Estimates Debate — Vote Finance

I am interested to hear from the Minister of Finance why he thinks that after 4 years in Government it is acceptable to be overseeing an economy where record numbers of New Zealanders are moving to Australia, notwithstanding the fact that New Zealand has had the best terms of trade in a lifetime, and notwithstanding the fact that our two main trading partners, China and Australia, have been having very good rates of growth. How can he say that he is succeeding as Minister of Finance when record numbers of people are leaving for Australia, given that that is the very metric that he invited the New Zealand public to judge him by, prior to being elected? He said that if National were elected, they would say to goodbye to higher taxes, not their loved ones—I think that was one of its catchphrases. Another catchphrase was promising New Zealand a brighter future. How can he accept that 4 years into his Government, he can blame Greece? He stands up in this house and he says that “Planet Labour” is out to lunch—that is essentially what he says.

He tries to claim the excuse that the problems of other parts of the world like Europe are responsible for the record number of people leaving from New Zealand to Australia. I think it is 158,000 people since he took office, and 53,000 people in the last year alone, and 40 percent of them are between the ages of 18 and 30. These are people who should have hope and opportunity in New Zealand, who have given up on a decent lifestyle in New Zealand and are instead putting their shoulder to the wheel of the Australian economy. I want to suggest to the Minister that the reason that they are doing that is that he has failed in his ambitions, and he has not rebalanced the economy towards the jobs and growing incomes that New Zealand needs from growing our productive export sector. He has not pulled the levers that need to be pulled in order to grow the depth of our capital markets through having a universal KiwiSaver scheme. He has not addressed the concern that was raised by Treasury in its briefing to the incoming Minister, where it said that this differential between taxing capital income and other sources of income needs to be fixed, otherwise we have too much money going into the speculative sector and not into the productive export sector. He is not willing to pull those levers, and as a consequence we have a rising current account deficit. We are getting poorer every year as a country. This is projected to get worse.

By 2016 the very cause of the last downgrade of New Zealand’s credit rating is said to be getting worse again, rising to over 6 percent of GDP. In the 2016 year—by which time, if we are unfortunate to have a National Government, it would have been in power for 8 years—New Zealand’s current account deficit will be at 6.7 percent of GDP. We will have borrowed or sold assets worth $16.8 billion in that year alone, because our economy will have not rebalanced, and this Government is not bringing forward the new jobs, the new exports, that we need not only to get wealthier in the world but also to keep our New Zealanders in our own country by giving them hope and opportunity.

We are seeing the hollowing out of the provinces. This is not just a city problem. In fact, it is worse in the provinces, because the inflow that we have from migration is largely concentrated in Auckland, yet the people that we are losing are from Whangarei, for example, with 1,200 people from Whangarei going to Australia, and 460 from Nelson to Australia. These are big population losses. These are our young, productive people. We have an ageing population as a consequence of this, according to the demographer from Massey University Paul Spooner on Q+A recently—

💬 Phil Twyford: Spoonley.

Sorry, Paul Spoonley from Massey University told us on Q+A that this increases the problem we have with an ageing population, which is another problem that this Government will not address. This Budget—this zero Budget, as National tried to describe it at the start—brings forward assets sales that make the Government deficit worse by $100 million a year, that do not change the output of the economy, that put up power prices, and that put up the current account deficit. The centrepiece of Mr English’s Budget was wrecked within days when the Prime Minister backtracked on improving student outcomes by increasing class sizes, which was never a good idea.

Citius, altius, fortius—faster, higher, stronger. We all recognise the Olympic motto, but “faster, higher, stronger” can also describe New Zealand’s performance in the tradable sector under this Government. It is a stark contrast as, despite the best economic times in decades, under the heavy regulatory hand of the unlamented last Labour Government the tradable sector languished. We have turned that round. We are building a more productive economy. We are encouraging faster growth. We are producing products that people want and need, and getting higher prices for our products, and our tradable sector is stronger and more resilient under the indefatigable Tim Groser and his team. We have got a clear goal of trade contributing to 40 percent of our GDP by 2025.

💬 Hon Clayton Cosgrove: What are you doing about it?

Growth in New Zealand, Mr Cosgrove, over the next 4 years is forecast to be higher than growth in Europe, the US, the UK, Japan, and Canada—citius, altius, fortius. This Government is a safe pair of hands, a responsible pair of hands, and we are getting on with the job.

Prudent management of our debt and fiscal discipline is fundamental to New Zealand’s well-being. The financial markets are intolerant of poor fiscal policy. Any profligacy would be penalised by higher interest rates and increased debt-servicing costs. We need a buoyant New Zealand economy, weighed down by the least debt possible, to ride out the troubled waters ahead. The global markets, in case you have noticed or have not noticed, are experiencing ongoing turmoil.

