $400 million, and we are about to tax all New Zealanders, and charge all New Zealanders more for their electricity, their petrol, and their food, so we can pay $400 million in compensation to pre-1990 foresters—and we cannot even be sure they have suffered a loss.

Let us look at what has happened since this legislation was passed 6 months ago. Copenhagen, as I have said, failed to produce a post-Kyoto agreement. Climategate has challenged the very credibility of the scientists on the UN’s Intergovernmental Panel on Climate Change, and the very hypothesis of climate change. We have had record cold winters in Europe and the United States, which have resulted in a substantial reduction in public support for that type of scheme. France has abandoned its proposed carbon tax on transport, and, just last month, Australia announced it was withdrawing its emissions trading scheme until at least 2013.

So what will this National Government do? It will blunder on ahead, blinkers on, eyes focused, ignoring totally what has happened in the world, and ignoring totally that the Minister for Climate Change Issues got up in this Parliament, not once but twice in the last 6 months, and said that it is the most comprehensive emissions trading scheme in the world. The National Government is pushing on and ignoring the fact that it promised it would not be a leader.

New Zealanders will pay more for their electricity—Treasury forecasts 5 percent more—and we have already seen it with Mercury Energy’s price rise just last month. Mercury Energy talked about increasing prices to reflect costs in emissions for the industry as a whole. That is Morse code—a signal—for windfall profits. The Government will make very substantial windfall profits from this emissions trading scheme, and it does not even have the courtesy or the decency to acknowledge to the people of this country that it will make those windfall profits. The Minister for Climate Change Issues knows it, because 2 years ago he wrote the National Party minority report on Labour’s scheme, and he quoted the fact that the windfall profits to the Government, in terms of its ownership of Mighty River Power and Meridian Energy, would be over a billion dollars.

Dr Smith has said, up and down the country and on television, that 29 of the 38 Kyoto developed countries have an emissions trading scheme. That is very generous of him. By his own admission, those 29 countries are all in Europe and 80 percent of those European exports are to countries within Europe. Only 20 percent of European exports actually leave Europe—only 20 percent. How does that compare with ourselves? Eighty-five percent of our exports go to countries other than Europe. Our four major trading partners, Australia, China, the United States, and Japan, do not have emissions trading schemes, and only one other country that we trade with, in the top 10, has a scheme and that is part of the European emissions trading scheme.

💬 Charles Chauvel: But Europe together is our second-largest trading partner.

I say to Mr Chauvel that that is right. Mr Chauvel is reminding me that we export 15 percent of our product to Europe, and 85 percent to countries that do not have an emissions trading scheme, and that is four times as much as Europe. Europe exports 20 percent of its products to countries that do not put these costs on their own economy. What are we doing? We are exporting 80 percent. It is an own goal, and we are going to tax people up and down the country.

One of my more successful meetings was held in Gore. At 11 o’clock on Monday morning in Gore, 52 people attended to discuss the emissions trading scheme. The meeting was held half a mile from the Deputy Prime Minister’s electorate office. What did those people complain to me about? They complained about the fact that the area is situated around coalfields, and the cost of the coal that they use to heat their homes in winter is going up by 30 percent. That is not a mistake. It is 30 percent. The cost of electricity might be going up by 5 percent, but the cost of coal is rising by 30 percent. Where is the money going? It is going in subsidies to the Japanese owners of forests in Southland; that is where it is going. This Government is prepared to put taxes, penalties, and costs on to its exporters, and to make it difficult for our exporters to expand, at a time when we need them to be expanding, and it is putting jobs at risk. Why? It is so we can pay, in the current financial year, $1.2 billion of subsidies to foresters, both pre-1990 and post-1990.

This is a disgrace, an absolute disgrace, and members of this Government know it. I urge members of the public to contact Ministers, and to contact their members of Parliament, because it is not too late. It is not too late for this Government to acknowledge that it made a commitment to the people of New Zealand not to lead on climate change, not to lead with a world-class emissions trading scheme, and not to bring in the most comprehensive emissions trading scheme that Dr Smith so proudly talked about in this Parliament fewer than 6 months ago. Thank you.

Budgets over the years have come in all shapes and sizes, and have had names to match. We have had the “black” Budget, the “chewing gum Budget”, and the “block of cheese Budget”. But a commentator recently said of Budget 2010 that this is the “hip pocket Budget”, because that is exactly where people will feel it; in their back pockets, where they will have extra cash to assist them in their costs. They will have extra cash in their back pockets. The official name for this Budget is the Budget to recovery, which of course is an important step for us, having come out of very hard times last year. A lot of my constituents are saying that they are still experiencing the struggle days. That is why the recovery in the Budget to recovery is so vital.

I want to cover just a few things. I want to cover why exactly growth is important. But, more specifically, I want to talk about the impact of this Budget on my constituents in the Taupō electorate. I will bring it back to basics, and how this Budget will have a positive impact on families. I also want to share with members some feedback. I held seven Budget forums around my electorate last week, in a variety of places—Tokoroa, Arapuni, at the chamber of commerce in Cambridge, and in Taupō—in order to get a wide range of views on what people thought of Budget 2010. I thought I would share some of that feedback, as well.

But, first and foremost, this Budget is about growth. A constituent phoned my Cambridge office last Monday and asked why growth is important. I thought that was a question that many people would know the answer to, but obviously not everyone does. Of course, growth is important in our economy if we want, going forward, to be able to afford the things as a country that we believe we should have. It is about improving our quality of life. It is about improving things, whether they are health, education, growing our businesses, or growing our export market, so that we can afford the things that we want to do. The challenge is that we have some of the incentives in the wrong place at the moment, and this Budget is a major opportunity to address those imbalances. We are talking about the fact that we have borrowed too much, consumed too much, and have had unsustainable increases in Government spending.

Budget 2010 addresses some of those concerns, in terms of making sure that we grow through increased savings, exports, and investment that is productive. It means also that New Zealanders can get ahead, under their own steam, because they get to keep more of what they earn. That is such a simple message. When people go out and work hard, it is quite simple that they have the expectation that they would keep more of their earnings, and that is exactly what this Budget allows for.

Tax reform is of course one of our key goals and part of the National Government’s plan for improving and fixing the economy. We can look at a couple of key facts. I am particularly interested in the people who are on low and middle incomes. Families in the Taupō electorate have lower incomes than the New Zealand average, so that is particularly important to me as their member of Parliament. If we are talking about an income of $48,000 a year or less, 73 percent of income earners will now pay 17.5 percent or less in income tax. Now is that a fantastic result. If we look at that group of families, or individuals, we can see that 2 years ago they were paying 33c in the dollar. So for them that is a massive amount of money that they get to keep in their hip pocket, and that is how the name has come about—the “hip pocket Budget”. So if we look at families, we can see that they will be $25 a week better off, which is pretty significant. It is definitely a considerable amount to the families in my electorate, whether it is, for example, someone who is on a pension or someone who owns his or her own home. By the time people have taken into consideration the GST increase and also the increase in their superannuation, they are still better off by $11 a week, and that is exactly what this Budget is all about. It is about making sure that New Zealanders are better off and that they feel the improvement as a result of this Budget.

People have asked why we would drop the highest level of tax. Well it is pretty obvious really. We already have major problems with the brain drain from New Zealand, and too many of our skilled New Zealanders have left. I give members the example of my own brother, who is a doctor. If he did the same job in Australia, he would earn three times as much as he does here. So it is really important that we do things like reduce tax across the board to keep those people here. [Interruption] It is really unfortunate that members opposite do not want to keep New Zealand doctors here. Well, I do want to. I want New Zealand doctors who train hard here to stay. If that means tax cuts across the board, well, bring it on. That is what this Government is delivering. It is not about just tax cuts for some, it is tax cuts for all. But those members cannot handle that. They do not like the fact that we are willing to cut taxes across the board so there are benefits for all.

One of the other areas that I want to touch on that we have not had a lot of discussion on is the $30 million boost in tourism. If we look at the Taupō electorate, aside from agriculture and forestry, the tourism sector is the biggest employer. That is why it is really important to me, and I was thrilled to see an additional $30 million for that in Budget 2010. It is creating jobs, it is providing employment, it is providing opportunities, and it is providing some certainty.

A couple of significant events are coming up in my electorate, and one, of course, is the World Rowing Championships, which is being held at Lake Karapiro later this year. When we look back at the championship in 1978 there were 40,000 spectators; double that number is expected this time. So it is really important in terms of tourism spend that we maximise that opportunity, and that is what it is all about. It is about making sure that those who visit here, whether they are competitors, whether they are spectators, or whether they are part of the support or training crew, experience the very best that New Zealand can offer. In addition to that we have also seen money go into high performance sport, and some of that money has gone into the high performance rowing hub at Lake Karapiro. If we want to do well across the country, and if we want to do well in our sport, we have to invest more money into it. The remaining funding of $1.8 million has gone into this rowing facility. There are also further conversations about looking at canoeing as another high performance sport that could be leveraged off the existing facilities. That is what this Government is all about. It is about being clever with the money that we spend so we get the maximum bang for our buck, and using existing facilities and leveraging off that so that there are more people who benefit. It is important that we support our sport and that the competitors do well.

Another aspect of the tourism spend that I think is really important—and it is something that I had a look at last week—is progress on the Waikato River Trail, which was the first cycleway route that was announced by our Prime Minister, and that was under way already with a trust. It has got to the last 25 kilometres and the hard parts, which is why the funding into the cycleway is really, really important at the moment. Irrespective of the work that has been done before today and what is coming, that is 20 jobs just for those who are working on the tracks. So that is why investing in our future and putting money into recovery is so important for my electorate.

I want to finish by having a look at some of the comments that people made to me or discussed with me when I held the seven Budget forums across my electorate. As I said before, they were in very small places—from small villages up to the main centres. One comment in particular stood out for me. It was from a gentleman who came to one of the Cambridge meetings. I did a presentation on some of the main points of the Budget, and he was very clear in pointing out to me that he was not a National supporter and he was not a Labour supporter. Each election he makes his decision based on what he believes will be the best for New Zealand. So he has followed a lot of Budgets in his time, and he said that Budget 2010 was the best Budget he had ever seen because of what it will provide for New Zealand.

As a family person, I can say this is a Budget that will do well. People who have children the same age as I do know that it is money in their hip pocket, which is why the commentator gave it this name. New Zealanders will be better off. There are incentives for them to work hard and stay here, and they will reap the rewards as well as this country going forward, and that is what is critical. I am extraordinarily proud to be part of the National Government led by John Key, which has put together this comprehensive Budget. It focuses on growth. It focuses public spending on the important things and keeps the money at the front line. It reforms the tax system so that hard-working New Zealanders get to keep more of what they earn. I do not think that is anything too difficult to ask. That is why 2010’s Budget will be known as the “hip pocket Budget”, but it is also about building the recovery. Thank you.

I think one can tell when members opposite have drafted their own speeches rather than using the research unit notes—we could tell on that particular occasion. I congratulate the member Louise Upston on doing some original work. I agree with her on the question of the “hip pocket Budget”. But it is a question of whose hand is being put into whose pocket, and, in my opinion, this is a case of John Key and Bill English going around to average Kiwis and people who have below average incomes, putting their grubby hands into their pockets, stripping the cash out, and putting it on a direct credit to their mates.

The Prime Minister will get a tax cut of over $1,000 a week as a result of this Budget. But the people in my electorate on the average income with a couple of kids, or someone who used to get one of the tertiary incentive allowances that Paula Bennett got, will be paying $50, $75 or maybe even $100 a week extra for their early childhood education in order to finance John Key’s tax cuts. How can it possibly be fair that lower income New Zealanders have to pay extra GST and have to pay extra for their early childhood education so John Key gets a tax cut of over $1,000 a week?

The other obvious point that should be made is that the Minister of Finance has no credibility in this area whatsoever. He talks about being a fiscal conservative, but how he can possibly do that when he has taken over half a million dollars from the taxpayer by saying that he lives in Dipton when he does not? How can a Minister of Finance have any credibility anywhere around New Zealand or in the international capitals of the world when time and time again he made a declaration that he lives in Dipton when we all know that he lives in Wellington? He is an embarrassment to members who have been Treasury Ministers, because he should know better than that.

The other thing that I think has embarrassed—

💬 Hon Nathan Guy: Get out of the gutter.

Well, I will say it again. I have been invited to repeat my comments by the former whip, Nathan Guy. How can a Minister of Finance have any credibility at all when he has taken half a million dollars, put it into his own pocket, and used it for his own purposes by declaring that he lives in Dipton when we know that he lives in Wellington? Where is the credibility? I ask where the fiscal rectitude is in that from Bill English. The problem is that the whole Budget—the whole Budget—is tainted because it was delivered by someone whom the New Zealand populace does not believe. People do not believe him, because he made a series of declarations that were just not true. And he did not pay back the money. He did not pay back over half a million dollars. We ask ourselves what sort of a Minister of Finance we have.

He has also absolutely refused to acknowledge the sound balance sheet he got when he became the Minister of Finance. There was nil net debt. How many Governments in the OECD are in that position? Not one. Members opposite cannot name one Government that received a nil net debt position. We had the unemployment rate under 4 percent at the point when those members took office. It was well under that of Australia, and look at it now. Look at those Kiwis. I think that all members in the House know that an enormous exodus across the Tasman is happening in a way that has not happened for quite a long time. People are going back across the Tasman because we know and they know that there are jobs in Australia and there are not jobs in New Zealand. The reason is that in Australia, the recovery was not choked off in the way that it was choked off in New Zealand by Bill English and John Key.

I acknowledge that the member for Taupō mentioned the cycleway, but what she did not say was that not a single kilometre has been built that would not have been built before then.

💬 Jacqui Dean: Yes, there has. Do your homework.

I ask that member to name the kilometre that was not already planned.

💬 Jacqui Dean: Name it?

She should name the kilometre. Quickly, away she should go! [Interruption] No, name it by interjection. Come on.

💬 Jacqui Dean: I raise a point of order, Mr Speaker. The member has asked me to name a section of cycle track that has been constructed that had not already been thought of, and that section of cycle track is in Ōāmaru.

The ASSISTANT SPEAKER (Hon Rick Barker): That is not a point of order. A point of order is about the order of the House. If the member wishes to respond by way of interjection, then the member is perfectly entitled to do that. If the member wants to raise a point like that, she waits until her speech. That is not a point of order.

While we are doing the procedural thing, for the benefit of the member’s education, I say that she could have asked me to yield. I would have yielded, because she has told us something that we did not know. There is a kilometre. One kilometre has been built in Ōāmaru that was not already planned. And that was the grand plan of the Government for jobs! What about broadband? Members opposite should tell me about fibre core. They should tell me about the Crown fibre corporation and about one inch of fibre that has been laid as a result of the decisions made 15 months ago.

💬 Jo Goodhew: Ōāmaru! Mid-Canterbury!

💬 Hon Member: Ōāmaru again?

No, we have got this absolutely right. I got it in a briefing yesterday from them. Not a single dollar has been spent and not a single inch of broadband has been laid as a result of the Government’s intervention—not one, not an inch, not a cent. An arrangement has been made and, as a result of that, the bright, shining star of Steven Joyce is beginning to slip. He was the one who was going do it. In fact, I thought at one stage that he would be the Minister of Finance. I thought that John Key would do the right thing and push him in. But, I tell members what, given the progress that Steven Joyce has made, I reckon that Simon Power is the one. When those members finally work out that Bill English is not up to the job, Simon Power will be the one who will get the job.

💬 Hon Nathan Guy: Talk about your reshuffle today.

I notice that Nathan Guy wants to tell us about Richard Worth and the reason that Nathan Guy got into Cabinet. I ask whether that member wants to tell us more about Richard Worth and the reason why he got into Cabinet. [Interruption] Oh, he is not in Cabinet. Sorry, I thought that National had a talent-based ministry, but then I looked at Pansy Wong.

I say to Aaron Gilmore that I agree with him. I agreed with him when he told that group in the workingmen’s club in Christchurch that he could do a better job than Anne Tolley. That is true. I agree with him. I absolutely agree with him, but I think that Allan Peachey could—

💬 Aaron Gilmore: I raise a point of order, Mr Speaker. I did not make such a statement, and I ask the member to withdraw and apologise. I take offence at his saying that.

The ASSISTANT SPEAKER (Hon Rick Barker): Excuse me, but that is not a point of order. That is a debatable point. If the member has taken offence, then I have to say to the member that much worse things have been said in this House about a member that fall well below the level of offence. If the member wishes to rebut it, he can do so at a later time.

The member should try a bit of cement—harden up. I wanted to say that that might well be true. He might well be a better Minister of Education than Anne Tolley is. That is not a high test. But we know that Allan Peachey knows about education. I do not always agree with him. I think that he has been wrong on a number of occasions. I certainly would not lease a corporate box in the way that that member did when he was the principal of a school, but the thing one cannot argue about is that he knows something about education in a way that the Minister of Education does not. That is the reason why she has made so many foolish mistakes in the time that she has been the Minister. I think that my colleague will talk about early childhood education, and about the Minister’s attack on standards and her cutting of the number of teachers. But in the end, this Budget will be known as the “hip pocket Budget”, because Bill English put his hand into people’s pockets.

I thank the previous speaker, Trevor Mallard, for raising the cycle track initiative, which has been and will continue to be a huge success for tourism in New Zealand. I have spoken about the economic revitalisation of Central Otago before, but I will briefly traverse it again because I think it is worth doing so. That revitalisation has taken place because of the Otago Central Rail Trail. A region in New Zealand that was struggling economically is now in an economic boom. Why is that? It is because of the rail trail. Our Prime Minister recognises the benefit of having this kind of initiative for rural and provincial New Zealand, and I applaud the vision of our Prime Minister in seeing the value of having this kind of initiative.

I also thank the member who spoke previously for asking the question—well, actually, for displaying his complete lack of knowledge about anything that happens outside the beltway, and for not knowing that the Prime Minister came down to Ōāmaru in May of this year to open the final kilometre of the Alps to Ocean Cycleway.

💬 Hon Trevor Mallard: It’s the only kilometre.

It was not the only kilometre; it was the final kilometre. What a day it was in Ōāmaru. The sun shone, the temperature was balmy, and the crowds were huge as the Prime Minister of New Zealand walked down to the Ōāmaru harbour and officially opened the final kilometre of the Alps to Ocean Cycleway. I think there were 2,000 people in the crowd in Ōāmaru, which is a huge crowd for our small but very proud town. Half of the town turned up on their bicycles; everyone from little kids through to grandparents was there. There were penny farthings; there was steampunk. It was an exciting day. The town was galvanised, because people understood only too clearly the economic benefit that the cycleway from the ocean to the Alps will bring, not only to North Otago but also to South Canterbury. I thank the member opposite for reminding me to raise in this House this example of the economic benefit and the real, sustainable jobs and industry that will come as a result of this project.

💬 Carmel Sepuloni: Stop wasting the time of the House.

The member opposite does not understand; that does not surprise me. She does not understand the need for small rural communities to have a sustainable economic base for their future growth and economic well-being.

This Budget has been good. I will talk about some of the feedback we have received. Labour in 9 years in office did not have the boldness to cut taxes, but now it slams National doing so. Who said that? Well, that was one of the country’s most respected newspapers, the New Zealand Herald. “Does it mean that Labour will reverse this law and increase the taxes if they return to power? If not, then why the gripe? Am I the only one to see double standards here?” asked the New Zealand Herald. Well, the news is that, no, it is not the only one to see the double standard. Most of New Zealand shares the view that Labour has the gripes severely about this Budget. The New Zealand Herald goes on to say: “The worst bit about the Budget was listening to Mr Goff respond to it in Parliament. He has the oratory skills of a robot. Labour, you still look tired. You seem to have no response to National’s obvious plans and your leader cannot even compete on the sound bites with Mr Harawira and Mr Norman.” That has been one slice of the feedback about this excellent Budget.

I will give the House a couple more examples, from what Bernard Hickey said: “This is the most comprehensive and coherent reform of New Zealand’s taxation system in more than 25 years. It goes a long way to tilting the economy back towards productive investment and away from property investment. … Overall I’d give it 8.5 out of 10.” Those are kind words indeed, and they are true. He also said: “The corporate tax cut is the big surprise in the Budget and will give a real boost to business just when it is struggling out of the recession under the weight of tight bank lending.” The reaction to this National-led Government’s Budget has been very, very positive.

Last year, National was busy concentrating on getting the Government’s finances under control. This year, we are squarely focused on the economy and building the recovery for the people of New Zealand. Budget 2010 will help to build faster and more sustainable economic growth. It will contribute to rebalancing the economy, so that all Kiwi families can get ahead. New Zealand has come through the recession in pretty good shape. This is partly due to the measures taken by the Government back in Budget 2009 and partly due to the resilience shown by the many New Zealanders who welcome the measures brought in by this National-led Government.

The Government finances face many challenges. We are spending more than we earn, and over the next few years Government debt will increase significantly. This Budget, however, makes progress in getting back to a surplus much sooner than had been forecast. The bottom line is that we need to rebalance our lopsided economy and correct our fiscal imbalances.

How will Budget 2010 help to achieve those goals? Well, first of all, this Budget puts economic growth at front and centre stage. Its overriding aim is to tilt the economy towards savings, investments, and exports, and away from borrowing and property speculation, and certainly away from excessive Government spending. Secondly, our major tax reform package features across-the-board tax cuts that will help families to get ahead and help to keep more skilled Kiwis in New Zealand. It makes the taxation system fairer and promotes faster economic growth. Thirdly, the Budget shows an improved fiscal outlook where both Crown debt and Budget deficits are better than were forecast in last year’s Budget But, even so, our aim is to do better still—why not?—and to get back to having a surplus as fast as possible. Finally, the Government has stayed within its $1.1 billion allocation for new spending. In addition, we have moved another $1.8 billion over 4 years to priority front-line public services. We are spending significant amounts on health and education, and we are investing in our future with the hundreds of millions of dollars that are being invested in science, research, and technology, in ultra-fast broadband, in rail, and in roads.

I will now turn to health. I will give the House some feedback from the chief executive of the South Canterbury District Health Board, Mr Chris Fleming, who said: “South Canterbury DHB is thankful for the increase in funding announced in the Budget. This money, along with an estimated $1.4 million in efficiencies already planned for next year, will ensure that we can continue to provide a high level of service to the community. Despite difficult times, we are pleased that this funding has left us in a position of not needing to consider any reductions in health and disabilities services for financial reasons within South Canterbury over the coming year. About $295,000 of the new funding will go towards providing extra elective services.” The South Canterbury District Health Board is a relatively small district health board, but it received an extra $5 million of funding through this Budget. That money will be used wisely. That money will be used for the benefit of the people of South Canterbury. I welcome that kind of initiative in the Budget. Similarly, for the Southern District Health Board, which is much larger than the South Canterbury District Health Board and is also within my area, the extra $20 million of funding given to that district health board will provide extra services for the people in my electorate and the southern part of the South Island.

This is a good Budget. I commend this Budget to the House.

I raise a point of order, Mr Speaker. Following Nicky Wagner’s comments, I seek leave to table a document that indicates that the Ōāmaru cycleway has received no cycleway funding. There is 1.3 kilometres built and there is an application for 300 kilometres, which has not yet been considered.

The ASSISTANT SPEAKER (Hon Rick Barker): Leave is sought for that. Is there any objection? There is objection.

I raise a point of order, Mr Speaker. I feel it might be helpful at this time to give the member the opportunity to perhaps correct the Hansard in that he referred to Nicky Wagner, when, in fact, the member’s name is Jacqui Dean.

