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 2020.

I’m pleased to present the report of the Finance and Expenditure Committee on the Budget Policy Statement and the Half Year Economic and Fiscal Update, both of which were presented by the relevant Minister and ministries in December 2019. I’d like to thank the committee for the work they did reviewing these important documents, and I’d like to thank the Minister of Finance, the Hon Grant Robertson, and the Secretary to the Treasury, Dr Caralee McLiesh, for appearing in front of our committee to answer our questions.

I would especially like to thank the submitters who put in submissions on the documents. Forty-two individuals or groups took the time to present their views to us on the Budget Policy Statement and on what they thought we should be doing. Many of those were from representative bodies, so it represents a large number of New Zealanders who took an interest in what is happening in Budget 2020. I especially, though, thank those who came and spoke to us in person. It’s an important part of the Budget process and an important part of the functioning of our democratic system.

This Budget Policy Statement and, of course, the Half Year Economic and Fiscal Update were prepared last year. We reviewed them in February this year, just a month or so ago, and since then much has changed. In December 2019, I don’t think we’d even heard the term coronavirus in respect of the illness that broke out in China. By February 2020, when we were starting to review the Budget Policy Statement, we had just started to use the word COVID-19, and now, coming up for nearly a month later, of course, COVID-19 and its impact on New Zealand and on the world is being regarded as a very serious matter indeed. But what this report shows is just how very well we are placed to meet the challenge posed to us by COVID-19. Let me turn to the Budget Policy Statement to show why this is so.

First of all, I want to talk about how the Budget Policy Statement builds on the work that we did in 2019. It focuses on wellbeing, and that’s important because it means we are moving beyond measuring just the economy and focusing on what really matters to New Zealanders, the traditional things: housing, jobs, families, and so on—all those sorts of things that ensure that people have the capabilities to live lives of purpose, of balance, and of meaning to them.

This Budget in 2020 draws on the work that we did in the Wellbeing Budget of 2019, and it draws on a long tradition of considering what makes a life worth living. What we know when we talk to people—this is well-established in the literature—is it’s not money, though money does help. It’s family, it’s friends, it’s satisfying work, it’s security, and it’s health. Understanding that gives us our focus on wellbeing and it has enabled us to identify priorities for Budget 2020. So the Minister of Finance has identified those in the Budget Policy Statement and they are reflected in our report.

So what are the priorities for Budget 2020? They are a just transition, supporting New Zealanders into a climate-resilient future, the future of work, enabling all New Zealanders to benefit from new technologies, and to lift productivity. It’s the focus on Māori and Pasifika, lifting Māori and Pacific incomes, skills, and opportunities; a focus on child wellbeing; reducing child poverty and improving child wellbeing; a focus on mental and physical wellbeing; and improved health outcomes for all New Zealanders.

That’s the focus that is talked about in the Budget Policy Statement and it builds on the strong economy—a strong economy in which wages are up 4.9 percent, a strong economy in which the minimum wage will be going up to $18.90 an hour, a strong economy in which household incomes are up, a strong economy in which debt is low at 19.5 percent of GDP, a strong economy in which unemployment is at 4 percent, and a strong economy in which growth is ahead of our OECD partners. It was raised at 2.2 percent growth in December, and just today we’ve heard that it is still being raised, at 2 percent growth. At the time of our HYEFU, the Half Year Economic and Fiscal Update, it was predicted there would be a small deficit for the year ended December. In the event, the actual financials have shown a small surplus.

This is the fundamentally sound and strong economy, which means that we are very well placed to meet the threat of COVID-19. We are facing an international storm, but we can meet it. And why can we meet it? It will have a profound effect on us and we are responding. It is a health issue primarily, but it also is an economic issue, and we can meet it. Why can we make it? Because of the programme that is laid out in the Budget Policy Statement in 2019.

So what’s the best thing to do when facing that kind of economic storm? The Budget Policy Statement 2019 tells us what we are doing. We have the New Zealand Upgrade Programme, a Keynesian measure that will support our economy—$12 billion of infrastructure. So after the nine years of neglect, we are doing the work that sorely needs to be done in New Zealand. So there are upgrades for transport, for education, for health.

The Budget Policy Statement tells us that there will be $6.8 billion going into rail and roads, but not just roads for cars, but roads which have dedicated lanes for freight, roads which have cycleways and pedestrian walkways incorporated into them so that different modes of transport can be used to get us about from place to place.

In the Budget Policy Statement, we are told that there will be $300 million going into investment into our district health boards, that sorely needs investment to replace the rundown infrastructure that was left to us. There is $200 million going into reducing carbon emissions in the public estate, making sure that in the Government—in the Government—estate, in the public estate, we are moving towards a low-carbon economy.

Four billion dollars is going to the multi-year capital allowance to look at future spending and support future spending on infrastructure, and all of this will add 1.4 percent to GDP, a 1.4 percent that will be so needed in the face of COVID-19. So what we have here is fiscal policy that is supporting our economy.

Let me tell you how this works on the small scale, and it’s most easily seen in our schools package, the package where we have fired $400 million into repairs and maintenance and upgrading school property. That is affecting virtually every State school in the country. In my electorate, and in the electorate of every single constituency MP in this House and in the electorates where list MPs work, there are schools who are benefiting from this, schools who can at last replace the school pool, can get some painting work done, can get the roof replaced.

But it is not just the schools who benefit from that; it is the local tradies—the plumbers, the roofers, the builders—who will get work, the kind of work that enables them to employ people, and that will sustain us through this COVID-19 outbreak. It is a classic measure to support the economy.

The Budget Policy Statement has a whole series of other measures that we are building on. I just want to talk about that minimum wage increase. We all know that when it comes to low-income people, that extra money gets cycled straight back into the economy. If there is a simple way to support the economy, it is by lifting the incomes of the lowest paid. Why? Because they spend it to support a better life for themselves, and that spending cycles straight back around the economy. It is an excellent measure.

What this Budget Policy Statement shows is that we are supporting our communities, we are supporting our families, and we are working to support the economy that in turn supports all of us, and we are governing for all New Zealand. We are challenged by COVID-19, but this Budget Policy Statement and this coming Budget show that we are doing what matters—leading with a public health response and then leading with an economic response, an economic response that we are prepared for, thanks to our Prime Minister, with her concern for all New Zealanders, and thanks to the excellent work done by our Minister of Finance. He is insightful, courageous, and visionary—a worthy successor to Sir Michael Cullen. I commend this report to the House.

Thank you, Mr Speaker. Speaking on this Budget Policy Statement and the Half Year Economic and Fiscal Update, of course, which includes projections of future growth, and, of course, all those projections are now cast into the air by the impact of coronavirus, I just want to mention one or two issues there. Certainly, it is having a big impact and will have a big impact on the projections in this update. We’re seeing a lot of businesses around this country really finding it tough right now—tourism particularly, the hospitality sectors, forestry, international education, a lot of pressure on universities and that export education sector, which is an important part of the economy. We worry about potential job losses but also people losing hours and losing their income and their smaller businesses.

So we support the Government’s initiatives so far, in terms of the message they sent through IRD and the Ministry of Social Development (MSD) to help in the short term around payments, around provisional tax, and so forth. There’s been some particular work going on in the East Coast. We do note that the Minister of Finance, who will no doubt repeat it soon, is right in the sense that the first conversation that these businesses that are struggling should be having is with the banks, their own banks, in order to make sure that they’ve got the money to get through. However, not everybody will. So we do acknowledge that the Government’s announced that it will be coming up with a business continuity package that will include—they’ve indicated some form of wage subsidy to businesses directly affected, and it absolutely should be targeted to those businesses. Our point on that is that we think the Government should move with more urgency because those businesses have been under pressure now for a number of weeks. We know that it’s complicated, but we just encourage the Government to move swiftly in this area because we worry that the window of opportunity to save jobs is closing and we need to move fast.