Let us take a look at the international financial situation. In the US, unless Congress acts, across-the-board income taxes will expire on 31 December, meaning there will be steep tax increases. The deep automatic Government spending cuts of US$1.2 trillion over 10 years are slated to begin on 2 January 2013. There is a need early in 2013, of course, to raise the US borrowing authority or face a debt default, and Congress must decide to fund programmes beyond 30 September, the end of the current fiscal year, to avert Government shutdowns.

These factors combined will be enough, according to some commentators, to push the US economy over a fiscal cliff—colourful language, but what does it mean? Well, the Congressional Budget Office estimates that with these spending cuts and the increase in taxes, the US gross domestic product could drop by 4 percent—4 percent. Right now, the US economy is not looking a picture of health, as growth has slowed to an annual rate of 1.5 percent as Americans have cut back on spending. This will not be enough to lower the unemployment rate, which was 8.2 percent last month. House sales are weakening, and there is a fair old notion that the US economy is threatening to stall.

💬 Hon Clayton Cosgrove: Let’s talk about the New Zealand economy.

Sadly, the political environment ahead of 6 November is not likely to be one of compromise and negotiation. Once again, local political brinkmanship and posturing in the US is likely to severely discommode the global financial confidence in structures.

Let us look at Europe, Mr Cosgrove. I know your view is normally somewhat more insular—summit follows summit, band-aid is applied to elastoplast. Two elections were necessary before Greece could receive its latest tranche of funds. The IMF, the European Central Bank, and the EU are all looking at it to see whether the austerity measures demanded will be enforced, and already last-chance options are being considered. Portugal and Ireland are also under scrutiny. Are they following the tough austerity measures demanded of them?

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Chairperson. I apologise to the member. I was very reluctant to raise a point of order, given what we had some half an hour ago, and I am conscious of Speaker’s ruling 20/8, but last time I checked, these are the New Zealand appropriations. This is Vote Finance—in New Zealand. It is not Greece, or Spain, or the US, or Botswana, or anywhere else. This is the New Zealand financial accounts and a New Zealand debate. I know it is appropriate to refer to other jurisdictions from time to time, but we have had 4 or 5 minutes talking about every country other than this one. Last time I checked, this was the New Zealand Parliament.

The CHAIRPERSON (H V Ross Robertson): Well, thank you for bringing it to the attention of the Committee, Mr Cosgrove. I appreciate that. But I know that the member is coming closer and closer, and he has not got too much time left.

Thank you. I will speak more slowly for Mr Cosgrove, because I did mention that the whole point of this was prudent financial management. Meanwhile, Spain is putting up its hand and signalling that between now and 2015 we are going to need €540 billion to bail Spain out. And, of course, the principal point here is that a Greek-style bailout of Spain is not possible once—

💬 Hon Trevor Mallard: I raise a point of order, Mr Chairperson. I have done a quick check of the estimates, and there is no €540 billion to bail out Spain in these estimates.

The CHAIRPERSON (H V Ross Robertson): Can I just say to the member that it is a debatable point, and the member has—

💬 Hon Trevor Mallard: No, it’s fact.

The CHAIRPERSON (H V Ross Robertson): Well, I can only go on what the member is saying in the Chamber, and I would expect the member to be able to refer to the appropriations as they reflect for this financial year.

Thank you, Mr Chair. It is all about context, and really the Opposition benches are showing why it was such a disastrous period of time when they were in power, because they had no idea of the global context that this country is operating and trading in. The President of the European Central Bank, Mario Draghi, told business leaders in London just in the last week that it will do “whatever it takes”.

I rise to speak in this debate on Vote Finance. I want to speak briefly about the central, if you like, economic strategy of the John Key - John Banks Government. The central economic strategy of the John Key - John Banks Government is around asset sales. What the John Key - John Banks Government has as its central pillar is the privatisation of assets. This has been justified on financial grounds, and I think it is worth referring to the Government’s own books as to what the fiscal impact will be of going ahead with this privatisation programme.

I think the Government has misled New Zealanders about what the real fiscal impact of this privatisation is if it goes ahead. If you look at the Budget Economic and Fiscal Update from 24 March 2012, on page 42 you will see Treasury’s estimate of the actual impacts of this privatisation programme if it goes ahead. What you will see is that the estimate is that in 2016 the loss to the Crown as a result of privatisation would be $360 million in a single year because of the forgone profits, and the savings, because of the reduced finance costs, would be about $250 million.

What this means is that if the privatisation of the assets goes ahead, the Crown position will be worse off by $100 million per year. That, I think, puts to a lie the fundamental argument that the Government has put forward that this is a fiscally rational strategy. So when the John Key - John Banks Government tells us that it makes sense to go ahead with this privatisation programme fiscally, the lie is to be found in the Government’s own books. When you look at the Government’s own books, the estimates—

The CHAIRPERSON (Lindsay Tisch): Order! The member just needs to be very careful about saying the word “lie”—Speakers’ Rulings, page 42. I just bring the member back. Just be very careful about that.