I am a person who never corrects the Hansard. If I said that, I said it. If I got the member wrong, I apologise. But other than when someone does something like Mr John Carter did on one occasion, I think the Hansard should show what people said.

The ASSISTANT SPEAKER (Hon Rick Barker): The member has apologised for getting Jacqui Dean’s name incorrect. I think that ends the matter.

I am happy to talk about the Budget, because there have been quite a number of wins in it for Māori, particularly in the areas where they are needed. There was a time when Māori were on the sideline of the economy: unemployed, Labour’s socio-economic group, last to be employed, first to be laid off. It is a different story now as Māori and iwi are developing assets and starting to work in terms of the economy. There is $16.5 billion in total of what they have towards kick-starting the economy. I was pleased to receive $10.5 million for my Economic Taskforce, which set up a number of Māori entrepreneurs in economics, who are working in different areas. One of those areas is about establishing possibilities of iwi infrastructure development. They have produced a book of all the infrastructure to be set up in the next few years around New Zealand, and ways in which iwi can partner with each other, with the Government, and with private companies, in order to get involved in infrastructure, to provide training, and to create more jobs. It is a major move forward, coming out of my task force.

Another area is the coordination of small to medium sized enterprises. A network has been set up whereby they can help each other and work with each other in terms of their small businesses.

We are establishing a Māori brand for exports. This work has been going on for some time and it is coming through now. There is a group called Koura Inc., with a seafood export line off to various parts of Asia, where quotas, whether they are large or small, can be combined. It allows small quota holders to participate at every level as much as major quota holders, and they get in what they put out. If they put in 2 percent of the quota, that is what they will reap from it. It allows them to participate in the world export economy.

Science and innovation is another area where this is happening. Māori are looking to add value to the products they are exporting, rather than just moving out timber or wool. They are looking at how their products can have value added through the use of science and innovation, and we have invested in that area, as well.

In September I am taking a group of Māori entrepreneurs to the expo at Shanghai. They will be working in different areas. We lead the world in certain areas of graphics, so we are taking graphics people, along with leaders in agriculture, forestry, fishing, infrastructure, culture, language, technology, phones, and education, as well as investment entrepreneurs, and so on. The group of Māori I will be leading will go to Beijing, then down to Shanghai for the expo. We are looking forward to that.

Training is very important. I remember a year ago I set up a training programme that was launched with InfraTrain and Te Puni Kōkiri. We were hoping to get 250 students on the programme to train in infrastructure development. We wanted 20 from outside the industry to be involved, and three to reach diploma level. Instead of getting 250, I went to the graduation and we had 359. Instead of 20 from outside the industry, we had 40. Instead of three reaching diploma level, we had eight diploma graduates. So the programme we set up is exciting.

Another facet that everyone knows about is the contribution to Whānau Ora. There is $134 million over 3 years. Tariana Turia spoke about that in her delivery; I am a little late being in here because I am not in the House a lot.

Treaty settlements have received a boost of $6.5 million. This will strengthen the teams that will go out and do the negotiating, in line with the Government’s aim to complete the claims at soon as possible and as soon as iwi want them. Added to that, we have managed to accumulate $72 million worth of land that has been land banked to go towards those settlement processes.

In education for Māori there is $12.6 million for a number of areas such as kura literacy and numeracy. For the development of new wharekura, to move from a kura into a wharekura, stage by stage and class by class, there is another $12.6 million, which will set up seven wharekura. The most important thing about education for Māori is the Government drive for early childhood education. Another $91.8 million has been put in there. We will be concentrating on puna reo and kōhanga reo, particularly in areas like south Auckland.

The very urgent area I am working in is corrections. We have $20 million for Whare Oranga Ake. Two of those establishments are to be built, one in Hawke’s Bay and one in Auckland. The idea is that they will house initially 16 inmates. Ultimately they will house 32. The value of this is that we are not just incarcerating 32 inmates; it is 32 each year, because they are not coming back. One of the problems with prison is recidivism, as 55 percent of Māori who are released return to prison. We have tried different programmes. We have Māori focus units up and down the country; there are five of them now. Some of them have been marginalised by the demands of mainstream, which interfere, if you like, with the numbers, the muster, who go in, and the programmes in Māori focus units. It has been difficult to run a straight programme and have them benefit in the way that was intended.

In Waikeria, it is different. We have been able to protect, to a certain extent, that Māori focus unit. I am happy to say that since 2007 there have been 217 go through there, and of those only 23 have reoffended and gone back in the prison system somewhere in New Zealand. That is a far cry from 55 percent of Māori incarcerated.

The thing about Whare Oranga Ake is that inmates will be required to map themselves out a career. They will be required to go through programmes where they deal with their faults—what is wrong with them and what caused them to commit crime—whether that is through psychologists, tohunga, social workers, or whatever. There will be fewer jailers but more people working on their rehabilitation. They will be trained in whichever vocation they want. They can get a degree or train to be a carpenter. Firms like Fletcher’s are prepared to give tool sets and to mentor these people to work.

The main thing for Whare Oranga Ake is that the people outside who are involved are contracted in. They will run the programme and make sure there is a whānau group outside so when these people are gradually rehabilitated into the community, they will be rehabilitated into a support group. The support group will bring them into their whānau, whether it is on to a marae or into a different activity such as a gym, as well as progressing their work.

The main reason why people have gone back into prison is they have not been able to make it once they are released. I remember two guys in Pāremoremo. When they were being released, they were happy and looking forward to their flat and having a life outside. I visited them 2 months later in their flat—there were no light bulbs, no money, and no jobs. They were depressed, and a few months later they were both back inside, and happy as Larry. We are fighting against institutionalisation, and that is why we want to make sure they re-establish themselves out in the community.

To round off, I say that Minister Turia and I have been lobbyists for the Government to get money into health, early childhood, housing, innovation, Warm Up New Zealand, land banking settlements, and so on. The figures come to $400 million in total. Added to another $400 million in the general area for Māori, it is $800 million. Thank you.

It has been just 26 days since the Minister of Finance, the Hon Bill English, delivered a fantastic Budget. Budget 2010 will rebalance the economy, reward people, encourage families to get ahead, and attract and retain skilled people in New Zealand. It will encourage savings and productive investment in the economy of this great country. It will also make our tax system an awful lot fairer. I think it is worthwhile going through a few of the important points of this Budget.

Firstly, it will put economic growth at the forefront and centre stage. It will tilt the economy towards savings, investments, and exports, and away from borrowing, property speculation, and the excessive Government spending we saw under the previous Government. Secondly, we have announced a major tax reform package. There are tax cuts right across the board. They have been well received throughout New Zealand and particularly in my electorate, the wonderful place of Ōtaki. Thirdly, the Budget shows a much-improved outlook for the economy. It is projected to grow at 3 percent per annum over the next 4 years, which is absolutely fantastic, and we are starting to see signs of that. We are looking at getting back into surplus as quickly as we can, which is also very positive. That shows that our policies over the last 18 months of this very forward-thinking Government are working and making a difference. Finally, the Government has remained within its $1.1 billion limit on new spending. In addition, we have moved $1.8 billion over the last 4 years into priority front-line services, with a real focus on science, research, technology, ultra-fast broadband, rail, and, of course, opening up and unclogging our roading arteries, as well.

💬 Moana Mackey: What broadband? What rail? What cycleway?

This has been a particularly well-received Budget, and I say to those chipping in from the other side of the House today that it would be worth their while looking at the tax guide website to see how much they will be better off. If they look on the website www.taxguide.govt.nz they will see how much better off they are. Of course, we have made across-the-board personal tax cuts. We are also reducing the company tax rate, and that is absolutely fantastic. The business tax rate has been reduced from 30 percent down to 28 percent. Now we are ahead of Australia, and we hope that will stop the brain drain across the Tasman.

There has been a small rise in GST up to 15 percent. It is interesting to hear the Opposition chipping in, because if those members over there had been on the “Axe the Tax” bus, which is running up and down the country, they would know that when it pulled into Levin it was greeted by six people. And now we hear from the leader of the Labour Party, Phil Goff, that he cannot make up his mind whether he would reduce GST. But one thing is for sure: if Labour ever wins an election in the future—and I cannot see it doing that for a long period of time, with the turmoil it is in today—we know that taxes will go up.

We have also tightened the property tax rules, and we are closing a number of loopholes as well by aligning the top personal tax rate with the trust rate. We are also focusing on the Inland Revenue Department and giving it the tools to clamp down on the behaviour of people who, through loopholes, are able to avoid paying tax. We are investing $120 million in the Inland Revenue Department over the next 4 years to ensure that it does more audits and achieves more compliance. The reality is that for every $1 that this Government spends on the Inland Revenue Department we get a $5 return. That investment will make a difference, as well.

This Budget is all about giving people an incentive to get ahead. It is a very fair, well-constructed Budget that has been particularly well received. It is important for members opposite to realise that taxes have come down considerably. For those on the bottom income rate, earning up to $14,000, the rate has dropped to 10.5 percent. For those earning up to $48,000 a year, the rate has dropped to 17.5 percent. That means that 73 percent of our workforce right across New Zealand will not pay any more than a 17.5 percent rate of tax. Finally, a family with two children pays no income tax until it earns $50,000 a year. That is absolutely fantastic. The comment has been made this afternoon on this side of the House that those earning the minimum wage and the average wage—that is, about $30,000 to $50,000 a year—now pay 40 percent and 50 percent less tax than they did in 1996. That is a huge change. By comparison, people earning $100,000 a year are now paying around 20 percent less tax than they were back then. So this is a Budget for the many and not for the few, which is something we have heard Mr Goff talk about in the past.

There is also a real focus on health and education, which get the lion’s share of the new spending over the next 4 years, as well as a real focus, as we have heard from the Hon Pita Sharples, on science and research and development. One focus that is really important in my wonderful part of New Zealand, the Ōtaki electorate, is the focus on infrastructure. We are focusing $7.5 billion on infrastructure across the country and have earmarked another $1.45 billion in this Budget alone for unclogging our roading arteries. Soon I will talk a little more specifically about this investment in roads, schools, ultra-fast broadband, and rail.

The other exciting thing for me as Minister of Internal Affairs, Minister responsible for National Library, and Minister responsible for Archives New Zealand is that my Budget bid to the Minister of Finance for Archives New Zealand was successful, and I am delighted. So $12.6 million of new money goes to a digital archive, which will really help the storage of information by Archives New Zealand and the National Library. This new money shows that this Government values and treasures the work that the National Library and Archives New Zealand do. If we think about how fast technology is moving, about how the zip files, floppy disks, and what have you of the past are now becoming obsolete, we realise that we have to keep up with technology and to make sure that such information is retrieved and stored. This is a very, very positive investment, which I am excited about: $12.6 million of new money to Archives New Zealand and to help the National Library. Of course, we have $52 million flowing into the National Library, as we speak, for the New Generation strategy, we are putting a new roof on the library as part of its refurbishment, and soon a fantastic new library will be opening for the people of Auckland and those regions that encompass it.

This Budget has been fantastically well received. The people of Ōtaki are saying thank goodness the Government is going to look after our superannuitants. We have 16,000 in Horowhenua and Kapiti. They will be compensated for the small rise in GST. We have also announced in this Budget $3 million for land for a new school, which will cater for up to 400 children in Waikanae, and a new early childhood centre will be attached to it, as well. That has been fantastically well received. More money is available for community law centres like the one in Levin, my home town, and there is also a large investment, as I have already alluded to, in the expressway all the way from Wellington Airport to Levin, including Transmission Gully. That investment has been fantastically positively received. I am very disappointed to see that Labour will now oppose the expressway through the Wellington region up into Horowhenua. I cannot believe that Labour has decided to oppose that fantastic investment in roading. Also, we have a turn-round plan for KiwiRail: $250 million will be invested in KiwiRail. Let us not forget that Labour lost $600 million of taxpayers’ money on rail. Budget 2010 has been a well-received Budget and I commend it to the House.

Following on from Nathan Guy, the National member who has just resumed his seat, I say I was very surprised that he did not speak about the $1.2 million cut to the health services in Ōtaki. He was telling us that the people of Ōtaki are thankful for the Budget. But the people of Levin are not; they are protesting about the $1.2 million cut to their health centre.

💬 Hon Nathan Guy: No, no, you’re not right.

I know that that is the member’s home town, and apparently he is now saying he has that issue all sorted out. But we will wait and see whether that is the case, because the people of Levin will be voting on that issue next year.

But I will get back to Budget 2010, which was a Budget of price increases and broken promises. Not only was there the broken promise from John Key, who had said he would not increase GST—and in Budget 2010 GST has been increased—but also there was the broken promise from the entire National caucus. The National candidates went out on the hustings and promised that they would keep early childhood education intact, in the way that Labour had left it. But they went further than that: they promised that they would keep the 20 hours’ free early childhood education, and they said they would keep all of the existing subsidies for early childhood education. Well, the National members have broken their promises. When the Budget was delivered they broke yet another promise to all of the families who had believed them. Those families now feel betrayed, because they took the National members at their word and believed them when they said a National Government would keep all the existing subsidies. Those families now find that $295 million has been cut from the early childhood education budget, and that affects 93,000 children and their families.

Early childhood education used to be a high priority, and certainly it was for the previous Labour Government. When National first came into office, it said early childhood education was a high priority for National, too. So what happened between then and May 2010 that has resulted in early childhood education becoming such low-value spending that it has suffered cuts in the Budget? The Minister of Finance, Bill English, said only low-value spending would be cut in this Budget. Early childhood education was cut, so how did it slip from being an important investment under the previous Labour Government to becoming a cost under the National Government, and a cost that had to be cut? That is what has become of the education of our youngest children, yet that is the time when we can make the best improvement in their lives. Labour saw early childhood education as an investment, and it still sees it in that way. One of the best investments that any Government can make is to invest in early childhood education. This Government can now talk about early childhood education only as being a cost, and a cost that must be cut.

So 93,000 children and their families are affected by this funding cut, and the cost will be an average of about $25 per child per week, because this Government wants to put that money into the pockets of wealthy New Zealanders for a tax cut that they, quite frankly, do not need. The Government is taking that $25 per child per week out of the pockets of ordinary, hard-working New Zealand families and putting that money into the pockets of the very, very wealthy, who do not need to be given a tax cut and will spend it offshore.

That cut affects 93,000 children nationwide and that is pretty hard to get one’s head around, so I will break it down. What does it mean in some of our provincial centres? I look at my home city of Hamilton and know that 3,700 children and their families will be affected by this severe Budget cut to early childhood education. In my city alone 3,700 children attend 78 early childhood education services that employ 80 to 100 percent qualified staff. Then there are more children affected by the cut, because the centres that employ between 50 and 79 percent qualified staff will also be affected. So the number of affected children is even larger than the number that the Minister of Education has admitted to.

Many of those services have staff in training right now who are about to become qualified between now and February, when these cuts take effect. Why is that? Members opposite look a bit confused about this. Many of those centres have staff in training now because the previous Labour Government set a target that 80 percent of the staff in the early childhood education sector should be qualified by 2010. So the centres have worked extremely hard and have invested time, money, planning, and effort into getting people into training. The individuals concerned have invested their hard work, their own time and money, and now they come to 2010 and find, when they are about to qualify, that the National Government has pulled the rug from underneath them. National has cut the funding to the sector, but there was no consultation about that and no warning was given of it. Suddenly, come Budget day 2010, the sector found out that it does not have the funds to pay the wages of those qualified staff.

The Government would have us believe that it will put that money into improving the participation rates for Māori and Pasifika children. Well, that is not so. I have here a letter from the Living and Learning Foundation, which runs a new early childhood education centre in Māngere. The centre was officially opened by the Prime Minister, John Key, just last year, but this year the Government has cut the centre’s funding to the tune of $95,000 per annum. There are 113 children who go to that centre, and 98 percent of them are Māori or Pasifika. [Interruption] I know that Tau Henare thinks it is funny that the centre’s funding has been cut, but 98 percent of the children who attend that centre are Māori or Pasifika. I quote from the letter from Michelle Pratt, and the members opposite may want to listen to this: “In order to recover the sums of money that will be lost to us as a direct result of the Government’s Budget we are going to have to increase our fees by a minimum of $20 to $25 per child, per week. This will not leave any profit and we will be forced to trim further service to families. Most families have more than one child at the centre, some even three or four.”

How are families possibly going to afford this? This cut puts a cost on families who have three or four children—[Interruption] Katrina Shanks seems to be having difficulty doing the sums. Some children—

💬 Jo Goodhew: Three or four children in early childhood education?

I do not know; has anyone heard of twins? I do not know.

💬 Hon Maurice Williamson: I’ve got twins.

There you go! Maurice Williamson has twins. Some of these families have three or four children attending an early childhood education centre. Government members are looking very confused, but I can tell them that decision will cost a family in that position $100 more per week. And that is before GST is increased.

I have an example from the community kindergarten owned by the Ōtūmoetai Plunket branch, and it tells me that it will lose $34,000. The examples go on. I have another one from the North Shore, but the member for that electorate is not present.

I am concerned that the Prime Minister has said having 100 percent qualified staff at a centre was a matter of personal choice and if parents really wanted that, then they would just go ahead and pay for it. We all know what that will mean. We will end up with three grades of early childhood education in this country. Families who come from a wealthy neighbourhood will have centres with 100 percent qualified staff, those who come from a middle-income neighbourhood will be able to afford centres with only 80 percent qualified staff, and those who come from South Auckland will have a playgroup. That is the Government’s plan. The children from that area will have a playgroup. The Minister of Education has already washed her hands of responsibility for the funding cut. She says that if centres have to increase their fees, then that is not her responsibility; it is a business decision. But it arises from her funding cut.

In my remaining minute I want to talk about the overall response to this Budget. I have received a letter that will resonate with most New Zealanders. It comes from Wīremu Bayliss of Hamilton, who writes: “Prior to the recession Sunny and I were on track to own our own home, a first time for us in nearly 5 years of marriage. At the time we were both working full time, earning good salaries. Considering our overall financial position, we were able to service the loan as well as other expenses, with enough for savings at the end. We now believe that failing a substantial Lotto win, we will never own our own home in the next 10 years, and it could”—

The ASSISTANT SPEAKER (Eric Roy): The member’s time has expired.

I want to talk about pigs—a few pigs. The first is the pig of an analysis of the Budget by some members of the Opposition, but more important is the situation of “PIGS”—Portugal, Ireland, Greece, and Spain—in Europe and what that might mean for our Budget.

Despite the fact that New Zealand has come out of the worst recession in my lifetime and, in fact, in the lifetime of every member in this House, this country is still borrowing in the order of $240 million a week for the foreseeable future. That is about $10 billion in change, and that is a lot of money. When I was born New Zealand was in a quite fortunate position. It was wealthier than Australia. Our per capita income was higher and New Zealand was a wonderful place to grow up in. But in 35 years things have gone backwards. I am glad to say that this Budget, building on Budget 2009, puts us on the road to recovery.

Opposition members have talked long and hard about what National has done in its Budget, and what they would do, but I want to talk about some of the risks. Basically, Labour would borrow obscene amounts of money that this country cannot afford. Today Moody’s, one of the world’s leading credit-rating agencies, downgraded the status of Greece’s Government bonds to junk bonds. One might say: “So what! Who cares?”. But it means that the cost of your borrowing skyrockets, and every 1 percent increase in the cost of your interest rates costs this country $500 million.

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think it is not usual to bring the Speaker into the debate, and especially the Speaker’s finances.

The ASSISTANT SPEAKER (Eric Roy): The member must be more careful with his pronouns.

Every 1 percent increase in interest rates costs this country $500 million, which is another $500 million that my children will have to pay back at some stage, so getting our finances under control is absolutely critical. You see, pages 76 to 84 of the Economic and Fiscal Update in the Budget documents outline pretty carefully some of the detailed issues we have to deal with, and some of the risks and scenarios that might arise. For example, do members know that if economic growth rises by 1 percent more than we are forecasting, if it is 1 percent higher, that is an additional $3 billion per annum for us to spend—$3 billion? What would $3 billion do?

💬 David Bennett: Waikato Expressway.

It would pay for the Waikato Expressway. All sorts of lolly scrambles would arise. This Budget is about maintaining our debt profile and getting our economy to grow faster. We believe that the best way to control our expenditure is to put money in places where it makes sense to do so.

Today, as I said, we have seen Moody’s give Greece’s Government bonds junk-bond status. There is a risk of other countries in Europe falling over. That is the situation with Ireland, with Spain, and with Portugal, and I can tell members that if any of those countries have the same demise that Greece has had, major riots will occur across the whole of the Euro zone, and that would be a tragedy. Yesterday a new Prime Minister was elected in Japan. Japan is facing debt levels of 200 percent of GDP. The new Prime Minister has announced massive austerity measures, because the Japanese recognise that their financial position is unsustainable.

This Budget is about creating opportunities—opportunities that were lost under 30-odd years of successive Governments, which were maybe a bit misguided. It builds on our recovery, and puts us in a position where we will have a Government surplus, a proper surplus, by 2016. That will allow us to start paying back our debt position, and stop us from borrowing more. This Budget is about strengthening our economy and putting in place tax changes that incentivise work and savings, and that allow people to do things they really want to do and to spend their own money in ways they see fit.

I will touch a little on what the previous speaker talked about—early childhood education. I had the massive good fortune of growing up in a neighbourhood that did not have a kindergarten to choose from; I attended playcentre, and I was very happy that my brothers did, as well. National members respect choice. We respect the ability of people to choose whether they want their children to go to a playgroup, a playcentre, or a kindergarten. I respect the ability of people to choose. I sent my children to the same playcentre I went to as a child. I had enjoyed it. It was an absolute pleasure that my mother had sat on that playcentre committee, I had gone to that playcentre, and my children also were going there. It was a parent-led centre, and it was about choice.

💬 Hon Tau Henare: Same teacher?

Not the same teacher, I tell Mr Henare; she is no longer with us, I am afraid.

💬 Hon Tau Henare: Oh!

Yeah, well. At the moment there is scaremongering from the Opposition about what the early childhood changes may be. I can tell members that a year or so ago early childhood centres were screaming out that they could not get enough teachers to meet the previous Government’s requirement that 100 percent of teachers be qualified. I sat in a meeting with members of the New Zealand Educational Institute involved in early childhood education, who said that they did not believe in choice, they did not believe in parent-led education, and they did not care about the playcentre movement or the playgroup movement; they wanted a monopoly on providing education to children. Members should ask the head of the New Zealand Educational Institute, or come and talk to me in Christchurch.

We have the ability to put in place tax cuts that, for 73 percent of New Zealanders, will reduce their marginal tax rate to 17 percent—17 percent. I can go and talk to my brothers and look them in the eye over that. One of them is on the minimum wage, but I was able to tell him how much better off he would be. He turned round and said that he did not believe me. Do members know where I went? I went to the website.

💬 David Bennett: The tax website?

The tax website. My brother did not believe me, but I showed him the tax website and he said that it was great that he would get a few extra dollars in his back pocket. Do members know what he did then? He rang up his boss and said that he wanted to do an extra shift on a Saturday morning. The tax cuts will give him a few extra dollars in his back pocket, and that will help him to get ahead. They will allow him to buy his own little car, in this instance, and to start saving, hopefully, for a house for him and his future wife—or maybe for an iPad, like the one our great Minister Mr Williamson has. You see, the average tax rate—not just the marginal tax rate—that those people will pay is about 15 percent. People who are out there working and earning about $50,000 a year, with two kids, will pay zero tax. Their net tax will be zero. I can tell the House that I would be proud to stand in front of any community anywhere in New Zealand and say to them how wonderfully off those people will be because of the incentives being put in place for them to work.