We’re also particularly worried about the logic of helping those businesses, but, at the same time, making their job significantly harder by pressing on ahead with the 1 April minimum wage increase, which does make it harder for many businesses to survive in challenging times. Our proposal is that it be postponed—not cancelled, not unwound, not sent off to never-never land, but postponed for six months so that businesses have less headwinds to struggle against at a very difficult time. We don’t want to be making it more difficult for businesses right now.

As well as that short-term work to help businesses most directly affected by the outbreak that we’re dealing with, there is the wider question of whether some broader stimulus is needed across the economy if indeed the impact of coronavirus extends beyond what is short and sharp—which it already has—into a longer, more deeper impact on the New Zealand economy, whether it is indeed leading to a recession, whether it is a trigger to a much wider global slow-down. These things we don’t know yet, but the initial indications now are increasingly disturbing. So there may well come a time soon when wider stimulus is required. We’ll be interested to see what the Government has to say about that and when they will make those decisions, and we think some sort of direct tax relief will be part of that story.

In the meantime, we shouldn’t be losing sight of the more basic issues facing New Zealand. The Minister of Finance will no doubt stand up, like he has many, many times, and say that the New Zealand economy is great and we had strong momentum coming into this crisis—and that is wrong. It is completely wrong. We did not have strong momentum at the end of last year. This economy was growing at a rate of 1.6 percent, according to the Reserve Bank in 2019. Now, those figures may be up slightly or down slightly, but that is not strong momentum. In fact, the strong momentum that we did have as an economy, back in 2017, after nine years of good government by the National Government led by John Key and Bill English over an extended period time—that was strong momentum: over 3 percent growth, huge surpluses being generated, about 10,000 new jobs a month being created for the last two years. That was strong momentum. What we’ve seen in the first two years of this Government is the attenuation of that momentum, the slowing down of that momentum, the slowing down of the economy, the slowing down of job creation, and the disappearance of the Budget surpluses.

The Budget Policy Statement projected, prior to any coronavirus, prior to any droughts, a deficit for this year, and it projected no surplus for the year after that. Again, we hear the Minister of Finance talking about projected surpluses. Yeah, they’re two or three years out, and nobody believes that they would actually occur on the path that the Government was already heading. So that is what it is, and it’s just made it slightly more difficult for New Zealand to respond.

So as well as responding directly to the impact of the virus, we do need to have a clear growth plan and a focus on growth, and that’s what the National Party has delivered and continues to deliver. We’ve talked about the need in five areas: firstly, to reduce regulation, and we talked about that earlier this week—the need to take pressure off businesses so that they have more money to invest and grow and provide jobs for people, provide opportunities for New Zealanders to have good work, good opportunities, to look after themselves and their families and to do the things that they want to do. So we need regulatory reduction. We also need to have help for small businesses, and we’ll be talking about that more.

We often hear about the Prime Minister’s empathy. Well, I don’t feel like the Prime Minister has any empathy for the realities of the 500,000 small-business owners in this country who struggle, who get up early in the morning, work hard, try to employ people, and are confronted with never-ending costs and further regulations and further difficulties imposed upon them, while they’re also just trying to survive in business, which is hard, relentless, and requires great effort every day. Those people are the backbone of the New Zealand economy. We should be supporting them. We should be standing up for them and saying, “They are performing the public service that New Zealand needs.” They are the people that only survive in business if every day they give people what they want, at the right price. It’s a beautiful thing that they’re doing, and they should be supported by this Government, and we should be making their life easier, not harder.

So there’s regulatory relief, there’s a focus on small business, there’s the need to provide tax relief for hard-working New Zealanders when appropriate, and, fourthly, there’s the need for infrastructure and investment. This Government will no doubt, again—we’ll hear the Minister of Finance standing up on his hind legs in the next few minutes; he’ll be saying we will be spending $12 billion on infrastructure. But announcing is not the same as delivering, and that’s the basic lesson that they don’t seem to have learnt yet. When they arrived in Parliament, the first thing they did was they came in and said, “We don’t like National’s infrastructure. We’re going to stop it.” So they turned off all the roads, because they were going to build the light rail down Dominion Road. Two years later, they realised that they hadn’t even figured out what the purpose of the light rail down Dominion Road was, whether it was a—

💬 Fletcher Tabuteau: I raise a point of order, Mr Speaker. Sorry, I was restraining myself, but under the standing rules of this debate, the member must confine himself to the content of the Budget Policy Statement itself—this is not a Budget debate—and not waffle on about unrelated matters.

TEMPORARY SPEAKER (Hon Tim Macindoe): I thank the member for his intervention, but this is a wide-ranging debate related to Budget policy matters, and I don’t believe that the member has strayed from that overarching framework.

A typical load of nonsense from New Zealand First. They are only sore because they don’t like the light rail project down Dominion Road. They don’t support the light rail project down Dominion Road, which is why it’s not happening. So two years later, they still haven’t got the support of New Zealand First for the slow tram down Dominion Road. We don’t know whether it’s about urban regeneration or a fast track to the airport—nobody believes it will be a fast track to the airport—and so they haven’t done anything. So two years later, having done nothing on infrastructure, they decided to turn the key on and start up National’s roading projects and the fourth railway line and all the things that we were going to do two years ago. So they’ve wasted 2½ years on infrastructure.

The final point is we need to help families. What New Zealanders will be deciding as the election comes up, in six months’ time, is: is there a difference between a party that thinks that announcing things is all you have to do and to have good intentions is all you need, versus a party that understands that it’s delivery that counts? And that’s where we stand.

Now, when we get to the Budget policies outlined in this Budget Policy Statement, what we see is a list of five goals: the just transition, the future of work, Māori and Pacific, child wellbeing, and physical and mental wellbeing—and they’re all very worthy. I’ve got no problem; they’re very worthy things to do. But my suggestion to the Minister of Finance is that they’re out of keeping with the time. The priority right now for New Zealanders is restoring growth and saving jobs, and that should be the overwhelming priority for this Budget: saving jobs and restoring growth in this economy. I don’t see too much about that in the Budget priorities as outlined. It might be somewhere in the future of work, but I’m not sure.

So I’d be very interested to see that, and I’d be very interested to see, after all the talk and all the announcements, when they’re going to deliver 100,000 houses, for example. I’d be very interested to know that, because it is quite true that the Prime Minister, with her intervention at Ihumātao, has stopped more houses being built there than the entire $2 billion KiwiBuild programme has delivered so far. I would love to hear how the Minister of Finance explains that. Thank you, Mr Speaker.

I firstly just want to acknowledge the Hon Tim Macindoe for an excellent little spell in the Speaker’s Chair that he’s just had. He was, unfortunately, melding into the sheepskin behind you in a way that made him look a little unusual, but he did a very good job.

💬 SPEAKER: The member knows that he doesn’t bring the Speaker into the debate, although I might say he merges less than he would’ve a few weeks ago.

All right, Mr Speaker. The member opposite, the Hon Paul Goldsmith, started out pretty well in that contribution. He started out by endorsing a number of actions that the Government is taking in response to COVID-19. In particular, I think it’s very important at the outset to note that the first response to COVID-19 has to be a public health response. That is what New Zealanders expect of us. That is what we have prioritised.

He made a comment at the end about not being sure that the priorities in the Budget Policy Statement fitted with where we were at in terms of COVID-19. Well, I would say we’re very proud on this side of the House of the additional investments we have made into our health system. It is our health system, our health workers, who are at the front line of ensuring the wellbeing of New Zealanders during the COVID-19 outbreak, and that is one of the priorities in this Budget Policy Statement. So I think, on behalf of certainly the Government, I want to be able to take an opportunity to thank our front-line health workers, who are currently under quite a high degree of pressure, doing a great job in making sure that not only is New Zealanders’ health and wellbeing being protected but also that information is flowing.