Thank you, Mr Chair. If you look at page 42 of the Government’s Budget Economic and Fiscal Update, you will see there the actual fiscal impacts of the privatisation programme. I think it is worth repeating the numbers in this table, because in this debate around asset sales and privatisation there have been a lot of arguments put forward that this makes fiscal sense, but when you look at the actual numbers you realise that this is not the case. I would like to repeat those numbers for the benefit of the Government members, who obviously have not looked at it very closely. If the John Key - John Banks Government goes ahead with privatisation, it means that in 2016, in just that single year, the forgone profits as a result of it will be $360 million—$360 million. It means the estimated finance cost savings—the benefit to the Government—will be about $250 million. So we are $360 million worse off, and there is $250 million in savings for finance costs. What that means is that the net impact on the Government’s operating balance will be that it is worse off by about $100 million in a single year.

This is the Government that says it is going to veto the extension of paid parental leave because it is going to cost $108 million a year. This is the Government that says it cannot afford to help working families and new mums and dads with paid parental leave, because it costs too much—it would cost about $108 million a year. Yet here it is: as a direct result of the asset sale programme that the John Key - John Banks Government is promoting, the Government books will be worse off by about $100 million per year. That is the fundamental fiscal reality of this asset sale programme.

So when people are considering whether this makes any fiscal sense, whether it makes sense in terms of the Government’s position and in terms of the Government books, you need to not listen to the rhetoric from the Government; you need to look at the actual figures that are printed in the Budget Economic and Fiscal Update 24 March 2012, put out by the New Zealand Government. I refer you again to page 42. You will see in black and white the reality of the impact of the privatisation programme. This privatisation programme, remember, went through on one vote—the vote of John Banks—with 61 votes to 60. It went through with one vote.

The impact of that programme will be that the fiscal position of the New Zealand Government is worse off by about $100 million every year going forward into the future as a result of privatisation. That is the truth that underpins the John Key - John Banks privatisation programme. That is the truth that we need to keep at the heart of our minds as we have this debate around asset sales going forward. We actually look at the Budget documents rather than the rhetoric.

It gives me pleasure to rise and speak on Vote Finance in the Appropriation (2012/13 Estimates) Bill debate. Can I say that there was the real Opposition, the real leader of the Opposition, that great Australian Russel Norman. He is the one who is standing up and speaking up for everyday New Zealanders, at least as far as he says.

Here is the problem, you see. What has happened in this last Budget is that this Government, led by the Prime Minister, John Key, and with our Minister of Finance, Bill English, has delivered a Budget to New Zealand that focuses on responsible management of Government finances and on how to make the engine that is New Zealand go faster—how to make it grow, and grow faster. What we have seen in the last week or two is the Labour Party rebranding itself, grabbing great, strong, National Government policies and saying: “We’ll have a little bit of that, as well.”

So what have we heard from those members? They are in favour of mining. In fact, they want to do more mining. It is good that they have finally woken up to that, because before the Budget they were saying they did not mind New Zealanders going to Australia to work in mines, but they could not be doing that here. Well, everyday New Zealanders want to work hard, they want to stay in their own country, and they want good jobs. This Government is focused on finding the very best way to balance the environment with mining so that our economy can grow. So Labour is saying it wants more mining. The real Opposition, that great leader of the Opposition, that great Australian Russel Norman, is saying he is not opposed to mining; it is just he has never found a mine that he agrees with: “No problem, we don’t mind mines, but we don’t like any of the ones that are here or any that are proposed.”

We have also heard from the Labour Party that it is now in favour of reducing debt. It does not like borrowing any more; it is in favour of reducing debt. The problem with that is that before the last election and before this Budget was delivered, those members said they had no problem with getting some more debt, as we could pay it off some time in the future. Well, here is the difficulty: the real Opposition, that great Australian the real leader of the Opposition, Russel Norman, is saying that debt is fine: let us tax New Zealanders more, let us go out and borrow a lot more and spend it on lots of things for New Zealanders, but let us not find a single way to grow the economy, to grow a way for the Government to get more resource and make our economy stronger and better.

And then, finally, what has happened? The Labour Party has said that it, too, now accepts that we should get back to surplus by 2014-15—that is its policy. Labour members have said they believe that the Government will do it then, or thereabouts, and that that is something that they too would do. Before the last Budget that was not their policy at all. Certainly, before the last election they were saying they would borrow a lot more money, make a lot of rash decisions around spending, and make New Zealanders work longer and harder to pay that back into the future, but now they have changed their position. Getting back to surplus by 2014-15 is acceptable to them.

The problem they have got on the other side is the real Opposition, that great Australian Russel Norman, who is the leader of the Opposition, is actually saying that it is not about going back to surplus then; it is about borrowing more money, spending more money, racking up debt on behalf of New Zealanders, and then finally, some time in the future, paying it off.