Who will pay for that? Who will pay for what the Labour members say is great smoke and mirrors? Well, it is those big, nasty multinationals—those big, nasty multinationals.

💬 Hon Tau Henare: Who are they?

Oh, you know, the Shells, the BPs, the ANZ banks of the world. Heaven forbid that they should pay some more taxes through the thin capitalisation regime! I am proud to be part of a Government that is putting up taxes on multinationals in order to give something back to average New Zealanders. What a wonderful thing that is; I cannot believe that the Labour Opposition would be against it.

Where else will the money come from? Well, we have taken out a rort that existed involving trusts and companies. We recognised the incentives to stop it from occurring. Thousands and thousands of trusts were being set up all around the country to earn money that would be funnelled through trusts rather than through individual taxpayers, who as workers did not have the ability to do that. I think that it is great that workers will be paying a lower rate of tax, and that people with trusts—that unproductive activity run through many lawyers and accountants up and down the country—will have to use them for productive purposes. I think that is the right thing to do.

I will talk quickly about somebody who came into my office in Christchurch recently. This person lived in north New Brighton. As a result of that visit, I investigated how much better off this person will be. This person was a university student, who received the student allowance for 40 weeks of the year. They flatted and paid about a hundred bucks a week in rent, but got about $40 a week in an accommodation supplement, and earned about $9,000 a year by working part-time throughout the holidays. This person was ropeable, on coming into my office. GST was going up, everything was going up, and they believed that they could not afford it. Well, I had great news for that person. That person was going to be better off by $3.92 a week because of the student allowance going up, and would also be better off through a tax cut of $4.85 a week. Yes, they would pay a little bit extra GST—about $5.21—but overall they would be better off by $2.66 a week. That is only one cup of coffee a week, but it is a start. I am proud to be part of a Government that creates a start, and that puts in place the right incentives for people to get ahead and get skills so that they can work and invest. I am proud to be part of a Government that puts in place incentives that allow working New Zealanders to get on. That person who came to see me is not going to take on more debt; they can reduce their student loan a little bit, or spend a little bit more on their own education. I think that is a wonderful thing.

💬 Iain Lees-Galloway: A dollar!

It is $2.66, I tell that member over there—$2.66. Students could have got together, saved it up, and gone to the meeting in Palmerston North where Craig Foss spoke.

Look, I think the incentive is there for people to work a little bit harder—people like my brother. The situation with early childhood education is that parents can have a choice; parents’ choice is respected. I think that is a good thing. I think that it is a good thing we have bent back the debt curve; we will not be like the “PIGS”. Our finances will come under control, and we will have the ability one day in the future to again catch Australia’s income stream. I am proud to be part of a Government that enables that.

It gives me great pleasure to follow on from that great speech by Aaron Gilmore, a man who is making big inroads into Labour’s vote in Christchurch. He will be the member for his seat at the next election, because this Budget sets up the National Government to take to the people at that election a very successful economy—an economy based on prudence but also on the individual ability of people in New Zealand to be successful and have a better income and a better lifestyle. That is what people have been looking for. We have worked through the hard years of the recession that Labour brought upon us, and we have gone through that. We have started to turn on to the road of recovery and success, and that is the success that New Zealanders have been long waiting for.

I think that the salvation note of this Budget is the tax reform package that was part of the Budget. That is the bit that has been, I guess, the stunning point; it has actually stunned Labour members into silence. Over 9 years they had the ability to deal with the property sector, and to set the right signals for New Zealanders, but they did not do it. Time after time we heard about interest rates going up because of the property sector. That was the previous Government’s excuse. Never did it do anything to change the tax system, or even to talk about it. It just spent money on buying elections by giving out false hope to New Zealanders—

💬 Craig Foss: And golf clubs.

—yeah, and golf clubs, and other things. The thing is that the National Government has tackled the hard issues. We have looked back and seen the inequalities in the economy and the tax system, and dealt with them. We had to deal with some of our own people in doing so. That is hard, but it shows a fair-minded and successful Government. I think that is what the public have liked about what they have seen from National in this Budget. They have seen a Government that is willing to tackle the hard issues and put the right signals and incentives in place, and one that is not afraid to make the right call for New Zealanders. This Budget will go down in history for setting up the direction that we need.

Let us look at some of the directional facts. Two-thirds of the tax cuts have gone towards reducing the bottom two tax rates, taking the lowest rate from 12.5 percent down to 10.5 percent, and the 21.5 percent rate down to 17.5 percent. In other words, two-thirds of the tax cuts apply to people who earn less than $48,000. Basically, those on an income of less than $50,000, with two children, do not pay any tax in New Zealand. In what other country in the world can people say that they do not pay tax if they are part of a hard-working family and need that support from the Government? We are very proud as a country and as a Government to be able to offer that to our New Zealand citizens.

The other thing is that 73 percent of income earners will now face a tax rate of 17.5 percent or less. Nowhere else do we see those kinds of figures. That is great for people. It gives them the opportunity and desire to succeed. We are putting in place the structures that will ensure New Zealanders can compete and have the lifestyle they desire. That is something the previous Labour Government ignored. Its policy would have been to increase taxes and make people pay more, so that the Government could redistribute money. That policy is made on the basis that Labour knows how to spend somebody else’s money better than that person does. That is the philosophy that a Labour Government would have brought into its Budget at this time. It would have increased taxes so that it could spend more money. The last thing that the economy needs is increased taxes. What is needed is the right incentive, and that is what the National Government has done.

Some people may ask why we would make tax cuts at this time. That is the question Labour has been asking. It is done to send a signal. A lot of young New Zealanders out there have a choice between staying in New Zealand and going to Australia. That choice will be determined by a number of factors. Some of them will be financial; some of them will be social. On the financial factors, the Government can have a big influence, through providing the right dynamics in the economy. We want to see those young New Zealanders stay here and make their home and future in this country. To do that, we are giving them an environment where they feel valued, rewarded, and on a par with their colleagues in Australia. We will catch up with Australia, because we are making the right financial decisions at this time, whereas unfortunately Australia is not, and it will pay the price in terms of its economic growth. New Zealand’s economic growth will be better than Australia’s on a per capita basis as we go forward, looking at the position we started from. That is the success that we see and that New Zealand will inherit as a result of this Budget.

There will be some impact on those who have invested in the housing sector for reasons other than basic income growth, and that is understandable. But at the same time, it is something that people who have made that investment are very much aware of, and they are not necessarily finding it so problematic. They would rather have had that than the potential of a capital gains tax or something similar, which had been floated earlier in the year by other parties, and which just would not be a reality in the present economic environment.

Taxation was a huge part of the Budget, but there were other very strong features in it. In health and education the National Government continued to increase expenditure. Today at question time we heard from the Minister of Health, Tony Ryall, that the highest-ever percentage of expenditure on health has been made this year. That is a very strong statement to be able to make in recessionary times—to be able to say that we are spending more on health than any previous Government has ever done. That will deliver the kinds of services in surgery, primary care, and tertiary care that Kiwis have been looking for in their health system.

In the education field, changes to the operational grant for schools have been very welcome. Schools like the idea of the 4 percent increase, but, more important, they like the idea of staggered funding, which means they can get paid throughout the year, rather than having to wait for one lump-sum payment. That is called listening to the sector, delivering for the sector, and making practical changes that provide some reassurance and delivery for the sector. Those are things the sector has long been waiting for, and now it has been delivered.

We are also strengthening our investment in infrastructure. Infrastructure is key to building growth, because we have to give New Zealanders the tools for growth. A lot of the work on infrastructure will be related to the technology for growth. Our investment in broadband and other technology will deliver an environment where New Zealanders can work and take part in the global village, we could say, in a way that will deliver to them a prosperous future.

We are also building on the future that we see for families and working New Zealanders in this country. We are giving them incentives through the tax system. We are giving them structures through things like infrastructure so that they can take advantage of those incentives. We are giving them the social services that they desire in education and health care, and which are crucial to maintaining the future they wish to see.

New Zealanders are seeing that the brighter future is becoming a reality. The brighter future on which we campaigned is now becoming the future of New Zealand. The National-led Government can take a lot of pride in this Budget, because it is a Budget that delivers results. It delivers what we said we would set out to deliver for New Zealanders, and it does so in a manner that most New Zealanders have found exciting and beyond comparison with the previous Government, which just went out there from election to election. This is a long-term Budget. It sets up a long-term direction, and it will be a strong point for National as we work towards long-term success in Government. Thank you.

Less than 1 month ago, on 20 May, the Minister of Finance, Bill English, read a Budget that brought the most fundamental change—a step up, a step forward, for New Zealand—that has been seen in many, many years, particularly in the period between 2000 and 2008. The changes in this Budget deliver what is probably the biggest reform of the tax system in nearly 25 years. The Budget aims to deliver a fairer tax system, bringing fairness and equity back into our tax system. It will encourage savings and productive investment, keep skilled Kiwis in New Zealand, and help families get ahead.

The Budget itself covers just under $70 billion of spending, which is a huge amount in anyone’s terms. But what is most important is not the total, but how it is managed: whether the management is prudent, prioritised, and transparent, and whether it has accountability all the way through every single line of the Budget. In fact, a line-by-line review has produced the numbers that are in the Budget document we have before us, and in the Appropriation (2010/11 Estimates) Bill that is lying on the table.

It is a Budget for our times. It is a Budget for a much, much brighter future for New Zealand. It also acknowledges the changes that were necessary, as most members in the House, including those from the previous Government, acknowledged; the difference is that this Government is doing something about it. The problems, which are fundamental to our economy, are all about the imbalances between an increasing total debt in New Zealand—private sector debt—and unfocused Government spending. Basically, there have been out-of-control increases in State-sector spending over many, many years, and we have a private sector that has been squeezed out by the State over the 9 years from 2000 to 2008.

There are two main features of this Budget. One is, quite simply, to bring fairness and equity back into our tax system, switching our taxes around to try to encourage taxpayers to move away from consumption and into savings. I noted in an earlier speech on the Taxation (Budget Measures) Bill, which pertained to this Budget—and this still surprises me—that the Greens still do not support the increase in consumption tax. They are on record—as are many members in the House, including the previous Minister of Finance, who is no longer here—as pointing to New Zealand’s problem being a lack of savings, a lack of financial assets, an overemphasis on debt, and the debt-fuelled housing boom. There was a need not to eat our equity on flat-screen TVs, etc., but, rather, to build up our financial assets, or, at least, not increase our debt.

In the current conditions around the globe, the whole world is looking at every country and every set of sovereign accounts. This is a very timely Budget, because the other feature of it is the prudent management of the Crown’s accounts, or, as I always like to put it, a much more prudent, fair, and transparent management of the taxpayer’s balance sheet, because actually, at the end of the day, it is not the Government’s, at all—it belongs to the taxpayers. That is where the funds come from in the first instance, and we should do all that we can to guarantee taxpayers the most efficient, fair, and transparent spending of the money that has been taken from them in the first place.

If there are opportunities for the Crown to save funds, or not need to take so much in tax in the first place, so be it. We trust families and we trust taxpayers to make the best and wisest decisions for their circumstances at their time of life. That is what this Budget starts to put in place. It addresses changes such as the arbitrage that happened between the top personal marginal tax rates on PAYE, which we moved from 39c to 38c, and then to 33c; the trust rate, which is at 33c; and the corporate rate and the portfolio investment entity rate, which are at 30c. We are starting to rebalance, and we have made changes in the depreciation schedules—the way depreciation can be applied to property—to at least try to address and change some of the incentives, so that decisions and investment decisions are made on a cash-flow basis, on a fair return, as opposed to some perceived or otherwise tax advantage.

There have been many discussions in this House during question time and at other times about how many folk were able to minimise their PAYE obligations. In fact, 50 of the top 100 wealthiest people in New Zealand, according to the National Business Review’s list, were not even paying the highest marginal tax rate. That gave us a clue that the tax system was broken and not working—and those are the words of the Tax Working Group.

There is a global crisis going on, and sovereign debt, in particular, is one of the key elements that institutions around the world and other countries are focusing on. Budget 2009 and this Budget in 2010 are setting New Zealand up to do very, very well compared with countries that are unfortunately suffering crises at the moment, and, as my colleague just noted, some have been downgraded. Some people out there might think those big credit-rating companies do not play any significant role. People might ask who they are to affect our future. Like it or not, New Zealand owes $200 billion to the rest of the world, so when New Zealand does have to borrow those funds, I, for one, would like to at least try to make them as cheap as possible. That is what a better credit rating is all about.

This Budget also caps new spending at $1.1 billion. That is unheard of after the previous administration. It is basically discipline of spending, and spending growth. It is capped at $1.1 billion.

💬 John Boscawen: The price of the ETS.

No, capped at $1.1 billion. We are talking about spending, I say to the colleague over there on my extreme right. I recall an Opposition member who interjected when I was talking about this in another debate. He did not think we could stay within the cap, but actually we have achieved that already in these Estimates of Appropriations. We are well within it. Surprisingly—and this is where the Opposition does not get it—even though we are being disciplined about spending, and we are refocusing, we have found $4 billion - odd of spending over the last 2 years that can be reprioritised, and that is why there is more elective surgery going on in New Zealand than ever before, particularly more than under the previous administration.

I will touch on a couple of points that have been raised in previous speeches. I am very, very disappointed, because I have just learnt that Labour will not be endorsing Transmission Gully. I am particularly saddened about that. As people driving home listen to the radio tonight, stuck in a traffic jam somewhere going up round the coast, they will note that I now understand that Labour is opposed to Transmission Gully. That is very, very sad news to me, and it is very, very sad news to people up and down the coast.

I will also pick up a point that an Opposition speaker was talking about. That speaker spent a bit of time on early childhood education. Members should just note—because this is where the discipline comes in, again, about fiscal spending and prudent management—that the total spend on early childhood education about 5 years ago was about $435 million, and it is now $1.3 billion. Have we had three times the improvement? Members should remember we are borrowing $240 million per week, as a country, simply to keep the lights on and to keep early childhood education funding.

I also note that we are paying about 5.5 percent interest on that $240 million. About 5.5 percent interest is being paid at a cost to the taxpayer on new debt of about $10 billion or $11 billion a year. So when we wander through the balance sheet and the appropriations, it is a very, very fair and prudent question to ask and address, whether we are getting at least that return from the spending that the Government makes in various votes. I am not talking about just the social spending—let us put that aside. Anywhere where the Government is involved in financial assets or financial investment, are we in fact getting more than 5.5 percent? Because if we are not, that is a direct loss to the taxpayer. I note that the Opposition continues its spend, debt, and borrow theme. Members will note on page 136 of the Estimates of Appropriations, which are on the table in front of us, there is an increase of $3 billion in interest payments this year—over $3 billion of payment of interest and other costs relating to the Crown debt. So as an investment now and in our children’s future, we should be doing all we can to minimise that, because for every single dollar that is borrowed and paid in interest, that is one less dollar available to fulfil some of the aspirations of all parties in the House. If you ain’t got the money, you cannot spend it.

I make one final point. A lot of noise has been made about GST. Nominal wage growth over this forecast period will actually increase more than inflation as forecast in the Budget. In fact, if we look at the consumer price index—I just cannot believe some of the lines of the members opposite—we see that real wage growth after the forecast period will be well ahead of inflation. Thank you.

The ASSISTANT SPEAKER (Eric Roy): I understand this is to be a split call. There will be a bell at 4 minutes; there are two 5-minute calls.

The most inadequate parts of the Appropriation (2010/11 Estimates) Bill are the sections on the intelligence services—the SIS and the Government Communications Security Bureau. For example, the Government Communications Security Bureau budget goes up from $59 million to $70 million without any explanation whatsoever, without a breakdown into capital expenditure or projects, or anything. On Budget day the Dominion Post asked me what the increase was for, and I hazarded the guess that it was for further processing for the National Security Agency of the communications intercepted at the Government Communications Security Bureau’s station at Waihopai. I said the Government Communications Security Bureau was reputed to be hiring more speakers of Middle Eastern languages for such tasks.

A Government Communications Security Bureau spokesperson, Hugh Wolfensohn, responded that “the vast majority” of the increase in this year’s Budget was tied to the building of the Government Communications Security Bureau’s new Wellington headquarters. So, as a diligent MP guarding the public purse, I thought I would find out whether that was true and what the figures actually were. On 26 May I lodged a written parliamentary question to the Prime Minister, asking what this year’s Budget allocation was for the new building. The reply on 3 June was that he would not tell me. Mr Key tried to hide behind the Public Finance Act, which prescribes the minimum information the Government Communications Security Bureau needs to provide, which is basically the gross budget for the year. But, as we all know, the Public Finance Act provides only the minimum requirements for Government department reporting, not the maximum requirements.

The whole process we are involved in, including in the select committee estimates examinations, is to get more information on departmental spending beyond that provided in the official Budget documents and beyond the minimums prescribed in the Public Finance Act. All Ministers comply with requests for extra expenditure detail, except the Minister responsible for the GCSB, the Prime Minister. John Key says that it is “established practice” not to say how much money is being spent on anything, but that is not an adequate reason. Everyone recognises that the Government Communications Security Bureau, along with the SIS, has to be a little bit more secretive in these matters than other Government departments, but the bureau still has to have a good reason not to disclose particular information where there is absolutely no security concern. Clearly, the expenditure this year on the headquarters of the Government Communications Security Bureau is not in any way a matter of security concern and should be disclosed. As I act for the taxpayer, I will continue to push for such disclosure.

As we have seen recently, including in the latest information on ministerial spending, transparency and openness is a good thing. Of course, the transparency in Government Communications Security Bureau spending will be less than for other departments, but zero transparency is not acceptable and is a recipe for inappropriate and excessive spending. Mistakes are made even when there is a fair amount of transparency, as was the case a year or two back when the Defence Force purchased 105 light armoured vehicles at a cost of around $700 million, but they have not been used in Timor-Leste or in the Solomons, and they have not been used by our provincial reconstruction team in Afghanistan, because they are not strictly useful for peacekeeping duties. They are too tank-like and closed-in to appeal to the population among whom our troops are doing peacekeeping work.

The only light armoured vehicles that have been used are the three that have been sent to Kabul to help the SAS contingent, but this is an operation that is not supported by a majority of New Zealanders. Last month the Dominion Post reported that 70 percent of Kiwis favour either a full or partial withdrawal of our SAS forces from Afghanistan, and the British and Polish Governments—two of the main contributors of forces to Afghanistan, outside of the US forces—are making plans to get out, over the next year. The war that the SIS has been involved in is a pretty pointless war, which has unfortunately only strengthened the extremist Taliban rather than weakened it.

There has been some good capital spending in defence on a multi-role vessel and on six new patrol boats, which already are providing useful work around the—

💬 Mr DEPUTY SPEAKER: I am sorry to interrupt the honourable member, but his time has expired.

Before the Budget was announced, the Prime Minister said in this House that there would be good news in the Budget for the elderly and for aged care. But I am not sure what the Prime Minister meant because there was no good news; there was only bad news. There was no new Budget funding for aged care, despite the acute shortages of staff in many aged-care homes and the pitifully low wages that aged-care workers are paid.

There was no increased budget for home care, either. It was quite to the contrary. More and more elderly all around New Zealand are having the few hours of home-care help that enables them to stay in their own homes cut. Yesterday Winnie Laban and I were in Invercargill, where 682 older New Zealanders have had their home help cut. Two hundred people turned up to a meeting to discuss the devastating impact these cuts are having on them, causing widespread distress, dismay, and anxiety. We heard horror story after horror story. A 99-year-old woman who is getting treatment for cancer has just had her home help cut. She has absolutely no one to help her, as her family live in the North Island. A woman who is blind is having her home help cut, as is another woman who can walk only with the aid of a walking frame. A caregiver told us that she had popped in to see a woman who had had her home help cut a month before. Nobody had been to visit this woman for a month, and she was then living in squalor. Is this how we want to treat our elderly? We were told that already two people who had had their home care cut had ended up in hospital after falls. These drastic cuts to home care around the country, which the National Party campaigned against before the election, amount to little more than discrimination against, and even abuse of, our elderly.

The story is equally grim for aged care. People who are living in rest homes are some of the most vulnerable in our society. Surely we have a duty to ensure that these vulnerable elderly are treated with dignity and respect, and do not suffer from abuse or neglect. But unfortunately, as a succession of recent reports have revealed, many residents in aged-care homes are suffering from neglect, and even abuse. We have reports of residents not being showered for days on end, not being walked properly, and suffering from malnutrition, weight loss, lack of fluids, or dehydration. Some are not being fed properly, or are being put on psychotic medication to keep them quiet. Residents have not been discovered for 8 hours after a fall, and so on. I could go on and on about the stories that people have been telling us, as well as those incidents that have been reported in official documents.

The aged-care workers we have been talking to around New Zealand say that most of them are so overworked they are simply unable to provide the care they believe residents need. Many of them say they are instructed not to talk to residents, because the workers are too busy and it is not in their job description. Many aged-care workers report they are doing the work that would normally be carried out by nurses on a routine basis. Despite lacking qualifications or training, they are dispensing medication—even drugs like morphine—on a routine or even daily basis. Nurses themselves report that on a shift they are caring for as many as 30 or even 50 residents on their own. One nurse I talked to was responsible for 30 residents in an aged-care facility and another 33 residents living in villas.

Can we imagine if these sorts of problems were discovered in preschools or creches, and if we had preschoolers suffering from malnutrition and dehydration, untrained staff, and toddlers left on their own for long periods of time? There would be a national scandal. So why do we turn a blind eye when it is happening to our elderly? One of the main reasons, I believe, that these incidences of neglect and abuse keep on surfacing is that the aged-care sector is almost completely deregulated. There are no minimum staffing levels, or any requirement for even minimum qualifications for aged-care workers. On the one hand we have large multinational corporations making huge profits out of aged care—Rymans Healthcare made a profit of $61 million last year—on the other hand we have older New Zealanders suffering from neglect and abuse because of a lack of staff.

Let me tell members about the great tax swindle that is also known as Budget 2010. It is a great tax swindle because it is the Budget that has taken money out of the pockets of many and given it to the few. It has given money to the people who do not actually need it.

Let me tell members about friends of mine in Kaitāia who together earn $60,000—their combined income. She earns $25,000 and he earns $35,000. They pulled out a calculator and did the sums. After they had finished their sums, they realised they will be $11 worse off. They were promised they would be better off after this Budget, but they will be $11 a week worse off. Compare that with the tax cuts afforded to the head of Telecom, who used to get $60,000 a week after tax. My friends get $60,000 a year before tax. The head of Telecom will get $4,500 a week more in his pocket from the tax cuts. I ask the House and I ask New Zealand what he could do with $65,000 a week that he could not do with $60,000. And my friends are told not to be envious. My friends work really hard. They put in as many hours a week as the head of Telecom puts in, and they are told not to be envious of somebody who will get an extra $5,000 a week in his back pocket when they will get $11 less a week.

I really want to talk about education and the broken promises afforded to the education system. What is it that National members do not understand about education? They just do not get it. They do not get that in order to improve the outcomes and the achievement of kids in New Zealand we need to invest in education, not cut education. It is ironic that some 3 or 4 weeks ago we were in this House debating the Education Amendment Bill, and part of the bill introduced information matching between the New Zealand Teachers Council and the Ministry of Education to identify individuals teaching in schools without registration. I agreed with that because every teacher in every school should be registered. Five minutes later, when the Budget came out—the great tax swindle—we found that only 80 percent of the teachers at early childhood education centres need to be fully registered. I wonder why there is that anomaly. We say that it is really important that 100 percent of the staff in schools are registered, yet only 80 percent of the staff of early childhood education centres have to be registered.

