Debate on Budget Policy Statement

I move, That the House take note of the report of the Finance and Expenditure Committee on the Budget Policy Statement 2016. It is great to be able to talk about the Budget Policy Statement, a document that shows the future of New Zealand going forward into 2016 and beyond. It draws on Treasury forecasts in the half-yearly update, it looks at how we are managing public finances to responsibly deliver a surplus to New Zealanders and reduce debt, it makes sure that we get a productive and strong economy, it delivers better value for public services, and it supports the rebuild of Christchurch.

It is a Budget that shows prudent economic management in the most difficult of international times. It shows that this Government can deliver the best environment for New Zealand businesses to succeed and prosper. We are delivering the stable conditions for economic prosperity in New Zealand. The Government made a surplus of $414 million in the 2014-15 year. We made this surplus after the most severe economic recession since the Great Depression and rebuilding our second-biggest city. With a debt of an $18.4 billion deficit in 2010-11, we have now turned that into a surplus of $414 million. That is a great achievement for any country, and especially the small country that the New Zealand economy represents.

There is a weaker outlook going forward due to lower commodity prices and the international situation, and I will come back to that later. But let us have a look at some of those statistics. Real GDP growth was 3.2 percent in 2015, and it is forecast to be 2.1 percent in 2016. We are running slightly higher now, at 2.5 percent. That is great news for New Zealand. The unemployment rate—the actual rate in 2015 was 5.8 percent and the forecast in 2016 is 6.5 percent. We are running below last year’s actual rate, at 5.3 percent.

If you look at the Consumers Price Index and the inflation rate, 0.3 percent was the actual rate for 2015, and it is forecast to be at 1.4 percent. Low inflation means low interest rates for New Zealanders, and we have record low inflation in New Zealand. Wage growth is going up. It has gone up by 2.1 percent in 2015, and is forecast to go up by 2.6 percent in 2016. The current account balance is at negative 3.5 percent, and is scheduled to go up to minus 4.8 percent. That may sound bad, but when you consider the current account deficit under Labour of 7.9 percent, that is an improvement for the New Zealand economy. The total Crown operating balance before gains and losses, at 0.2 percent, is forecast to go to a negative 0.2 percent. And net Crown debt, at 25.2 percent, is forecast to go to 26.9 percent—still keeping New Zealand’s debt at reasonable levels for this country, going forward.

We need to compare this with the country that we inherited—a country in recession, a country that had interest rates at around 11 percent, a country with a current account deficit of 7.9 percent, and a country that had permanent deficits and debt rising to over 60 percent of GDP under the figures that Labour would have delivered for New Zealand. The Opposition members over there will talk endlessly today about agriculture in their speeches in this debate. They will say that they care about farmers.

Speaking as a farmer, it hurts us to see the Opposition members actually come into this Parliament and say that they care about farmers. Not once have they ever supported anything for farmers in this Parliament in the last term, and they have no intention of supporting anything in the future. To all those New Zealand farmers who are listening today—do not believe what you will hear from the other side. Do not believe those members’ rhetoric about how they suddenly care about farmers and they are there for farmers in their time of need, because, believe me, Labour never has been, never will be, and never can be there for anybody who is in the rural sector or in any economy that is based around the rural sector.

Let us have a look. There are lower payouts coming to dairy farmers this year—nobody is denying that. It will be extremely tough times for New Zealand dairy farmers—they will be extremely tough—and New Zealanders will face greater impacts from this as it flows through into our economy. But, as the Minister of Finance said today, similar things happened in the sheep and beef industry in the late 1980s. Every industry will go through ups and downs, and they have to be able to reconcile that with their debt, their income, and their ability to service that debt, going forward. All businesses do face challenges, and this is a time of immense challenge for the New Zealand dairy industry. Let us not forget that at all.

It is not just a Fonterra issue. A lot of people will blame Fonterra and say that this is a Fonterra issue—it is a problem of having a structure around Fonterra. It is not a Fonterra issue. Open Country Dairy suppliers will have the same problem of lower payouts coming to them, as well. In fact, they have got a bigger problem than Fonterra shareholders because at least Fonterra shareholders have a shareholding in that company, which gives them a greater asset. Open Country Dairy farmers are probably the most at risk because their only asset is their land and their cows. They have no shareholding asset in the company and they do not have that buffer, should the banks be looking at their properties, and I think that that is something that we need to take into account. It is a whole dairy industry issue, not just a Fonterra issue.

In saying that, Fonterra is the biggest player and New Zealand dairy farmers do look to it for leadership, and this is a time when Fonterra can step up and show that leadership. It has done that earlier in the season by providing some extra funding through a capital mechanism for its shareholders and it is indicating that it will have another capital mechanism later in the year to help farmers as well, or some other mechanism through using its assets. So it is time for Fonterra to actually help and deliver to its farmers, but it is not just solely a Fonterra issue.

New Zealanders need a Government and a Parliament that understand and support farmers, not a Parliament that tries to take advantage in their time of weakness and their time of difficulty to make political capital, but that is what is happening on the other side of the House. I ask the members of this House, and I ask the public who are watching here today: when was the last time that the Opposition parties supported the Government’s actions on water reform? When was the last time the Opposition parties supported our reforms of the Resource Management Act? When was the last time the Opposition parties supported the free-trade agreements like the Trans-Pacific Partnership (TPP) agreement? And when was the last time that the Opposition parties actually supported New Zealand dairy farmers by voting for them in this Parliament, rather than saying one thing and doing another? Farmers do not want that. They do not want Opposition parties saying one thing and doing another, because they can see through that and see the reality of the situation.

Let us look at what would happen if the Opposition parties were in power. There would be no free-trade agreements. There would be no trading with the TPP agreement—

💬 Clayton Mitchell: There would be three trade agreements.

Oh, no. The New Zealand First Party wants to do trade with Russia in dairy products, but it does not want to do a TPP agreement. So let me understand that one. The Resource Management Act reforms would be off the table. There would be no chance of having Resource Management Act reforms from the Opposition. The Opposition parties would not support the Government on Resource Management Act reforms. The Opposition parties would have higher taxes on farmers. They would be taxing farmers to a higher level to pay for unrealistic election promises that they have already made around payments to students, for example, and there will be more to come during the election campaign.

That unrealistic spending would mean higher interest rates for New Zealand farmers. The biggest problem coming out of this room that New Zealand dairy farmers would face would be if there was an incompetent Government here delivering a poor economic situation and a poor Budget, which would lead to higher interest rates. That is exactly what the Opposition would deliver. New Zealand farmers are smart, they are hard-working, and they will deliver for this country, as they have in the past.

We do not need a patronising Opposition that does not care about farmers to come into this Parliament and suddenly show that it has some ambitions. The Opposition members over there will yell and scream all they like, and in the next speeches you will only hear from the Opposition members about how, under Labour, there would have been a diversified economy, and how, under Labour, there would have been none of these problems. Well, I say to you—and I say to the members of this House—New Zealand farmers would have been worse off with those guys. New Zealand farmers deliver, and will deliver in the future, and we do not need the patronising attitude from the Opposition at this time.

I congratulate the member David Bennett, who has just resumed his seat, on his ability to retain some numbers in his head—

💬 Hon Damien O’Connor: No, he read it.

Oh, he did read; that is true. He had a number of numbers in his speech. Let us start by talking about that, and perhaps raising some of the other numbers that the Budget Policy Statement draws out for us. For instance, in the last year, per capita GDP: nothing. No growth, zero, flat—absolutely flat. How about debt—because we know that the Government, in the past, has been very proud of its record around debt.

💬 David Shearer: Surely that has come down?

Well, no, you would think so, would you not? Net debt in 2008 was $10 billion. In 2015 it was $62 billion—an additional $52 billion. There is another number for David Bennett—$52 billion. In the spirit of my colleague Dr David Clark, the Government has borrowed more than Muldoon; that is what it has done. But it is all right, because we had a promise from the Government. We had a promise from the Government that exports as a percentage of GDP would be up at 40 percent—that was the promise. I will admit that this is not going to happen in a day; it is the kind of thing you need to take step by step to improve exports. So they were 32 percent of GDP when the Government came into office—it will take steps forward and they will reach 40 percent by 2020.

💬 David Shearer: What is it?

So you would think now they would probably be in the mid-thirties somewhere?

💬 David Shearer: On the way.

Yeah, on the way—28.4 percent—going backwards. Exports as a percentage of GDP are going backwards. But what about the stuff that really matters—the numbers that really matter to working New Zealanders, like whether or not they got a pay rise? That is an important thing covered here in the Budget Policy Statement—New Zealanders working hard, adding to the productivity of their companies, hoping for a pay rise. What number would David Bennett want us to have there? In 2015, 46 percent of New Zealanders did not get a pay rise—46 percent of New Zealanders. So there is a number for the Government.

💬 Chris Bishop: You are getting the wrong stats, Grant.

What we also know is that the labour force participation rate—something that the Government has wanted to crow about and say that is why we have to be careful about the unemployment numbers—is actually coming down. It is actually coming down. People are giving up on the labour market, Mr Bishop. They are giving up, because the jobs are not there for them.

💬 Chris Bishop: It is the third-highest in the developed world.

I would have thought Chris Bishop would get it—the trend matters, Chris. It is the trend that matters. It is going the wrong way. They are the numbers that perhaps David Bennett might have wanted to focus on when he was looking at the Budget Policy Statement.

But what I think is really missing from the Budget Policy Statement is the vision of the Government to create the economy of our future. What this Budget Policy Statement is really about is a Government that is stuck. It is a Government that does not really have any new ideas about what a new economy might look like, about how we can—as David Bennett said—support and invest in diversification of the economy. The Government was very keen, Mr Bennett, to crow about dairy prices when they were high, to take the credit, to have the Prime Minister charging his glass with Theo Spierings, to say “It’s all on.”, to make the best of his trip to China to start a new export line in there—so, credit was being taken. But now, on the downturn—we have farmers who are facing, potentially, what they themselves are calling a catastrophic situation. This is not the Opposition saying this; this is the farmers themselves.

There was the performance by the Prime Minister today, who decided that it was more important to throw political insults than to actually recognise what farmers are calling a catastrophic situation—the possibility that there would be a drop in land value of more than 40 percent—the fact that, potentially, we could have 40 percent of farmers in a position where they are not meeting the terms of their loans. This is tough stuff. Those communities are having a tough time. It is not right for the Government to suddenly say it does not matter anymore, because we have got tourism now. It is not actually a diversification strategy to let one industry collapse in the hope that that means another one looks better. The only reason tourism is now larger is that dairy has gone down. That is not diversification. That is not a Government in the 21st century being a partner in the economy—being a partner in the economy—and that is what regional New Zealand is calling out for.