The reason I raise this is because our Budget and our focus on finance deliver a better, more competitive and productive economy for New Zealanders. We have heard others in this debate today refer to the John Key - John Banks Government. Well, I have got to tell you, based upon what we have heard from the Opposition, I would rather have that. I would rather have John Banks any day than a Russel Norman - David Shearer - Hone Harawira Government, which is what the Opposition parties are pitching to us. So it is fine for the Labour Opposition to say at the next election: “We’ve changed our position. We’ll have more mining. We’ll have less debt, less borrowing, and we will certainly get back to surplus sooner.”, but the people it will have to do a deal with to try to form a Government in New Zealand are that great Australian, the real leader of the Opposition, Russel Norman, and Hone Harawira, who have different policies across the board and will not accept that at all.

On this side of the Chamber we are focused on what matters, and I say it again: give me John Banks any day over some of the others whom that lot over there will have to cast their lot in with, come the next election. I look forward to the debate that we will have as we go forward, and to hearing from the Labour Opposition what its position is on water in New Zealand and whether it backs some of the claims that are being made around the country. I bet you we are not going to hear anything about that, at all.

Delivering better public services is something the Opposition hates. It hates us doing better with the money we are entrusted with to spend on behalf of New Zealanders. Well, the Budget that has been delivered by Bill English does that. It focuses on better public services for New Zealanders, rebuilding Christchurch—

We have heard it here, and it will go now in the annals of this Parliament, as Todd McClay wraps his arms firmly around John Banks—firmly around John Banks—who is the political version of a human pinata in this House, being pinged every day for his conduct. He is the walking dead, the political version of a cadaver that is hanging this Government together. It is selling our assets that people already own on the vote of John Banks, the human political cadaver. Todd McClay gets up and flings his arms around John Banks like a lifeline. Well, I am going to enjoy quoting from that speech for years to come.

Here is the issue with this Budget, with these appropriations, and with this finance. This Government is responsible for some achievements, that is true: exports are down, the current account deficit is up, unemployment is up, and 1,000 people a week—1,000 people a week—are leaving for overseas. These are all things that the English-Key Government said it would fix.

I do not want to get on to tourism, because we have done it. The only thing I will say, as we are talking about jobs, is that if one consults page 582 of the Estimates, on tourism, one will see that we asked the Associate Minister of Tourism about jobs—job creation in relation to the cycleway—because this finance appropriation helps to fund that. He could not tell us how many businesses and how many permanent jobs have been created thus far by the silver bullet of this Government, which was to be the cycleway. The Associate Minister of Tourism could not tell us. He could give us a few anecdotes about a fish and chip shop that had opened in Napier, and apparently the local cycle shop in Napier is going gangbusters, but apart from that he could not name how many permanent jobs had been created.

We know that 1,000 people a week are leaving these shores. I say to Mr Calder that it is not about Greece, as Mr Parker has said. Mr Calder spent 90 percent of his speech, ironically, talking about every other country in the world except the one that he represents in this Parliament. He talked about Greece, talked about Spain, talked about Ireland, talked about the US, and talked about every other country except the one that he is in charge of as part of this Government.

We look at asset sales. I remember a debate during the election campaign, the famous “Show me the money” debate. Remember that? I say to this Government, because this Government is always quick to hold everybody else’s feet to the fire in terms of fiscal prudence, fiscal accountability, and costings, that we had an example of utter—I cannot say that; it is the “h” word. We had an example of saying one thing outside this Parliament and doing another thing inside this Parliament when it came to the asset sales loyalty scheme. We had a Prime Minister get up at his conference and come out—as if, you know, everybody loves this Prime Minister coming out at his conference, so the National Party people said; people are going to love these asset sales—and announce a loyalty scheme without one dollar of costings having been done. He announced hundreds of millions of dollars’ worth of a loyalty bonus shares scheme. When asked in this Parliament how much it was going to cost, where the dough was coming from, and what the counterfactual was in terms of losses to the taxpayer and the Crown of providing these free shares for those who can afford $1,000 or $2,000, he had not one shred of evidence or data to back up the policy. If that had been us, oh, would we have been shredded by the National Party for not costing things!

It seems it is OK to dish it out but not be accountable when you are in Government and announce a major plank of a policy costing hundreds of millions of dollars so that those at the top, again, can get a major wealth transfer in bonus shares and those who have their noses presses against the glass, who cannot afford the $1,000 and $2,000 they need to get in to buy back what they already own, end up paying for it. So I say to Mr English that I would be really interested, as is addressed in the report of the Finance and Expenditure Committee, whether he could tell us the costings around the loyalty scheme and whether he could also tell us, if his Government is so certain—as it has told us week after week and month after month—first, that Kiwi mums and dads will be first in the queue and, secondly, that they will hold on to these shares ad infinitum because it is such a good deal. I would like him to tell us, if he is so confident of that, why it is that he needs a loyalty scheme.

I would like him to tell us when this loyalty scheme is going to mature. Is this loyalty scheme going to mature prior to the next election? Oh no. The stated position on the loyalty scheme is that it will mature after the next election—about 6 months after it, I think. The Government said that it would be a 3-year scheme.

💬 Dr David Clark: What a coincidence.