Let me tell members about Ruawai Kindergarten. I visited it about 3 weeks ago and the staff told me—I do not make these figures up—that because of the decision that only 80 percent of their staff have to be registered, they would lose $46,000 every year. I am not making those figures up. That is what the head of Ruawai Kindergarten told me. It is amazing that over here in the Grand Hall we had a situation—

💬 Mr DEPUTY SPEAKER: Two members called out “Tell the truth!”; that is unparliamentary language.

It was not long ago that over in the Grand Hall we honoured all the excellent teachers. The head teacher from Ruawai Kindergarten received an award for being an excellent teacher. She was recognised for the great work she was doing up in Ruawai. Sitting there, she said that she wondered what would happen in the Budget, which was to be announced that very afternoon. Ruawai Kindergarten had $46,000 ripped out of its annual budget. How is that money going to be made up? That money is going to be made up by charging parents. Ruawai Kindergarten has only 22 kids on its books. That is how many it can enrol at any one time. There are 40 kids on the waiting list. Those 22 families will be charged to send their kids to Ruawai Kindergarten. It is the only kindergarten for about 20 kilometres. If those parents cannot afford the charge—$46,000 divided by 22 families—if they cannot afford to make up that money, they will have to send their kids 20-odd kilometres away, which they probably cannot afford to do, or not send their kids to early childhood education. That is a crying shame.

What we are doing here is re-emphasising, or reinforcing, the fact that low and middle income people who cannot afford education will not be educated. It is reinforcing that whole cycle of underachievement, and that is the fault of this Government. It was interesting to hear David Bennett over there say that National members are listening to the sector, and that schools are happy to have a 4 percent increase in their operations grant. Well, if the Government had really listened to the sector, it would have got a 5.9 percent increase in the operations grant, because that is how much inflation is going up by. In fact, a 4 percent increase in the operations grant and a 5.9 percent increase in inflation is actually a 2 percent loss. It is about time that the National Government members got their heads round education. The only person opposite who has any experience in education is Allan Peachey, who is so out of favour that he is sitting on this side of the House, amongst us. He is the only person in the National Government who has any idea whatsoever about education.

Then we have the sad story about the wharekura. Anne Tolley said in this House that she was really rapt that the wharekura were happy with the amount of funding that they have got, but that is because they do not know how much they are missing out on. Under the previous Labour Government the kura in Taumarere, in my own patch of Moerewa, where I grew up, would have received $451,000. Unfortunately it will receive almost half of that. The wharekura at Whangaroa would have received $234,000, but instead it will get $140,000. This is the Government’s investment in Māori education. Te Kura Kaupapa Māori o te Tonga o Hokianga should receive $324,000, but instead it gets $218,000. I ask how the Minister of Maori Affairs, who is also the Associate Minister of Education, could allow that to happen. What is it that he does not like about Māori education? Why is he is prepared to support the National Government, which is underfunding Māori education to such a horrific extent? It is wrong, and both the Minister of Māori Affairs, who is also an Associate Minister of Education, and the Minister of Education, Anne Tolley, need to be hauled over the coals or held to account by Māori educators throughout New Zealand.

If we are going to raise children’s achievement, we need to invest in professional development. We need to make sure that our teachers are the most skilled. Every child in every class in every school or early childhood centre has the right to an excellent teacher. That is up to the Government. It is the Government’s responsibility to create conditions where excellent teachers can weave their magic. Those excellent conditions can be attained only by giving teachers the right training and the right professional development. But what do we see? We see cuts made to professional development. We see professional development on how to implement national standards, but let me tell members that national standards are about reporting achievement; they are not about teaching. So reporting is over here on this side, and teaching is over there on that side. The interaction between teachers and students is where learning occurs. That is where the investment needs to be made, not just in professional development on how to implement national standards. National standards on their own will not raise achievement. In fact, if they are implemented wrongly, and I believe that they are being implemented wrongly, they will have a detrimental effect on achievement in New Zealand.

I met with wharekura the other day and they are concerned about ngā whanaketanga, which are the Māori national standards. They do not feel that they have had enough time to implement them properly. Fair enough, they are only halfway through the trial year, but mainstream schools also deserve that trial year. It is not fair.

I believe that this Budget is a tax swindle, it is a Budget of broken promises, and it is a Budget for the few, not the many.

I start my talk on the Budget this afternoon with some remarks in relation to Kelvin Davis’ speech. He said that National has never got it in education. I tell the House what National has never got in respect of education: we have never ever got that there are kids leaving school who are unable to read and write. It is fundamental—it is actually a human right—that kids leave school with the basics, just with the bare basics. Under the last Government [Interruption]—I tell members across the House not to get all defensive—in its 9 years we had more kids than ever before leaving school unable to read and write. Just give them the basics. That is the starting point. We are not talking about rocket scientists; we are talking about saying to “Hone Davis”, “Marama Davis”, and the like of Moerewa that what we will give them is, first and foremost, the basics. We will teach them to read and write. But, oh no, when national standards came in, there was a hue and cry from the unionists and from the members opposite who are still paid up members of the New Zealand Educational Institute, flicking the money here, there, and everywhere.

💬 Sue Moroney: So bitter, because he failed as a union official himself—so bitter.

Oh, there we go—we can talk about that.

I love the Budget debate, because it is a time for nationalism. Personally speaking, I say that Budget debates are a time for nationalism. When we are talking about nationalism, we know that nationalism demands certain things from Governments. I think that the Budget should do four or five things. It should build on the recovery that we are in at the moment. It should strengthen the economy. It should, where possible, assist every family. We also need to keep people within our borders, because the strength is in keeping that capacity, that critical mass, in our own territory.

I suppose that one of the last things that nationalism demands is a fair tax system. It demands a tax system where the Government is not always putting its hand in the back pocket. I can understand Labour having its hand in the back pocket of the worker for so many years, even when times were tough, but I cannot understand what happened during the 9 years the Labour administration was in power. Those were good times. It was not the Depression; it was a boom time for New Zealand. What happened? We had higher taxes, higher taxes, and more higher taxes. That is what happened. Labour members have stood up in the House today and said that workers need a bit of extra money, a bit of extra this, and a bit of extra that. Well, that is what should have happened in the boom times. Now it has been left up to this administration to come up with a fairer tax system.

I will quote something that my colleague from Hamilton, David Bennett, said in his speech on the Budget. He spoke about two remarkable facts. First, two-thirds of the cost of personal income tax cuts has gone towards reducing the bottom two tax rates. We have taken the current 12.5 percent rate down to 10.5 and taken the 21 percent rate down to 17.5 percent. In other words, two-thirds of the tax cuts apply to people on income below $48,000. Secondly, 73 percent of income earners will now face a statutory income tax rate of 17.5 percent or less—73 percent of income earners will face a statutory income tax rate of 17.5 percent or less. I tell members that not even Roger Douglas in his heyday as Minister of Finance for that lot over there would have believed that New Zealand could have had such a good tax system. It is the beginning of a good tax system; the beginning of one of the fairest tax systems in the Western World. For those near the top of this income range, that tax rate is almost halved. It is down from 33 percent in just 2 years. This rate will also apply to income and savings, including KiwiSaver.

I will come back to the five points that I was making about nationalism. When I talk about the setting of a Budget, any Minister of Finance will tell us that it is a pretty difficult job, especially when the global economy is not doing too well. We had to make sure that we focused on good fiscal management. Everybody knows that we cannot spend more than we earn, so our Minister of Finance has shifted us from a decade of deficits, and we are on our way and are on track to record some modest surpluses in the next few years ahead. We are moving in the right direction. It would be a long time in New Zealand’s history since we thought that the corporate tax rate could be as low as it is today, and that is thanks to the Minister of the Finance, his Cabinet colleagues, and the Prime Minister.

This Budget is all about giving our country the tools to do the job in really tough times. Let me make no bones about it: these are tough times. Our small country of 4 million people is on the other end of the world, watching countries like Greece, Spain, Italy, and Portugal, and we are doing rather well. We are doing the things that need to be done. What things need to be done? [Interruption] Oh, OK. I could talk about all the stuff that has been happening over the last week but I will not, because that is just a distraction. This country is on the road to a good recovery. This country is on the road towards, to coin a phrase, getting up the ladder in the OECD. The previous Prime Minister used to rant and rave on about our country going up the ladder in the OECD. Admittedly, she did not talk about it too much in the last 2 or 3 years of her reign. But, however—

💬 Grant Robertson: How’s the closing the gap with Australia going?

It is going great. It is going great; fantastic, in fact. We are a small economy. We know which buttons to hit. We know not to put our hands in the back pocket of the workers. We know that every little amount of money that we can give back to the workers says that they have the ability to go and spend it as they like, instead of being told by Labour how to spend it. For goodness’ sake! It is Economics 101: let them have their own money. How simple is that? We let people have their own money so that they can make decisions for themselves. The left love to do nothing else but spend other people’s money. It is rampant in the unions and it is rampant in the teachers’ union, and Kelvin Davis knows it. The New Zealand Educational Institute, with all of its fees, loves to spend other people’s money. That is what that mob over there is about: those members love to spend, spend, and spend, and to put it on the card.

Well, it is no wonder that Mauri Pacific died a death. That speech was from the former leader of that great esteemed vehicle, Mauri Pacific. I think that Mr Henare might have been getting confused, in terms of New Zealand ambition, when he talked about Spain, Greece, and Portugal. He was getting confused between the economy and the FIFA World Cup. We are ambitious to meet Spain, Greece, and Portugal in the FIFA World Cup, but we want to do a whole lot better than that when it comes to the economy. Mr Henare needs to accept that if Labour had followed the advice of the National Party when we were in Government and had indulged in a frenzy of tax cuts, we would have been in the position of Greece. Year after year, John Key, Don Brash, and Bill English stood up and asked why Labour was not cutting taxes. Instead, we were paying down debt and investing in the economy, and that is why we are not in the position of Greece. That is why New Zealand is able to come out of this recession OK. We did not take the advice of the National Party to cut taxes.

This was a Budget where there were choices to be made. This was not a recession year Budget. Bill English has told us the recession is largely over for New Zealand. This was a Budget where there were choices available to the Government, and the wrong choices were made. This Budget could have been about increasing the skills of New Zealanders. This Budget could have promoted an economy that is based on sustainable jobs. I have just come back from China. Even in China, the message is getting through. The economy and the environment need to be seen together. We need to invest in high-tech, greentech new technologies that will grow sustainable jobs for the future. This Budget could have made that choice, but it did not. This Budget could have invested in our future and said that skills and training were important.

The Government talks about Australia a lot. It could look at the last two Budgets to come out of Australia and see an extra billion dollars going into tertiary education to lift caps on enrolments that they have had in place. The Australian Government knew that this was the time to invest in people. This was the time to say that skills matter. As we emerge from the recession, we need an economy where people can pick up those new technologies, take on new skills, take on new jobs, and become more productive. This Budget could have made choices to invest in people, but it did not. It made the wrong choices.

The Government said to young people that it was not very concerned about giving them a good start, because it wants to give tax cuts to the few. That is the choice that has been made. Any member opposite can go to an early childhood centre in his or her area, and then answer this question: do tax cuts for us in this House matter, or does quality teaching and affordable childcare and affordable early childhood education matter? That is the choice, and the choice has been made by National to give tax cuts to the few and take money away from early childhood education and away from parents.

I visited several early childhood centres in my electorate, after the Budget was delivered. They are deeply concerned, on a number of levels. They are concerned because a number of parents will not be able to afford the increased fees that they are being forced to charge. One early childhood centre that I visited with my colleague Sue Moroney was talking about an additional $50 per week being charged. That early childhood centre estimated that at least eight families out of the 30 families attending the centre would not be able to afford that increase. Is that the choice that the National Government wanted? Does the National Government want to put that choice on parents? Does it want to say that quality early childhood education is not its priority? That is the message that parents and families are getting in New Zealand today. This Government had a choice and it chose tax cuts for the few, above quality early childhood education for the many. That is an unacceptable choice, in my view.

An investment in skills could have addressed the fact that 60,000 young people are now out of work. Where was the investment in New Zealand’s future? This was not a time to give tax cuts to the few; this was a time to invest and to say that we want people in good quality jobs and we want sustainable development. We want research and development supported by our private companies and in the public sphere. Those choices were not made, because “short-term-ism” ruled. National has given a quick tax cut, designed to come in so it benefits National going into the next election, at the expense of the future of New Zealand, and I think that is shameful.

I think this Budget failed two key tests: it failed the aspiration test, and it failed the moral test. We need to aspire to be far more than what Mr Henare said about the basics—it is just about the basics; all we can aim for is to have people leave school with the basics. This Budget comes from a Government that told us it was going to be ambitious for New Zealand. That is not being ambitious for New Zealand. We should be investing in quality teachers and quality education, and not worrying about national standards and slogans. We need to make sure that people have a future in this country, and that they know they can stay here and work in good quality, sustainable jobs.

The real difference between Australia and New Zealand is not about tax. We can play around with all the numbers about taxes—State taxes, payroll taxes, and income taxes. But in the end the difference is actually wages. That is why people go to Australia. It is about wages. It is about having good quality jobs with good quality, high wages. Where is the plan in this Budget for wages? Where is the plan in this Budget to increase wages and increase quality jobs? There is no aspiration in this Budget to invest in the future of New Zealand. We have seen a tax swindle, a tax shuffle, that has increased prices for ordinary New Zealanders.

In my electorate, even in a relatively affluent electorate like Wellington Central, I see people who are struggling with their cost of living. The No. 1 issue I get coming through the door from people is the cost of living. What did this Budget do about power prices, food prices, and petrol?

💬 Hon Member: Nothing.

It is worse than nothing. This Budget has increased costs in electricity. It has increased the cost of food through the increase in GST. It has made the cost of living far, far worse for ordinary New Zealand families. The Budget fails the test to give them inspiration and aspiration. If the Government cuts education and cuts into health, then that cuts into the social fabric of New Zealand. We have seen accident compensation charges go up. We have seen early childhood costs go up. Any benefits derived from the tax cuts are wiped out. We have had examples in this House of families who are $55 a week worse off, once we factor in early childhood costs and accident compensation costs.

So what is the Government’s reaction to all of this? What can it do? Well, straight after the Budget speech Bill English started talking about asset sales, because, quite clearly, that is the agenda he wants to get to. John Key is not so sure. But the shine of the Budget wore off very quickly in my electorate, and I am sure it has in a lot of other electorates. This Budget has failed the aspiration test. It has failed the test of inspiring New Zealanders to get out there and be proud of their country, to work hard, and to be in a sustainable economy. But far worse than that, in my opinion, it fails the moral test that says that a society should be judged on how it treats the young, the old, and the vulnerable. If we look at how this Budget treats the young, we see cuts to early childhood education and to childcare support. Is that really the message we want to send? Is that really the moral message we want to send about the importance of young people? This Budget fails that test.

Let us look at how this Budget treats the old. The health budget does not even meet inflation and the increased costs of an ageing population. It goes backwards. There are home-care cuts. In my own electorate, I have had people in tears in my office about cuts to the care of their elderly parents. We have seen the rates rebate cut back. That fails the moral test in terms of supporting the elderly. It also fails the moral test in terms of supporting the vulnerable. There are mental health funding cuts. There are no new State houses. Pathways to Partnership and the refugee study grant have been cut back. How mean can the Government get in this country? Refugees, whom we have traditionally supported into study, have had their tertiary education funding cut by this Budget. This Budget fails the clear moral test of supporting the young, the old, and the vulnerable. It fails the test of aspiration. It is a very poor Budget, made up of very poor choices, broken promises, and a failure to support New Zealanders into the future.

It is my pleasure to take a call tonight. It is interesting to listen to what Opposition members have to say about early childhood education and taxes. According to them—in their world—National is all bad. We are making all these opportunities, yet National is all bad! I tell members opposite that over 1 million people voted for a National Government because they believed that National would make a difference. Over 1 million people decided that they wanted a change in Government because they were sick of what was happening in education. They were sick of working hard and not getting rewarded for it. They were sick to death of the nanny State, and the direction in which the previous Labour Government was taking this country.

What is this Government doing? First of all, we have addressed taxes. National has said that it wants people who are earning money to get some of their own money back, because the Government believes that people should have their own money back and that when they work hard they should get ahead. In this country we reward people who work hard. We are making the tax system more transparent and more workable. Opposition members have said they have been around and talked to constituents who have come through their doors. I have talked to many people, and I can tell those members that people are pretty happy to think they will work hard and get rewarded for it. People are pretty happy that we are listening to what they want. Instead of getting them trapped in a welfare system and handing out more and more money, we are giving them back their money. That is what will get growth in New Zealand.

What else did we do? We did things in education that the Opposition, obviously, does not like. We talk about early childhood education and not having 100 percent trained teachers in preschools. I remember when Labour was in Government and it tried to force through legislation requiring 100 percent fully trained teachers. There was an outcry in the sector because many, many people teaching in that sector were not qualified. My children went to preschool and some of their teachers were not fully qualified, but they were some of the best teachers my children ever had. They had a love for children, and they had the time and patience. The kids absolutely loved them. The previous Government tried to stop those teachers from teaching, even though they were still good teachers. They left the sector in droves. They should never have been driven out. Labour thought it knew best, but it did not. This Government listens to what parents want. We listen to what the people of New Zealand want, and then we put things in place.

I will talk about the top tax rate and quickly pick off that little bit, because tax is my area as I come from a chartered accountant—

💬 Sue Moroney: Talk about GST.

Certainly I will talk about GST. When we said we would put GST up we made adjustments absolutely everywhere else to counter that increase. We have cut tax for people who work, we have increased superannuation, and we have increased Working for Families. People might listen to the spin of the Opposition, but this Government is doing a good job. We listen to the people of New Zealand. Was there a huge outcry after the Budget? No, there was not. Did Phil Goff’s ratings go up after the Budget? No, they did not. He is sitting on a nice, flat—what is it—6 percent preferred Prime Minister rating.

I do not think this Labour Opposition has any fresh ideas to offer this country. The Opposition is lost. It is like a boat without a rudder. It is just floating along, depending on where the tide will take it. Those members have no good arguments against this Budget. They have no fresh ideas, because they are tired. We may see this Labour Opposition slowly, slowly get a new idea, but now it has none at all. It needs some fresh blood as it is extremely tired.

It was my pleasure to take a call in this debate this afternoon.

It is a pleasure to take a call in this debate. I want to start by commenting on Tau Henare’s presentation earlier on. It is always really, really suspicious when we see a Government hiding behind a recession and using the recession as an excuse for a Budget that lacks aspiration and lacks any sense of a plan, a strategy, or a vision. Bill English started off by saying that his Budget is about the long-term objective of lifting New Zealand’s growth rate and New Zealanders’ living standards. I could not agree more. That is a wonderful, aspirational statement. But when we start unpicking what this Budget contains, we realise that, underneath it, it simply will not deliver that. As many of my colleagues have spoken about, Mr English will deliver tax cuts to those most wealthy. The richest 5 percent will get one-third of the tax cuts. One-third will go to the very rich. John Key will get $218 extra a week, and the minimum-wage earner will get $3 extra. For some reason, the Minister of Finance seems to think that that will not increase inequality in this country. He thinks that somehow giving hundreds of dollars a week to those who earn the most, and only a small amount to those who earn the least, will not increase inequality. I do not get it. This is the first Budget I have been in Parliament for, so maybe there is something I am missing, but that increases inequality. It makes New Zealand a much more unequal place.

The big sleight of hand is the tax breaks that were going to middle-income earners. Those middle-income earners might get $20 extra a week, but they pay 2.5 percent more in GST. Of course, that is only meant to be a temporary thing and just the one time, but it stays up there, does it not—

💬 Paul Quinn: Are you giving that to someone? Of course you’re not.

I tell Mr Quinn that it stays up there because if GST goes up 2.5 percent, prices do not come down the next year; they stay up there. People have to pay increased power prices. They have to pay increased tobacco prices. There is the increase in accident compensation costs and in early childhood costs. I have been to three or four early childhood education centres in my electorate in the last week, and they all tell me exactly the same thing: the parents who are sending their kids to that centre will be paying more. Many of them will be dropping out and not sending their kids there any more.

Also, we will have an inflation rate of 5.9 percent. That inflation rate will push up interest rates. We are one of the only countries in the OECD that has had interest rate hikes in the last few years.

💬 David Bennett: What about Australia?

We are one of the only countries with interest rate hikes.

💬 Craig Foss: Half of Europe has put it up. What are you talking about?

In the US and Europe—all of those countries have not had interest rate hikes. Wages might be predicted to rise by 2.5 percent, but they will be undercut by the little amount of money that people will get in their hands. Overwhelmingly they will be paying more taxes, more costs, more inflation, more on their home loans, and more on accident compensation, and they will get 2.5 percent. If people happen to live in Auckland, there is a bill of about $500 each that is coming for them to pay for a new Auckland super-city they do not want. The ratepayers in my electorate will be paying more. It will cost $200 million to pay for the super-city. If we divide that by the number of ratepayers out there, it is about $500 each. We can ask anybody on the street whether they will be better or worse off, and they will know really well that they will be worse off. That is what we hear and that is what is in the polling. I can guarantee that the Government’s polling is no different from our polling. Those members know that this is a huge swindle and we will be going backwards.

This Budget is being touted as the thing that will stop people crossing the Tasman to live in Australia. As my colleague Grant Robertson said, people do not cross the Tasman because the tax rate is marginally lower; they go for better jobs and better wages. What will we find on 1 October when we go to Australia? We will say: “My God, it’s cheap here. It’s really cheap in Australia.” That will be because they are paying only 10 percent GST, whereas we will be paying 15 percent. The average person will think to move to Australia because it is a whole lot cheaper. This will increase the flow across the Tasman, not reduce it.

As if we will not get closer to Australia! One day after the Budget, the Minister of Finance said: “Let’s see what we can do with Kiwibank. Let’s flog off Kiwibank. Let’s sell off some shares in Kiwibank.” That man wants to rename Kiwibank “Koalabank”. That is what will happen. As soon as we put that bank on the sharemarket, it will be Australian banks that will buy the shares because they want to dominate the New Zealand market. We will have “Koalabank”, not Kiwibank. Kiwibank is the very pride and joy that people want to hold on to, but the Minister of Finance is willing to flog it off.

I ask what this Budget will do for the economy. According to Treasury, this Budget package will improve GDP by an accumulative 0.9 percent over 7 years. That 0.9 percent over 7 years is pathetic. That is simply pathetic. What about the jobs? This Budget, according to Treasury—this is not me, this is according to Treasury—will generate 10,000 jobs over the next 7 years; 7 years to generate 10,000 jobs!

💬 Hon Parekura Horomia: What about the 300 who lost their jobs at Wairoa?

I thank Mr Parekura Horomia—

💬 Hon Member: You need to eat more lamb, because it’s not going through the works.

Absolutely! We will need to borrow $1 billion to finance these tax cuts over the next few years. We have to borrow money to finance the tax cuts. When we were talking about putting money into the Cullen fund, the idea of borrowing to put in the Cullen fund and investing was completely rejected out of hand by the Minister of Finance, but we will borrow money to finance tax cuts for the 5 percent at the top of the scale. That is what we will do.

But let us look at what will really generate growth in this economy: research and development. The increase in research and development is the big success story of this Budget. It was so headline-grabbing that it was announced a week before the Budget. The increase in spend in research and development is 7 percent, we know that the inflation rate will be 6 percent, so we have an effective increase now in research and development in science of about 1 percent. The $56 million a year is new money. Most of that new money is tied up in grants and vouchers. The 15 percent tax credit that Labour offered has been scrapped. We have had nothing for more than 18 months—actually we will have had nothing for 2 years by the time this comes into being. A bunch of businesses will have to go on their hands and knees to a bureaucrat to apply for a voucher or a grant.