I absolutely accept that farmers are not looking to be bailed out by the Government; they do not want that. What they are looking for is a Government that will be a partner, that will get into those communities and work with local Government, work with businesses, and help to establish the kinds of industries, the kind of economy that can ride out the waves in the commodity cycle. Because in the end, that is what this Government is leaving us with—an economy and economic growth that has been built on an over-inflated dairy price, the Christchurch rebuild, and the Auckland housing bubble. You could not get a less secure basis going forward from here, for the New Zealand economy.

This Budget Policy Statement misses the trick of planning an economy for the future. When we discussed this in the Finance and Expenditure Committee, it was quite clear when the Minister of Finance came in that his vision for the spending allowance for the future, which is here in the Budget Policy Statement, was to look at tax cuts. That was the only plan—not to invest, not to create opportunity for future generations, but to squirrel that money away for 2017 and the election, and for tax cuts. We know, from what happened in 2010, where the National Party’s focus for tax cuts will go. It goes to the top earners—the top 10 percent getting 40 percent of the value of tax cuts. That is the focus for National and that is what it wants to do with the money that is here in new spending allowances.

Well, I can tell you is that on this side of the House we are proud to say that what we want to do with Budgets of the future is use them to create opportunity for New Zealanders. That is why Labour has proposed, as a direct alternative to National’s tax cuts, our Working Futures Plan, which says “Let’s use that money to earn”—

💬 Chris Bishop: Ha, ha!

Chris Bishop laughs. He does not care. He does not care whether or not when people leave secondary school they have got the ability to go on and get the qualifications that—

💬 Chris Bishop: I do.

—that they need to add to the skill base that they need. “I do”—I hear a high-pitched squeal from across the aisle. What we need is a policy like the Working Futures Plan that actually means that every single New Zealander will go on and get more qualifications, will be the skilled workforce that employers tell us time and time again they need, but there is no sign of that in this Budget Policy Statement. The Government thinks it can get away with 20th century approaches in the 21st century. That is not how we are going to grow the economy.

What we want to see in the future is the Budget Policy Statement being used to define the kinds of measures that would make for a good society. By all means, we keep measuring GDP. Of course it is a very good way of measuring activity in the economy. But let us start measuring some other things in the Budget Policy Statement. Let us start measuring how we are doing in creating jobs, in lowering unemployment. Let us set as a goal that wherever you live in this country you should be able to get a decent job. That should be a goal of any Budget. Let us make it a goal to have targets in the Budget to reduce child poverty. Let us hear about them. The Government is so scared of that that it will not even set a target for child poverty, let alone use the Budget to actually measure it. Let us use the Budget to actually be honest about expenditure in health, because we heard David Bennett tell us that health expenditure as a percentage of GDP has gone up. It has not; it has gone down—it has gone down.

We need to have a Budget that says we will set up the building blocks of society strongly: education, health, decent work, and getting kids out of poverty. That is what the Budget Policy Statement should be saying today—a vision for how we will create opportunity and how we will create an economy that is based on diversification and on giving people an opportunity for decent work in the future. We are facing huge change in the workplace—technological disruption, globalisation—and we have got a flat-footed Government looking in the rear-view mirror. What is needed is a Budget Policy Statement that says today: “We will work with business, with local government, and with the community to create the jobs of the future, to give every New Zealander the dignity of a decent job backed up by a decent home, good education, and good health—not allowing one child to grow up in poverty.” That should be in the Budget Policy Statement. That would be in a Budget Policy Statement from a Labour Government. It is, sadly, missing today.

I do not know what planet Grant Robertson has been living on for the last few years, because just at the tail end of his speech we heard from him that the Budget Policy Statement should do other things than talk about GDP—that we need to measure things like jobs and we need to measure things like wages. Well, we do measure those things, and the good news for Grant and the good news for the House—

💬 Mr SPEAKER: Order!

—is that jobs are up by 175,000 over the last few years, unemployment is down to its lowest level in 7 years, at 5.3 percent, real wages are up over the last 7 years, and just in the last year they are up 3.1 percent compared with inflation of 0.1 percent. We do measure those things, and those measures are heading in the right direction for this economy and, more important, for New Zealand families.

What else did he say? He said: “We should have targets. Let’s set some social targets.” Well, again, we do do that. In 2012 we established the Better Public Services results programme, which sets the Public Service to measure itself against targets to reduce recidivism, to increase the number of kids getting National Certificate of Education Achievement level 2, and to reduce youth crime across a whole range of measures. Again, the good news for Grant and the good news for the House is that—

💬 Mr SPEAKER: Order! [Interruption] Order! It is not acceptable for a member to continue to refer to another member by just a Christian name. If it happens again, I will stop the member’s speech.

I apologise, Mr Speaker. The good news for Mr Robertson is that those numbers are heading in the right direction. I want to talk, in my contribution today, about three things that are reflected in the Budget and reflected in the response from the Opposition. The first is fiscal strategy, the second is about our attitude to the outside world, and the third is about the tertiary policy, labelled the Working Futures Plan, of the Labour Opposition.

I want to start with fiscal strategy, and I want to take members back to late 2008 when National inherited the Treasury benches. Members opposite often turn up in the House and they often skite about the fact that the Labour Government from 1999 to 2008 ran 9 years of surpluses, and that is false. The 2008-09 accounts, when they were produced, produced a $3.9 billion deficit. When we came to office, Treasury was forecasting never-ending Budget deficits and debt to blow out to 60 percent of GDP. These are not National’s numbers; this was the fiscal reality we inherited from a profligate Opposition. Michael Cullen was gleeful.

💬 Hon Annette King: Was it a reality or a prediction?

Mrs King’s best mate, Michael Cullen, was gleeful. He went around Parliament saying: “I’ve spent the lot. The money’s gone; I’ve spent the lot.” He used to crow about that—about how there was no money left for anyone to spend. Government spending between 2003 and 2008 increased 50 percent in 5 years. It was simply unsustainable, and we had to spend 7 years getting the books back in order. That is reflected in the Budget Policy Statement presented before the House, and it will be reflected in Budget 2016. So this Budget Policy Statement reflects the considered fiscal discipline of the Government. New operating allowances for Budget 2016—there is just $1 billion. There is $2.5 billion for 2017, and it is lower again in 2018 and 2019. These are well below the massive new operating allowances under the Labour Government. Labour used to say that we would never get the books back into the black. In fact, Andrew Little said that it was the biggest political con he had ever seen. It was pretty embarrassing for him when the 2014-15 Budget accounts showed a small—albeit small—but very definite surplus.

So what is Labour’s latest strategy? Labour’s latest strategy is to turn up here and complain about debt. We have David Clark over there, and every day without fail—you can set your watch by it—he turns up here and says that we have borrowed more money than Muldoon did. Well, I put it to the House that that is a little hypocritical, because Labour spent 2009 and 2010 saying “You’ve got to go on a massive deficit spending. You’ve got to go on a debt-fuelled, Keynesian stimulus package to get the economy going.”—all of which involves borrowing. Then it left the Government a fiscal mess, it called for more borrowing, and then it had the temerity to turn round and criticise the very borrowing that is maintaining social entitlements and the social welfare safety net. That is, of course, without considering Labour’s current fiscal plans, which is a massive spending blowout on wasteful and ineffective programmes such as subsidised macramé classes and Moroccan cooking.

Secondly, I want to talk about what this Budget Policy Statement demonstrates about our attitude towards the outside world, because that is now a major fault line in New Zealand politics. Budget 2015, which is reflected in the policy statement that we considered in the Finance and Expenditure Committee, contains support for a range of measures to support an outward-facing, confident New Zealand competing hard in a rapidly globalising and changing world. Our prosperity depends on increasing our global competitiveness, expanding our markets overseas, and building on those international connections. But, sadly for New Zealand, Labour has spent these past 7 years becoming more and more hostile to free trade, foreign investment, and now even migration to New Zealand.

I do want to talk about the Trans-Pacific Partnership (TPP) agreement, because this is the apex of foreign and trade policy of New Zealand for the last 30 years, and it is truly sad that the Labour Party that started the TPP programme—the Labour Government that started it—will not back it now. Phil Goff knows it is good for New Zealand. Helen Clark knows it is good for New Zealand. The Labour members’ heads are down; they do not want to engage with this point. Helen Clark knows it is good for New Zealand. She says it is unthinkable that we would not be a part of it. David Shearer knows it is good for New Zealand; he is just not allowed to say so publicly, because he is not running for the Auckland mayoralty. Phil Goff knows it is good for New Zealand. Mike Moore knows it is good. In fact, there is barely a Labour leader still alive who does not think it is a good deal for New Zealand, other than Andrew Little. So the reality is that it is unthinkable, as Helen Clark says, that we would not be a part of it. Their arguments on this are hopeless.

I will tell you what happened today. The Government ratified a thing called the Maritime Labour Convention. Do you know what this convention does? It is an international agreement, and it commits the New Zealand Government to introducing measures to address the health, safety, and welfare of seafarers on commercial vessels. It is an international agreement, it is binding international law, it commits the New Zealand Government to doing various things under international law, and it means that we have to bring our domestic law into compliance with it. It is the Maritime Labour Convention. Have we heard a word from the Labour Party about this “terrible international agreement that affects our sovereignty”? No. It wants to focus only on the TPP agreement, which is exactly the same in principle as the Maritime Labour Convention: it is an international agreement, it commits New Zealand to doing things on the world stage, and it means that we have to change our laws. So the Labour Party’s major argument about the TPP is that it affects our sovereignty. Well, so does the Maritime Labour Convention, so I am looking forward to the outraged press releases, the questions in Parliament, and the roadshows up and down the country about this “outrageous, flagrant breach of our sovereignty”, which is an international agreement.

The reality is that the Labour Party is giving into its worst instincts. It is backsliding to a 1970s Fortress New Zealand, nostalgic view of New Zealand, and the sad reality is that half the caucus actually knows it, but they are just so frightened of the hard-core left of the political spectrum losing support for them. We know the Greens can never be relied upon for free trade; Labour used to be able to be relied upon, but not anymore.