It is quite a coincidence, as my colleague Mr Clark said. Why is that a coincidence? That is a cynical con, because that is simply about the Government being able to try to cobble together an argument in the next election campaign to say: “Oh, look at all these Kiwis. They’re hanging in there; they’re keeping their shares. We told you so.” Mr Key will say that and then, hey presto, 6 months after an election campaign, the free bonus shares will mature and be delivered, and the same thing that happened with Contact Energy will occur, when Kiwi mums and dads—those who remain—will sell out the windfall gain.

Of course, those who have got in to get that windfall gain will be those Kiwi mums and dads who can afford $1,000 or $2,000 to flick on to the old share market. I do not see many of them in Christchurch or around the country. By the way, if you are paying 20 percent on your credit card, and you are going to get 5 percent, maybe, off the back of these asset sales, then would not the smart thing to do—and I do not think many financial advisers would disagree with me—be to pay off your credit card or pay down your mortgage if you have a discretionary $1,000 or $2,000 just hanging around in your back pocket?

The point is this. I know that Mr Goldsmith, the member for—no, he is not the member for Epsom; I got confused there for a minute—the soon-to-be member for Epsom, will be able to afford 1,000 bucks or 2,000 bucks. I would wager that most people in his electorate would probably be able to have a go, and that is the nature of it. But for those people on Struggle Street—those people who do not have 100 bucks to get the kids a couple of new pairs of school shoes, pay the school fees, or put bread on the table—I cannot see too many of them sitting around with, you know, mum talking to dad and saying: “Hey, we’re going to dig up $1,000 or $2,000 and do you know what we are going to do? We’re scratching to make ends meet, but we’re going to take Bill English’s advice. We’re going to invest in shares that we already own and we’re going to buy them back again.”

So let us get real about this. This is about a wealth transfer, from those who have the least to those who have the most. This is also about an election year con.

I just ask Mr English again, if he is so confident that Kiwi mums and dads will hang on to these shares, why does he need a loyalty bonus? There is no answer, apart from the fact that he knows the inevitable will happen. Contact Energy, it was floated in 1999, had a share register of 225,000 individual Kiwi shareholders. Today, that number is 78,000, and that company is overwhelmingly and predominantly owned by foreign interests, most of them in Australia.

I just say to Mr English that if I am wrong—and he can laugh and cackle—he should stand up, take a call, and tell the Committee why it is he is promoting a loyalty share scheme if he does believe, in his heart of hearts, that Kiwis will hang on to these shares and that it will not be the case that in, say, 3 years, just after the loyalty scheme expires, the share register is turned on its head because the Kiwis go out with their windfall gain and the foreign investors move in. That has been the precedent after precedent with asset sales historically.

Eighty percent of New Zealanders do not want it. Mr English has botched this from stem to stern. He has inflamed Māori interests. He has not spoken. We had Tūwharetoa come to the select committee, lawyered up, saying that they had gifted back water resources to the Crown for the public good, but now the rules had changed, and they wanted a slice of the action. What was the Government’s reaction to that? Well, according to Mr Ryall in this House, it had planned for all this. So it had planned for a dust-up with Māoridom, it had planned for a Waitangi Tribunal hearing, and it had planned, presumably, for the inevitable court action that will follow and, therefore, for the delay in the initial public offering. Only a fool—to quote Mr Key—would float an asset, would do an initial public offering, with court action and tribunal action hanging over their head.

I say this to Mr English. He will go down in history as the person who dudded—to use an Australian expression—the Kiwi taxpayer by selling assets that they already own, dudded them because the least in our community could not afford to buy them, dudded them because he transferred the wealth to the most, and then dudded them with a loyalty issue that should be unnecessary if he believes in his heart of hearts that Kiwis will hang on to these shares. “Dudded the taxpayer” will be his legacy, and that is what we will go to the next election about.

I am very glad to hear from the member for “Struggle Street”, Clayton Cosgrove. By my calculation he could get about 17 lots of shares worth $1,000 each.

💬 Todd McClay: How much does that add up to?

About $17,000, I recall.

I was interested to read, a couple of days ago, of what was said of Mr David Parker: “if you closed your eyes and just listened to David Parker speaking—it could just as easily have come from National”. If only it were so. If only it were so of David Parker that if you closed your eyes, you could think that he came from the National Party. If we were to contrast the Government’s Budget—we have this excellent Budget here, which is about investing in New Zealand’s future, stimulating jobs, and delivering better services for families while keeping the Government on track for surplus in 2014-15, with what we would have seen if Mr Parker was the finance Minister, aided and abetted by that great Australian Russel Norman, we would be looking at a capital gains tax, would we not? We would be looking at a partial capital gains tax, which excludes the family home.

It always amazes me to wonder how it would help grow the economy if we were to add a new tax on all businesses and small businesses in the form of a capital gains tax, and if every farm had to pay a capital gains tax. How that is going to grow prosperity and encourage entrepreneurialism in New Zealand is beyond me, given the fact that such a tax is in place in Australia, the US, and the UK, and they seem to have had housing bubbles. How that is going to solve New Zealand’s housing affordability is beyond me.