As I say, the member, while he started out well, then ended up in a typical “Negative National” rant—not about the positive things that are happening in our economy, not about the things in the Budget Policy Statement that actually are about lifting productivity, are about making our economy more sustainable, are about making sure that more New Zealanders are included in our economy and benefit from the prosperity in our country, and that is at the core of the Budget Policy Statement. But, obviously, it is clear that we have this debate today in different times than when the Budget Policy Statement was written, in December 2019, and those times mean that we do, at all points, need to assure ourselves that what we’re doing in the Budget is in the best interests of New Zealand at this time. Over the coming weeks, we will be refining the Budget, which is delivered on the basis of this Budget Policy Statement, in line with what has occurred with COVID-19.

But the good news for New Zealanders is that we entered into this period in good shape. Our economic plan was showing benefits right across the economy, and in the face of the global headwinds we’d seen in the last couple of years with the US-China trade war and Brexit, we were coming through particularly well. We have been growing at a faster rate than many of the countries that we typically compare ourselves to, including Australia, Canada, the UK, the eurozone, and Japan. Looking across fiscal and monetary policy across our labour market, across consumer confidence, and even, in the last months of 2019, business confidence, we saw that the economy was on the improve.

The Government’s accounts, for the six months that ended December 2019, were strong. We had a surplus over the first six months of the fiscal year, and we were sitting $500 million higher than we expected. That’s due to a strong economy. That’s due to more revenue coming in as a result of more businesses doing well, making profits, and paying corporate tax, of more people being in work, of more people earning more, and paying their taxes in that regard, and of more people spending because they have confidence to spend in the economy. All of those things were ahead of forecasts at the end of December 2019.

We also had labour market statistics highlighted in the Budget Policy Statement where we now have 4 percent unemployment—historically low levels of unemployment. All of these things are signs that we enter into the face of COVID-19 doing well.

We often compare ourselves to Australia in this regard. Australia’s unemployment rate is actually back up to 5.3 percent. In New Zealand, and the Budget Policy Statement outlines this, we saw record wage growth in terms of the last 10 years in the period covered by year, with around 3.6 percent. We also saw Statistics New Zealand data in the last few days showing us that the total volume of manufacturing sales had its strongest quarterly rise in six years in the final quarter of 2019. We also saw trade data that showed that terms of trade hit a record high in the December quarter.

So all of those things are the reason why we say we are in good shape going into this challenging situation. We particularly say that because we have kept levels of net debt low. We have net core Crown debt now at 19.5 percent—19.5 percent of GDP. That is less than the 22 percent of GDP that we were left with when we came into office. That is what gives us the fiscal space to be able to respond, to be able to make sure that we protect the health and wellbeing of New Zealanders and plan for what may come in terms of the economy.

But the significant announcement made at the time of the Budget Policy Statement was the New Zealand Upgrade Programme. This is the $12 billion boost to New Zealand’s infrastructure. We’re able to do that because debt is low, because the cost of borrowing is low, and because the projects are there to do. This is a fully funded programme. This is not a wish list. It’s not a series of promises. It’s not a media statement put out just before the election. It is a fully funded programme, and it’s a programme that does get the balance right in our transport system. Yes, it supports major roading projects, but it also supports significant investment in our rail sector, in walking and cycling.

It also supports core investment in our education and our health systems. It is those hospitals right now that know that they’ve got a Government that’s got their back and has invested in them as they lead New Zealand’s public health response. That’s what a responsible Government does. It ensures that we invest in our health system. After nine years of neglect of that health system, we have come through with significant boosts, both in terms of what we’re building in hospitals and the support we’re giving, be it through the wages for nurses or be it through the increased investment in our DHBs. So that New Zealand Upgrade Programme, that infrastructure boost, puts us on the right footing as we move forward into this challenging period.

We’ve covered several times in the House in the last couple of days what we’re doing directly in response to COVID-19 of supporting our business community, of getting alongside workers through the Ministry of Social Development, through Inland Revenue, through making sure that the Government departments pay their bills on time. That issue of cash flow was raised directly with us by Kirk Hope of Business New Zealand. He said, “What’s one thing we can do? It’s make sure those bills are paid on time by the Government.” We signed that off within three days to respond to exactly that. We continue to develop the business continuity package alongside the business community.

Most businesses understand that right now we’re in the phase where it’s targeted responses that are needed, tailor-made responses that deal with the industries, the sectors, and the regions who are facing the brunt of this. At the same time, we plan. We plan for the possibility that this may go on longer, that the impacts may cut deeper. We are ready for that and we have the fiscal space to deal with it.

But all of the things that we’re doing for COVID-19, which we must prioritise and we are prioritising, stand alongside a Budget Policy Statement that fundamentally delivers on what the Government came here to do. Yes, we need a strong economy, and we’ve got it. Yes, we need to manage the books carefully, and we are, but we must deliver to our people and to our environment. That is why the Budget priorities that are in here are the ones that we must stick through, no matter what is happening.

Yes, we have to grow jobs. Yes, we have to make sure that we’re investing in our small businesses. All of that’s being done, but we must continue to deliver and prepare, make sure that the economy is able to get ahead in terms of climate change, make the most of the opportunities that exist there, address the future of work, support Māori and Pasifika aspiration, make sure we lift children out of poverty. We’ve seen the statistics that are proving that we’re doing that, and investing in our physical and our mental wellbeing.

I am extremely proud that we are now getting the focus right. Yesterday in the House, James Shaw, in his tribute to Jeanette Fitzsimons, raised the question of her views around how we needed to move beyond GDP. We are doing that. Yes, it’s important to grow our economy, but it is also important that we care about who shares in the success of that economy, that we measure our success in the wellbeing of our children, the health of our environment, our mental health, and our success in terms of work. All of those indicators are now clearly laid out in a Budget Policy Statement that gives a feeling of confidence to New Zealanders that we are on the right track, that we have the plans in place to make sure that they and their families feel safe and secure. We are in challenging times, but we are in very good shape to handle them.

Thank you, Mr Speaker. Can I start by thanking all those people who have sent nice, kind words of support for Holly Collins, my dog, who is almost 17. Obviously, you know, dogs can get coronavirus, so I tell you, if I get a sniff, I’m not coming to work.

So I think it’s really important, though, that we look at this Budget Policy Statement and say, “Is this a Budget Policy Statement fit for present times and into the immediate future?” I’m sorry to say it: no, it’s not. So we have a Government that has talked about—and the Minister who has just resumed his seat just talked about—the Wellbeing Budget, and the business as usual, basically everything continuing the same, and looking to the future and climate change, everything else.

We can put our heads in the sand over this COVID-19 or we could understand that it is coming our way. When we see the panic that has occurred in supermarkets where people are buying toilet paper in New Zealand in great trolley loads—which is totally insane behaviour, frankly, given that we export toilet paper. I’ve just checked on the internet, and apparently in 2018 we, as a country, exported $54 million worth of toilet paper. So I’m pretty certain we’re covered no matter what, when it comes to the toilet paper.

But let’s not joke too much about it. That is a sign of people panicking. The reason they’re panicking is they’re not certain what to do, and so they race round and they think, “What might I need if everything’s shut and I can’t go out, or I’m stuck in isolation or something?” That’s what they’re doing.

Last night, or yesterday, rather, I should say, 168 people died in Italy of COVID-19. Now, the wave of death seems to have occurred in China over the last month, and now seems to be trailing off. That is a good thing that it is trailing off, but the wave now seems to be in Italy. Italy has 60 million people; we have 5 million people. That would be like us standing up in this House and saying that yesterday we lost 34 people to COVID-19.