Lastly, quickly, just on tertiary policy, this Budget Policy Statement continues this Government’s strong support for tertiary education. We just heard Grant Robertson skite about Labour’s Working Futures Plan. Labour is desperate for a big-bang start to the year. It is desperate to grab the public’s attention. So what did it do? It went right back to its student union roots—the Labour Party leadership went right back to the things it knows best. What does it know best? What do Grant Robertson, Andrew Little, and Chris Hipkins know best? They know all about spending on tertiary education. Is it not indicative of their political priorities? After carping for 5 years about child poverty, they materialise—they magic up—$1.2 billion to spend. What do they spend it on—child poverty? No. Social housing? No. They spend it on the things that they know best: money for students. Now, I am the first to defend support for students, but not the policy that the Labour Party is promoting. It would be ineffective—it is ineffective—it would be inequitable, and it is regressive. The Labour Party, which started the student loan scheme, should be defending it as one of the most progressive and successful public policy achievements of any party, of any Government—it should not be trying to destroy it. This was a great Budget, and it is reflective of a country that is ambitious and confident and heading in the right direction, led by an ambitious and confident Government.

Chris Bishop, the last member of Parliament who spoke, is spouting the same lines that we have heard from this Government for 8 years. We are hearing the mantra, but no one believes the mantra any more because it cannot back it up with evidence. This Government has borrowed more than Muldoon—the member referred to that, and it is true—and that is because it has not managed the economy well. Sadly, it has not done what is best for New Zealanders. It has not taken the opportunity to diversify the economy. It inherited zero net debt, and now it is up to around $86 billion—$86 billion in debt. That is thousands of dollars for each and every New Zealander that the Government has borrowed. That is debt that will hang round the necks of future generations.

The last Labour Government grew the economy. I was not there, so I cannot claim credit for this, but it grew the economy by 25 percent—25 percent—and that is by two different measures. I have done the analysis myself—25 percent—and that is a quarter bigger than it was before that Labour Government came in. It is possible to support health and social spending when you are growing the economy at that rate. Unfortunately, this Government has had the worst economic record of any Government at all in the last 50 years. Inequalities are growing—inequalities are growing. The homeownership rate in New Zealand is the lowest it has been since 1951. Since 1951 the homeownership rate has not been so low in this country, and it is little wonder that the OECD just over a year ago came out with a study that said that the New Zealand economy has been held back by 15 percent—a whole 15 percent—because of growing inequalities in this country over recent decades.

Members opposite know very well what contemporary economists are saying—that, indeed, if you have all of your citizens contributing to the economy, it grows. It is not rocket science. If you have kids going to school hungry, they do not then turn up and learn at school. In fact, they are more likely to end up in the justice system because they are antisocial, because they believe society is against them. Well, actually, it probably is—it probably is—if they go to school hungry. Their opportunity to learn and contribute is inhibited by growing inequalities. We know, also, that when there are great inequalities, people make choices that are about maximising their own lot rather than about contributing to society because they are worried about the prosperity and well-being of those around them. So they do not necessarily make the choice to follow career paths that are best for the wider society, and that is disappointing.

We also know, on top of that, that infrastructure spending gets neglected by Governments that are growing inequalities, because the wealthy can afford the infrastructure they need through the private sector. And hang their heads they might—those members have all got their heads down. I can understand that, because they know it is true. They know that inequalities are growing under this Government. We can look around the regions. Almost every region in New Zealand has an infrastructure for broadband below the national average. All of the regions have New Zealand Transport Agency spending below the national average. That Government is focused on building holiday highways in wealthy areas, and it is not focused on what will actually grow the economy.

The OECD—the West’s economic thinktank—says that investing in the regions is the way to grow the economy. That is where the big gains lie because you have got underutilised infrastructure. I bet that the member opposite for Waitaki appreciates that investment in her electorate would be a good thing but, instead, her Government is neglecting investment in the regions. It is cutting funding to hospitals. Her own local hospital is under threat for its funding, and that is a shame, in my view.

The opportunity lies in the regions. Investment in the infrastructure in the regions has a more productive and larger return for less cost, and still most of New Zealand live in the regions. We cannot afford a two-speed economy. Ask Aucklanders whether they want more people to move in there, and most of them will say no.

💬 David Shearer: No.

Actually, there is one right behind me backing me up on that. That is because of overcapacity. The infrastructure is there in the regions and it is good for the whole economy if we invest in the regions, and yet the Government continues to neglect them. This Government continues to neglect those regions. It ignores the OECD and ignores contemporary economists, and instead it is focused on an ideological centralisation campaign that is straight out of a 1980s textbook and proven not to work. It is off-track, and that will result, of course—as we have seen—in increased borrowing, in a sluggish economy, and in a managed decline. Sadly, that is what this Government is going to be known for when history reviews its progress. It started with such aspiration and promise, and New Zealanders are now disappointed when they see Budgets that are focused on managed decline.

The next Labour Government will restore the Kiwi Dream. It will enable ordinary Kiwis to get ahead. We will make sure that ordinary Kiwis can earn decent wages again. We will be focused on diversifying the economy, on generating higher incomes, and on generating jobs. We are the party that is looking at the future of work because we are forward-looking. We are an intergenerational party. We are not interested in short-term returns. We are interested in what is good for New Zealand in the longer term.

Those people opposite are more interested, it seems, in getting re-elected. They borrow. They borrow for pet projects like holiday highways and they neglect the basic infrastructure that we need as a country—the broadband implementation, and so on—to get ahead. They are behind the eight ball, and history will find that to be true.

We back an economy that works for all of us, but those members are distracted as well—I guess that is the other point I would like to make. We have seen it in the Ministry of Business, Innovation and Employment today. Minister Joyce confessed that he had known about payroll issues that have been specifically brought up since last October, and when asked about the 2010 review, he fudged an answer. These issues that the ministry has with its payroll have been known about for a very long time. The private sector knows about it. There are payroll companies that advertise, as their point of difference, that they are compliant with the law. There are payroll companies that advertise, as their point of difference, that they are compliant with the law and the Holidays Act. This Government has known about the issue.

In fact, most Government departments have been compliant on Holidays Act payments. Only Mr Joyce’s agency, which is responsible for overseeing the implementation of the Holidays Act, has failed, and also the police. The police have already addressed their issue. Mr Joyce is dragging his toes again, and that sends an obvious signal to the wider public sector that it should not have to fix up its problems either. But this is of Mr Joyce’s making, because this should have been fixed early. National has been in Government for 8 years, and yet it is dealing with the distraction of payrolls within Government departments that do not even pay their employees what they deserve.

This is going to be an issue that is worth tens of millions of dollars—and is likely to be hundreds of millions of dollars—to New Zealanders. They have been denied the correct back-pay for Holidays Act entitlements. That is the kind of issue the Government ends up dealing with because it is not focused on what matters to ordinary New Zealanders. It ends up fixing problems, and not looking to the future and looking to how it can grow the economy like the last Labour Government did.

Labour has forward-looking policies. We will back the Kiwi Dream. We will back New Zealanders who want to get opportunities through the tertiary education sector. We will provide fees-free post-secondary education for 3 years. A plan has been laid out to achieve that. It is an affordable one.

💬 Alastair Scott: Tax and borrow—that’s the way.

The member opposite brings up tax. His Government has borrowed—has borrowed—$86 billion, as I said earlier. I find it deeply ironic. It borrowed $86 billion to fund the 2010 tax package, which gave a huge tax break to the top 1 percent, while ordinary Kiwis got a smaller tax break, which was more than swallowed up in a GST increase of 15 percent. That was a broken promise from Mr Key. Those members are focused on making sure the 1 percent are looked after and again and again and again the rest of New Zealand is neglected, and that, unfortunately, is also those in the middle.

This Government is distracted. We know it is focused on hair straighteners, barbecue sundecks, and Christmas parties with blow-up sheep. It is focused on doing deals with Skycity that the Auditor-General called neither transparent nor even-handed. It is distracted by all of these issues and not focused on the future.

Research and development tax credits—around the world they are the gold standard for encouraging innovation. What is the Government doing about that? Absolutely nothing. There is silence from the other side.

What is the Government doing about curbing property speculation? Well, we have just seen with the Trans-Pacific Partnership agreement that the Government did not even ask for non-resident foreign buyers to be banned from buying houses, as a right for future Governments to legislate about. Singapore, Australia, Viet Nam, and plenty of other countries asked to look after their own economic interests. This lot were asleep at the wheel.

So it is blatantly obvious that those members are focused on sorting out the problems that they have. They have got some trouble within their own ranks and some disagreements. They are starting to position because they know that Mr Key’s popularity is fading, and they are not a Government focused on the future. A Labour Government will ensure that the Kiwi Dream is restored, that people can own their own homes once more, and that New Zealand preserves its sovereign right and acts in the interests of ordinary New Zealanders, not just the 1 percent.

It is a little dispiriting, listening to Labour members’ contribution after contribution, because they clearly have not learnt the lessons of the previous Labour Government. The big elephant in the room, which Labour never, ever refers to, is the entrenched level of Government spending that was on an upward track, which was going to for ever—for ever—saddle New Zealanders with unproductive debt. They never want to talk about that, but that was the prime legacy Labour left New Zealand when it went out of Government. Through all those 9 years of good economic times, what did Labour do? It entrenched Government spending. What did Bill English do when he took the Treasury benches? What did this National Government do? It determined to turn that round.

I am so pleased to be speaking in this Budget Policy Statement debate because the fiscal projections show that this National Government has tackled that issue over successful Budgets, and once again promises to do that in Budget 2016. I just want to go briefly through the Government’s fiscal strategy. What New Zealanders have appreciated about this National Government is that it has had a constant message to New Zealanders, and that is about managing the economy. We have turned round that entrenched Government expenditure that Labour so lavishly—tax and spend; that is Labour. Labour has not learnt the message. It has taken us 7 years to achieve a surplus, but we have done it. It is so dispiriting to hear Labour members. They just do not understand economics, and they keep peddling the same story—more subsidies for students, as if that is going to fix the economy. They are simplistic, and their arguments certainly do not stack up.