What an incredibly inefficient way of administering research and development! No other country in the world does this. Australia gives 40 percent tax credits to its most innovative companies, and here we ask our companies to apply for a voucher or for a grant. Look at universities and tertiary education. What do we have there? Effectively their budgets have been cut for the last 2 years because they have not been keeping pace with inflation. So for research and development the Budget has absolutely no effect. We have a real generator of highly productive jobs and the best opportunities for New Zealand for the second year running—

💬 Mr DEPUTY SPEAKER: I am sorry to interrupt the honourable member, but his time has expired. I understand the next call is a split call. I say to Melissa Lee that the bell will ring at 4 minutes.

It is a pleasure to rise and speak on the Budget, but before I do I will comment on just one aspect of the comments of the previous speaker, David Shearer, about polls. There is nothing to comment on in that particular speech. Does that member live in the same electorate? No, he does not. Does he live in the same country? I do not know; I am guessing that he has just recently arrived. Let us talk about the polls. Let us talk about the preferred Prime Minister poll. John Key is at more than 70 percent—oh my God! Where is Phil Goff? He is in never-never land.

What a brilliant Budget it was. I must say the Minister of Finance, the Hon Bill English, delivered a Budget to move New Zealand forward both economically and socially, making New Zealand a more desirable place. The previous speaker talked about people wanting to move across to Australia. Let us talk about the real terms here. We have net gain. People are moving back to New Zealand because they are so interested in what is going on in New Zealand. They are feeling more secure about New Zealand’s future, so they are coming back to New Zealand. That is because of this John Key - led, National-led Government.

This Budget has been long overdue—25 years overdue—as it is the most significant tax reform package in New Zealand in that time. The thing that appeals to me most of all is that the average Kiwi, the average Joe Bloggs out there in New Zealand, will be rewarded for effort and hard work. It will encourage the average Kiwi to save and it will help families to get ahead. To me, that is a fabulous position to be in—to get ahead as a nation.

There has been some amazing feedback since the Budget; the headlines speak volumes. One that sticks in my mind is “Lollies for all”.

💬 Craig Foss: The Dominion Post.

It was the Dominion Post; I am sure it was. Everyone knows that the media are not very kind to the Government; the media are not exactly the Government’s public relations spin doctors. But they said: “Lollies for all”. The media have been so positive about the Budget. I have to say that people like those in the Employers and Manufacturers Association are talking about the tax cuts being fair and saying that the Budget is the best thing since sliced bread.

It has been interesting since 20 May to sit here in Parliament and listen to members opposite do their best to pick holes in this Budget. But from what I have actually listened to so far, they are having a difficult time of it. Do members know why? They know they cannot pick holes in it, because it is a good Budget. They know that it is a good Budget because two-thirds of New Zealanders will pay a maximum tax of 17.5 percent. That is more than Labour has ever done for its voters. People who have traditionally voted for Labour are getting a better deal with this National Government. New Zealanders who earn less than $48,000 per annum will have to pay no more than 17.5 per cent tax.

Earlier one of the Labour members talked about a tax swindle. It was a catchphrase; Labour is very good at catchphrases—things like the “Axe the Tax” bus. What a fantastic flop that was. Where did the bus go? Did anybody turn up? Hardly anybody, not even Labour’s own caucus members, turned up. And what is Labour’s answer for building our economy? It is higher taxes, increased borrowing, and capping public sector salaries. It is incredible to me that Labour wants people to pay more taxes. It complains about what the Government has apparently not done. Is Labour going to reverse the tax cuts? I do not think so. It will not say that.

What is Labour’s position on tax cuts anyway? I think it has four options even on GST. Let us talk about that. What is Labour’s answer? What is Labour complaining about? This is a fantastic Budget delivering for a better economy, and for a better future for our children, our grandchildren, and all New Zealanders. The average person is $15 better off per week in take-home pay and the average family is $25 better off, even if we consider the GST rise. It is a great Budget.

This Budget has received wide support in New Zealand through rebalancing our tax system and putting more money back into people’s pockets. At a time when, internationally, many countries are looking at increasing taxes, we have substantially reduced them across the board. As important as putting more money into people’s pockets is, this Budget has created incentives for people to be aspirational in developing their skills, to seek better jobs, and to be paid higher wages and salaries.

The significant across-the-board tax cuts in the Budget are not just about giving people more money but also about providing the right opportunities and incentives to self-improve and get ahead. This will encourage people to get more skills, and to get better-paying jobs and work over time. This is very much part of the Kiwi can-do ethos that people can get out there and, with hard work and determination, better themselves. They do not need to be dependent on the State, although there will always be those people who are, and whom we need to care for. But before we can do that as a State, we need to have robust and strong businesses. Before we can have people improving themselves and getting ahead with improved skills and better work opportunities, we need to have robust and strong workplaces.

Sitting suspended from 6 p.m. to 7.30 p.m.

I will speak of two remarkable facts. Firstly, two-thirds of the cost of personal income tax has gone towards reducing the bottom two rates. That takes the current 12.5 percent rate down to 10.5 percent, and the 21 percent rate down to 17.5 percent. In other words, two-thirds of the tax cuts apply to people on incomes below $48,000. Secondly, 73 percent of income earners will face a statutory income tax rate of 17.5 percent or less. For those near the top of that income range this tax rate has almost halved—down from 33 percent in just 2 years.

One member of the public said to John Key: “Good Budget in my thinking. Get the country earning more than it spends (note to self). As individuals, and as an economy, shift to productive investment. Let’s get the country cranking. Keep up the good work.” There is an inherent sense that in such a resource-rich country with such resourceful people, we can do better, and this Budget aims to enable people to do better. It is aspirational. Not only does it help people right across the board in every tax regime but also it creates incentives for people to upskill, improve their situation, work hard, and be rewarded for their effort. A member of the public said to Bill English, the Minister of Finance: “Keep up the good work, Bill. The Budget you have produced will move New Zealand forward and was long overdue. I appreciate all the hard work you do.”

First and foremost, this Budget is about achieving faster and sustainable economic growth. That is the most important thing, because it is the only way we can get the higher-paying jobs and the opportunities in this country for hard-working Kiwis.

Astonishingly, although we had nearly a decade of very good economic environment, our recent track record has been poor, and that was even before the global recession hit New Zealand. We were already in recession, and, before that, growth was paltry. We relied too much on borrowing, consumption, and unsustainable increases in spending. This Budget will help turn that round so that we have faster growth from savings, exports, and productive investment.

One particular area that we feel is very important is law and order. That remains a major area where this Government is focusing on things that matter to all New Zealanders. The Government promised 300 more police on the streets of Counties-Manukau by the end of 2010, and 300 more for the rest of New Zealand by the end of 2011. Since November 2008 New Zealand police numbers have grown by 350, and we are on track to achieve the 600 additional officers by the end of 2011. This Government is delivering on its promise of ensuring that our police are well resourced, well trained, and well supported. Thank you.

I say to Jonathan Young that it is always difficult when one has one’s speech interrupted by a dinner break. It is especially hard for us; I ended up with heartburn from having listened to him before dinner!

I will start by passing on a little rumour I heard on the way to the Chamber earlier today. Michael Laws is not going to be Mayor of Wanganui any more; he is coming back here with Winston Peters. I see that has got one or two members opposite weeping—

💬 Hon Darren Hughes: He used to be one of them.

They both used to be Nats but they saw the error of their ways and left that party.

This Budget has been a disaster for people in my electorate. They see that the chief executive officer of Telecom will save $1,600 a week in tax, but what will happen to people in my electorate who are struggling? To those in Finlayson Avenue in Clendon, the Budget gives just a few crumbs. What they will get, with GST increasing, is $3.30 a week. That is around $170 a year. Is $170 a year going to lift Māori in Clendon out of poverty? I do not think it will. Many people swallowed the line that this was a Budget for them. Well, it was not for the people in Clendon in my electorate, and it was not for the people in Wiri in my electorate. Those people will have to manage with much less money. From the beginning of next month they will find that the price of power has gone up. They will find that the price of petrol to get them to work, if they are lucky enough to have a job, has gone up. That $170 a year will soon disappear.

What is the answer to this? A week ago, at this time, I was sitting in a draughty school hall at a meeting about a new prison to be built in my electorate. It will hold 1,500 people. Where was the Minister of Corrections? Where was the Associate Minister of Corrections, considering that Manurewa is part of his electorate? They were nowhere to be seen. Let me paint a picture. I was in that draughty hall and some 12 or 15 kilometres away a person was sitting around in her blue fluffy slippers, with the heater going; she had her royal blue dressing gown on, her hair was in curlers, and she was holding a sherry, watching Coronation Street, and reminiscing about Ena Sharples. That woman should have been at that meeting. Dr Pita Sharples, the Associate Minister, should have been at that meeting, but neither he nor the Minister of Corrections was there. Instead they sent along Cam Calder, the most junior member in the National Party caucus, who tried to put forward what was happening. He asked us to think about the prisoners. The people there were not thinking about the prisoners; they were thinking about their own families and what will happen to their neighbourhood. Those two Ministers did not turn up. I have seen jellyfish with stronger backbones, and that is the reality. When the going gets tough, they disappear.

The Government came up with a solution: it would not deal with things at the top of the cliff; it would deal with them at the bottom of the cliff. I would have been very supportive if, instead of 1,500 jail beds, many of them maximum security, this Government had come up with 1,500 early childhood education places so that we do not make the same mistake that we have been making year after year. When one tries to get more early childhood education places, one finds that they have gone off the boil. Towards the end of the last Labour Government I was getting more early childhood education places throughout my electorate, as were many of my colleagues. They have dried up, and that is an awful pity. The Māori Party has quite a bit of support in my electorate, and what is it offering the people there? They might get a job in a public-private prison guarding some of their mates. What a promise! This Budget failed to deliver for ordinary people.

In South Auckland we have many problems. We have the largest amount of pokie machines around. People try to win a jackpot to pay for the groceries, but they lose out. There are liquor outlets all over the place. On every street corner, where in the old days there used to be a dairy, there is a liquor outlet, which is open from first thing in the morning to late at night. I want the Government members over there to get up and say how $170 a year will help those people. They might say it will pay for so many bottles of DB or Lion, but that is the problem; you see, we as a community are fighting that problem. I introduced a bill some time ago to enable people to have a say on liquor outlets. I have been supported by many of the Manukau city councillors, especially Daniel Newman, who has taken a real lead on this matter. But Dr Sharples, the Māori MP who covers Manurewa, has been silent. He has been to New York, but will that help the families with $170 extra a year? No, it will not, and I think that is a real pity.

One of the things I do is put out a very good paper, the Hawkins Herald. It is better than the New Zealand Herald, with far more substance. In the autumn edition was an article on the price of cornflakes and what people will have to pay. The cost to a Manurewa family per week—

💬 Dr Paul Hutchison: Who pays for the Herald?

Well, Parliament pays for it, and I am proud to use my money to let people know what I am up to. That member does not let his constituents know what he is up to; he is usually scurrying away from a meeting where he has been whipped.

The thing is that those people are going to find things very tough. When we look at what they have to buy, we see that their grocery bills are going up. We have very large families in Manukau: many Pacific families, many Indian and Asian families, many Māori families, and Pākehā families. Not all of them can afford to insure their cars, and putting up GST will just make things a bit harder. People do not pay their power bill on time. The dilemma they have is whether to feed their kids—get in some food—or pay the power bill. That is the question, and that is why this Budget is a very poor Budget. The ordinary people in my electorate have been short-changed by a greedy Government.

As the debate on this year’s excellent Budget draws to a conclusion, it is interesting to reflect on the fundamental differences evident in philosophy and economic understanding that the contributions of Government and Opposition members have revealed. Where Government members have championed aspiration, members opposite have championed envy. Where Government members have demonstrated their determination to assist New Zealanders to gain extra rewards for honest endeavour and to improve their lot in life, members opposite have resisted the measures that have been so widely and so warmly welcomed by people—including many of their own supporters—preferring to ignore the fact, the indisputable fact, that this Budget leaves the vast majority of New Zealanders significantly better off.

Where Government members have focused on achieving economic growth, creating a fairer tax system, and encouraging research, investment in jobs, and household savings, members opposite have argued for more of their failed policies of the past 9 years, which saw Government spending lurch out of control and the best economic circumstances of a generation squandered. In short, where Government members have focused on the needs and the goals of the many, members opposite have contrived to manufacture problems for the few.

💬 Hon David Parker: How can you say that with 30 percent of your tax cuts for the top 5 percent?

Opposition members’ hearts have not been in it, in this debate, I tell Mr Parker. Their heads certainly have not been anywhere near it, and most of the members opposite have been going through the motions in this debate, to offer some form of opposition merely for the sake of opposition. But in their hearts they know that the changes that this Government is making are the right ones, and that Budget 2010 is one of the most significant and impressive documents of its type to have been delivered to the House in my lifetime. That is why I will be proud to cast my vote in support of the Budget at the end of this debate—

💬 Hon Darren Hughes: Oh, a difficult decision for us!

—and it is why I have been proud to publicise and discuss the measures, I tell Mr Hughes, that it outlines in my electorate of Hamilton West. Like most people in Hamilton, I want our schools and health system to be generously funded, along with other essential social services. I share the hopes of many for higher living standards and fairness in our tax system. I am strongly motivated in my political career to create the conditions in our society and economy that will encourage my children, and all young New Zealanders, to see their long-term future here in New Zealand. To achieve that, we must face up to some major challenges.

In recent times we have been falling further and further behind, with the result that all decisions must be made in the context of some grim realities. Members opposite consistently ignore the disastrous legacy that they bequeathed to the incoming National-led Government at the end of Labour’s irresponsible 9 years in office. The global downturn certainly threw the problems into sharp focus and made things worse. But the previous Government cannot avoid responsibility for the serious and prolonged deficits that the new Government inherited, and that all New Zealanders are now burdened by and paying for, as a result of Labour’s reckless mismanagement of the economy.

💬 Hon David Parker: Then why did you cut taxes? If the deficit is a problem, why did you cut taxes?

For a country of 4.3 million people, I tell Mr Parker, to be forced to borrow $240 million a week just to meet existing expenditure commitments, is a disgrace, and it is Labour’s disgrace. That outrage was directly caused by Labour. That burden translates to approximately $12 billion per year, without the new Government having the luxury of funding many of the significant new proposals that we would fund, given better circumstances. As Bill English has said, Governments that operate heavy deficits do not have choices.

Yet not one member opposite has apologised during this debate for Labour’s reckless adherence to the ostrich economic philosophy that was the trademark of the Clark-Cullen Labour Government. For 9 years while Labour was in Government, members opposite buried their heads in the sand as talented New Zealanders departed our shores in droves, in search of better conditions and a fairer tax system. Those members kept their heads in the sand as bureaucracy exploded, and as essential public services came under increasing pressure. They shoved their heads and long necks deep down the hole as Government expenditure increased at twice the rate of revenue for 5 years—a shameful record that seriously undermined our international credit rating at a time of huge danger in global markets.

Had the voters of New Zealand not rightly thrown Labour out of office so decisively at the 2008 general election, we might now be facing a fiscal disaster akin to those we are witnessing in parts of Europe and elsewhere right now. No household can spend twice what it earns; to do so leads to harmful deprivation of basic necessities, and mortgagee sales. No business can spend twice what it earns and remain sustainable in the long term. To do so leads to redundancies and business failures, and the debts often knock over others, as well. And no Government can spend twice what it earns without leaving an unfair and unmanageable burden for future generations.

With that sort of reckless stewardship from the previous Government, is it any wonder that under Labour, New Zealanders saved less and borrowed more? That is why I am proud of the leadership that Bill English, John Key, and the current Government have shown, to steer the good ship “New Zealand” through the stormy waters that our economy has faced since we came into office—though we must not underestimate the challenges still to be overcome. We are sailing into calmer waters, and our new crew has the vision, the skills, and the determination to make the most of the conditions ahead.

That is why I am particularly proud of the good sense and imagination that the Minister of Finance has demonstrated in Budget 2010. The public agree, the media agree, my constituents in Hamilton West certainly agree, and, as the polls confirm, even most of the dwindling bunch who call themselves Labour supporters agree. As previous Government speakers have noted, first and foremost this Budget is about getting faster and sustainable economic growth. That is the most important thing we can and must aspire to, because it is the only way we can secure the higher-paying jobs and opportunities that hard-working New Zealanders demand and deserve.

One important ingredient in the mix is the significant change we have made to personal and company income tax rates to incentivise and reward honest effort. Throughout this debate and again tonight we have heard Labour members bleat their tired refrain of “tax cuts for the rich”, because that is what they were determined to do before the Budget was even delivered and they lacked both the wit and the integrity to acknowledge that the Budget was not what they had been expecting. Without a shadow of doubt the new tax rates are great for those on modest and fixed incomes. My constituents in Hamilton think it is great that two-thirds of the cost of personal income tax cuts have gone towards reducing the bottom two rates; in other words, taking the current 12.5 percent rate down to 10.5 percent, and taking the 21 percent rate down to 17.5 percent. It is a fact that two-thirds of the tax cuts apply to people on incomes below $48,000. If that is tax cuts for the rich, then Labour members have even lower aspirations than I have previously given them credit for.

As my colleague Jonathan Young noted a few moments ago, 73 percent of income earners will now face a statutory income tax rate of just 17.5 percent or less. For those who are near the top of that income range, that tax is almost halved, down from 33 percent in just 2 years. Let us not forget that significant provision has been made for superannuitants and beneficiaries. If that is tax cuts for the rich, then the people of Hamilton say “bring it on”. The Dominion Post editorial hit the mark when it described the Budget as “a coherent document that should encourage saving and investment and discourage consumption and speculative investment in property.”

Yet Labour would like to scare people into thinking they will be worse off as a result of the Budget package, so let us compare the records of the two previous Governments. Under 9 years of National up to the change of Government in 1999, the food price index increased by just 9.9 percent. Under the following 9 years of Labour it shot up a massive 37.1 percent. So it is more than a bit rich for Labour MPs to shed crocodile tears about the impact that increased prices will have on families, when their record was such a disaster. Let us look at health: the previous Labour administration left the incoming National Government with around $160 million worth of unfunded services to fill, and quietly stripped $150 million out of Vote Health before the last general election. It cut 30,000 people from hospital waiting lists. In its latter years it increased funding, certainly, but at the same time somehow managed to decrease health services and access to essential treatments and pharmaceuticals.

This is not just a Budget for challenging times, and it is not a Budget for the few. It certainly is not a Budget that continues the failed ostrich economic policies of 1999 to 2008. This is a Budget that will attract back home talented New Zealanders. It will provide the right incentives, fairer rewards, and significant growth, so I say “Well done!” to Bill English, and “Well done!” to the support partners in our Government. Thanks to their efforts, soon we will be saying “Well done, New Zealand!”. This is an excellent Budget.

We can pontificate as much as we like about the Budget, and we can share as much rhetoric as we care to share. In fact, National MPs have done plenty of that. We have heard a lot of talking in the abstract. I do not know how many times I have heard the word “aspiration”, but I am still none the wiser as to why Government members believe that this Budget creates any aspiration. We have heard a lot of talk about hip pockets. Sometimes we have even heard contradictory slogans coming from National MPs, including, for instance, the fact that the Government is fiscally prudent, even while we see the country moving into an extra $1 billion of debt in order to fund the tax cuts—and that is before I take into account the additional cuts that have been made to health and education to fund them.

I can understand that perhaps that is just a case of contradictory messaging. What I cannot abide is the utter hypocrisy of claiming that, in any way—

💬 Tim Macindoe: I raise a point of order, Mr Speaker. The member knows she cannot use that word in this House, and it is very rich coming from her.

💬 Hon Darren Hughes: He has just ruined his point of order.

💬 Mr DEPUTY SPEAKER: You do not need to comment further. The member knows that she cannot use that word.

What I cannot abide are any slogans or statements claiming that this is a Budget for the future of New Zealand, when in the same breath we hear that the last Budget’s suspension of contributions to the New Zealand Superannuation Fund will continue. That does nothing to assist the next generation to pay for the superannuation of the generation of baby boomers. We need to provide them with superannuation if we are to continue the superannuation accord on supporting the old in retirement. Add on top of that the fact that future generations will be subsidising heavy polluters through the Government’s emissions trading scheme, which does nothing to encourage or incentivise a reduction in emissions. Finally, I could also add to the list the fact that the accident compensation scheme has been whittled away. It is a scheme that Government members all benefited from in their youth and in their heyday—if they ever had one, indeed—but young people will not have the benefit of it. So I cannot let the assumption stand that the Government has done anything for future generations of New Zealand.

I want to apply a different measure to the Budget, and it is not one of slogans, statements, or calculators. It is simply the message that I am receiving out and about in Auckland Central, in particular, about people’s individual experiences of what the Budget will mean for them—putting aside all the hypothetical talk of hip pockets, and looking at what it will mean in practice for some of those families. The first measure I would choose to raise is the simple measure of the cost of living, because that is what is raised with me most often when I am talking to families in particular. Of course, they have been able to do their own maths on the Budget. They recognise that in many cases, particularly if they are low and middle income earners, their tax cuts will be modest compared with those of some higher-income earners. A lot of their tax cuts will be almost immediately swallowed up, not just because of the fact that New Zealand will have one of the highest consumption taxes in the OECD via the increase in GST to 15 percent—and people are very alert to that—but also because of the fear of what an increase in inflation to 5.9 percent will mean for the many, many homeowners in Auckland in particular who have disproportionately large mortgages. Members opposite who are from Auckland will know that in that area, households tend to spend a greater proportion of their income—well above the national average—on rent or mortgages. That means the rise in inflation is a real fear factor for those people. The true measure of the Budget is whether people will feel better off, and on that measure it will fail.

I want to delve into the housing issue a little more deeply. It has been brushed over by Government members as something that they have somehow dealt with through the simple measures we see in the Budget, but I do not believe that is the case. I ask what the Budget will do, first of all, for wannabe first-home buyers, and the plentiful renters that we have in my city. The Government decided to target the measure of depreciation, but I do not believe from what I have seen that that will in any way compel those housing investors who are holding on to our housing stock to sell up; rather, they will recoup the additional loss that they anticipate, and that will have a harmful effect on the many renters in my electorate. For instance, a survey of landlords was taken—

💬 Hon Nathan Guy: Which electorate? You don’t have an electorate.

The electorate where I represent Labour. It is known as Auckland Central. A survey of landlords found that 50 percent of landlords plan to increase rents. That will have an incredible impact on low and modest income earners, who will get maybe $15 from their tax cuts but are facing an increase in rent of—I have heard cases of this—between $10 and $30 per week. Earlier in the evening Aaron Gilmore talked about a student who had come into his office; he had sat the student down and jubilantly shown him that he would be $2.62-a-week or thereabouts better off as a consequence of the Budget. What he did not mention was the fact that the student, as a renter, pays a landlord for his accommodation, and may face a similar increase when the full effects of the Budget kick in. He also did not mention the fact that students are facing a $50 surcharge on their student loans, which in many ways is interest on student loans by stealth. That not only wipes out the student’s $2.62 but also puts him in the negative.

What about those who aspire to own their own home? The Budget does not fix the ongoing supply issue, which we already know about. In fact, all it does is affect people’s ability to save, if they are already renters in the rental market. Finally, on that last measure, it does not make renters’ lives better.