I understand why people feel a bit panicked. If it was us with those numbers, we probably would, too. We don’t need to panic buy food. We export 95 percent of the food produced in New Zealand. We produce enough for 40 million people. My message to people is we don’t need to panic. But the big thing that we do need to have from the Government response is that we need to know that the Government knows what it’s doing and it is properly prepared.

We were not overly, as people, convinced that the Government knew how to deal with a pandemic when it couldn’t cope very well with the measles epidemic. We didn’t believe that that was something that should be happening in today’s world when we have immunisations available. There is no immunisation yet available for COVID-19, and I think that is one of the things that is causing businesses and staff to be very concerned about this and how this could impact on them, their jobs, and therefore on the economy.

In the National Party, we believe that the Government needs to reassess the Budget based on the fact that COVID-19 is impacting on New Zealand, not so much in numbers at the moment—and it most likely it will—but in the way that it’s affecting our exports. If we consider that tourism is a major export to New Zealand—such as people come to New Zealand for tourism—that is clearly having a serious impact right now on our tourism industry, which is one of our biggest industries. It has made a huge negative impact on our tertiary education providers, and, particularly, not only on our universities and the polytechnics but also on the private tertiary education providers.

We should not underestimate the impact of this terrible, terrible infection on not only people’s health, but, actually, on their mind-set. I’ve been looking for some words of inspiration, and I didn’t get them from Mr Robertson, but I did get some from Franklin Delano Roosevelt who, in 1932, during the Great Depression, when he took over as the President of the United States, said the “only thing we have to fear is fear itself.” It’s a bit trite, I guess, to say that, but I think part of what’s driving this panic is people are fearful, and they’re fearful if they see their Government not looking like they’re in charge and doing the best they can.

It is important that if people believe that they have some of the symptoms of COVID-19—which I have to say, look to me, when I’ve heard about them, remarkably similar to most other winter viruses that we often get—they should be able to get tested. We have people now self-isolating in what we’d consider a responsible way. The problem is they’re not at work either. And so workplaces and businesses are having to think of ways of dealing with it. People are putting in place, very responsibly, plans—and I understand that Vodafone were doing this today, or very soon—where people can work from home, so that they are not putting both the work and themselves at risk and their workmates. So these are good, responsible responses from people.

I don’t think it’s responsible, though, for the Minister of Finance to stand up and say, “We’re just going to continue on with everything that we were doing in exactly the same way.” I don’t think anyone needs to be a rocket scientist to work out that the world is in a situation of quite a lot of flux. People are very worried and certain countries are taking drastic measures, primarily because they have to. We now have countries like Samoa—one of our neighbours and very good friends—saying, “If anyone wants to come to Samoa, they need to have a doctor’s certificate to say that they’re not sick.” I mean, this is going to have a huge impact on Samoa’s tourism, which is one of its biggest earners. But then again, they need to do something because they don’t have a lot of confidence that other countries are doing what they should do to keep this virus at bay.

We also need to bear in mind that not everyone who gets this virus is going to die, but many are going to be very sick and some may not be very sick at all. But when we look at those mortality rates, they’re not enormous: about 3.4 percent of confirmed cases so far. But if you’re one of those 3.4 percent, you might think that’s a pretty enormous number.

But what I’m concerned about is listening to Mr Robertson talk about how everything’s just going along fine and dandy. Well, they’re saying it’s all fine and dandy as a tsunami’s coming at you. We’ve got an enormous tsunami coming at us, and that is our export markets—and thank goodness for the farmers, by the way. If we weren’t producing all this food—thankfully, people still have to eat, but they’re not necessarily going to be eating quite the same quantity or quite the same as what we have, because we’re exporting fine product. But if we didn’t have the farmers—if the Government had actually succeeded in undermining farmers so much they stopped bothering to produce—we would be in very, very dire straits. Thank goodness. Think about Air New Zealand, for instance, and what they’re going through at the moment: cutting flights—they and many other airlines. This is not business as usual. About half of Air New Zealand’s owned by the Government. We’re going to have a massive loss coming up there. We’ve got losses all over coming at us as a country.

I just think it’s important that we don’t panic, that we don’t race around buying up all the toilet paper produced at Kawerau and thinking we’re the only people there. I think it’s important that, when we look at our Australian cousins and that terrible video that I think we’ve all seen of those Australian women fighting over toilet paper—do you know my thoughts were? “Oh gosh, I hope they’re not New Zealanders and they get sent back here.” We’ve got enough trouble without that nonsense. But it’s just a sign of panic, and people do, and they don’t trust that the Government’s in charge; that’s one of the problems.

So I think that the Government needs to not be so low key about it that nobody thinks they’re doing anything, but telling people straight up what’s happening: how many cases there are, what’s happening here, what’s being done. I think, hopefully, an immunisation regime will be put in place—a vaccine will be put in place or found—before it comes to New Zealand in a major way—this COVID-19—but let’s be real here: this is going to seriously affect the economy, seriously affect jobs, seriously put at risk people’s work, seriously put at risk people’s wellbeing. This country doesn’t need a Wellbeing Budget, it needs a Budget about keeping our people well, and that’s something we’re not seeing from this Government.

That was one of the most contrite contributions that this House has seen in a long, long time. The previous contributor, Judith Collins, stood up and spoke to this House about lacking consistency and she spoke about business as usual. And then she talked about applauding the measures of other countries in their efforts to shut down borders, whilst at the same time lamenting the fact that we’re having to slow down the number of international students coming into New Zealand at the moment. The consistency of the argument is lacking.

The member started giving us doomsday scenarios and talking about the end of the world, almost, and then she said, “But let’s not panic.” It’s just frustrating to listen to the members opposite politicise what is an incredibly important situation that this Government and the people of New Zealand—the people themselves and the businesses of New Zealand—need to work through together. I hope that as I stand in this House, I can give some reassurance to those businesses especially, but the people of New Zealand who have been told and updated and communicated to about what the situation is with COVID-19.

But firstly, I would like to address, actually, the Budget Policy Statement, which the Finance and Expenditure Committee addressed. It is an opportunity, despite my reaction to the contributions opposite, to acknowledge the committee and the work that we do—I being the deputy chair—together with regard to the finance and expenditure of this fine country of ours. So we heard and we wrote the report, obviously, which we’re debating now on, firstly, the Budget and the focus. And the member opposite spoke about not needing a Wellbeing Budget, and then finished, again, in a confusing way, saying, “We need to focus on the wellbeing of people.” That’s what this Budget does. That is what the policy statement has outlined, again, for this House and for the people of New Zealand to read, understand, and debate.

This is a Budget that, like the one before it, has said that GDP cannot be the sole measure of success. I think even the members opposite surely will acknowledge that the irony of GDP itself is that it is both too broad and too narrow a measure for us to use to measure the success of an economy. As I have said many times in this House, Kuznets, the economist who designed and created GDP, said himself, at the creation of this tool, don’t use it as a tool to measure the success of a nation’s economy. It is a useful number and it is a useful insight, but it is not a measure.

So we have said that we must work at understanding what else is it that we measure, because I’m not sure if the public at home will understand or realise that, for example, the rebuild of Christchurch, which was a necessary and important part of this country’s history, was actually good for GDP. It was a measure and a positive on the outcome, but that took mass destruction. So how do we underlie and analyse what is it that is good? What is wellbeing for New Zealanders?

Also within this work that we have undertaken in the Wellbeing Budget 2020, we are looking at “Just Transition—Supporting New Zealand in the transition to a climate-resilient, sustainable, and low-emission economy”. New Zealand First has always said—and we’ve worked with the farmers closely and come up with a good solution, despite the members opposite—that a good proposition for New Zealand exporters is to stand up in our world market and put the provenance to our buyers around the world and to have that story to tell about happy employees working and earning a good living in their job and about an economy that understands their world commitment to carbon emissions, so that our buyers around the world can take satisfaction and take pride and actually pay a premium for New Zealand products because they understand, actually, the contribution that New Zealand is making in terms of fighting against carbon emissions.