I want, for a moment, to go through the fiscal priorities: No. 1 is maintaining an operating surplus “over the forecast period”, which is the period under question, “so that cash surpluses are generated and net government debt begins to reduce in dollar terms”—tackling Government debt. No. 2 is “reducing net government debt to around 20 per cent of GDP in 2020 and, in the medium term, reducing net debt to within a range of 0 per cent to 20 per cent of GDP”—reducing net Government debt. No. 3 is “implementing a new funding policy for the Accident Compensation Corporation”, and that follows previous levy reductions. New Zealanders have benefited from significant and substantial ACC levy reductions. I know that in my part of New Zealand, people certainly appreciate that. No. 4 is “if economic and fiscal conditions allow, beginning to reduce income taxes from Budget 2017”, and that is income tax reductions for all New Zealanders. No. 5 is “using any further fiscal headroom—including from positive revenue surprises—to reduce net debt faster.”

So that is the constant message, the constant economic direction, that this Government has shown. Our priorities for this Budget are the same as they have been the whole time we have been in Government, except maybe for the last one. “Responsibly managing the Government’s finances”—we have done that. Bill English has returned a Government surplus. “Building a more productive and competitive economy”—it will give me great pleasure, in a minute or two, to talk about my part of New Zealand and how the economy is doing in regional New Zealand, in the South Island. No. 3 “delivering better public services within tight financial constraints”—that is something Labour simply does not understand. To Labour, all you need to do to fix something is throw more money at it. That is a recipe for economic disaster, and the last Labour Government certainly showed us that. “Rebuilding Christchurch”—it is so easy to forget Christchurch. I believe Labour has forgotten Christchurch. I believe Labour has forgotten the extraordinary economic impact that the Christchurch earthquakes have had, not just on the country’s economy but also on individuals. It is so heartening to see our own members of Parliament supporting Christchurch people through the last 3 terrible years that they have experienced with the rebuild. It is so good to see—it is so good to see—that this Government still has as a major priority the rebuild of Christchurch.

Have we heard that from Labour today? Have we ever heard that from the Greens? No, this House has not heard that as a priority, because those parties have simply forgotten Christchurch. It is so important to New Zealanders, it is so important to people in my constituency, that we do not talk ourselves down, and what do we hear from the other side of the House? A constant talking-down of New Zealand. I do not believe that that does New Zealanders or our economy or the way we are viewed in the world—we are a trading nation—any good. I do not believe that that benefits us at all. Luckily, this Government understands well and truly its place in the world, and we will be unrelentingly positive. We will be unrelentingly optimistic for the future of the New Zealand economy and for the future of New Zealanders. That is why we are focused on issues that matter to New Zealanders.

This Government continues to keep a tight rein on spending. It is so important that we deliver those Better Public Services, health, education, welfare, and law and order, of course, and we are continuing to build businesses through the Business Growth Agenda. New Zealand is experiencing growth: 2.3 percent economic growth in 2015, and growth is expected to average more than 3 percent over 2016 and 2017. These are not rates of growth that are experienced by other countries that we trade with, and we should celebrate that rate of growth and support the strategies that support that growth.

The previous speaker for Labour decried the fact, in his view, that there was little investment in the regions, so I am just going to take a moment, with the indulgence of the Chair, to talk about my region, the beautiful electorate of Waitaki. Dairying is a very important activity in the Waitaki electorate. We are very fortunate that our farmers in Waitaki, particularly those who are involved in dairy, are resilient. Many of them have been through the fluctuations of commodity prices in the past. They understand farming through commodity price changes, and they are prepared for the lean years that are ahead, much assisted, I have to say, by the introduction in South Canterbury, North Otago, and Central Otago of irrigation. Whereas before, drought years—and we have had many and they have been severe—have had a bad economic impact on those areas of Waitaki, the direct investment by this Government in something as simple as irrigation has had a profound effect on our local economy. Wine exports are now worth $1.5 billion, and that is up by 14 percent in the last year. A portion of that can be attributed to Central Otago wine growers, which is an industry that, again, is contributing to our GDP. Tourism is a huge growth area in Waitaki. Growth is 10 percent year on year on year.

Investment in our regional economies is very strong under this Government. We have Primary Growth Partnerships—there are a number of initiatives in our region. Free-trade agreements—of course, cherries through the Korea free-trade agreement. The Trans-Pacific Partnership—dairy will benefit, beef will benefit, sheep meat will benefit, wine will benefit. It is hugely exciting to those people in South Canterbury, North Otago, and Central Otago. There is the regional investment attraction programme; there is more science and technology investment; there are regional growth studies—that is going to point the way to future investment in our regions. We have ultra-fast and rural broadband. We are so connected—we are one of the most connected regions in New Zealand. There is potential in our regions that is being realised by this Government. This is a good Budget in the making, and I am very pleased to have made a contribution to this debate.

Tēnā koe, Mr Speaker. Tēnā koutou e Te Whare. I rise to speak on the Budget Policy Statement. This document has a whole lot of areas that I would like to speak to, but I want to start by focusing on the second Budget priority of this Government, which is called “Building a more productive and competitive economy”. Who could disagree with this objective? It is like motherhood and apple pie.

The Green Party does not take issue with a competitive or productive economy; we would just say National’s policies are not actually going to deliver that, and even if they were going to deliver that, being competitive and productive is not sufficient to create good lives for New Zealanders. The Green Party would also like to prioritise a fairer and cleaner economy, because that is what is going to make us better off in the long run. An economy that protects our precious natural environment and makes all people in New Zealand able to live healthier, happier lives is one that we should all be aspiring to.

In the eighth year of this National Government we are starting to see just how short-term and unsustainable National’s approach to the economy is. Its approach has seemed to boil down to an oversimplified and incorrect assumption that more is always better—in particular, doing more of what we have already been doing. We should keep doing more of that, according to National. Anyone watching at home probably knows that more is not always better. We like that piece of chocolate cake. It is delicious, right? So if one piece of chocolate cake is good for us, metaphorically more is even better. But each piece of chocolate cake we eat in a row will bring us diminishing pleasure, until eventually it makes us sick. So how does this play out in the economy? New Zealand had a successful dairy industry, and in the last decade we were making some decent money off it. Well, National thought: “Great. We’ve got it. The best way to get richer is to convert more land to intensive dairy, make twice as much milk powder, and sell it overseas. So we are going to set a target of doubling primary exports and put in place a bunch of policies that favour increasing the volume of primary exports.”

I heard finance Minister Bill English say today something to the effect of: “Oh, it’s got nothing to do with us. Individual farmers weighed up the costs and benefits themselves and made the decision to jump on the dairy bandwagon.” But they did not make that decision in isolation from Government policy. Let us just look at the facts. National’s Business Growth Agenda target is to double primary sector exports by 2025. It does not specifically mention dairy in the primary industries policy, but dairy contributes just over 40 percent of New Zealand’s primary industries export revenue. Therefore, it would not be unreasonable to suggest that the policy aim is for the dairy sector to double by 2025.

I think it is fair to say that National has been encouraging farmers to go for volume rather than value. For example, it has provided a whole lot of subsidies for irrigation schemes, which encourage farmers to take on more debt to fund dairy intensification. The Government has allocated $120 million to Crown Irrigation Investments Ltd, out of a potential $400 million in funding. Total Government spending on irrigation to 2016 will be $160 million. Another policy that National had: Landcorp, the Government’s farmer, was engaging in one of the biggest dairy conversions in the southern hemisphere. Of course, in the wake of the dairy price fall Landcorp has subsequently wound back this plan by half, and its chief executive officer was saying this week: “The days of New Zealand continuing to expand its dairy footprint are largely coming to a close.” So there is some acknowledgment amongst people in the industry that more is not better, and it is not anti-farmer to say that there are costs and risks in expansion.

In fact, it would have been better for the original farmers—the existing farmers, especially the ones who are looking after the environment, trying to use water well—if the National Government had put a price on the commercial use of water, had put in meaningful water quality standards to uphold the quality of our rivers, and had put a moratorium on dairy conversions. All of that would have protected existing farmers from having to compete with new farms for water and having to deal with increased pollution pressure on our waterways. And, of course, the lack of a meaningful price on carbon and the lack of the inclusion of agriculture in the emissions trading scheme meant that there was even more pressure or incentive to switch from forestry to dairy. This was under the National Government’s watch.

Debt soared during the dairy boom, when the payout in 2013 and 2014 jumped to over $8 a kilogram. People leapt on the bandwagon then to buy dairy farms at inflated prices or paid high prices to convert forest and other pastoral land to dairy. That would not have happened if we had had a different set of policies that were encouraging a more balanced approach to both farming and to economic development. So those conversions are actually a big part of the problem that we are facing today. They happened when we did not have a price on water or a meaningful carbon price, and that made forestry less economic than it would have otherwise been.

I will give the Government this: the National members have been masters of rhetoric over the past 8 years—

💬 Chris Bishop: Thank you.

Ha, ha! And that continues in the speeches from the Government members. Its MPs have been very disciplined and consistent in using their slogans to assert the values of strong economic management and to distract from any legitimate criticism or debate of its policy.

💬 Chris Bishop: Oh, you’ve been very loud in your criticism.

No, National does not want to engage in a constructive debate about whether or not its policies are going to achieve the stated objectives, so its members always resort to the straw man argument. So when the Green Party has said there are costs and risks in dairy expansion, in the next conversion from forestry or pasture to intensive dairy, the National Party has said: “The Green Party hates farmers. The Green Party is anti-farming; they want to shoot all dairy cows.”

Obviously, that is not what we are saying. We are saying that, probably, doubling the production of dairy is not the best way to protect existing farmers and ensure that they are doing well, nor is it the best way to develop our economy if we want to have a long-term, sustained prosperity that protects our environment and adds value to those goods that we are selling overseas.

But National says: “If you criticise our policies that are encouraging the expansion of dairy, then you are against all dairy.” That is not what the Green Party has said, and it is certainly not what we are saying now. We see some things similar with the Trans-Pacific Partnership (TPP) agreement—if anyone raises criticisms or questions about the costs of the TPP agreement to the New Zealand taxpayer and the New Zealand economy in the medium term, the National Party asserts: “Well, you must be anti-trade. The Green Party hates trade.” That is what we hear from the National Party. That is a straw man argument, because National has failed to address the serious questions and concerns about the costs of the TPP agreement, as compared with the benefits.

And if we say today that National’s failed policies promoting the expansion of dairy has not served farmers, has not served our environment, and has not served our economy—and we need to learn some lessons from that—its response is “Well, if you actually care about farmers, then, one, you won’t support the protection of our waterways, you shouldn’t.”, but also, we should, therefore, sign up to all of the provisions in the TPP agreement, even those ones which we know are going to cost the New Zealand taxpayer and the New Zealand economy in the medium term.