Another aspect is that we would be looking at GST reform right now, would we not? We would be taking the GST off the asparagus that is flown first-class into my local fruit and vegetable shop at Jack Lum’s. We would be taking the GST off that in order to bring about greater social cohesion in New Zealand. I do not see how that would have helped New Zealand, by any stretch.

Mr Parker is now in favour of fiscal responsibility. Well, it is one thing to talk about it; it is another thing to actually do it, and actions speak louder than words. When we look at the last term of the Labour Government—when I was not nearby—it did not show much fiscal responsibility, in my book. It increased incredibly the growth of Government spending and left this country pregnant with 10 years of deficits ahead of us. So those are the actions rather than the words. In terms of fiscal responsibility for Mr Parker and the Labour Party, it seems to be all about not controlling spending, but just raising taxes more and more in order to meet the never-ending desire for more moneys that they can spend.

Apparently he is now in favour—this member who, if you closed your eyes, you could believe was a member of the National Party—of labour flexibility. Well, I am not sure. Is Mr Parker now supporting the 90-day trial for workers? I do not think so, but I hope he is, because that would make good sense. That is the sort of flexibility that we need when employers are starting out and trying to grow their business—to have some flexibility about who they employ. That is how we grow the economy. At the end of the day it is businesses who think that they can sell something the world wants who will feel confident to hire new people and to grow their businesses. That is how the economy grows, not by taxing hard-working New Zealanders even more in order to grow the size of the Government, and somehow think that that is going to grow the economy.

What about mining? I understand now that Mr Parker is in favour of mining. Well, that does not seem to have filtered through to the Local Government and Environment Committee, where Labour members are opposing the Exclusive Economic Zone and Continental Shelf (Environmental Changes) Bill with everything they have got. The exclusive economic zone bill is all about balancing the needs of growing the economy and preserving the environment, where the Government has come through a very careful balancing of those two aspects, and Labour opposes it every step of the way. I do not know how he is in favour of mining, on that score.

Let us look at some of the other areas. Intensification and development of the agricultural sector? No, Labour is not in favour of that. Australian companies moving jobs to New Zealand? No, it is not in favour of that. Making welfare work? Well, here we are, having had the welfare system in place now for 70 years. It was supposed to end poverty when it was brought in by Mr Parker’s great—[Bell rung] It was supposed to end poverty back in 1938, and we have not quite got there yet, and we have entrapped 300,000 families in the welfare system, relying on the Government. Labour seems to think that that is perfectly acceptable, and that it is a good thing.

This Government does not. We have reformed, and we want to continue to reform, the welfare system, not because we do not care about people but precisely because we do care, and precisely because we do think we can do better and we must do better. That is what this Budget is all about, in terms of focusing on getting more effective results out of the welfare system, rather than just continuing to pour the money in: “Here’s your money. We don’t care anything about what you do with it. We don’t care how long you receive it. It can be for ever and a day, as long as you like.” That, somehow, was supposed to reflect a caring Government. Well, that is not a caring Government in my mind, at all.

What else would we be looking at here—$1.5 billion to invest in ultra-fast broadband in terms of opening up schools and businesses to the world. Would Labour be investing in that? No, it would not be. Foreign investment in New Zealand? I have been surprised at the Labour Party, which for a couple of decades now has been a party that has understood the importance of trade, and there has generally been an awareness across the House that New Zealand makes its living out of international trade. Getting ourselves closer to free trade in a number of industries and environments is very important to the future of New Zealand, but I cannot help but get a sense that Labour is backing away from that now. It is continually talking in a protectionist way about stopping the foreign investment coming into New Zealand and opposing that on every score. So how is that being supportive? Finally, I just want to see whether, if you closed your eyes and thought that Mr Parker was a member of the National Government, he would be talking in the same way about the emissions trading scheme, where Labour wants to extend that to farming and a whole range of other areas. I do not see how that is going to help New Zealand grow faster.

So all in all, when I look back and see what the Government has achieved through this Budget, and when we stand and look at the international economic context of developed countries around the world struggling, New Zealand in this context has continued to have growth—albeit modest growth, but growth nevertheless—over the last 4 years. It has been a remarkable achievement, and one that I am very pleased to be a part of in a small way. So I support the work of this financial element of the estimates debate. Thank you very much.

We have just heard from the member Paul Goldsmith some very rich rhetoric, and I guess that is what we might expect from the member from Epsom. Unfortunately, however, the facts will get in the way of that good story. If we examine the Government’s record we will find that the growth he has spoken of has not eventuated.