I will touch on young families, as well, because in that area we are seeing already very tangible examples of how the Budget will affect them. Anyone who has visited an early childhood education centre will know that. On my side of the House, I know that many Labour members have done that, although I am not sure many National MPs have visited early childhood education centres recently. In Auckland Central, for instance, I visited a Samoan bilingual early childhood education centre on Richmond Road. There was no rhetoric in what they shared with me; the numbers were pretty simple. They are facing a cut in their funding of $100,000 purely because they aspired to have their centre full of qualified teachers in order to get better outcomes—because the evidence demonstrates that that is what happens when we have qualified teachers in early childhood education. They followed the direction of the previous Labour Government and ensured that they had a higher ratio of qualified teachers in their centre, and they are now being punished for that, as are many early childhood education centres in Auckland, which tends to have a high proportion of qualified, registered teachers teaching in its centres.

I ask Government members whether they would care to speak on that point and perhaps share some tips with the people running those centres. For instance, is it their suggestion that they should start charging individual parents an average of $20 to $30 per child to keep them in what are now underfunded early childhood education centres? What should those early childhood education centres do about families who were previously covered by Work and Income, which gave their child additional support? The threshold has moved, so they are facing a double hit. How is the Budget making their lives better?

It would be remiss of me not to mention young people. There has been much trumpeting about how the Budget has initiatives that will assist the 60,000 young unemployed people in New Zealand. To date, the Government response on youth unemployment has, first and foremost, been to deny the numbers and to talk about benefit numbers. That is completely disingenuous, given that a number of young people are not eligible for benefits, which is the measure the Government chooses to use. The Government’s second technique seems to be to try to reduce the number of those unable to work who are able to access support from the Government by forcing them on to the Limited Service Volunteers programme before allowing them to access the benefit. The final attempt to assist those young people seems to be to deny them access to training, education, and support. At best, it is a poor plan, and, at worst, it is ignoring a significant issue. Again, the Budget has done nothing for those young people.

Just before the Budget came out I was asked by a National MP, whom I will not name, whether I was looking forward to my tax cut. I told him no, and that I would rather he did something useful with it, like continue to fund early childhood education. He responded that my tax cut would make me aspirational. I did not respond to him at the time, but I have to say, having seen the Budget in its entirety now, that in some ways perhaps it has made me aspirational. Now I have more aspiration than ever before to make sure that this Budget is one of National’s last Budgets.

What a challenge that member who spoke previously, Jacinda Ardern, laid down—that this is one of National’s last Budgets. Somehow, judging by the response from the people of Rangitata, I think not. In fact, I have to say that the response I have had—and I am happy to detail it during the course of the next few minutes—has been quite overwhelmingly positive. It has not been “Hurrah!” sort of stuff, nor would we want that when in fact we are just making our way out of a recession. Nevertheless, there is a quiet confidence that this Government at least knows where it is going.

How has the Budget gone down with the people of the Rangitata electorate? Well, it is almost 4 weeks since the Budget now, and I can say that the dust is settling. I say that because—let us face it—when New Zealanders are looking for inspiration that this is the place to stay, and that they should not pack their bags, put a container on the pavement, and pack their belongings into it to take them overseas, they do look to Budgets for that inspiration. This Budget was certainly about our seeing the way out of this particular mess, which was largely left to us by the stewardship of the previous Government. Across New Zealand, New Zealanders are enjoying the knowledge that this Government will take hard decisions and will deliver a brighter future for them and their families.

In my electorate offices, I have had phone calls and emails. They have been largely positive, but I will not stand up here and say every single one of them was positive, because that would simply not be true. One property owner raised a concern with me—one property owner. Then even he found that the matter was not as bad as perhaps the rumour mill had suggested to him. I have had one kindergarten teacher express concern to me. Then, to counter that, at a meeting I attended a man involved in governance of a kindy said that, actually, National had got the mix about right. After all, he is in the position to have to determine how his early childhood education centre makes its way forward.

I have held two post-Budget breakfasts within the electorate, both in fairly small locations—not in Timaru or Ashburton, which was basically because nobody asked for them there. But I went to Rakaia and I went to Methven, and I invited people to join me for breakfast and talk about the Budget, to hear more of the detail. It would be fair to say that at Budget time it is all about headlines; the detail comes later. For many New Zealanders, that detail will arrive in a pay packet, or they will talk to their accountant about just exactly how the Budget affects them. Of course, they could go to the Budget calculator at www.taxguide.govt.nz.

Speaking of accountancy firms, I ask members what they are saying. One example is not from my own accountant but from an occasional newsletter, as they call it, Footprint, from Footes Ltd., chartered accountants in Timaru. This is their opening line: “Budget 2010 was about materially repositioning the tax system to achieve some basic economic goals and chart a new strategic direction for the economy.” They got it in one; those guys understand it. I have to say that some elements about Budget 2010 could in fact see the income of accountants fall, because there will certainly be less structuring going on.

Ashburton accountant Trevor Croy also applauded the Budget, and stated in the Ashburton Guardian: “It was expected that the company tax rate would go down to align New Zealand with Australia, but not so quickly. Australia has signalled it will move in the next 2 to 3 years, but we’re down to 28c from April 1 next year.” It was clear that Mr Croy was pleased. He also stated: “With the top personal rate and trust rates now the same, the Government has also removed the tax avoidance incentive through actions such as family trusts.” I could not have said it better myself.

What are other people saying? This is a really good example from the High Country Herald on 26 May. “One family who will be better off because of Budget 2010 will be the Dalloway family of Timaru.” There is a lovely smiley photo of Mrs Dalloway with her three children. Clive and Dawn Dalloway have five children, in fact, and Clive is the sole income earner, with an annual salary of $37,000, so that is not a lot of money. Because of Budget 2010 that family will be about $20 a week better off. Mrs Dalloway said in the High Country Herald: “The extra income is definitely helpful. It’s turned out more beneficial for us than I thought.” Perhaps Mrs Dalloway had heard some of the scaremongering and the headlines that the Opposition wished to portray. Mrs Dalloway continued: “I wasn’t expecting much change. Overall, I was quite happy with the Budget. I think the Government has tried to take quite a fair approach across the board with people.” That is exactly the sort of approach that our Minister of Finance, Bill English, tried to take.

So in my electorate people are not hung up comparing their reductions with the really high tax reductions that some people who earn millions of dollars will get, because in my electorate there is still a perennial shortage of some skilled people, including professionals like doctors and dentists.

The people of my electorate understand that what keeps highly trained young people in New Zealand is not always about high pay; it might be about lower taxes, and it might be about the mood of the nation. Actually, it might be about feeling valued, and feeling that they are the very people who should not be slammed and taxed until the cows come home. They are the people we want to stay here.

What is the mood of this nation since the Hon Bill English read his Budget 2010 speech? The mood is lighter, and the mood is positive, because there is a recognition that this John Key - led Government has a plan that involves a brighter future for those who work desperately hard to get ahead. Unfortunately, we are continuing to see from the Opposition parties an endless scramble to try to grab a headline that tells a story about cuts. So often those stories lack basic facts and accuracy. I am sure members will get my gist.

I turn to some of the finer points of this particular Budget 2010. It provides for the biggest reform of the tax system in the last 25 years. It is about keeping skilled people in New Zealand, and giving families like the Dalloways the opportunity to get ahead. A really exciting statistic that I am sure everyone has heard a few times but that I will say again is that 73.5 percent of Kiwis will pay no more than 17.5 percent in income tax. Why would people not say yes to some overtime, that being the case? Why would they not accept a promotion? Of course they would.

But there is more than just the tax changes in the Budget. There is $512 million going into health. Every time people hear about funding cuts, they can think again. There is $5 million extra for the South Canterbury District Health Board and $50 million extra for the Canterbury District Health Board. This is what the chief executive of the South Canterbury District Health Board said: “The South Canterbury DHB is thankful for the increase in funding announced in the Budget. This money, along with an estimated $1.4 million in efficiencies already planned for next year, will ensure that we can continue to provide a high level of service to the community. Despite difficult times we are pleased that this funding has left us in a position of not needing to consider any reductions in health and disability services for financial reasons within South Canterbury over the coming year.” I wish I could read that statement out every time we hear the Hon Ruth Dyson parroting on about cuts that are not happening in South Canterbury.

More money is going into education, and more money will target getting more young people into early childhood education who are not currently attending. A flat-line of involvement in early childhood education is not OK. There are kids who arrive at primary school who have not been to early childhood education, and that is not OK. That is the tough end of the bargain. That is not the easy stuff that the previous Labour Government knocked off. That is the tough end, which, with $91 million, we will certainly be addressing.

Lastly, I will touch on the good news for our older citizens—that is, superannuation. In fact, superannuation will be fully and permanently compensated for the increase in GST from 1 October 2010, and our older New Zealanders are realising that now.

It is a privilege to be bringing up the rear of this estimates debate 2010. I think it is pretty well established in the mind of New Zealanders now that this Budget was a pay-off to National’s political base masquerading as an economic development plan. The centrepiece of the Budget’s programme of tax cuts is clearly a tax swindle. This Government has been saying to New Zealanders for the last few weeks that this is about giving New Zealanders back their own money. In fact, what we are seeing is a significant redistribution of wealth, away from middle and low-income earners in this country, to the well-off.

A number of things are worth mentioning. An average family with two young children, even after giving them the benefit of a wage increase, ends up $55 per week worse off after the GST increase with the 6 percent inflation that Treasury forecasts and the cuts to early childhood education. A third of the tax cuts go to the top 5 percent, and 15 percent go to the top 1 percent. I ask members on that side of the House how that can be considered fair.

I will talk about one particular line in this Budget, and that is the $22 million loan to the people of Auckland. This is the third of three loans that have been made to fund the work of the Auckland Transition Agency in setting up the Government’s super-city in Auckland. In total, the Auckland Transition Agency has been loaned $94 million by this Government.

💬 Hon David Parker: How much?

It is $94 million, which will be paid back by Aucklanders over the next year. The tax swindle is not the only swindle in this Budget. What this Government is doing in Auckland, in the way that it is spending Aucklanders’ money like a drunken sailor on shore leave, is also a swindle. The Government says it is doing one thing. It says it is improving the governance of Auckland. In fact, it is undermining local democracy and weakening the governance of Auckland. If this Budget were a video game it could be called Grand Theft Auckland or perhaps The Great Auckland Democracy Robbery. Although the Auckland Transition Agency is costing only $94 million—only—this Government is spending a lot more of Aucklanders’ money as it goes about setting up the super-city. I want to touch on some of those items.

It is interesting that the Minister of Local Government, who made his career as the self-styled “Minister for Ratepayers” as a champion for accountability and transparency, has had to have every last little drop of financial information squeezed out of him over the last couple of months. As recently as 16 March, the most that we knew about the cost of the super-city in Auckland was that $34 million had been loaned to the Auckland Transition Agency. Mr Hide said in the New Zealand Herald that he was unable to provide any more detail than that $34 million loan. Only 3 months ago he said that. On 25 May the New Zealand Herald reported that the super-city set-up costs had rocketed, as it put it, to $112 million. This was after information had been released under the Official Information Act. Then, only a week later, on 31 May, the New Zealand Herald reported that super-city costs were up to “$200 million and counting”—$200 million. In the space of 2 months, we have gone from a cost of $34 million to $200 million.

What is interesting about this is that Mr Hide still denies the real costs of his super-city, which are being picked up by Aucklanders. For instance, he told the Local Government and Environment Committee last week that he does not consider the $14 million worth of work that he has asked the Auckland councils to do on the transition to the super-city to be a transition cost. The councils are doing it because they have been asked to by this Government, but he does not consider that to be a cost of the transition. For some reason the Minister of Local Government does not believe that the costs of establishing Watercare Services, a brand new water monopoly in Auckland that is being set up to provide waste water and water for the home, which come to $26 million a year, are a transition cost. Yet the establishment of Watercare has been mandated. The royal commission recommended that this Government adopt that policy. It is clearly part of the establishment of the super-city, yet Mr Hide does not want to accept responsibility for that expenditure.

We have also seen a huge blowout in the costs of integrating the computer systems for the super-city. It will cost in the region of $120 million or $130 million to integrate the information technology systems. The problem is so taxing that the Auckland Transition Agency will be unable to get the integration of the information technology systems done by the time that the new council will be set up in November this year. So what is Mr Hide doing? He is allocating another $66 million of Aucklanders’ money for the integration of information technology systems in the super-city. That will be spent next year by the Auckland Council. It is clearly part of the transition costs; we cannot have one unified council without one unified information technology system. It will cost about $60 million this year and another $66 million next year, yet, for some strange reason that no one else can fathom, Mr Hide refuses to accept that that is a cost of the transition to the new super-city.

It is very strange. Mr Hide said that he takes responsibility for the $94 million loan, but he refuses to acknowledge that another $106 million for the establishment of Watercare Services, for all the work that has been done by councils, and for the integration of the information technology systems that will be completed next year is part of the transition cost. It is a very strange way to do accounting.

The thing that really sticks in the craw for Aucklanders about all this is that they are picking up the tab but they have never been given a proper say. This is a super-city that they did not ask for. Rodney Hide has rammed it down their throats in an unbelievably undemocratic process over the last 18 months. “Mr 3 Percent”, is he not? Or is he “Mr 2 Percent”?

💬 Hon Darren Hughes: 2 percent.

He is at 2 percent in the polls, yet he is running a reform programme that is remaking local government in our country’s biggest city. He is ramming it down the throats of Aucklanders. He cannot tell them how much it will cost. He is deliberately manipulating the figures to present them in the best possible light, yet all we know is that Aucklanders will have to pick up the tab.

Another cost that Mr Hide has not discussed publicly is the cost of redundancies. Dozens of senior executives in the Auckland councils will be made redundant in the next few months. That is a fact. There is no question about it, yet Mr Hide cannot or will not explain to Aucklanders what it will cost. Many of those senior executives have gold-plated redundancy agreements and we know that it will cost tens of millions of dollars, but Mr Hide says that he does not have the figures. Frankly, that beggars belief. He has been leading this reform process for over a year. He has the full might of the Government behind him and he has the resources of Treasury and the Department of Internal Affairs, but he cannot tell Aucklanders what the budget for the redundancies of executives in the Auckland councils will cost.

Mr Hide cannot tell Aucklanders what the savings will be from his super-city after a year of managing this process, and he cannot tell Aucklanders what that will mean for their rates. There is no question that when the eight councils are amalgamated, there will be many winners and losers when it comes to the new rating regime. Some people’s rates will go up and maybe some will go down, but, after a year, Mr Hide cannot tell the people of Auckland what this experiment will cost in terms of their rates bill. What he has done is look after his own behind, if you like, in this process. He has engineered a moratorium that means that rates will not go up for Aucklanders until after the next general election. So the Auckland Council will not have the opportunity until mid-2012 to bring in a new rating regime, which I predict will hit some Aucklanders very hard in the hip pocket.

The previous speaker, Phil Twyford, is the member whose glass is 28 percent full, because that is where he stands in the polls. That is where the community says to Mr Twyford that they are sorry, but they are not listening to him. The community elected a Government on a platform of enterprise and growth, and they wanted a Government that has ambition for their country. I have to say to Mr Twyford that it was not Rodney Hide who thought of the Auckland super-city idea; it was at a conference called the Catching the Knowledge Wave, run by Mr Twyford’s previous leader, Helen Clark. I happened to be at that conference when the idea of a super-city was advanced, and I congratulate Rodney Hide, not Helen Clark, for picking up the idea and introducing it for the benefit of those in Auckland and all New Zealanders.

I felt like I was listening to George Hawkins’ valedictory speech earlier this evening. I was particularly interested to see this piece of paper that I am holding, the Hawkins Herald, which is published using taxpayers’ money. I have never seen such arrant nonsense put into the public domain by a member of Parliament. I think that the public are absolutely entitled to get their money back, particularly because one of my colleagues says that this is not the autumn edition of 2010—he saw this edition in 2001. All that has happened is that it has been recycled. I say to Mr Hawkins that this is just not good enough.

What is this paper harping on about? It is harping on about an increase in GST, but it overlooks the increase in benefits that will be paid to people including our superannuitants. On an inside page is a completely fictitious photograph of two mining trucks with the headline: “Is this what you want to see on Great Barrier Island?”. I say to Mr Hawkins that this is an outrageous lie.

💬 Hon George Hawkins: I raise a point of order, Mr Deputy Speaker.

💬 Mr DEPUTY SPEAKER: I know what the member is going to say. The member cannot use the word “lie”. I ask him to withdraw that comment.

I withdraw. But I say that this is an outrageous misrepresentation of facts, because this photograph was not taken in New Zealand. Members will remember that Mr Brownlee, the Minister of Energy and Resources, presented a discussion paper and sought ideas. He did not say that this would happen on Great Barrier Island, yet the taxpayer has paid for this arrant nonsense from Mr Hawkins.

Then there is the article in the same paper from the member for Manukau East, Ross Robertson, which talks about ageism as being alive and well. Well, he should look around him.

💬 Hon George Hawkins: It is in your case.

Yes, he can look at my case. But he could look at Mr Hawkins too; in fact, he could look at himself or he could look at our colleague Winnie Laban. Ageism is not alive and well, as Mr Hawkins’ paper suggests. I see my good friend Mike Moore is to be ambassador to Washington, and I am proud to be in a party that has the presence of mind to find the best people for a job.

We want a free-trade agreement with America, and I am delighted that the John Key - led Government has—

💬 Hon George Hawkins: Tell us about page 10.

No, I will tell members about page 7, which has an article from Clayton Cosgrove, the Labour spokesman on law and order: “Police denied resources needed to fight crime”. It overlooks the fact that 300 police officers have recently been appointed and put into south Manukau—300 new police officers, yet Mr Hawkins’ newspaper says that police are denied resources to fight crime. This is what his newspaper is worth—nothing. I am really disappointed that taxpayers in this country have had to pay for it, because it is rubbish.

This Government has come through the recession in pretty good shape, partly due to the measures the Government took in Budget 2009, and partly due to the resilience of many New Zealanders. If we look at the previous Labour Government’s track record going back 9 years, which is well documented in this nonsense by Mr Hawkins, we see that even before the global recession hit, the economy showed sluggish and unbalanced growth driven by debt, driven by consumption, and driven by Government spending, particularly on bureaucrats, whom we have never seen so many of before. So this Government is particularly concerned to create an economy that produces new jobs. The burden of the recession fell most harshly on those who lost their jobs, and on their communities. We owe them every effort possible to create new opportunities for new jobs.

This Budget fulfils many of our pre-election commitments. These, together with agreements made with support parties—and by that I mean ACT, the Māori Party, and Mr Dunne’s party—have given us the first priority on available resources. Protecting the vulnerable is the highest priority we have. During the economic downturn we maintained entitlements, and we are still doing that. We made commitments to low-income earners and older New Zealanders, who need security when times are uncertain. That is why, I say to Mr Hawkins, this Budget maintains New Zealand Superannuation and benefits, it maintains student support, and it maintains Working for Families. All of the misleading statements that I have heard in the House tonight are absolutely untrue and entirely wrong. This Government is standing by its beneficiaries. This Government is taking action.

My colleagues across the Chamber cannot decide where they stand. In the 9 years of good economic conditions that those members enjoyed in Government, social welfare spending almost doubled. That is Labour’s idea of helping families—giving them handouts. I have been told by doctors in Masterton that they were getting calls from Government officials telling them to get Joe Bloggs off the unemployment list and put him on the sickness beneficiary list, because they wanted to pretend that the unemployment rate was dropping.

The bottom line is that Labour wasted the good times that we left it with in 1999, and here we are, back again, sweeping up after Labour. We inherited a decade of deficits from poor spending choices, and we are taking steps to control rising debt. We want to invest in real growth for all New Zealanders in infrastructure; in research, science, and technology; and in broadband for my electorate in the Wairarapa. Labour promised broadband for years, but it never delivered. In this year’s Budget we have committed over $200 million to the rollout of our $1.5 billion flagship, the ultra-fast broadband initiative.

Working Kiwis will benefit from tax changes—we have talked about that in this House—and New Zealanders, both rural and urban, and young and old alike, will gain from the Government’s investment in this economy. Our focus is on increasing the number of jobs and on boosting exports. The April export figures are up by $380 million over the last year. We are putting more money in New Zealanders’ pockets.

We have set aside $1.45 billion this year for infrastructure, including broadband for schools. I was looking at this matter yesterday out at Makuri, to the east of Pahīatua, where broadband is alive and well, miles from anywhere. On top of that, $1 billion is available for roads. We can go up the Rimutaka hill road and see that Muldoon’s Corner is disappearing. We cannot grow an economy without an effective infrastructure. We are directly supporting thousands of jobs, contributing to a stronger economy, through this infrastructure investment.

This is astonishing. I recently spent a week with KiwiRail. Members will remember that Mr Cullen bought it for $600 million. This Budget has put another $750 million into KiwiRail, which must mean that we paid $600 million for it at a time when the value of the company was negative $150 million.

It is a real pleasure to take a call, as one of the earlier speakers said, as we come to the end of this 2010 Budget debate. Since 20 May I have been following this debate with some interest, both within the Chamber and from my office. I have to say, having followed the debate since Budget day, that I am as proud today of the Budget that Bill English delivered on 20 May as I was then. I could even say that I am now prouder of it, because over that time we have all had a chance to get out into our communities, talk to our constituents, listen to our communities, and hear what people are saying about how this Budget will affect them. The message we are getting, loud and clear, is that this Budget is giving people a fair deal, it is giving them a reason to get ahead, and it is giving them reason to hope for the future of this country. That is what this Government came into power to give. That is what we came here to deliver. That is what we are committed to delivering.

We know that it will take some substantial change to do it, but this Budget is a substantial part of where we want to see New Zealand go. We are aspirational for this country. We are ambitious. We want to see New Zealanders have higher incomes, better jobs, a higher standard of living, and the sorts of social services that we all aspire to. The recipe for that is economic growth. Economic growth is what the National-led Government is committed to delivering for this country, and economic growth is what Budget 2010 is all about.

Before I turn to look at some of the detail of the Budget in the debate this evening, I will take a minute to recap the challenges that New Zealand was facing when this National-led Government came into power, because those challenges are still the pressing issues that this Budget is very much addressing. We had a productive sector that had been in decline consistently since 2000. That is a frightening statistic. Since 2000 our productive sector had been steadily declining. As a country, we were continually spending more than we earned. We saw rapid growth in Government spending, yet, scarily, there were fewer front-line outcomes for New Zealanders. Net Crown debt was forecast to peak at around 70 percent of GDP, and the household sector was routinely described as being consumption-focused and debt-driven. Because of that, we were looking at having a balance of payment deficit of over 8 percent of GDP, and our biggest single vulnerability was our external liabilities, forecast to be around $168 billion, or 90 percent of our GDP.

With that sort of external indebtedness, we were facing debt servicing that was strangling the little life that was left in the economy. I do not think it is overstating it to say that without some drastic intervention, we would have been teetering on the precipice of being the sort of economy we now see Greece as being. That is the sort of economy to which world markets will not keep lending. They will not keep throwing money into the pit while such an economy keeps on spending. Until the world markets had some confidence in where our economy was going, they would not have kept on lending to us. If we had not made some pretty important and serious changes, both in last year’s Budget and continuing through until now, we could very easily have found ourselves in the situation that Greece and other European countries are finding themselves in.