Let us have a real debate about policy. The Green Party is not opposed to reducing tariffs, but I do not think it is anti-trade to acknowledge the fact that the gains for our economy as a whole, from the TPP agreement, are marginal at best. And for dairy, it is a reduction in costs of only $102 million, by the time it is fully implemented, on exports of $4.6 billion. So that is only a 2 percent gain. Is that going to make up for the big drop in global dairy prices? Certainly not. The Green Party is pro-trade, and we want trade agreements that level the playing field, just like we want meaningful environmental standards that level the playing field here in New Zealand so that those responsible farmers can thrive and the other farmers are forced to clean up their act. That is how we get a thriving economy. And we want the same thing on a global scale; we want trade agreements that level the playing field by protecting environments and people, not by protecting the ability of multinational corporates to maximise their profits at the expense of taxpayers.

The Green Party supports policy that will protect the things that matter most: our pristine natural environment, our most vulnerable people. By doing that first—by putting people and the planet first—that is how we can create an—

I am sorry to interrupt the honourable member.

I do have to admit that I was listening to David Bennett when he first got up to contribute to the debate this afternoon—and I regretted it as soon as I started doing it. I regretted it because, once again, the chairman of the Finance and Expenditure Committee had nothing to contribute to the debate. He simply added to the rhetoric and he added to the spin. He simply repeated what the rest of that party over there has been telling New Zealand for the last couple of years. I will give him the concession, at least, that he is in good company on that side of the House. So I stopped listening to Mr Bennett. I did stop listening.

Not that far through the debate—

💬 Pita Paraone: Here was Mr Bishop.

Yes, that is exactly right. I thought: “Here’s Mr Bishop. This guy—he’s got some nous.” But let me qualify that as soon as I say that. All he did was attack the Labour Party. All he did was talk about policy that is over a decade old. He talked about what the Labour Party had done, and he said nothing, contributed nothing, to what this Government has to contribute in terms of the Budget Policy Statement.

He did allude to better trade; in fact, it seems to be a common theme. Mr Bishop did talk about the fact that we need more trade and better trade. New Zealand First and the caucus with me here this afternoon could not agree more with that sentiment. This country needs trade. We need better trade. But the reality is—

💬 Ron Mark: Smart trade.

Yes, smart trade. The reality is that that is not what Mr Bishop was talking about when he rose for his contribution this afternoon.

As rampant immigration grows, it places—and it has placed—a temporary band-aid on the GDP figures of the New Zealand economy at the moment. What that rampant immigration—especially going into Auckland, which clearly cannot cope with it—has done is increase the consumptive economy of New Zealand, thereby kind of hiding the reality that this Government has contributed nothing of substance, in terms of a Budget or in terms of policy statements; nothing substantive to grow this New Zealand economy.

New Zealand First agrees that GDP has increased. But when I talk about a band-aid—if you break the numbers down, what you see with the increase of new people in New Zealand is that, actually, when you look at it per person, GDP either, arguably, remains the same, or, some of the numbers suggest, it has actually gone backwards. GDP per capita is going in the wrong direction, and that is an indictment on the very real reality that that Government has done nothing meaningful to grow this economy. The only meaningful thing that it has contributed is to the media, in terms of spin and rhetoric—

💬 Tim Macindoe: “Rhet-oric”.

Thank you for the qualification, Mr Macindoe.

This country is going backwards, so although the members opposite speak publicly of prudent and sensible fiscal management, the reality is that behind closed doors, Ministers are panicking. They should not blame Labour any more, but they did it this afternoon. They cannot blame the global financial crisis any more, but they actually did that this afternoon as well. They cannot blame Christchurch any more, but, what do you know, they did that this afternoon as well. But although they spin these numbers, the country goes backwards. All the while, as they talk about prudent financial and fiscal management, this country’s debt has climbed from what some argue was zero but what I would suggest was $18 billion, which is negligible in the scheme of things, to—let us put this in perspective—$100 billion. There is $100 billion of debt under this Government’s so-called prudential management.

The people on our farms and the people in our regions are looking on, and they are looking at this Government confused and, I daresay, disappointed by the spin and rhetoric. Although Steven Joyce, the “Minister for Everything” and the Minister who can fix everything—except a by-election—creates regional strategies, which are dismissed by the very people who contributed to them and by the very people who wanted to contribute to them, the Government has lost an opportunity to actually grow our regional economies. “Mr Fix-it” can say something is being done, but the people of our regions can see through the veneer, and, all too soon, the people at home will be able to see through it. They will be able to see through the spin themselves—but it will be all too late, I suggest.

Recently, and perhaps not surprisingly, the Prime Minister has gone on an attack campaign, pre-empting any discussion on the Trans-Pacific Partnership (TPP). He has been saying to New Zealand that dairy farmers, in particular—and his trade Minister has actually been including wood processing in this argument, for some bizarre reason—will get better under the TPP. He keeps talking about those 800 million people, that customer base. He says it as if we are not exporting to them already; as if, somehow, if we do not sign this agreement we are going to miss out.

Let us put that into perspective and let us get some facts straight, right at the moment. Prime Minister, there are no tariff reductions for dairy in the TPP. Let us be very clear: the world price will continue to be the world price, no matter whom you trade with—$3.90 will continue to be $3.90. Let us not ignore that reality. Further, in terms of the TPP agreement itself, let us not ignore some of the detail. Let us acknowledge the fact that the US, for example, has a side letter with Japan that enables them to have preferential treatment in terms of US dairy exports into Japan—it completely sidelines New Zealand. Where is the benefit in that for us? That is actually ignoring, also, the fact that Japan, Canada, and the US are the most heavily subsidised nations on earth when it comes to their farming and dairy industries. This is what John Key and Bill English say our farmers will be competing with? That is farcical. It will not happen, and our farmers will be losing out.

As for the 800 million people, the Prime Minister implies that we will miss out if we do not sign the agreement. I quote his trade Minister, who talks about wood processing: “Industry exports to TPP members already total a whopping $1.5 billion.” We are already there, Prime Minister. We are not missing out. But then, to be fair, Mr McClay talks about those huge, gigantic tariff savings—he is on record, it is in the media. He is quoted as saying “these gigantic savings”. He keeps talking about them. To the Minister of Trade: let me put that into perspective for you. The tariff reductions total $11 million in an already $1.5 billion industry. That is less than a 1 percent gain on those tariff reductions, and fluctuations in our currency will have an infinitely greater effect than this measly reduction could possibly hope to achieve.

In fact, the reality is—I have gone out to industries; I want to talk with them and engage. I have asked them: “What does the TPP mean to you?”. The wood processing industry in particular, for example, has said: “It means nothing to us. We haven’t even processed what the Government is talking about.” Do you know why? What they are worried about is the fact that all of our logs are being bought up by foreign companies and are being shipped directly offshore. Our local processors are finally in a position to make money out of logs in New Zealand; they have got the technology, they have leveraged themselves, they are there, and they are ready. But the logs are being shipped overseas, because clever foreign corporates have bought up our entire forestry. It does not make sense. Then you talk about “wood first” policies, and the Government does not want to know about it. Encourage the development of wood industries in New Zealand, and the Government does not want to know.

This Budget Policy Statement needs to be talking about the future. Mr Bishop has a wonderful head for the history of this kind of thing, but nowhere in his contribution did he talk about how we move forward and what needs to be done for the people of New Zealand. New Zealand First cannot support any of this Budget Policy Statement; it is a spin document that holds no meaning for the people of New Zealand in our regions, in our farms, and in our homes. Thank you.

The previous speaker, Fletcher Tabuteau, was very interesting—well, maybe for 30 seconds. I just note that the Finance and Expenditure Committee’s report on the Budget Policy Statement, unless I find a minority report in here—actually, I am sure that member sits on the Finance and Expenditure Committee, or one of his party members does—is a unanimous report from the Finance and Expenditure Committee on the Budget Policy Statement. So what the member has just said here—I cannot quite see, perhaps I missed it. I welcome the member to point me to that bit where New Zealand First says it does not support the Trans-Pacific Partnership (TPP), where New Zealand First says it is not supporting Christchurch, where New Zealand First, essentially, says it is putting New Zealand last. I will come back to that in a minute.

This is a very good report from the Finance and Expenditure Committee; it is almost as good as the glory days of the Finance and Expenditure Committee, 2008-11—they were the days. They were the glory days, and I see the members are working hard to bring themselves up to that awesome, awesome level we had not too many years ago.

The Budget Policy Statement is part of a series of documents, of papers, in and around the financial settings for the Government, the BPS that we have here—not to be confused with the Better Public Services, of course, which is very strongly linked in here. The Budget itself, the half-year update, the full-year update—of course, which is the Budget—and, of course, the Pre-election Economic and Fiscal Update, which is also one of the very important series of documents in the transparency of the Government or taxpayers’ accounts across the country.

The reason I raise the Pre-election Economic and Fiscal Update and the half-year update is that the member the Hon Annette King earlier seemed to be somehow dismissing the validity of some of the numbers that the National members were using in their speeches. There were examples such as endless debt, debt going to 60 percent of GDP, ongoing—a peeking out of revenue, but an ongoing, almost exponential growth, in expenditure. Perhaps, some members are forgetting something from a few years ago or, perhaps, they are new—just go have a look, members, at the pre-election update of October 2008. Have a look at that document, which actually makes the half-year update not long after that more sober reading.

That was a document that described and noted that New Zealand had been in recession, as we all knew, for 1 year prior to the global financial crisis—and, of course, the global financial crisis, the rampant inflation, and the rampant interest rates caused by prolific spending and out-of-control Ministers and ministries across Government resulted in a chaotic economy, which National did inherit. Admittedly, yes, that was a good few years ago now, but we are still dealing with the consequences of it.

When small businesses talk to me—or even just households, New Zealanders talk about their mortgage. Many floating mortgages are now sub-5 percent. It does not take much to remind them of the cost to them, their family, their home, their business. A 10-plus percent mortgage was a devastating cost for their family, for their confidence, for their business. Just imagine, listeners and those watching, if your mortgage suddenly went to about 10 percent, because that is what it was not that long ago. The policy settings still favoured by the Opposition resulted in 10-plus percent mortgages for you and your family.

Another member was talking about GDP growth over the Labour term. I am not sure whether he was talking net, real—I think he was talking gross, because when you have got 5 percent inflation, which we had under the Labour Government, and we are in recession or near recession for a good few years, I am not sure how we would get to the astronomical figures that he was describing.