The second part is the “Future of Work—Enabling all New Zealanders to benefit from new technologies and lift productivity through innovation”. Again, New Zealand First, in particular, is proud of the efforts we made around the research and development legislation that we brought into the House in an incredibly important attempt, effort, and ongoing work where we have seen an increase in the investment and the incentivisation of investment into research and innovation by businesses in New Zealand. That, fundamentally, means more money in the economy but, long term, it means greater productivity.

The third tranche to this was “Māori and Pacific”, and as the Parliamentary Under-Secretary for the Provincial Growth Fund, or regional economic development, it has been a particular pleasure to work with Minister Jackson in our combined efforts to target work programmes in our regions where our Māori youth and Pacific youth but also our Pākehā youth can be supported—

💬 David Seymour: Tell us about economics.

—into work where otherwise they were ignored. I would go on about the nine long years of neglect, but the others on the other side of the House just couldn’t bear to hear more about the truth there.

The fourth part was about “Child wellbeing—Reducing child poverty and improving child wellbeing”, and so the investment there from this Government has been unparalleled in modern times and it is already making a difference. I’m already running out of time.

The last part of that was “Physical and Mental Wellbeing”, and, actually, what I wanted to touch on there in another part of my speech, but I’m running out of time, was the investment that this Government has made into health. I think the Minister of Finance touched on it in his contribution when he spoke about a health sector that this Government has invested in to the tune of billions of dollars, which means our front-line staff and the facilities that they need are actually, finally, coming into a place where they’re up to the task of making sure that if COVID-19 becomes the health problem that we are seeing around the rest of the world, we are prepared. Our front-line staff and the facilities that they use are ready to go, and that is fundamental to making sure that New Zealanders and their wellbeing are looked after.

What I wanted to say in conclusion is to talk about what New Zealanders can expect from a Government in terms of an emergency situation like COVID-19 at the moment, and what I want to say and to talk about is the position that this country has come into as reported in the policy statement. We are at 4 percent unemployment and our wage growth is at 3.5 percent, while inflation costs are less than 2 percent, which, fundamentally, means more people are employed in the New Zealand economy and they have more disposable income to spend in the economy and to look after themselves and their family. That becomes a virtuous cycle as we move forward in making sure that the scare tactics from the Opposition don’t work—don’t panic people—and we move forward and give the confidence to New Zealanders that they can make sure that if they are looking after their health, we are looking after the economy and business, and doing all we can to make sure that we move forward productively and healthily. Thank you, Madam Speaker.

Well, thank goodness that’s over. That’s 10 minutes of my life I will never ever get back. That was a terrible wander through the broad subject, and I do hope that we get a better quality of debate and speech from the members on the other side than that.

What a difference three months makes, because when this Budget Policy Statement was written and analysed by the Finance and Expenditure Committee, things were very, very different. About the only thing that’s the same now is the fact that we’ve got the same Minister of Finance, although he’s got the wrong photo. He’s grinning from ear to ear about this document. He’s not smiling now. He’s not smiling now because things have materially changed, even in the three months since this statement was written.

Actually, there wasn’t a lot of good news, despite the gilding of the lily by the Minister in this statement, because things were already going sour on the Government’s watch. GDP growth was going down. Job creation was going down. Bear in mind that this Government inherited an economy that was creating 10,000 jobs per month, and, by sleight of hand, they managed to reduce that by 60 percent. Not in a recession and not in tough economic times, like the previous National Government had to deal with, but, actually, the very best of times, when commodity prices were high and growing, when inflation was low, and when the conditions for growth and supporting the very families that they describe their Budgets as about—being wellbeing—and they’ve managed to reverse that trend.

I, frankly, think one of the biggest mistakes the previous Government did was it didn’t put a big, flashy neon light sign on its Budget, because it knew that every single Budget was about wellbeing—every single one. Every investment that we make into the people of New Zealand is to improve their wellbeing. Well, words are fine; actions are what really counts when it comes to Budgets and Budget policy, and the fact is we are now looking at a very, very different picture. We started from a low base, a much lower base than our economy should have been at, and we’re going backwards. Some of those things are matters that the Government does not control—and I’m going to talk about COVID-19 and the impact on both the economic update and the Budget which is being prepared—but some of them are.

The imposition of significant costs on business and on families and on job growth is going to have a material negative effect and undermine—and, actually, we can throw this update out. In fact, I do feel—I almost feel—a bit sorry for the Minister of Finance in trying to come up with the mathematical alchemy that he will need to put together a Budget in May that he can still call “about wellbeing”. This will be about not wellbeing but about being well, because the COVID-19 outbreak has the potential to significantly undermine our country’s wellbeing in the short term.

It already has done economically, and the degree to which the economic pain lasts will be a function of the Government’s management of the health effects of the coronavirus outbreak, and I have to say, as shadow Minister of Health, that my assessment of the Government’s performance so far has been that it has been slow and lacking in energy. I want to compare what the Government has or has not done with the responses of countries with whom we and our friends compare ourselves. Even as recently as today, our neighbours across the Tasman have committed a billion dollars.

💬 DEPUTY SPEAKER: Come back to the bill.

I’m sure they appropriated it, Madam Speaker, and it has a very significant effect—

💬 DEPUTY SPEAKER: It needs to relate to this.

Well, it does because it is very much—

💬 DEPUTY SPEAKER: You need to do that.

Well, it’s a broad-ranging debate, I would suggest.

💬 DEPUTY SPEAKER: It’s not that broad.

Well, it’s broad enough.

💬 DEPUTY SPEAKER: It is on the Budget Policy Statement. So relate it to that.

Right—I certainly shall. Things are bad and they’re going to get worse. That is the simple measure.

💬 Anahila Kanongata’a-Suisuiki: Pessimist.

The member says I’m being a pessimist, and I think that was the accusation that was put by Fletcher Tabuteau to the previous speaker. I think there is a big difference between rhetoric and hyperbole and the reality of what’s going on. Call me a number of things, but you would never call me an optimist when it comes to the situation that we face and the conditions within which Budget 2020 is going to be written. All of the slogans and all of the fancy hyperbole that comes out of the Government is not going to deliver the improvements that this country needs and the strategies to keep New Zealanders well through a significant economic and health crisis.

In particular, the very immediate effects of that on the Budget Policy Statement has been on our balance sheet, because our ACC investments, our superannuation fund, the New Zealand Superannuation Fund, New Zealand fund investment vehicles are all taking significant hits to the point where the projections of income from those investments are going to be materially downgraded. That’s the stuff that, potentially, the Government doesn’t control.

What it does control is spending, and what Treasury also said in its economic update was that the financial risks to our DHBs in not meeting their eye-wateringly high projected deficits for 2019-20 are very real. Indeed, that’s been borne out by the fact that in the five months to date, the combined DHB deficits are now 24 percent higher than they were this time last year. So we could throw those projections out. Treasury were right that that fiscal risk is being realised and the Government is going to need to find, probably, I would predict—because they didn’t fund last year’s deficits—somewhere in the region of between $500 million and $600 million just to stand still. None of that is included in the numbers that underpin these two reports.

And that’s before we get to the effects of COVID-19, and what we’re hearing from the health sector is that that investment is not being made. We see our friends in Australia, in the United States, appropriating over US$8 billion over the weekend, taking dramatic steps to reduce the financial impact of that and appropriate it through their Budgets. We’ve done nothing.

We’ve got doctors telling the media that the DHBs are asking them to fund their own personal protective equipment (PPE), to keep those patients out of the very hospitals that the DHBs run. That is outrageous. It is penny-pinchy, and it is not the actions of a Government that portrays its budgeting as being about wellbeing. And we’re only at the start of the slide. I know that if we don’t get a sustained community outbreak, it will be because we got lucky. But if we do, it will be because we did not take energetic, proactive, nimble steps to prevent the virus being spread.