This Government needed to protect the entitlements of New Zealanders, it needed to soften the harshest edges of the recession, and while doing that it needed to get New Zealand back on to the path to growth. We needed to reprime that economic pump and to get a handle on Government spending and debt levels while we did that. We needed to address the fact that our best and brightest were continually leaving our shores. That was not acceptable to us. We did not want New Zealand to be a place where one grew up and left to get ahead. New Zealanders want to have their grandchildren and children here in New Zealand, and not have them saying that there was nothing for them here and that they had to go. We wanted New Zealand to be a place where New Zealanders want to live and want to get ahead, and we still do. [Interruption] There is a future for them here, I say to Ms Turei. We did not want a country where we are all made as poor as each other but as long as it was equal, no one cared. We have greater aspirations than that, and we are not ashamed to stand up for them. This Budget was a major step in our plan to get our economy away from debt and consumption and towards saving and investment, where there are aspirations and hope. We wanted to address this not just in the public sector but also in the private sector.

Let us look at some of the things that this Budget addressed in the public sector and at how we are changing that culture of inefficiency, debt-driven overspending, and rising debt levels. What that means to this Government, and what we are seeing in this Budget, are things like putting a lid on new spending. We signalled last year that we were committed to having a new spending cap of $1.1 billion. That was signalled to our core Crown agencies and we are living within that. Last year we saw $2 billion of poor-quality spending being reprioritised towards front-line outcomes for New Zealanders, and this Budget has found another $1.8 billion. That is $3.8 billion of poor-quality spending that Bill English and John Key have now reprioritised into real, front-line services for New Zealand that will get this country growing.

It is about spending more than ever on the health sector. I will repeat that, because I think members opposite fail to accept that. We are spending more money than ever on the health sector. Health is the biggest single area of new spending. If the numbers do not add up for members opposite, they should get a new calculator. We are spending more money than ever in the health sector. That does not fit in very well with the Labour campaign speech, but it is true. I am sorry if that upsets their brochures, but we are spending more money than ever in health. We are also putting another 4 percent into operational grants for schools. I can tell members that a 4 percent increase into the operations grants for schools will make a significant difference. Even though we are in this period of fiscal restraint, having to live with a cap on new spending, an extra 4 percent is going to schools’ operational grants. It is about delivering better, smarter public services, it is about getting more for less, and it is about imposing on the Government books the sort of fiscal discipline and efficiency drivers that businesses have been living with year on year.

Frankly, Government spending was getting fat and lazy, and we came in and said that it was time for the Government sector to live up to the sort of restraint that the private economy has been working with in this country for a long time. We saw endless examples under the last Government of more and more money being spent, and fewer and fewer outcomes. That was not good enough, and that is the sort of poor quality spending that this Budget addresses.

It is about delivering better balance sheet management. There is a phrase we have not heard very often in relation to Government expenditure. But the Government is the largest holder of assets in the country. We are talking about over $217 billion worth of assets. If we are not managing those assets well, how will this economy get ahead? If we cannot manage our ship, if we cannot get our assets performing, how can we expect that of the wider economy? So, this Government is demanding better from its Government-owned assets. We are starting to see a significant improvement now coming through.

What will those sorts of changes and that sort of discipline mean? I will tell members one thing those things mean. I mentioned earlier in my contribution tonight that under Labour, core Crown debt was forecast to peak at around 70 percent of GDP. Well, last year’s Budget announced that that would come down to close to 36 percent of GDP. Now, in this year’s Budget, we see that forecast to be 27 percent of GDP, falling away to 14 percent of GDP. That is the sort of fiscal discipline that will get this country back on track. It will ensure that we are not the next Greece. My estimation is that we will come out of this recession better than our trading partners. We will come out stronger relative to the rest of the world. We are putting New Zealand back on the track to economic growth. That is what this is about. Economic growth means jobs.

Treasury tells us that the 3 percent growth we are forecast to get for the next 3 years means 170,000 new jobs for Kiwis. It means $7,000 per annum more income for Kiwi families. Those are the sorts of outcomes we want to be hearing about. We want to hear about better jobs, better incomes, and better standards of living. That is what economic growth gives. That is what we are here to do. I know that it is a cliché, but it is about growing the pie. We cannot keep cutting it. Sooner or later, we have to see the pie grow. That is what this Budget will do.

In the private sector, it is about getting away from consumption and heading towards investment and saving. The Budget tax reform has been well gone over in this debate. That is the sort of change that will see New Zealanders rewarded for their effort and incentivised to get ahead. We are letting New Zealanders keep more of their own money. We are saying that if they bend their backs and get stuck in, we will let them keep much more of that money; for 73 percent of New Zealanders, 82.5c of every dollar earned stays with them. That is half the tax that those New Zealanders were paying. This Budget from this Government is a significant step to delivering New Zealanders the sort of future that we promised in 2008 and we are delivering on in 2010. I am very pleased to commend it.

Tēnā koe, Mr Speaker. Tēnā tātou e te Whare i tēnei pō. I am delighted and proud to join my colleagues in speaking in this 2010 Budget debate. I am proud that all the commentators, all the people I have met up and down the country, and all my relations and whānau have told me that this is the kind of Budget that gives them hope. It delivers on the aspirational and ambitious message that we have delivered from the time we began campaigning and that was the basis for New Zealanders voting National into Government. This Budget lends itself to hyperbole. It is brilliant. It is a once-in-a-generation Budget. It is smart. It is comprehensive. It is positive. It encourages all New Zealanders to have the faith in themselves that this Government has in them.

There are huge philosophical differences between this side of the House and that side of the House. Basically, we ultimately and absolutely believe in New Zealanders. We trust them to make good decisions for themselves, and we believe that they want the best for themselves. The role of Government is to create the environment that helps them to be successful. It is not the role of Government to continually cut the pie ever smaller, to get better at making slivers available to this segment of society and to that segment of society. Rather, it is our responsibility, we believe on this side of the House, to put practical incentives in the hands of New Zealanders, so that they can make decisions about how hard they work, how much they spend, how much they save, and how much they invest. This Budget, through the tax reform that the Minister of Finance has so smartly designed, allows that for all New Zealanders, regardless of the kind of work they are doing. As my colleague who has just sat down said, it allows New Zealanders to keep 82.5c of every dollar that they earn. This Budget incentivises them to know that, rather than handing it over to an ever-increasing bloated bureaucracy to make decisions about what is best for them, that decision is left in their own hands, to be made for themselves, for their families, and for their communities.

One of the key philosophical differences that we can see in the Budget that has been presented to New Zealanders, and to which New Zealanders are responding so positively, is that we believe in them to make good choices for themselves. We are trying to model the very behaviour we want to see occurring. We are focusing on good fiscal management. Ever since National came into Government, we have sought to ensure that all public services are delivered in a smarter, more consistent fashion, and that we deliver greater value for the same amount of money. In doing that, in last year’s Budget we were able to find nearly $2 billion of poorly spent money, and a further $1.8 billion in this Budget. That is almost $4 billion worth of taxpayers’ money that is being reprioritised into areas like health.

As the previous speaker pointed out, much to the disbelief and scepticism of members opposite, $2 billion worth of new money will go into health. That is $2 billion of new money going into health, and New Zealanders appreciate that. They know that they need good health, they need good housing, and they need a strong educational platform if they are to make their way in life and be successful for themselves and for their families.

We cannot spend more than we earn. If we think about the Budget for our nation, we will find that it has the same simple recipe as the budget for our own households. We cannot spend more than we earn—or, certainly, we cannot go on spending more than we earn—and we have to become more discerning about the consumption choices that we make. Our tax package has tilted that economic behaviour in favour of people working harder in order to keep more money, but also in terms of making better judgments about how much we spend and what we spend it on. We have seen a period of rampant consumerism, not only confined to New Zealand but also in the rest of the world. We have young generations, my children amongst them, growing up and thinking that buying more is better. I am endeavouring in our household to role model the very behaviour that our Minister of Finance has set for us in this Budget. I have required my daughters to get jobs. They moan and groan when I say “When I was your age, I was doing x, y, and z.”, which of course I was. In fact, it was a, b, c, d, and all the way through to x, y, and z. Our children understand about working hard and earning their money, and the difference between paying more or less tax is now completely understood by my daughters.

We are moving in the right direction, as unemployment and business confidence figures show. We are expecting, on the basis of the Budget, to see 170,000 new jobs over the next 4 years and they will be real, sustainable jobs. This has been welcome news to my wider whānau, as I said, who live on the East Coast of the North Island, and who have been the victims of the boom-and-bust investments of many Governments over many eras. They had decided that trees were the answer, then it was grapes, then kiwifruit, then corn that were the answer. In fact, the answer is not what the Government decides to invest in, or not invest in, in a community; the answer is people making decisions for themselves. Those people live in those communities and know what does or does not work for them. Our Government’s role is to invest in those people to make the decisions, rather than the Government making the decisions for them.

Part of the equipment that people require in order to make those good decisions is an excellent education. This Government is very committed to ensuring that an excellent education is available to all New Zealanders. This Budget invests a further $91 million in early childhood education, to raise the participation rates of those communities that have a very low record of engagement with the early childhood sector; in particular, Māori and Pacific Island communities. We know, both directly and through research, that those children who participate in early childhood education will have a stronger educational experience that will sustain them through life. The trajectory of their educational experience will be longer, higher, and wider, and that is why we have invested $91 million in the early childhood sector so that Māori and Pacific Island children in particular, but not exclusively, will have the opportunity to participate and engage in early childhood education.

Not 2 weeks ago, in Porirua, the Minister of Education, the Minister of Pacific Island Affairs, and myself attended the opening of Toru Whetū, a kindergarten in Waitangirua that is associated with Maraeroa Marae. That kindergarten is a first in New Zealand, in that it is a joint venture between the Niuean, Cook Island, and Tuvaluan communities. They have come together because they recognise two things that we on this side of the House recognise and want to invest in. The first is that it is extremely important to have strong cultural identity, because that is the vehicle that will carry one through life. The second is to have a strong education, because that is the power that will boost that vehicle through life. Toru Whetū anticipates and reflects exactly the investment that this Government is making in early childhood education.

I think the Opposition would do the country a service by not scaremongering about early childhood education, and putting off those families whom we are trying so hard to engage with early childhood education. I am a playcentre child. Playcentres are run by parents, and they are very happy with the idea that they can continue to offer early childhood education on an equivalent basis to the other early childhood options that choose to have trained teachers. But our Government is about choice. If parents choose to send their children to playcentres, which have parent-led early childhood education, to kohanga reo, which have nanny and papa-led early childhood education, to Toru Whetū, or to kindergarten, those are the choices that are available to them. This Government has been prepared to put its money where its mouth is and back cultural identity, early childhood education, primary education, tertiary education, and lifelong learning. That is what this Budget is about, and I commend it to the House with pride, excitement, energy, and delight. It is a generation-changing Budget, and New Zealanders will be able to build not only hope but also the practical embodiment of it. Thank you.

It is perhaps my good fortune to again follow Hekia Parata as we speak on the Appropriation (2010/11 Estimates) Bill. I note her comments about the importance of early childhood education. This Budget cuts early childhood education by $250 million. We heard her say that we cannot afford to spend more than we earn, and therefore we should not be borrowing, but this Budget borrows the best part of half a billion dollars for tax cuts that are clearly unaffordable. We heard her comments that all the commentators are applauding this as a brilliant Budget. Well, I say to her that she ought to go back and reread the commentary of some of those who have observed this Budget, such as the Productive Economy Council, Business and Economic Research, and the Manufacturers and Exporters Association, and she ought to look at their comments about this Budget.

I note that some of the previous speakers from the other side of the House have been rural MPs talking about how this is a great Budget for their electorates. Well, I ask how this is a great Budget for a rural economy when the Minister’s own statements to the House reflect the fact that we will see, in the next year, an increase in exports, yes, of 2.4 percent, but an increase in imports of 10.8 percent—leading to a blowout in the current account balance. That is actually a more important measure of our wealth as a nation, because it measures all of the expenditure that we make and all of the costs that we incur. We have not had our current account in balance since I was in shorts at school. That is where we should be trying to head with this Budget, but, in fact, we are going backwards.

I note the comments from Amy Adams about awful, wasteful expenditure. I will mention the call that I got from a rural constituent—not in my electorate of Christchurch Central, but from a rural Canterbury constituency—who asked in desperation whether I could assist her, because her home help has been cut from three visits a week to two visits a fortnight. She has had three accidents on the farm or nearby—one was a road accident—and she is struggling to keep body and soul together. Those home-help visits are the difference for her between a quality of life and no quality of life. If the Government describes that as wasteful, bloated expenditure, they need to think again very, very seriously.

Bill English was in front of the Finance and Expenditure Committee last Thursday, and the question was put to him about how this Budget would stimulate the economy when we have tax cuts. All the signals are that those who will have discretionary income from tax cuts will retire debt. So there will not be very much stimulus for the domestic economy, and certainly not for discretionary spending like in the retail and restaurant sector. Of course, we have exports flattening out, in part because of the rise in the official cash rate, which the following speaker at the Finance and Expenditure Committee, the Governor of the Reserve Bank, Dr Bollard, confirmed. That feeds into higher interest rates, so the dollar rises with it. Therefore, our productive sector, which is the lifeblood of this economy, is certainly not being assisted by the Budget’s economic settings and what is flying out of them. The reality is that this Budget is not a good Budget for the productive sector—the rural sector—or, indeed, the urban sector of New Zealand.

Let me comment briefly about the Prime Minister’s comments today that there may be funding found, perhaps in this financial year, for irrigation schemes in Canterbury. I want to say that, believe it or not, I am a supporter of irrigation for Canterbury, with this important caveat: we want to see irrigation in Canterbury, and we want to see more greening of the plains, but we want to see it take place in a situation where the environmental outcomes improve alongside the economic outcomes. When the Prime Minister is indicating, and has said on the record, that he wants to see new irrigation in place in Canterbury next year, I say that there is no way on God’s Earth that that can be done alongside environmental improvements. That is why we see the question today about the role of Wyatt Creech, who, 18 months ago, was being briefed about what was needed in Canterbury. Nearly one year before he took on his role reviewing Environment Canterbury, and nearly one year before he took on his official role as an independent chair of an independent review, he was being briefed by the Minister of Agriculture’s office about what was needed in Canterbury. Things flowed from there, very, very obviously.

This Budget was a shocker for people in my electorate. More than three out of four people in my electorate of Christchurch Central earn less than $40,000 a year, and that is why I oppose the increase in GST provided for in this Budget. It is simply a smokescreen. It is a smokescreen to allow a further tax cut for those on the top rates of pay. They will benefit handsomely from that increase, while those on very basic incomes will get virtually nothing by the time cost increases take their toll.

We have had 12,000 job losses in my city of Christchurch in the last year—12,000. There is very little in this Budget about providing training to give any stimulus to the economy in terms of job creation. Just in the last 24 hours we have heard the announcement about more than 100 job losses looming at the meatworks on the outskirts of Christchurch. Where is the Government’s response to that? What will happen in respect of the people working there and their lives? What is coming from the Budget to assist them and their families into their futures? There were 12,000 job losses in 1 year in Christchurch—1,000 a month—and there is nothing in this Budget to provide for more job training. In fact, job training is going backwards. The YMCA in Christchurch was, until quite recently, providing literacy training for 15 and 16-year-olds who were basically in last-resort education. That funding has been lost recently, and it certainly has not been replaced in this Budget. I say that that will leave a social legacy in my city whose effects on everybody else in our community will be seen for a long time to come.

We are also seeing the situation of nearly 50 early childhood centres in my electorate where mums and dads are simply going to have to pay more because of the cuts, with perhaps $1 an hour or more having to be found by some of those families on basic incomes to provide for their childcare. In the meantime, of course, other sectors of the community will be doing it hard, as well. We are seeing a handful of money provided by way of personal tax reductions, and then two handfuls coming back to the Government by way of GST, higher early childhood fees, rising power prices, and a number of other things, as well.

One other little gem in the Budget that has not been given much focus yet is the cut in the rates rebate funding. That is a scheme that Labour introduced to try to take some of the pressure off those who are at the bottom end of the income scale. Rates can be a big impost, and they will be going up as a result of this Budget. At least 2.5 percent will be going on to rates, and I will comment about that further in a moment. The $58 million in the previous Budget to provide for people who might take up the scheme—and only about two out of three do—has been reduced by this Budget. That simply means that we should be promoting the scheme and taking some of the pressure off low-income households, but in fact that spending has been deleted by the Budget of last month. My prediction is that we will see a quite savage round of rates increases next year because, of course, city councils, district councils, and other territorial authorities struck their rates before the Budget really took effect. They will therefore have to take account of the year from 1 October through to 30 June next year, and then they will have to take account of any inflationary impact driven by the GST increase for the following year, as well. So I suggest that we will see some significant double-digit rate increases next year flowing in large part out of the GST increase of this Budget. That will be a further impost on costs for low-income families.

The Environmental Protection Authority missed out in this Budget in terms of funding. That was a blow to the credibility of the Minister for the Environment, Nick Smith, who pledged last year that the Environmental Protection Authority would be up and running by 1 July this year. Now he is saying that it should be up and running by 1 July next year. He is talking about 150 staff, but he does not mention much that 90 of those will be staff coming from the Environmental Risk Management Authority, and many of the others will actually be employed and paid to process major resource consents. So I ask where the environmental protection staff of the new environmental protection agency are, because they are certainly not provided for in this Budget. They are very, very much needed, especially if we are to see new water growth across Canterbury and other regions. It is another gap in this Budget, one of very, very many indeed. It is a very poor Budget, it is not a brilliant Budget by any means, it is a Budget that savages low-income people, and it is a Budget that this Government will pay a price for in the days and years to come.

I rise to speak in this Budget debate and to support what has been seen to be, as advanced by many people, a brilliant Budget, and one of the most reforming Budgets of the last quarter of a century. May I congratulate the Hon Bill English for the work that he and his officials have put into stitching together a comprehensive Budget that will lift our long-term economic growth, create jobs, boost New Zealanders’ incomes, raise our living standards, and produce world-class public services. I also rise to congratulate the Ministers responsible for putting together the various departmental budgets, and the officials who put in long hours in order to put this Budget together. It is really a piece of work that is to be commended.

The taxation reforms that we have put in the Budget were really about making a more even and fair taxation system. Taxation reform was one of the biggest reforms. GST will rise to 15 percent, but as I have stated, people across the country will be compensated for that not only in terms of tax cuts to personal income but also in terms of the beneficiaries seeing their benefits rise in order to compensate for that rise in GST. One of the pieces of taxation reform that has not been spoken about much in this debate is the decrease in the company tax rate to 28 percent. When I visit the businesses in my electorate, Maungakiekie—businesses like Masport in Mount Wellington, and Sanitarium Health Food Co. in Royal Oak—they are without prejudice satisfied and happy with the measures we have taken in Budget 2010.

The Budget is also focused very much on priority spending in Government, and that priority spending is being moved towards those portfolios that require more attention. They are, of course, health, education, and law and order. The need for that attention is reflected in the work done in those areas in the 19 months that we have been in Government; the changes in legislation, and the types of reforms in those areas have been comprehensive.

I also commend the Budget for the work done in the area of infrastructure. Infrastructure, as we know, is the key to having a dynamic and successful economy. We inherited an asset, a dud of an asset, called KiwiRail. But this Government has indicated that it is prepared to invest $250 million in the next financial year to support that KiwiRail investment and to put that investment back on an even keel. That will not happen in the next financial year, but it will happen in time.

The other area, in terms of investment, that is critical is the investment in our schools. This Budget puts more than $177 million into new school property, and certainly I am happy, and local residents in Onehunga are happy, with the investment being put into a new centre for Onehunga High School, which will be built in the next year and a half.

The Budget is about infrastructure, and one of the projects in Maungakiekie that has been a beneficiary of the Government’s focus on infrastructure is State Highway 20. On State Highway 20 the bridge that is going from Māngere over the Manukau Harbour is to be opened in September. It is 6 months ahead of schedule, and in terms of projects that is something that the previous Labour Government could not point to. It could not point to projects being ahead of schedule, or to projects that were on time, to specification, and to budget.

This Budget is about infrastructure and it is about education, but it is also about health and the type of spending that this Government is putting into health resources in order to cater for the health needs of all New Zealanders. We are looking at $1.4 billion a year being spent on health, and that is more than has come from any Government in the past. That record health spending is because we are prioritising elective surgery, we are putting more money into disability services, and we are also putting $24 million into a bowel cancer - screening pilot programme. So health is very much a priority of this Government.

When we look at social development and housing, we see we are putting in more than $134 million over the next 4 years to implement Whānau Ora. I had the privilege of going to a Whānau Ora meeting with the Hon Georgina te Heuheu and the Hon Tariana Turia to meet Pacific providers who are looking to Whānau Ora in order to apply their services. The response by the Pacific people and the Pacific services was hugely positive. It is a new way of doing social services. The previous Labour Government had no idea of implementing these types of services.

This Budget is about recovery, and this Government has had to work through the worst of a recession. This Budget forecasts that the economy will return to a surplus in 2016, which is 3 years earlier than was forecast in the last Budget, in 2009. So in 1 year we have managed to control the debt burden that this country was experiencing. We have managed to control the excessive Government spending under the previous Government, and we have managed to better focus Government services on to the front line. The packages that have been released in terms of tax mean that an average family that has an income of $76,000 a year, two kids, and a mortgage, and that is receiving Working for Families will be $25 a week better off than previously. This package has resulted in people looking to this Government for hope and for aspiration. It is a breath of fresh air that we have released this Budget and are moving the economy forward. We are creating jobs, we are creating opportunities, and we are making a better New Zealand. Thank you.

A few weeks ago I spoke on the second reading of the Taxation (Budget Measures) Bill, which brought into force this Budget’s aggressive tax reform policies, the policies of a National Government that does not care. It does not care for Aotearoa, it does not care for its people, and it certainly does not care for our children.

That tax bill, which was passed with the help of the Māori Party and the ACT Party, gave tax cuts to the very wealthy. It also provided tax reform that would charge our most vulnerable families much, much more for the very basics that they need to live, such as food and clothing—the basics. The Green Party has a vision for a much smarter economy than this National Government could ever imagine. It has a vision for a much fairer society than this National - ACT - Māori Party coalition Government was prepared to provide. It has a vision for a smart economy that delivers real prosperity for this country; a vision for a fairer community where every New Zealand child, every child in this country, lives in a safe society where he or she has access to warm, dry housing, safe and affordable food, quality public education, and quality, publicly provided health care.

This John Key - led Government chooses instead a society of haves and have-nots. John Key’s Government chooses a society where the poorest New Zealand children go without shoes, food, and shelter. That is the choice that was made in this Budget. The negative impacts of this Budget on the plight of children in this country cannot be underestimated, but they have been underestimated by National and John Key, because National and John Key are divorced from the reality of the ordinary lives of New Zealanders. When the Green Party launched Mind the Gap—our package of solutions to deal with the widening gap between rich and poor—we focused on the fact that Aotearoa is one of the worst countries in the developed world for income disparity. We know that inequality hurts every child and every family. The National Party backbenchers are shouting behind me because they know they are doing nothing for children in this country and it is uncomfortable for them to hear this. We know that New Zealand is one of the most unequal countries—

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. It might be the speaker systems having a little bit of a problem again, but despite the member not being one of the quieter members in the House, I am having a bit of trouble hearing her. I cannot tell whether it is the speakers, the noise from members opposite, or a combination of both. Could you get them to look into it, please.

The ASSISTANT SPEAKER (Eric Roy): I will now monitor it and the member may continue. I am afraid I was engrossed in a matter of order that I was researching, and I was not paying the attention I should have been.