Other members have talked about Christchurch, and Christchurch has been blamed, or something—this Government does not blame Christchurch for one thing, one iota. This Government stands beside Christchurch; we continue to stand beside Christchurch, be it economically, morally, fiscally, and we are doing all that we can to rebuild that city. Members opposite seem to think: “Well, because the earthquakes weren’t last year, therefore, Christchurch—it’s all over.” Actually, in these documents we are debating, in the Budget Policy Statement, page 6 has a table called “Net earthquake expenses”. Members may be interested in that. The total half-year update net earthquake expenses that this Government has stood beside Christchurch are $17 billion.

So when members opposite are rattling off emotional debt numbers, etc.—yes, much of that has been borrowed to fund that. That is absolutely right. Go down to Christchurch, members opposite, and tell them that no, if you were in Government, you would not have done the same. Go down and look at those people in Christchurch and tell them you would not have done the same.

The half-year update in October 2008, which was the last time we could test the Opposition’s policy settings, was not a pretty picture, nor was it good reading, at all. The National Party is the party for jobs. The National Party is the party for growth, with our partner parties in Government, helping drive better medium to long-term prospects for all New Zealanders, regardless of their circumstances.

It is for those reasons we are so supportive and so driving of free-trade agreements. It is for those reasons that we stand on the free-trade agreements negotiated by Governments before us and previous National Governments. It is for those reasons we proudly used to have bipartisan support in this House across the two major parties, National and Labour, for job-enhancing, growth-enhancing, and opportunity-enhancing agreements for New Zealand. It is so sad for this Parliament, and it is so sad for New Zealand’s opportunities and prospects that the Labour Party has walked away from that. It does not stand any logical test.

My colleague Mr Bishop pointed out the agreement that we signed just the other day for international shipping. Labour’s arguments do not stand any logical test. They do not stand any historic test against, say, the China free-trade agreement, which Labour so proudly—and good on them—initiated and signed, which was ratified under this Government. It does not stand any test in comparison with another agreement, because if we follow Labour members’ logic through, we would tear up CER. Are they arguing that? Are they arguing that we should tear up other free-trade agreements?

They seem to be supportive of the European free-trade agreement initiative, but not this one. Why? Why is Phil Goff the only Labour MP to be given a dispensation to come out publicly and say he is supportive of the TPP? Why have the members opposite, in the party that used to call itself the party for workers—when 40 percent of the jobs are in export regions around the country; they depend directly on exports—not been given dispensation to say they support their region, they support they families in their region, they support jobs in their region, and, therefore, they will be supporting the TPP, as they, inherently, know it is the right thing to do?

Those who were in Government with the Rt Hon Helen Clark know it is the right thing to do. Those who are true to their convictions and are true to what they say know, inherently, it is the right thing to do. I challenge them to come out and actually stand and say why they are unable to support job-enhancing, prospect-enhancing, opportunity-enhancing agreements that they once, along with most other parties in this Parliament, stood and supported.

The Opposition has recently come out with this thing called the Future of Work Commission. I was very interested recently to see that someone else had done this quite a long time ago. Mr Bishop will help me here. Mr Bruce Beetham—was it in 1981—came out with the original “future of work”. It makes interesting reading. I guess we are now in the future from 1981; not much of it has really turned out.

So Mr Robertson and his colleagues are busy working out the future of work. Perhaps, one of their colleagues over there will do a copy and paste job again and just pick up what Mr Beetham forecast back then.

💬 David Seymour: It wasn’t in digital format.

Yes, it may be in a different format—perhaps a typewriter.

The TPP, political rhetoric from some members aside, protesters aside—we all know and expect them to do their usual stuff; they are perfectly entitled to do that. But the moment they get in the way of other people’s democratic process, the moment they try to shout down other people who are expressing their democratic desire and opinion, they have lost the debate—and they have lost the debate.

So I go back again. I ask, I challenge, New Zealanders and all MPs across New Zealand, particularly those whose areas totally depend on the export prospects of this country, to stand up, to follow the lead of Phil Goff, and to get a dispensation to be able to say to their people that they truly support the jobs and, therefore, the free-trade agreement. Thank you.

The next call is a split call. Eugenie Sage—5 minutes.

Tēnā koe, Mr Assistant Speaker. National’s economic strategy is looking increasingly tattered, and this year’s Budget will be against a very different backdrop from recent years. National can no longer crow about a brighter future for New Zealand, because even in its rural heartland things are looking increasingly grim. It is all because the National Government and Bill English have bet the farm on dairy expansion, and the problems with that apology for an economic strategy are becoming increasingly clear.

We have had a goal, set by the Government, to double primary sector exports by 2025, and it certainly encouraged the dairy industry to be the major player there. That, of course, as the Green Party has been saying for some time, has had huge environmental impacts, in terms of water quality—it is doing enormous harm to our rivers, lakes, and aquifers—and major damage with greenhouse gas emissions increasing and the climate pollution that is associated with that.

But now we are seeing the economic and social consequences for farming and rural businesses of that failure to diversify, of that focus on the primary sector, and particularly dairying. Just recently, Fonterra’s move to extend its payment date to 90 days, asking suppliers to slash their costs, and the crash in dairy payout prices shows the real strain that the sector is under. It is the Government’s strategy of focusing on one product to one market—milk—and its failure to commit to sufficient investment in innovation to diversify our export base that is the major cause of the problems we are having today. The Government has sat on the sidelines while manufacturing has struggled with a high dollar, and it has just failed to invest in innovation.

And now we have got heartbreak for a lot of farming families. It was distressing listening to Northland farmer Ben Smith on Radio New Zealand National this morning talking about selling his stock and half his land. I have met Ben Smith. He is an innovative farmer. He featured on Country Calendar for the way he was using surplus fruit and vegetables to feed his stock. He cares about the state of his local rivers, and now he is being forced into this position because National has led farmers like Ben up the garden path.

It has pushed dairying as the route to economic success, both for individual farm businesses and for New Zealand Inc. It has focused on production, production, production—increasing production rather than adding value, rather than diversifying, and rather than investing in innovation. It has not cared enough about the profitability for individual farmers, nor has it cared enough about the economic and environmental cost of that focus on dairy.

So now, when milk is no longer the white gold that National thought it was, when the payout prices have crashed, and there is no sign of a sharp pick-up any time soon, because of the glut in milk and because of the reduced demand from China and Russia, we would expect the Government to have a plan. Yet what did we hear from Bill English this morning? He hopes that farmers will “get through”. And again, in question time today, he recognises that there will be a number of farming families that are distressed, but he just hopes that they will adapt and get through. There has been a total failure by the Government to recognise that we are not like the rest of the OECD. New Zealand invests roughly half of what other countries in the OECD do in research and development, and significantly less than other small advanced economies.

So instead of investing more in innovation, we have had the Government tag $400 million for subsidised handouts to irrigation, and $120 million going to Crown Irrigation Investments. Those sorts of subsidies—the Government’s handouts to the Ruataniwha Water Storage Scheme, to Hawke’s Bay Regional Investment Company, to Central Plains Water—mean that farmers are encouraged to convert from dryland farming to dairy, to expand dairying on to lands that are inappropriate because they are drought prone, and to think that dairy farming can happen anywhere. Those sorts of handouts have encouraged farmers to intensify, to move to much more expensive, high-capital-cost models where we are importing feed and there are high costs for production. That means there is no buffer, no resilience when dairy payouts fall. So it is a spendthrift model that the Government is applying across the country. Thank you.

I call David Seymour—5 minutes.

I have greatly enjoyed tracking the Green position on dairy throughout today, and, in fact, throughout this afternoon. First, we heard from Metiria Turei that the current levels of farming need to be steeped in and subsidised by the Government, then we heard from Catherine Delahunty, who, as it turns out, hates “Old McDonald” after all and wants him to farm fewer cows. And now we come back to the member who has just resumed her seat, Eugenie Sage, who believes that the level of farming has been overly subsidised, which makes me wonder why Metiria Turei wanted to subsidise it to remain at that level in the first place. It has been a very confused afternoon for the Greens on dairy.

I want to direct my comments to a long-suffering, long-forgotten, and much-neglected group of people in the Budget Policy Statement, and that is the taxpayer. Without a taxpayer, we would not have a Budget, we would not have Government revenues, and there would not be much to debate about today. Have they not been neglected, because what we see in the Government’s fiscal strategy is very clear: from $65 billion in taxes up to $85 billion in taxes in just 5 years.

Is it not interesting to look at the new spending allowance—that is, we are going to spend this much more money before we have identified a particular purpose. It is $1 billion in 2026; $2.5 billion in 2017, which just so happens to be an election year; $2 billion the year after that; and I think it was back to $1 billion for the mid-term of the electoral cycle the year after that.

This Budget Policy Statement says that the taxpayer is going to be neglected and is going to pay and pay and pay. I asked the Minister of Finance just a couple of days ago how big the surplus needs to be before he will start cutting taxes. He could not give an answer. National members like to say that they will cut taxes, but the truth is they have not really thought about it. They have not really committed to when they are prepared to start offering tax relief to New Zealanders who work, New Zealanders who have families, and New Zealanders who have businesses.

If the Government was to deliver some ambition for giving relief to the taxpayer, I could make a couple of minor suggestions. These really are quite modest, but let us just have one. Time after time, the Minister of Finance says that there is not enough revenue coming in because there has not been enough inflation to push people into progressively higher tax brackets. Well, since when did a centre-right Government support fiscal creep as a means of raising revenue? This Government should be indexing tax brackets to inflation, and there is no better time to do it than when inflation is low and fiscal creep is having a lower effect than usual.

What indexation would do is ensure that this Government and future Governments, if they want to take more money, would have to be honest and go to the taxpayer and say: “We want to raise your taxes, not creepily allow them to drift into higher thresholds due to inflation.” That is the first thing they could do and the cost to the household is real. The average household in New Zealand has paid $1,500 in additional tax over the past 5 years just because of fiscal creep—just from being pushed into higher tax brackets by inflation. That is the average household; not even high-income households who have paid far, far, far more than that due to fiscal creep.

The next thing that the Government could do, if it got really ambitious about looking after the taxpayer, is that it could examine the fact that we have one of the highest effective tax rates of capital in the OECD. It could actually make a conscious decision to reduce extra spending by just $120 million a year. When it is planning to increase spending by $1 billion to $2.5 billion a year, it could set aside $120 million of extra spending to knock a point off the company tax rate and make Kiwi businesses competitive with the rest of the OECD.