The Minister of Health in question time talked about how great the close-contact precautions to keep people safe from that virus were, and yet being in a mosh pit at a concert with lots of sweaty people around them, within a metre, doesn’t meet his definition of close contact. For that reason, the risks of a sustained community outbreak and the significant healthcare, social and fiscal costs to this country are significant, and none of that’s mentioned here. None of that is mentioned here.

Never mind what kind of response they’re going to give, not a single dollar of extra money has gone into prevention or control or recovery. We’ve got our fingers crossed on the Treasury benches, and that’s not good enough. This Budget Policy Statement is a relic. It is out of date three months after it was written. The conditions on which it was built, poor though they were, have changed for the materially worse. That worries me. I think the Government needs to be much more realistic. People like Tamati Coffey and Fletcher Tabuteau can actually be a little more measured and a little less of a cheerleader for a Government that’s failing to deliver for New Zealanders—because talk’s cheap; actions matter.

National delivers. It delivered through two earthquakes. It delivered through a global financial crisis, and it will deliver again, and the country will not need to wait. It will deliver from day one, and that day is about 197 days away.

Thank you, Madam Speaker. Just before I turn to the substance of the debate, I just want to take this moment to acknowledge the passing of Sir Rob Fenwick, who died, after a five-year dance with cancer, in the last 24 hours. I know that the House will want to mark Sir Rob’s passing in an appropriate way, but given the proximity of the event, I thought I would just take this moment. He was one of the greatest environmentalists our country’s ever seen. He was one of the most extraordinarily kind and generous, thoughtful and committed human beings that I’ve ever had the pleasure of knowing. I think his loss will be felt greatly, not just by his friends and family, for whom we give our condolences, but also by the whole country.

I want to pick up, in the spirit of this being an actual debate, on some of the comments of the previous speaker, Michael Woodhouse. One of the things that he said in his address is that there are things that are beyond the Government’s control, such as the arrival of the COVID-19 virus and the impact that that has, but there are also things that the Government can control. And one of the things that he said that the Government can control is spending. He is, of course, completely correct. Governments can use spending to keep the economy buoyant, to keep cash flowing through the economy, and, in fact, that is exactly what we are doing. So I’ve got good news for Michael Woodhouse in that regard.

There has been a multi-decade under-investment, particularly in infrastructure, particularly in social infrastructure and natural infrastructure in New Zealand, and this Budget Policy Statement directly refers to what our intentions are, what to do about that. Figure 2 on page 6 talks about net capital spending and actually shows the amount of money that this Government is planning to invest in the economy, not just to keep money going but also to make up for some of that extraordinary deficit in our water, in our transport, in our regions, in our cities, and in our natural capital.

I would actually have to say that when he talked about the job that National did in analogous circumstances—not similar, but analogous circumstances—through the global financial crisis and the Christchurch earthquakes: yes, they went from a position of no net debt as a percentage of GDP, and obviously leveraged up to deal with those and continued to spend, but, actually, being fiscally conservative probably had a dampening effect on the economy and kept those constraints on longer than was necessary. One of the impacts of that is that whilst central government might have kept its levels of debt low, actually, if you look at household debt, which shows up on page 9 of the Budget Policy Statement, what you will see is that that rose over the period of National being in Government. The reason for that is because there was not sufficient social spending going on in the economy over that period of time. So what has happened is that, because National doesn’t believe in paying people minimum wages and because they think that the costs should be borne by low-income families rather than by all of us equally, actually what that has done is driven households into debt. We see some of the consequences of that, and it’s going to take quite some time for us to unwind.

Mr Woodhouse says that every Budget is about wellbeing, and to some extent that is true. The reason why this Government’s wellbeing approach is different from previous Governments—not just the previous National Government but all previous Governments—is that by the “wellbeing approach” we’re referring to a very specific way of putting Budgets together. Many of the features are exactly the same as they have been for many years: Ministers and agencies put in bids, and so on, and those things have to have a benefit-cost analysis attached to them. But in the wellbeing approach that’s being used by this Government, and it gets extended through this Budget Policy Statement, actually what’s happening is that, in addition to those normal benefit-cost ratios, there are additional pieces of analysis where those bids have to demonstrate how they contribute to the stock of human capital or natural capital or both in Aotearoa New Zealand. So it’s actually a higher hurdle for Budget bids to have to go through; it’s actually a more scientifically led approach than Governments in New Zealand, of any hue, have done in the past. It is an added discipline to the Budget process.

Now, I’m not going to pretend that it’s perfect; we’ve only been at it for a few years. Every iteration over the course of the last three years has gotten more sophisticated and we’ve learnt from some of the, you know, holes and the patches from the year before. But it is a very significant development, and it’s one that I’m very pleased that we’re continuing, and to see it reflected through this Budget Policy Statement.

I just want to refer, also, to some of the things that are actually outlined in this Budget Policy Statement. Again, to, sort of, Michael Woodhouse’s point, the things that he seems to think that we shouldn’t be spending money on include major investments in rebuilding the health sector, major investments in core Crown education expenditure, addressing child poverty, lifting outcomes for Māori and Pacific peoples and communities that are traditionally excluded in our political economy, enhancing the Māori-Crown relationship as we move into a post-settlement world, strengthening the aspirations of Pacific peoples, strengthening our response to climate change, dealing with a 30-year infrastructure deficit. I mean, the idea that, actually, these things are somehow optional and that we shouldn’t do them is, to me, ridiculous. I’m very proud of this Government for investing in these things. Actually, when you have an economic downturn, when you have a risk presented such as with COVID-19 and you are looking at a period which is going to be tough for the economy to handle, these are exactly the things that we should continue to invest in—and I would argue actually invest more in—because it gets money flowing into the economy.

The one thing that Michael Woodhouse was correct on is that the thing that the Government can control is expenditure, and, actually, in continuing to invest in infrastructure and health and education, in the environment and in our people, not only are we building up the resilience of our people to be able to respond to crises like the COVID-19 challenge that’s in front of us; we’re also continuing to stimulate the economy. If you decide that you don’t want to do those things, you actually pull that money out of the economy at exactly the same time as businesses are facing a downturn. That’s when you really run into trouble; you actually make a downturn worse and you run the risk of tipping the country into a recession.

So I would say that, actually, this Budget Policy Statement is relevant. I know that, obviously, there is, you know, new information—shall we say?—that’s popped up since it was published and since it was written. But the fundamentals of this Budget are solid; they are important when times are good, they are also important in times of challenge like the ones that we have in front of us. So I think that this is a good start for the Budget process. I commend this and I commend the work of the committee to the House.

It’s a pleasure to have a contribution in the Budget Policy Statement debate and particularly a pleasure to follow on from the Hon James Shaw, who correctly pointed out that the only thing the Government can do in this situation is control expenditure. So I suggest that the Hon James Shaw has a very quick word with his parliamentary colleague—in fact, his Cabinet colleague—the Hon Shane Jones, and starts controlling expenditure, because the revelation yesterday and again in the House today of over $1 million wasted by officials, going around the country, trying to solicit bids for the Provincial Growth Fund, trying to solicit bids for the slush fund developed by New Zealand First—absolute waste of money.

💬 Darroch Ball: What did you guys do for the regions?

Well, Darroch Ball will have his chance for a valedictory speech very shortly; he doesn’t need to start now. It’s not far away, Mr Ball. But I suggest that if the Hon James Shaw wants to do anything to help the situation that the Government finds itself in, start talking to his own Cabinet colleagues and start to control some of the expenditure that is clearly being wasted.

I do acknowledge that of the many Budget Policy Statement debates I’ve been involved in, none has been quite like this one when we’ve had such a short time lag between the publication of the Budget Policy Statement and such significant changes in the economic outlook, to the extent that the document we’re discussing today is completely outdated. Of course, it was signed off by the Minister the Hon Grant Robertson with a huge photograph and a smile on his face on 11 December 2019, and here we are less than three months on; the situation has changed dramatically.