The Government’s record on growth is the worst record of a Government in 50 years—the worst economic growth record of a Government in 50 years. There are over a thousand people a week leaving for Australia, for good reason. People are discontented with the growth, or the talk of growth, that this Government has offered. They want real growth. They do not want talk. We have had a 50 percent increase in unemployment. That member said that he was concerned about it, and that the Government must do better. Well, it must—it must do better. It needs to be providing jobs. Talking a big game does not achieve anything at all. If we actually look at the record on growth, we can look at the GDP record of the last Labour Government, which grew the economy in real terms—in real terms—by 25 percent. That made the pie one-quarter bigger, and that contrasts starkly with this Government, where real wages per capita are dropping. That is all about priorities.

When it comes back to Vote Finance, it is about where the money is being spent. Is it being spent to best effect to grow our economy, to grow the policies within Treasury that will grow our best economy, and to make sure that jobs are provided for New Zealanders who want them and who want to contribute to our country’s future?

That raises a very important question, which was covered in the estimates and related items for Vote Finance in the Finance and Expenditure Committee. We asked the Secretary to the Treasury about the Crown Retail Deposit Guarantee Scheme, and asked just what work Treasury was doing, or, indeed, what work the Minister had asked for, in respect of that scheme. We know that it is quite likely that hundreds of millions of dollars were lost as a result of the Government’s mishandling of that scheme. We know that its handling of the scheme could have lost more taxpayer money than INCIS did. This could be the greatest loss of taxpayer funds in New Zealand history. I want to know, in the current financial year, what Government resource will be allocated to finding out just how much money was unnecessarily lost in addition by Treasury’s poor handling of this scheme. I would like the Minister of Finance, when he takes his call, to tell us how much resource he will be devoting in his department toward quantifying this loss to the taxpayer—quite possibly the greatest loss to taxpayers in New Zealand history.

A quick look at the estimates tells us that the Government’s priorities are not Labour’s priorities. We know that the asset sales programme will take this country back by $100 million a year. We know that, because Treasury has quantified it. We know that it was a rushed process. We know that the Government is trying to rush it through because it is embarrassing—80 percent of New Zealanders are against it. We know that 99.4 percent of the submissions that we heard in the select committee were against it, and we know that New Zealanders do not like it, because it is a bad idea. But the Government continues to push ahead. It continues to push ahead with its plan to deprive us of revenue that the Crown could have to ensure that we pay off our debts faster and that we can invest in the assets that we all value as New Zealanders over the longer term, rather than some kind of sweet, sugary quick fix. We know that the sale of these assets will lead to future cuts in services for all New Zealanders. We are talking about hospitals and schools. Once the capital that is gained from any asset float has gone, the revenue will dry up, and we will all be worse off.

This Government is refusing to take the big decisions. That is also clear from these estimates. We know that superannuation is one issue it is not prepared to tackle. It is saying it is not an issue until 2020. Well, it is an issue. We all have to plan for our retirements. We need to know with certainty whether this Government intends to go on spending more money on New Zealand superannuation than it is spending on the entire education system, or whether it is actually prepared to tackle these harder issues.

We also want to know about the Government’s economic management. We know that this Government has borrowed more from overseas, under John Key, than any previous Government. This Government’s borrowing would make Muldoon blush. This Government’s borrowing record is shameful. We know that we need pro-growth tax policies, we need research and development policies, and we need proper savings policies.

Well, there was another visit from one of the aliens from “Planet Labour”, David Clark. Funnily enough, a lot of them look the same. Just a couple of points that were raised on the way through. Apparently, low-income New Zealanders cannot afford—and this may be right—to buy $1,000 worth of shares in Mighty River Power, but, according to Labour, they can afford compulsory superannuation contributions. So can those members explain that to us? We have heard all this ranting about how those people cannot afford $1,000 once in their life, for $1,000 worth of shares, but they can afford what Labour euphemistically calls universal KiwiSaver, which means compelling people on the minimum wage to make savings every week for the rest of their lives. Apparently, they can afford that. So I look forward to the explanation of how those two bits fit together.

Listening to the Labour Party lecture about the current account deficit is unbelievable. I recall the campaign in 1999 when a finance spokesman from the same city who looks a bit similar to this one campaigned on getting rid of the current account deficit. At the time it was 4 percent. Then Labour had 9 years of the great moderation—the best economic conditions, apparently, that the globe had seen in a generation—and at the end of it, not only did Labour not get rid of the current account deficit, but it was double what it was when Labour started.

💬 Mark Mitchell: Double?

Double. First mortgage interest rates were 10 percent, there was 5 percent inflation, and we had a doubled current account deficit. And today we are hearing, in this debate about the estimates, the same kind of hocus-pocus of some magic mix of research and development incentives and something else that, apparently, will fix all this. The Government’s plan is a consistent plan, and if we stick to it—which this Government certainly will—then we are going to see New Zealand less vulnerable. It will be less vulnerable over time, but it is a huge challenge, not only because of the multigenerational build-up of that external indebtedness, but also because we are now in a world where dealing with it is going to be a bit more difficult.