Finally, if the Government is worried about debt, it has got $28 billion in the New Zealand Superannuation Fund that it could get rid of tomorrow, because I do not know anybody in New Zealand who would borrow money on their mortgage to play the global equity markets. That is what this Government is doing and for the taxpayers’ benefit it should wind up the New Zealand Superannuation Fund, pay off debt, and, finally, reduce risk so we can start actually cutting taxes for the people who make this Budget Policy Statement possible. Thank you.

The next call is a split call. Melissa Lee—5 minutes.

It is a pleasure to rise to speak in the Budget Policy Statement debate, and I think it is important for this House to note what an amazing level of dedication and service our Minister of Finance, Bill English, has given to this country and our Government. New Zealand’s books are back in the black for the first time since the global financial crisis. As of last week, the Government is running a $934 million operating balance before gains and losses, and that is an increase of $724 million—higher than noted in the 2015 half-year update.

This is an excellent achievement by our Government—a Government that is working hard to support our economy and promote better businesses and deliver key outcomes for all New Zealand. Unemployment is now sitting at 5.3 percent and wages are up by 3.1 percent in the past year. We on this side of the House are supporting the needs and aspirations of our country and we will do our very best to continue this fine work through 2016.

Regional growth, which our earlier speakers have talked about as well, is up as well. Our Government has been developing the economy all over New Zealand. Although I am based in Auckland it is clear that the entire country is actually benefiting from well-balanced management by this Government.

Earlier, another member was talking about the tourism sector—I think it was the my learned colleague from Waitaki, actually, who talked about the tourism sector—and I have to say that tourism is booming. This Government in the last 7 years has spent $700 million promoting New Zealand tourism overseas and in the last year alone, in 2015, we had international visitors spending $9.7 billion. So that $9.7 billion spent in New Zealand is a humungous benefit, I would have thought, when you are spending $700 million over 7 years and gaining $9.7 billion.

While members were speaking I had an opportunity to actually check Facebook—often members do—and I was checking the Facebook of the New Zealand Embassy based in Seoul, Korea. The embassy was actually celebrating tourism—New Zealand tour operators are visiting Korea to promote more tourism from Korea. Tourism from Korea last year, in 2015, was up 21 percent year on year. With the free-trade agreement, which was signed by this Government and came into effect in December 2015, lamb and beef duties have actually gone down and now, apparently, restaurants are selling lamb. They are putting lamb on their menu because the import duty to Korea has actually dropped from 22.5 percent to 18 percent. Restaurants are celebrating New Zealand lamb and beef and they are putting it on their menus. What a fantastic thing that is.

Today a 9.6 percent increase in retail spending was noted for February compared with the same period last year, as well as a 5.7 billion increase in the GDP for the Auckland region. This is coupled with a 3.7 percent increase nationwide, which shows what a great state our commercial sector is in.

Also, since I was talking about the free-trade agreement, I just want to commend the work of our former trade Minister and now ambassador Tim Groser. He should be fully commended by this House because he did a fantastic job for New Zealand not only for the Korea free-trade agreement but for the Trans-Pacific Partnership, as well as the European Union trade negotiations, which the new Minister, Minister McClay, is currently at the helm of. The agreements will grow our economy and put more money in the pockets of ordinary New Zealanders.

I know that across the House there are some members who often talk about Auckland house prices and say that the reason why the situation happens is because of people with Chinese-sounding names—and mine happens to sound like one. So I think we need to recognise the role that migrant New Zealanders actually have in this country. How long are migrants going to be called migrants in this country? I have spent three-quarters of my life in New Zealand and I think I deserve to be called a New Zealander. Over 30,000 Korean people have actually moved to this country and call this country home. [Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I want to hear what the member is saying, and this barracking across benches is unacceptable.

As I was saying, over 30,000 former Korean residents—Korean-born people—are now calling New Zealand home and are very proud New Zealanders. As part of our diverse commercial and economic practice, not just Korean people but 25 percent of all New Zealanders are born overseas—

I am sorry to interrupt the honourable member. Her time has expired. I call Alistair Scott—5 minutes.

I am going to talk about two of the four pillars of our fiscal strategy. I am going to be talking about the tight rein on spending that we demonstrate and the way we look to return excess revenue to taxpayers, but before I do that I would like to comment on a couple of the sanctimonious comments that were made by the Green Party. To start with, Eugenie Sage said that the Government had led dairy farmers up the garden path. Well, dairy farmers are not stupid. They have their own sense of business and they have their own sense of ability—these guys are smart. These guys run their family businesses to large corporates, and to say that they have been led up the garden path is offensive, quite frankly. There was no complaint from that party when grape prices halved, when cherry prices dropped, or when kiwifruit businesses had their difficulties. Those members talk only about dairy farmers being led up the garden path—that is offensive and sanctimonious.

I am going to talk about the pie. Julie Anne Genter talked about the Greens not wanting to eat chocolate pie. Well, she did not want a chocolate pie and she thought it was because it made her feel sick if she ate too much. This side of the House is interested in growing the pie and in making it chocolate, banana, fruit, nuts—everything that is able to be jammed into that pie—because we want a larger pie so that we can all share that pie to raise the standard of living for all New Zealanders. The pie that the Green Party wants would be sugar-free, wheat-free, chocolate-free, and butter-free. There would be no cake. There would be no economy. The economy would be destroyed. That party wants to go back to the horse and cart. That is just ludicrous and really is a thing of the past.

I would like to turn my contribution to the tight rein on spending that we have in this Government. We will be heading to—the target is 20 percent of GDP for net debt by 2020. That is a very good result, given the global economy and the global situation as well, of course, as our domestic situation here, particularly around Christchurch. Minister Foss talked about $17 billion going into Christchurch. That is a big number, and a number that is unavoidable, unless, of course, one was to ignore Christchurch, which would be totally unacceptable.

Members on the other side talk about supporting farmers and talk about supporting small businesses, but they are not willing to vote for the Trans-Pacific Partnership (TPP). They are not willing to get on board with Resource Management Act reforms. They are not willing to support our exclusion of agriculture from the emissions trading scheme. The Green Party wants to tax farmers up to the eyeballs so that—to ensure, in fact—they go out of business and so that they are uncompetitive with our international competitors, and, of course, without those people earning a living by exporting our products, there is no tax. There is no tax to be taken. There is no tax to spend on health and education and the police, for example.

I am looking forward to the Opposition members voting for the TPP, but, of course, they are not going to. Instead, they are going to increase their handout policies by giving away free education. They are wanting to give, in fact, to the top 1 percent. They are going to give more money to those who are already earning more money than the average. The Opposition members say: “Well, yes, that is fine. We want to give them more money because they are going to be paying more taxes when they get into the more highly paid jobs.” People are willing to borrow to be educated in the tertiary sector, and to have a policy from the Opposition that simply gives more money to those who do not need it is just a waste of taxpayers’ money. Those members are not concerned about the use of taxpayers’ money. They forget who is going to be paying for that handout. It will be the person—

💬 Carmel Sepuloni: It’s not a handout; it’s a hand up.

It is a handout to people who do not need it, and they are going to be taking money—

Order! The member’s time has expired.

First of all, I want to start on a serious note. I understand that there have been two police officers shot in the Bay of Plenty. I understand that they have not been shot dead, but news is still coming in. I hope like hell that they are fine, and we send them all our best wishes—there is no doubt about that.

One thing I must say is that I love it when Mr Scott paraphrases Marie Antoinette—he said to the poor “Let them eat pie.” Mr Scott, that comment cost Marie Antoinette her head—be careful. And, I must admit, David Seymour is always great for a laugh, is he not? He comes in here, and he is even dressed in character. He has got that woollen knit tie on and the pink shirt. He says “Sell the superannuation. Sell this. Do that. Do this.”, and he wonders why there is only one MP from ACT and it is not even polling above 1 percent. Well, just look at the Hansard and you will find out why.

I am here to speak about the Budget Policy Statement. What this does is set out the Government’s broad plans and goals and fiscal strategy. First of all, I would like to say, let us see how this is going to play out between 2015 and 2017 according to the Government’s numbers. First of all, real GDP drops by around a quarter—this is between 2015 and 2017. Second, Consumers Price Index inflation increases from 0.3 percent to 2.1 percent. Third, employment growth is down by about 50 percent. Fourth, the unemployment rate increases to 6.1 percent. Fifth, wage growth drops to 1.8 percent. Sixth, the current account percent of GDP goes from 0.35 percent to negative 6 percent.

Are those the figures of a Government with a plan, with an aspiration, and with a vision? Absolutely not at all, and these are the Government’s figures. You know, I actually do not know what this Government stands for any more. I just have no idea what it stands for, because it seems that what it is doing is leading this country down the garden path when there is such a much more attractive, viable, 21st century option. There is an alternative. I have heard from every single National speaker that the Trans-Pacific Partnership (TPP) is the way forward. Those members are putting all the eggs in the TPP basket. That is their only plan for the future—the TPP. I wonder who they would be voting for—Trump or Clinton?

When we read that the Government’s focus is on improving public sector productivity—which is one of the pillars that Mr Scott did not talk about—this is its philosophy of “Let’s do more for less”. Well, what are the outcomes? Let us have a look at one of my portfolios, the portfolio of police. Where are we at the moment? We have these really hard-working police officers on the front line, of whom 86 percent—86 percent—believe that the front-line cops are under-resourced. We have burglaries at record highs. We have resolution rates below 10 percent. Is that more for less? Not at all. That is no way to run a law and order system.

We also have police budget underspend. In Auckland alone, in the three districts that make up the Greater Auckland region, where burglary resolution rates are below 7 percent, we find, in fact, that the police have underspent their budget by $14 million. There is a difference between fiscal prudence and mismanagement, and at this point in time, when we are saying that 93 percent of burglaries in this country go unsolved, I would have thought that more money and more resources would be put into resolution, because this is what our public wants to see. Doing more with less is not working in the police force. Do you know what? The Commissioner of Police says he has enough money to fight crime and solve crime. Well, 86 percent of his staff disagree with him. I think that what he perhaps needs to do is sit down and look at those results and figure out what is going on.

Let us have a look at another one of my portfolios: forestry. The main difference between Labour and National is that National believes that you just stand back and you let the market take control because the market knows best and the market will deliver optimal outcomes, whereas Labour believes that where we see behaviour that is not in the best interests of New Zealand society and our communities, the Government has a role to play there. Forestry is a classic case.