We at the Finance and Expenditure Committee had the opportunity to talk to both the Secretary to the Treasury, the Governor of the Reserve Bank, and the Minister himself before we prepared the report. I note that Tamati Coffey’s in the House; he will have remembered my contribution and my question as we deliberated on this report. If he looks at page 5, there’s a bold heading there: “The outlook for the economy remains positive”. I took issue with this; I said, “I don’t think we’re being realistic in saying the outlook to the economy remains positive.”

We heard—in fact, we quote—the rate of economic growth is projected to rise in 2020 and beyond—the outlook for GDP growth to increase from 2.2 percent in 2019 to over 2.8 percent in 2021. I said to the committee at the time, “That headline is misleading.” But I think it might have been the chair herself who wanted me to then look at the next headline, which was—and I quote—“But the full impact of COVID-19 outbreak on the economy is unknown”. And with that I totally agree because I remember the questions we raised of the Secretary to the Treasury and of Adrian Orr, the Governor of the Reserve Bank. We were asking them: what about the effect of COVID-19? This is now three weeks after the outbreak had reached prominence in China, so it was early in the current worldwide development of COVID-19. Neither Mrs McLeish or Mr Orr had a clue as to how COVID-19 would affect the New Zealand economy.

I don’t say that as a criticism of those two officers. The world was in uncharted territory. We had a pandemic developing at that stage in Mainland China, the risk of outbreaks to other countries, and as we’ve all seen—in the months since we signed the report off before the Finance and Expenditure Committee—this pandemic has moved from Mainland China. In fact, Mainland China, I would suggest, has basically got it under control but you’ve got countries like Iran, you’ve got countries like Italy, you’ve got potential developments in the United States of America and the United Kingdom. You’ve certainly got cases in our own nearest major trading partner, of course, Australia, and we’ve got positive cases here in New Zealand.

So I say to the Government: the impression you are giving New Zealand voters is that as a Government, you’re scrambling to respond to the COVID-19 outbreak. In the Budget Policy Statement, we would hope we’d have some surety from people like Adrian Orr, but we didn’t get it. And I’ll give you an example of why I say this amateurish Government is struggling to respond. And we saw it today in the House with questions to the Minister for Social Development around the response of Social Development to the potential for people to be laid off from jobs and then their eligibility for the jobseeker benefit—the dole, which she won’t allow to be called the dole, but most people know it as the dole. The Minister informed the House, as had been actually made public probably a week ago, that they’d adjusted the stand-down period. Positive move—a good move. But what I was alarmed to hear today in the House in question time is that doesn’t become effective until 23 March—

💬 Andrew Bayly: What?

23 March was what the Minister said in the House today. So there’s an opportunity for the Minister for Social Development to actually respond positively to the outbreak of COVID-19, both in New Zealand and the effect it will have on the economy, and again, either through laziness or through incompetence she hasn’t made an immediate announcement to fix the stand-down period. She hasn’t even asked her own ministry to update reports about what potential rise in numbers to the jobseeker benefit there could be because of COVID-19. And it’s that sort of response that you’re getting from this Labour Jacinda Ardern - led Government that New Zealanders have not got confidence in.

I say to the members on the other side of the House, the Government members, if you want to see an example of a crisis that hits quickly, go back to the earthquake situation in my city of Christchurch. The earthquakes occurred, from memory, on a Saturday, a Cabinet meeting on a Monday, and a wage subsidy announced at the end of that Cabinet meeting. There wasn’t time to put parameters around it. People were suddenly without regular wages. The Government needed to do something and it did something and it did something almost immediately. And then we had the Kaikōura earthquakes. Same response from the John Key - led Government.

So the Government needs to look at some of these examples because they’re relatively recent. The situation we have now is at least as critical to the New Zealand economy and it’s time for a response. And if you think back to what happened last Monday after Cabinet, the Prime Minister and the Minister of Finance called a press conference to announce a package of support for business. And you know the essence of the announcement: we will call another press conference next Monday and then we’ll give you details. Another week lost as businesses can’t afford to hang around while the Government flounders and struggles to find a response.

So I say to the Ministers sitting on the other side, I say to aspiring Ministers sitting on the other side—well, they haven’t got much hope because we’re nearly at election time. But I say to them “Don’t be too proud to have a look at the way the John Key Government handled a crisis.” because that’s what New Zealanders want to see. They want to see a response. They don’t want a press conference called, with all the palaver of the press conference being called, to be told, “Wait another week for this announcement.” I say to Grant Robertson that time is running out, because I know of businesses that are struggling.

I want to address my final minute to the fallacy that Grant Robertson continues to run—and he did it in his contribution to the House this afternoon in this debate—that the New Zealand economy is in good shape and it’s resilient enough to withstand this crisis. The New Zealand economy was in good shape before the country elected a Labour - New Zealand First - Greens Government. But the opportunities given by that strong economy, which this Government inherited, have been completely squandered with the likes of the wasteful expenditure we heard about in the House today from the Hon Shane Jones and his provincial slush fund. The economy was not resilient. It is not in good shape. That’s why there’s an urgency for this Government to bring a package together as quickly as possible, and if it doesn’t happen by next Monday, then it will be too late. New Zealand businesses are struggling. People will be unemployed shortly unless this Government responds.

This is a split call.

We’ll only have to put up with a few more contributions in this House from that member, the Rt Hon David Carter, and rightfully so, because he’s putting—so what we’ve seen a lot of in this House is we’ve seen a lot of scaremongering and actually we need to call it out because what it’s doing and the effect that it’s having on the people out there in New Zealand is not good. It’s making them panic buy, it’s making them panic—full stop—and we need to turn that around and we need to inform people with fact. And fact is really good. And here’s a fact for you: actually, the Budget Policy Statement said that the economic outlook is good. So I agree with my fellow Finance and Expenditure Committee member over there. It is good. They don’t want to believe it on that side of the House, though, because they just couldn’t fathom the thought that a Labour and New Zealand First and Greens Government just could have a handle on the economy. They just can’t believe it.

But let’s chuck some facts in there, because actually that was what was in the conversations that we had with the Reserve Bank and on our committee. Unemployment is down to 4.2. Māori unemployment is the lowest that it’s been in a decade. Annual wage growth is incredibly high. The minimum wage is going up. And at a time when, obviously, we are facing this crisis, you can do two things. You can either continue to invest in the people who are on the lowest wages in the country or you can pull back on that. And the Opposition ideologically would say that it’s time to pull back on it, but over on this side of the House we think that when New Zealanders have got more money in their pocket they head back out into the economy, into their local economy, and they spend that money around. So now is not a time to be frugal, as they would have you believe.

They would like to paint a picture of us being the all-spending Government. But actually, what we’re doing is we’re investing in this country like it’s never been invested in before. The Government’s priorities for the Wellbeing Budget 2020 are about “Just Transition—supporting New Zealanders in the transition to a climate-resilient, sustainable, and low-emissions economy”. That’s a great thing. There are people out there in New Zealand who would hear that and go, “What a noble priority that is. Push that up.” So that’s one.

“Future of work—enabling all New Zealanders to benefit from new technologies and lift productivity through innovation”. Again, a great priority that’s really hard to argue with. And here’s another one, and I’ll probably call these ones out together: “Māori and Pacific”—to have that as a priority in terms of “lifting Māori and Pacific incomes, skills, and opportunities” is just something that I find incredibly hard to negate and that’s what the Opposition will try to do. They’ll try to tell you that actually it’s not worth it. But actually we’re here saying that that is one of our priorities and that’s what we’re investing in. There is “Child wellbeing—reducing child poverty and improving child wellbeing” in our communities—and, of course, physical and mental wellbeing.