One of the speakers talked about the greatest losses over the Crown Retail Deposit Guarantee Scheme. Let us just run through a quick list of the mess that the wasteful, hopeless last Labour Government left. There were multibillion-dollar losses in ACC, because it cranked up entitlements, and cut and tried to hold levies—multibillion-dollar losses. The Housing New Zealand Corporation has $5 billion worth of houses in poor condition in the wrong place that cannot really be used to help serious housing need—$5 billion. It is not a theory. That is paid for by the PAYE of people who voted Labour believing it knew what it was doing—$5 billion of PAYE invested in housing that cannot be used properly to help the people Labour says it stuck up for. Student loans—$1 billion worth of write-offs, because when we became the Government no one was in charge of student loans. No one in that whole Government was in charge of a $10 billion asset, and I had to sign off write-offs of hundreds of millions of dollars because of negligence and lolly scrambles being the outstanding characteristics of the previous, wasteful Labour Government.

Then today in the House Labour was criticising us over welfare reform. It was another one of its lazy, thoughtless spokespeople who do not do any work and contribute nothing, even in the area where Labour is meant to be the experts: welfare policy. Labour members are a generation behind in their thinking, if they are thinking at all. These estimates include hundreds of millions of dollars invested to get on top of long-term welfare dependency—dependency on which labour parties rely because that is what feeds the government system from which they draw their personnel and their ideology. We believe we must change long-term welfare dependency, and these estimates show the best ideas in a generation to get on with that.

I will respond to a couple of issues raised by the Minister in the chair, the Minister of Finance. He asked why it is that we think New Zealanders can afford compulsory savings through a universal KiwiSaver scheme. The truth is, New Zealand cannot afford to ignore these long-term problems. New Zealand has slid down the rankings of the international wealth tables over recent decades, and although it is true that in the next few years there are a couple of countries that are going to pass us going down faster than we are—some of these European countries to which Bill English has referred—the truth is that the countries that have done better than us do better in labour productivity. They do better in labour productivity because they have the right tax signal into the economy, and their precious investment capital goes into businesses based on the profitability of the investment rather than tax advice. And they do better in labour productivity because they have more money to invest in their economy, because they save more.

How is that paid for by low-income people? It is a very good question, because low-income people spend everything they earn. That is why, allied with our policy of a universal savings scheme, we have a proposal to increase the minimum wage, because an increase to the minimum wage is necessary in order to help those people save. Mr English, you might laugh in the chair, but, you know, one of the reasons why people head to Australia is that it has got a more competitive wage structure. That competitive wage structure is born of the universal savings scheme. New Zealand would be in a similar position if an earlier National Government, under one of his predecessors, the Rt Hon Robert Muldoon, had not abandoned an earlier Labour universal savings scheme that was designed by Roger Douglas and put in place by Norman Kirk. That is how the contributory saving scheme would be introduced, and, as one of the New Zealand First contributors interjected, there is a difference between a lump sum and a contribution over time, even if the Minister of Finance does not get that distinction.

We heard from Paul Goldsmith. Paul Goldsmith, biographer of John Banks—another person who is very close to Mr Banks—said that it is a new recipe from Labour that we were in favour of returning to surplus by 2014-15. It is not. We campaigned upon it. We produced detailed fiscals at the time of the last election that are the most detailed that have ever been prepared by an Opposition—far more so than we had from National when it was in Opposition. Not only that but we actually properly costed what was happening with the State-owned enterprises; the Government did not. In fact, the Government did not come clean on the fact that the State-owned enterprise sales were going to make the deficit worse by $100 million per annum until this year in this very Budget process, in the pre-Budget fiscal update.

Not only that but under Dr Cullen we did run nine surpluses in a row. In a time of plenty, when a lot of Governments around the world were not putting away money for a rainy day, New Zealand was. Every one of those Budget surpluses was opposed by Bill English—every one of them. Every one of those Budget surpluses was opposed by his finance spokesperson predecessor, John Key, and by his predecessor, Don Brash. Every one of those Budget surpluses is absolutely essential if you are going to run Keynesian economics. There are lots of people now who favour a Keynesian approach in a recession, and they are right. You have a danger of running into a deflationary spiral if you do not run a deficit, and that is why I am not critical of Bill English for having run a deficit in the last couple of years. It was absolutely necessary. If you run surpluses for all those years, then you have the worst recession around the world since the Great Depression. It is absolutely appropriate for the Government, for a period, to run a deficit in order to keep the economy moving. He has done that. We have not criticised that. We criticise the shape of it, we criticise the fact that 40 percent of his income tax cuts went to the top 7 percent of people, but we do not criticise the fact that there has been a deficit. New Zealand can afford that deficit for a period because for 9 years we—and, indeed, the prior National Government—ran surpluses during the good times so as to put money away for the tough times.

In terms of welfare reform, I am not going to put up with being lectured on welfare reform by a Government that says that it does not have to move on the age of eligibility for superannuation, despite the fact that a million people within a decade and half—or a bit more than that—will be on superannuation, and that by 2016 we will be spending more on superannuation than on the whole of Vote Education.