We know that New Zealand is one of the most unequal countries in the developed world. We are 23rd out of 30 in the recent OECD report on inequality. We are the sixth most unequal country among highly developed countries; that came out of the United Nations Human Development Report last year. At the Welfare Working Group debacle earlier this week the head of social policy for the OECD, Dr Monika Queisser, said that New Zealand’s child poverty was one of the worst in the OECD. She said that 15 percent of children in this country live in families who survive on less than half the median income. Let us make that clear: around 120,000 children live in families whose weekly income is less than $270 a week, and that is OK with this National Government. This National Government does not mind. When Bill English was questioned on inequality, what did he say? He said his Budget does not really make any difference to that. It does not make any difference at all, because John Key, Bill English, and the National - ACT - Māori Party coalition Government do not care that 120,000 New Zealand children are living in families whose income is less than $270 a week.

Well, the Green Party does care because income inequality like this has devastating effects on children. At the launch of Mind the Gap, which is our proposal to deal with this issue, we heard about a mother who was so malnourished that she could not produce breast milk for her child. That mother lives here in this country. We heard about the 20,000 children who go to school—[Interruption] National members are giggling over there; I see the Minister for Treaty of Waitangi Negotiations, the Minister of Pacific Island Affairs, and Sandra Goudie having a giggle about the fact that 20,000 New Zealand children go to school each day without sufficient food, shoes, and raincoats. Those are New Zealand children living today, in the 21st century, in this country.

This Budget increased the gap by shifting money from our poorest and most vulnerable children to the richest families and corporations. Just after the Budget was released two more reports came out that highlighted the plight of children and child poverty in this country. The Best Start in Life report from the Public Health Advisory Committee ranked our country 29th out of 30 for child health and safety—that is how bad we are. We are almost the worst in the OECD for child health and safety. Increasing financial pressures on families, widening socio-economic disparities, and low Government investment in early childhood education, which this National-led Government is doing once again, are reasons for our children’s appalling health status in this country and when compared globally. Every one of those factors has been made worse by this Budget. We will have a GST increase that puts pressure on low-income families, tax cuts that widen the gap, and funding cuts to early childhood education.

The Children’s Housing Futures report, which also came out a few days after the Budget, showed how important housing is for the health and well-being of children. It found that the quality of children’s housing in New Zealand is worse than the OECD average, and that many New Zealand children are living in poor-quality, unaffordable, insecure, and crowded housing. Children are more likely than any other age group in this country to live in crowded housing. There are 800,000 children living in this country; nearly half of them are living in housing that is cold, damp, and expensive to heat—that is, 375,000 New Zealand children are living in cold, damp, and expensive-to-heat homes. One hundred and twenty thousand children live in families who earn less than $270 a week, but that is OK with this National - ACT - Māori Party Government. So what did the Budget do? Well, it slashed the housing budget. It slashed the State housing budget by $100 million, leaving 10,000 people—and their children—languishing on the State house waiting list. John Key’s Government chose to give big tax cuts to corporations while nearly half of New Zealand’s children live in cold, poor-quality housing.

Let us just have a think about who some of these people are who are making decisions. You know, Paula Bennett, who was a beneficiary—

💬 Hon Trevor Mallard: Paula’s allowed a benefit but no one else.

Well, that is right. She and her child had the opportunity of a State welfare system that provided for them and for Paula’s education. John Key, as a child, had access to a State house, where he and his family could be housed. But where is the provision of those things for New Zealand’s children today? Where is the support for the solo parents who have to take care of their children in poor, cold, and damp housing? Those children will not have access to State housing, because this Government has cut the State housing budget. Why are this Government and the responsible decision-makers like John Key and like Paula Bennett stripping away from today’s New Zealand children the same entitlements and rights that they had when they needed State support? Those decision-makers have lifted the ladder behind them, and they are taking from New Zealand’s children the same entitlements they had when they needed State support. That is grossly unfair; it is grossly unfair. Today’s children deserve the same support that John Key had as a child, and that Paula Bennett and her family had when she needed State support. But that will not be provided to New Zealand’s children today under this Government.

But it is not just about the solutions that we have for reducing inequality, because the fact is that huge savings can be made. In our estimation, by providing 6,000 more State houses, progressive pricing on electricity, and extending the in-work tax credit to more low-income families, we could save about $2 billion a year in costs to the health system and from loss of work because of respiratory illnesses from cold and damp housing. If we increased the minimum wage so that families can be supported in their work, we could save a billion dollars in social support that the Government is currently paying as a subsidy to big business like the aged-care sector, like the fast-food sector, so that they do not have to pay a decent wage to their workers. Investing in our families now, in our children and their incomes now, in their housing now, and in their education now will save us money in the future. But, more than that—much more than that—this is about choice.

It gives me pleasure to rise and speak this evening on the Budget debate, towards the end of this session. If the country had not just moved out of recession, the previous speaker, Metiria Turei, might have pushed it straight back where it came from. I would like to say that in listening to the content, I thought that was nothing but a miserable speech. The previous speaker suggested to us that there was nothing good in the Budget. My advice to her is to pick up the newspapers and have a look on the Internet at what happened just after the Budget was announced. She should get back in touch with what New Zealanders said.

💬 Metiria Turei: You think child poverty is funny, do you?

No, I certainly do not think that it is funny, but there was not a lot of humour in your speech, which is why many people in New Zealand turned the TV off. I would have thought—

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. You did not make a speech, and this member has now been here for nearly a year, I think, and he should know better.

The ASSISTANT SPEAKER (Eric Roy): The member is not the only one who transgresses. Members from this side of the House do it, as well. Members on both sides of the House need to tidy up a little bit in that regard. Let us have a general warning.

Thank you for the correction, Mr Assistant Speaker, and I apologise. I certainly do not think you are humorous, either. I suggest that this Budget is a good Budget. It was warmly received—

💬 Hon Trevor Mallard: He just did it again.

I was speaking to the Assistant Speaker.

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. He did not finish a sentence before he insulted you by saying he did not think you were serious. I just wonder whether an IQ test should be applied before the member enters the Chamber—

The ASSISTANT SPEAKER (Eric Roy): No, you must not attack members when you make a point of order, or I will think that the purpose of the point of order is to attack the member and not to address a matter of the order of the House. So that is also misbehaviour. I ask the member Todd McClay to be careful.

Mr Assistant Speaker, thank you very much. I think that it was a good Budget. It was warmly received by New Zealand. All you needed to do was turn on the TV the next night or look at the newspaper, and up to 80 percent—

💬 Hon Trevor Mallard: Ha, ha! Did you turn it on, Mr Speaker, or not? “All you needed to do was turn on the TV …”—another sentence he could not do.

I was speaking to the Speaker.

💬 Hon Trevor Mallard: You’re not allowed to bring him in—

I raise a point of order, Mr Speaker. I need a little clarification, because the member opposite is right: I am a little newer in this House than he is. If I am addressing you, I can talk to the Speaker as “you”, can I not?

The ASSISTANT SPEAKER (Eric Roy): If a member is speaking to the Speaker, he or she should say “Mr Speaker”. The pronoun “you” gives us all sorts of problems, and members will get on better by desisting from using the pronoun “you”.

Thank you—all we had to do was turn on the television and look at the newspapers the very next morning, and we would have seen that 80 percent of New Zealanders thought that this was a good Budget. There were positive headlines throughout the country, and people were saying that it was a responsible Budget. It has vision for the New Zealand economy, and after many, many years we can see where the country is going. It is moving in a positive direction.

💬 Hon Trevor Mallard: A royal variety—the royal “we”.

I understand that Opposition members need to oppose everything, and they feel they should be negative about these things. Sadly, I have come to the conclusion, in following the debate in the last few weeks, that few people if any in New Zealand are listening to the Opposition. In fact, if we look at the media coverage in New Zealand about the Opposition in the days after the Budget, one might assume there was much, much more coverage in the last week than there was then. But I would agree with members opposite that this Budget was very important for New Zealand.

As I said, this Budget has vision. First and foremost, the Budget is about getting fast and sustainable economic growth back in New Zealand. That is one of the most important things we campaigned on and one of the most important things we can deliver for New Zealanders. It is the only way we can get higher-paying jobs and opportunities in this country for hard-working Kiwis. It is the only way we will keep people in my electorate and in other people’s electorates. Indeed, it is the only way we will get hard-working Kiwis who have gone overseas over the last 8 or 9 years because they felt there was not enough opportunity in New Zealand to return to our shores and work hard for our country.

We have a poor track record in New Zealand. Even before the global recession hit, New Zealand was already in a recession of its own and growth was very slow. That is because for far too many years this country relied upon borrowing, consumption, and unsustainable increases in Government spending. Well, this Budget certainly addresses that, and it delivers for New Zealanders. The Budget will help turn that round so that we have faster growth from savings, exports, and productive investment. We are focused on good fiscal management. Like everyone, New Zealand cannot spend more than it earns. We have done that for far too many years already. We have moved, with this Budget, from what was to be a decade of deficits to a return to surpluses, as forecast by Treasury, by 2016. That is something that New Zealand businesses, and New Zealand as a whole, have welcomed.

We are also moving in the right direction as we are seeing confidence in business return, and certainly a reduction in unemployment, although I would suggest that we still have some way still to go on that. All members of the House would have been happy when we saw, only a month ago, reductions in unemployment throughout New Zealand from 7 percent to 6 percent at the end of the first quarter. Certainly in my electorate of Rotorua there were significant reductions of unemployment, and particularly pleasing was a reduction in unemployment amongst young people, who were finding jobs and moving away from benefits. We are also looking to help New Zealand families through the Budget. During the economic downturn we maintained entitlements, and the Budget states that we will continue to do that. We are compensating Kiwis for the small increase in GST, and that includes beneficiaries, low-income families, and people on superannuation. We are making changes to how we help those people, and the Budget is very much about helping them to help themselves.

There are a number of changes in the Budget, particularly towards a fairer tax system to help the economy grow. There is a great feeling for that in the community. Indeed, the Minister of Finance, Bill English, came to my electorate and held a lunch in Rotorua, days after the Budget. The Rotorua Chamber of Commerce hosted the lunch, and more than 150 people came along to hear about the Budget and to hear the Minister of Finance speak. For comparison, we only need to cast our minds back to last year, when the Leader of the Opposition came to hold a similar lunch with the Chamber of Commerce. I think six people registered, and, very sadly for the people of Rotorua, that lunch had to be cancelled. The business people of Rotorua were not able to hear the wisdom of the Leader of the Opposition, but at least 150 of them came to see Mr English and listen to him.

The feedback was very positive. The Daily Post wrote a very good article. It talked to those who had been in the room, some of whom were employers and had their own businesses and some of whom were employees. The feedback was very positive. Those hard-working people of Rotorua realise that the country has to move in a direction where people have greater opportunity and where there is greater support for jobs and businesses. Well, the Budget does that. High-quality, front-line public services are to be delivered, along with strong, sustainable economic growth and value for the taxpayer dollar. Value for the taxpayer dollar will be a good thing after 9 years. We are also creating opportunities for families, as I mentioned earlier, with across-the-board personal tax cuts, a fairer tax system, and encouragement of investment and production in New Zealand and productive businesses.

What will the tax cuts mean to people? This is the biggest reform of the New Zealand tax system for nearly 25 years. In fact, it is near on 9 years since New Zealanders last received a tax cut—at least before the last election. Many New Zealanders who are out there working now probably do not remember what a tax cut is. We have provided incentives for New Zealanders to get ahead. We are cutting their personal taxes, something that was not done during Labour’s 9 years in office when it is fair to say that the country was going through a time of economic boom. There is also compensation for the small increase in GST, and we are making it easier for companies to do business in New Zealand, which encourages them to stay here and create jobs for New Zealanders.

We are also making the tax system fairer by closing the loopholes that have allowed many high-income earners to dodge their responsibilities or legally move their funds aside, so that those who are able to pay tax are paying more. I will give examples of what this will mean for people out in the country. A young person in Rotorua who works in a supermarket and earns just over $26,000 a year, and who flats and spends $100 each week on rent, will be nearly $350 a year better off because of the tax cuts—and that is after taking into account the increase in GST. A family that earns $50,000 a year or less and has two children now effectively pays no tax when we factor in Working for Families and in-work tax credits. In both of those examples, those hard-working Kiwis will be paying a top tax rate of 17.5 percent, which is down from 33 percent just 2 years ago. I am yet to meet anybody who says they are hard-working and want to pay more tax. There are a lot of people out there who will be grateful for the tax cuts, when they are delivered in just a couple of months’ time.

I will give a little bit of feedback, with some of the comments that people have been saying about this Budget and the very good things it has done. Here are some interesting messages that members have received. We go to the Prime Minister’s Facebook page. Boy, does he get a lot of feedback: “This Budget is a good move. It will help undo some of the damage that Helen Clark did to our economy while she was in charge.” Someone else wrote: “I like the shift away from income taxes towards flat consumption taxes.”

💬 Hon Trevor Mallard: Yeah, but he’s got four people paid by the taxpayer to write the comments. They’re not very productive, at all.

I think the member opposite might have said that a few years ago, when he was in Government and there was talk about a similar sort of tax.

💬 Hon Trevor Mallard: No, I never wrote anything on Facebook.

I think he might have, but certainly not on Facebook. The member is right; he would have defriended the Prime Minister, as he has others in this House.

Another person wrote: “A good Budget is my thinking. Get the country earning more than it spends as individuals and as an economy. Shift to productive investment.” Another states: “Pleasantly surprised is an understatement, Prime Minister. I am a very happy camper for the first time in 10 years.” I do not think that man was a camper, but certainly he was pleased. It is a good Budget. I am happy to stand up and support it, as New Zealanders have. Thank you very much.

I too want to talk about the Budget, and I will focus on education. But before I get down to specifics, I say that I feel as though we are in parallel universes. We are obviously talking to different New Zealanders. Certainly the New Zealanders whom I am talking to, the good people of Maungakiekie, recognise that this Budget is a great tax swindle. They recognise that most of the tax cuts will, in fact, be wiped out by the 5.9 percent inflation. We have already seen interest rates rise in response to inflationary pressures. Of course, people can see the broken promises. They can see that the promise not to increase GST was rubbish, the promise not to borrow in order to pay for tax cuts was rubbish, the promise not to undermine 20 hours’ free early childhood education was rubbish, and of course the promise that the majority of people would not be worse off was again rubbish.

This is an unfair Budget. Let us put that on the table. I agree with what Metiria Turei said about inequality in this country. Again, I say we are seeing 15 percent of the tax cuts go to the top 1 percent of income earners. Just in case members did not hear that, I repeat that 15 percent of the tax cuts will go to the top 1 percent of income earners, and one-third will go to the top 5 percent of income earners. In the Maungakiekie electorate, 64 percent of people will not receive tax cuts, when we factor in the increase in GST. There are also cuts in this Budget. The Government can characterise health spending as increasing, but the level of health spending will not keep up with the increase in costs, so we will see continued cuts to so-called front-line services. Certainly the elderly who are having their home help cut would consider that to be front-line expenditure. Of course, there is also the issue of State house maintenance, something that is quite important in the part of Auckland that I live in. Again, we see a cut, from $100 million to $10 million, for State house maintenance.

So what is the real agenda here? I think a lot of New Zealanders now realise that the real agenda here is people being softened up for privatisation. We are already seeing privatisation in the accident compensation scheme work account. We have already seen the Prime Minister flip-flop around on Kiwibank and privatisation. We need only to look at local government, do we not? In local government we are seeing water potentially being outsourced for 35 years—an entire generation—and Auckland City corporatised. That is all about softening us up for privatisation, and New Zealanders are seeing that.

What I feel really strongly about is that this is also a missed opportunity to strengthen our economy. The economic plan, if there is one, is to have tax cuts. Tax cuts are the whole economic plan. Some of us do not believe that the trickle-down theory works. Government members can say as many times as they like that this Budget is about economic growth because they are cutting taxes, but people know that it does not work like that. Where is the investment? Where is the investment in lifelong learning, for example? We are seeing caps in tertiary education. We see no new initiatives in the skills area. Early childhood education is being cut by $250 million over 4 years, and higher costs for parents and lower-quality education for their children will result from those cuts in early childhood education. Our economy is unbalanced. It is unbalanced in many regards. It is certainly inequitable, and we have a very poor savings record. What is happening in that space? What is happening in the superannuation space, for example? A strong economy is about people having quality jobs, decent incomes, and the public services that we need. That requires active Government, and active Government includes investing in our people. [Interruption]

Some members on the other side of the House clearly do not understand much at all about the education system. Early childhood education is one of the most significant investments that we can make in our future. The compulsory education sector is facing funding shortfalls, as increases in operations funding will not keep up with inflation. Of course, we see further increases in the Aspire Scholarship programme, prioritising private education. That is not a surprise, is it? Tertiary institutions are capping places. That is ridiculous, when we have skills shortages in our economy. In second-chance education, a further $11 million is being stripped from adult and community education. That is just crazy.

But what really is appalling is the lack of investment in workplace learning and skills development. Where are the new initiatives there? We are listening to a Government that is supposedly “ambitious for New Zealand”. Well, where is the ambition in terms of workplace learning and skills development? Our workplaces are low-waged and generally low-skilled. Our Prime Minister, the Hon John Key, in his speech at the start of this year, talked about labour laws imposing excessive costs on the country and holding back opportunities to create jobs. He thinks everything is about cost when it comes to investing in our workplaces. Actually, it is about investment.

There is a lot of rhetoric about productivity. One of the things that is really problematic in our economy is low productivity, and we need to focus on skills and on productive employment relations. I just record here that a report last month showed that New Zealand managers in manufacturing have considerable room for improvement, and that investing in their people-management skills would lead to major productivity improvements. The study was done by the University of Technology, Sydney, and it shows that the impact of increasing management capability from the lower to the upper quartile would be the equivalent of increasing the workplace by 41 percent.

💬 Paul Quinn: What’s quartile mean?

Now that would be a lift in productivity.

I tell Mr Quinn that perhaps, if he listened instead of shouting, he would hear that, interestingly enough, one of the priority areas for the New Zealand Skills Strategy was to build the capability of managers and workers to develop and utilise their skills. What has this Government done with the Skills Strategy? Despite a willingness on the part of unions, business, the tertiary education sector, and industry training organisations to cooperate, it took over a year to bring those parties together and even call a meeting where they could talk about implementing a skills strategy. There was an agreed Skills Strategy. That meeting was held in December last year to look at the supposed revitalised skills forum that was referred to by the Prime Minister in his speech to the Council of Trade Unions conference in October last year. There have been no further meetings of that group; so much for a revitalised skills forum.

Why should we be worried about investing in skills? It is because the seven drivers of productivity are all about skills and investing in skills, and that is what will lead to greater workplace productivity. Eighty percent of the workforce that we will have in 10 years’ time is already in the workforce. We have major skills deficits in our workforce. [Interruption] It would appear that members opposite do not care about that, but if we are serious about lifting productivity, we need to invest in our workforce. New Zealand has major skills deficits, as I am saying—the legacy of a lack of investment in skills in the 1990s. A Government with vision would invest substantial resources in supporting people into training, to upskill our workforce.

Although this may be amusing to some members opposite, I tell them that investing in skills has benefits at every level, and has benefits for individuals.

💬 Paul Quinn: Capital productivity is down.

Yes, and we had an agreed Skills Strategy, and if you had been listening, Mr Quinn, you would realise that it has not been implemented by the new Government.

The ASSISTANT SPEAKER (Eric Roy): The member must not use the personal pronoun “you” when speaking in the debate.

How kind it is of you to draw that to my attention, Mr Assistant Speaker. As I was saying, the benefits accrue to every level. They accrue to individuals, in providing job opportunities, improved income, and greater job satisfaction. They accrue to families, as they benefit from having a higher family income, but they also accrue to parents, who are able to support their children’s learning. The benefits accrue to businesses, in terms of greater productivity. The benefits accrue to our economy, through greater productivity, higher GDP, more innovation, and an ability to transform our workplaces and our industries. We are laggards in this area. Thank you.

I was absolutely stunned by the previous speaker, Carol Beaumont, who called herself a laggard. We all know that the Labour members are making uninformed, generalised, negative comments, and that that can be expected from the members on the Opposition benches. Those members had their chance under the 9 long years of the previous Labour Government, and they blew it.

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. I think something has gone wrong in the rebalancing of the sound system. It has gone from not working properly, to being deafening. Is there any chance that we could get it adjusted, so that it is not quite as loud and screechy?

The ASSISTANT SPEAKER (Eric Roy): I rule that point of order out of order.

I am not surprised by that. The point of order was trifling, as we say, but it was probably raised because the member has only just decided to sit up and listen. He is having fun now. The point of fact is that under the 9 long years of the previous Labour Government, those members blew it; they absolutely blew it. Do you think that they can manage money? I ask all of the people who want to think about—

The ASSISTANT SPEAKER (Eric Roy): The member must not use the word “you”.

My apologies, Mr Assistant Speaker.

All of the people who are listening might like to think about whom they would choose to manage their household budget. Would they choose—

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. I do not have the exact Speaker’s ruling or Standing Order to hand, but I am sure you are aware that members must address you and not the listeners to these proceedings on the radio or the television viewers. It is a longstanding ruling. It used to be observed and ruled on relatively regularly in earlier times. I know that standards are meant to be lifting again, and I think it would be good if this member were to be reminded that she is addressing the House, and not the world.

The ASSISTANT SPEAKER (Eric Roy): The point is a valid one. The member has only 3 or 4 minutes left, and I would like to hear her contribution.

Who knows whether the world is listening?

💬 Paul Quinn: I’m sure it is.

I am sure it is, too. People should ask themselves whom they would pick if they had to choose someone to manage their household budget. I wonder whether they would pick John Key and anyone from National, or whether they would pick Phil Goff and anyone from Labour. I have to say that, hands down, it continues to be John Key and National.

This is a great Budget. In order to understand that, we have only to read all of the feedback and the comments from all of the commentators who are held in high esteem and who actually understand figures. The Opposition does not understand money. As I often say in this House, the Opposition could not manage a piggy bank. That is why National is in Government today, and that is why this is such a great Budget. We had to drag this Budget out of a black hole created by Labour, which, after 9 long years in office under the disgraceful leadership of Helen Clark and Michael Cullen, left this country in debt and abused the hard-earned taxpayer dollars. That was an absolute disgrace, and that is Labour’s legacy. It is a legacy of disgrace and abuse of those taxpayer dollars.

I say John Key is the greatest leader in New Zealand’s history. Working in tandem with Bill English, the two leaders are a formidable pair.

💬 Hon Darren Hughes: I raise a point of order, Mr Speaker. I regret to interrupt Chris Finlayson’s political strategist, but this member said the same thing about Don Brash and Bill English. I am confused about which one she thinks is the greatest leader.

The ASSISTANT SPEAKER (Eric Roy): That is not a matter for a point of order.

Those members cannot stand hearing this, because John Key and Bill English are—

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. Again, I do not think the member is one of the new ones; she has been here for a term and a bit. She should know by this stage that it is inappropriate to refer to rulings that you have made, as she just did.

The ASSISTANT SPEAKER (Eric Roy): The member is correct; no member should refer to a point of order in that way.

The reality is that John Key and Bill English are a formidable pair, and the Opposition cannot stand that. John Key and Bill English are supported by a line-up of the best Ministers and best members of Parliament that this Government has ever seen. The Opposition can eat its heart out. It just wishes that it had that pool of talent and the coalition partners who are working so well together with National. Labour has never been able to achieve that. The Labour members can only sit there and wish that they were in our position. They once were, and what did they do with it? They blew it.

This is the best Budget ever, and this Budget is a testament to the excellence and capability of this Government. That is roundly endorsed.