I have four examples of cases where New Zealand sawmills cannot get the logs they want, and we are talking about sawmills that employ a whole lot of people in areas that are usually deprived. We are talking about Northland here, and we are talking about the East Coast, and these foreign log buyers are coming in and they are not providing our sawmillers with logs at export equivalent log prices. Our sawmillers are not asking for anything else. They are not asking for any sort of deal. All they are asking for is a fair go. They will pay the export equivalent log price, but they cannot get it. That is not right.

Let us have a look at something else—Government debt. You know, when that Government took over the books—when Mr English became the Minister of Finance—it had a gross debt of $31 billion in 2008. It is now $86 billion.

💬 Peeni Henare: How much?

It is $86 billion. The net debt was down to $10 billion. It sounds a lot—but in the scheme of things $10 billion is what net debt was down to. It is now $62 billion. That is a substantial amount of money. What tends to get forgotten about in this is that that $62 billion has to be serviced. That is a significant amount of taxpayer money that is going to overseas institutions to service that substantial debt—and it is expected to get a lot worse.

Let us have a look at another measure. We hear Government members say they are aspirational for New Zealand. They are going to grow—what was it, Mr Scott? They are going to grow the pie. Well, let us have a look at a measure that I think determines how well we are doing—exports as a percentage of GDP. In 2008 it was 32 percent. Now it is 28.4 percent—28.4 as a percentage of GDP. As we a trading nation, the Government should be incredibly concerned about that. As a person who was involved in trade for a number of years, I look at these figures and think “Goodness me!”. We have a whole lot of New Zealand companies here that should be doing a whole lot better, but the Government has not put in a regulatory or a legislative environment that has allowed that to happen.

There are three members sitting over there at the moment who were on the Finance and Expenditure Committee when we talked about research and development help for our companies. They all know—because they are businessmen; they are shrewd guys—that it was not the package needed by our small to medium sized businesses in order to really drive growth, to scale up and go international, which is what we need in this country. There is no doubt about that.

Labour believes in governing for those who work hard. We believe in giving all Kiwis a fair go. We believe in First World early childhood education. This Government gutted what was acknowledged as one of the world’s leading early childhood education systems. We believe in providing education all the way through. This Government cut night classes, and it gave the most pathetic excuses, but every single reason that people undertook a night class was the right reason. We will reinstall them, because we understand that community is at the heart of every single country. If you had wandered around my electorate you would have seen that Napier Boys’ High, Tamatea High School, Taradale High School, and Napier Girls High were hives of activity after dark. Now the lights are out.

💬 Chris Bishop: Back subsidised crochet classes.

It does not matter, Mr Bishop. If someone wanted to go to a night class and learn crochet, then they could gather with 12, 15, 20 other people and learn crochet, because, you know what, it was not necessarily about the crochet; it was about people interacting with those in their community. It is about community. It was about these people, who do not have many other interests, gathering for 1 or 2 hours a week—that is all—with those of a like mind. It is about building communities. What that Government did was to destroy the communities.

There is no vision with this Government, there is no plan, and it has lacked aspiration. It seems, yet again, that in 2017, it will take a Labour Government to restore the settings and restore and build communities, as it did in 1935, 1957, 1972, 1984, and 1999. Anyone who knows their political history will know that after a National Government it takes a Labour Government to come in and restore the settings and rebuild the Kiwi Dream.

Before I start, I just want to acknowledge the passing of Tahuna Minhinnick, who was a leader of Ngāti Te Ata in my electorate. He played a pivotal role in leading that iwi, and he has been cut down in his prime. I want to share my condolences and sympathy with not only the family but also the iwi.

It was interesting listening to that speech by the previous speaker, Stuart Nash. Sometimes you must wonder whether we are actually in the same place. I just do not even know where some of those figures came from. I have been trying to find out where he even dragged up some of those figures from, which, I think, in some cases are totally wrong. What I am going to talk about today is that this Government has four key things that it is trying to achieve. One is returning—

💬 Stuart Nash: I raise a point of order, Mr Speaker. [Interruption]

The ASSISTANT SPEAKER (Lindsay Tisch): Order! [Interruption] Order! There is a point of order.

💬 Stuart Nash: Page 4, Budget Policy Statement—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! That is not a point of order; that is wasting the House’s time.

The second thing we are trying to do is make this economy much more productive and competitive. Thirdly, we want to deliver better value from the Public Service—and, again, we are going to pick that point up—and, fourthly, we do, and have, continued to support the efforts in Christchurch. I note that we have spent $17 billion over the last few years trying to get Christchurch back into shape.

I will just deal with the first point: returning this country back to surplus. Well, guess what? We have already achieved that. We have taken this country from an $18 billion deficit in 2011 back to a surplus of $414 million. From here—even with the Treasury forecast—we are going to be around budget, but continuing to grow those surpluses over time. Mr Nash, I suggest you stay and learn something before you take off. Of course we just reported in the last 7 months to the end of January, Mr Nash, that we have achieved an even higher Budget surplus than we were projecting, which is close on a billion dollars.

So what does this all mean? Every year this Government spends $6 billion on new infrastructure: roads, rail, transport, education, and new schools. What it does is it creates the opportunity for new spending. This year we have an extra billion to spend, and next year $2.5 billion. What that does is help to fund that continued building of an infrastructure network for this country to enable all New Zealanders to grow and prosper, whether they are working as employees or whether they are running a business. The second thing is that running a surplus means that we can reduce debt. Contrary to what Mr Nash said, the rate of debt to GDP is actually 25.4 percent. We have got a projection, an intention, to get it down to 20 percent by 2020. I have spoken previously in this House about how we compare with countries like Australia, which, in 5 years’ time, is projected to have close to twice our level of debt—i.e., just under 40 percent. England and Europe are projected to have four times our level of debt, and the US five times our debt levels. We have modest debt levels, and we want to see them come down. The only way to do that is to deliver surpluses.

The other thing that is leading to these surpluses is growth. Somehow, everyone from the Opposition has been very silent on this. It is 2.3 percent—

💬 Todd Muller: How much?

It is 2.3 percent in the year just gone, and it is projected to be averaging 2.7 percent over the next 3 years. Of course what does that all mean? It means that we can actually start to see wage growth, and see people getting paid more and families earning more.

💬 Hon Clayton Cosgrove: To pay your public services.

So it is interesting that when we look at the wage growth in 2015, it was 3.1 percent, Mr Cosgrove—3.1, compared with one of our lowest inflation rates of 0.1 percent. That means a 3 percent real increase for all the working people in New Zealand—even for you, Mr Cosgrove. Also, what that means is that they are also continuing to benefit—our households, our working people—from low interest rates, because we have low inflation; also, fuel costs and all those other things. So we are starting to see some real benefits coming to our hard-working New Zealanders. Then, when you overlay that with those recent policy announcements around our social initiatives—not only the free access to health care for under-13-year-olds, which was brought in last year, but also the recent Budget announcement of nearly $800 million that is going towards people who earn less than $36,500 getting a $25 increase per week. That is a real increase for those people. That is about sharing the gains with all New Zealanders. This is what this Government is about: sharing the gains and recognising that everyone has a part to play. Everyone should be participating in the upside.

I now want to turn to the second one of our initiatives, which is about making our economy more productive and competitive. By running a good economy it means that we can start to help businesses in an even more meaningful way. We are limited, and this is where the Opposition, I find, starts to stray into saying that the Government should be doing these things and this and that. Often we do not have jurisdiction over them. We cannot influence what goes on in the business sector. What we can do is make sure we have got the right policy settings. So it is interesting, what we can do.

What have we done? ACC—we have basically written off $2 billion of levies, reduced them by $2 billion, and I note in the last Budget that we cut them by $430 million. The Hon Nikki Kaye is doing a great job, seeing the levies reduce for employers, for the workers’ account, and also for motor vehicles. Secondly, we continue to invest in research and development, and I note the previous speakers on this. We want to get research and development up to 1 percent of GDP, but we put $80 million in in the last Budget to further increase the level of investment in research and development, and we do agree that research and development is vital to our economy.

Thirdly, we are continuing to invest in skills training, and we have got a target of getting to 60 percent of all people aged between 25 and 34 into skills training. People seem to have glossed over it. We have opened up 21 new trades academies. I note in the February 2016 report that there are over 40,000 people now doing apprenticeship schemes in New Zealand, or the equivalent—40,000 people working. And I hear it all the time that we do not put people into apprenticeship schemes. That is very meaningful.

Then what else can we do? The main thing we can do for businesses is to create a marketplace. From a Government perspective that is about free-trade agreements. We have already done the Korean one. We have done the Trans-Pacific Partnership agreement and, of course, there is a lot of debate about it, but what cannot be debated is that even on today’s figures, there is a $102 million benefit for the dairy industry. I heard it all during question time about what we are doing in the dairy industry: there is a $102 million immediate benefit once that agreement comes into force. So those are really important things. We are also going back over the China free-trade agreement. We were the first to get that, but we are going back now that the Australians are doing one, seeing whether we can leverage that position and to further improve our trade links. I think that is great. It is a meaningful thing when you take $200 million - odd and give it to businesses in the form of reduced penalties that they have to pay at the border.

Then there are other initiatives—for instance, with iwi. I think the passage of the Te Ture Whenua Māori Bill, which enables iwi to better use their lands, is a very important economic step in terms of helping them drive their own investments much more productively. Then there is the roll-out of broadband. I do not want to labour that point, but everyone is well aware of that—what a significant investment it is, just on $2 billion.

But I just want to say that with the better value for services that we have been trying to drive out of the Public Service, we have reduced the extent of the investment that we have made in public services from 34 percent to 30 percent of GDP. That is, effectively, $9 billion of savings. That is $9 billion of savings that can be applied to new schools and new investments in road and in transport. I think that during that time what we have also done is we have made sure that our Public Service is working much more effectively and getting better value for money. So it is not just necessarily about cutting back the number of people involved in those activities; it is about getting better results.

The other thing that I think is most important about the way this Government is operating is it is setting clear targets—sometimes even uncomfortable targets to try to achieve, whether it is social policy, whether it is in the environmental sector—and trying to measure ourselves against those, as opposed to just simply spending money, which is always the way that Governments are operated. So this approach towards a real outcome focus, I think, is a most important factor towards driving better Government. I think all those things around social developments, around our environmental policies, around our economic management are all about rebuilding the Kiwi Dream.