When we came into Government, we knew that we had a mental health crisis, because our people were telling us. They were telling us that they wanted change and they wanted our Government to deal with that. So, again, we have had unprecedented investment into mental health, and that’s something that I’m incredibly proud to be a part of this Government for. And it’s something that, actually, I tip my hat to the leadership of our Prime Minister, Jacinda Ardern, who has done a brilliant job of leading us despite the shocks that we’ve had as a country just in the short couple of years that we’ve been in Government.

As we sat on that committee, first of all I want to thank all of the submitters that came before our committee and put forward their different points of view. Of course, there was, as you would imagine, a spectrum of views, but I have got to say a common thread there that was coming through again and again in these submissions was that they felt that the Government was on the right track. They felt that we were the ones that were tackling the long-term problems, and they felt that we were the ones that had our priorities in order. Those Budget 2020 priorities are listed there. They engaged with them on behalf of their organisations that they represented.

One thing that has been talked about is the impact of COVID-19. The member opposite was right: this wasn’t a thing—we didn’t even know about it—when the Budget Policy Statement came out, but actually we took the opportunity in the committee to talk about it, and the reason that we’re going to be able to tackle it head on is because the economy is doing really well. We have gone and prepared ourselves the best we can for this, and yes, it is an evolving situation, and yes, we haven’t got all the answers, but yes, we’re going to make sure that New Zealanders are looked after in this process, during this outbreak, to make sure that they’re informed with facts and make sure that they’re looked after now and into the future.

Thank you, Madam Speaker. I rise to take a short call on the Budget Policy Statement (BPS). Can I, first, begin by just critiquing Tamati Coffey’s observations. Firstly, he raises the issue around the levels of panic in this country. He’s right: they’re rising. But he’s wrong about the cause. The cause isn’t New Zealanders reaching that view because they feel that they’ve just naturally fallen into that state. They look at the capability that sits on the Treasury benches and they know that, fundamentally, they don’t have the ability to manage through it. They’ve got no trade experience. They’ve got no commercial experience. They have never in their own lives, in their lived experience, been exposed to something as complex and whole of country and economy of this scale—and, bluntly, they’re bereft of ideas as to how to do it. So they end up returning to process and platitudes. Last week, we were told that we were going to have an announcement, and a week later that it was coming in a week’s time. They’re out of their depth, and it’s their actions every day which is reinforcing the sense of unease in this country, and the sooner they realise that and actually grip it, the better.

What I would like to talk about—as has already been covered by a lot of speakers—is that the deterioration of the New Zealand economy in the few months since this statement was put on the Table is severe and acute. What I find quite remarkable is that, as the Government is flailing around looking for ways of protecting and buttressing the economy from the shocks that it is living in and is likely to live in over the next few months, they are turning to the very sector that they have spent the last two years trying to unwind, constrain, and whack, which is the agricultural sector of this country. As they see economic confidence eroding beneath their feet, as they see unemployment starting to rise, GDP growth stalling and going into likely recession, the one sector that could be the difference between a deep, deep recession and something which is bearable in this country will be the strength of our food exports to the world. How quickly has their tune changed, confronted with the reality that, actually, 70 percent of our country’s exports come from food and fibre, and actually they are sectors that deserve to be worked with, not condemned—celebrated and not looked to be constrained.

You have heard it in some of the conversations about the BPS already this afternoon. They have put in place over the last two years a view that freshwater management should be so acutely changed that fundamental land-use change should occur in this country. They talk about the importance of decarbonising the economy. In their own report in the last week, the Ministry for the Environment has made, looking forward to 2035, their assessment that there will be 20 percent less sheep and beef hectares in this country—a drop from eight million; 1.3 million hectares less—to about 6.8 million. Their own report! So here you have the dichotomy of a Government that is out of their depth in terms of knowing how to respond. The only sector which is buttressing the economy from freefall is the food export sector in particular, but their activity for the last two years has been to pull together a suite of policy initiatives—be it carbon tax, be it freshwater, be it biodiversity—all aimed to make that sector feel less supported, more vulnerable, more unable to see a way of continuing to produce what our historic competitive advantage has been. They put in their own Budget Policy Statement that their vision is just transitions away from sectors where we’ve been historically strong in. For goodness’ sake, wake up.

We are part of a world that has got 180 countries. The Government works on behalf of 5 million people whose economic interests are under pressure and under threat, and the way we get there is by producing food and fibre for the rest of the world. Start supporting them. Start working with them. Admit in this House that actually the policy prescription that your ideological hearts have driven you to is wrong and that what is required is a far more holistic approach around what are the strengths of this country. How do we work with those sectors to support them to ensure that the recession that looms in front of us over the next two, three, four, five months is not as acute as possible? For a party that says at its core it represents and cares for people, why don’t you realise that what actually matters for them is a job in an economy that’s working?

This is a split call. I call David Seymour.

Thank you very much, Madam Speaker. Before I begin contributing to this debate on the Budget Policy Statement, I wish to acknowledge, as the member of Parliament for Epsom, the passing of Sir Rob Fenwick, a tremendous man that I was grateful to know, a fabulous conservationist, a fabulous entrepreneur, philanthropist, and New Zealander who will be sadly missed by our community and many others. Farewell, Sir Rob.

When it comes to this Budget Policy Statement, it is only weeks old but aeons out of date. This report forecasts 2.4 percent economic growth for the year—two weeks ago, that was slowing, but believable. In the last week, markets have dropped 15 percent and we’re heading into bear territory. Nearly every bank is telling us we’re in for a rough ride. ANZ has firms’ own activity expectations at the lowest since 2009, the BNZ was first to forecast recession this year, Westpac is forecasting a 28 percent drop in visitor arrivals—this correction has been coming a long time. We have had the longest expansionary cycle in the post-war era and we may be experiencing the greatest correction in that era too. And the anecdotes are scarier: I was talking to a guy who’s a motor vehicle dealer a couple of days ago. He’d just had an order for six utes cancelled after they came off the boat—and why? Because they were supposed to be headed for the forestry industry, and the forestry industry is at a standstill. Businesses up and down this country are moving to plan B because they see what’s coming.

The ACT Party—for two years—has said that we have a Government led by a Prime Minister who is the best marketer in world politics today but the worst deliverer. And what this sea change of the last couple of weeks means is that the day for gesture politics is over; the day for economic management and leadership has arrived. One only needs to look at the bullet points heading up this report on the Government’s Budget Policy Statement and see what they are talking about: “Just Transition … Future of Work … Māori and Pacific … Child Wellbeing … Physical and Mental Wellbeing”—all things that sounded good when times were good, all things that are noble aims if you have a Government that knows how to pay for it, but what’s absent from this Government’s economic strategy is a way to manage the economic downturn and pay for all the good things that they want.

It’s not just that the gesture politics of this Government are ineffective for the economy; they’re damaging. So many of the gestures actually sideswipe people trying to do productive things, which was a problem when we had relatively good economic conditions but is dire now that we face bad economic conditions. Banning oil and gas—the shock of that and the impact on the perception of New Zealand as a safe place to do business is unaffordable. The one-size-fits-all freshwater regulations imposed on the rural sector—which other speakers have rightly noticed is the one sector that can pull New Zealand through because people eat no matter what, even if they don’t holiday—is far too expensive and is forecast to reduce the number of jobs in dairy by 15 to 20 percent with good conditions. The zero carbon Act is a slap in the face for every single farmer in this country. The new tenancy laws mean that people are abandoning the rental market as landlords in droves, pushing up rents and making things harder. Wasteful spending—the fees free, the Provincial Growth Fund. These are nice to haves in good economic times that are unaffordable in bad. This year’s minimum wage increase—ACT started the chorus. Economists from across the political spectrum—Shamubeel Eaqub, Sharon Zollner, the National Party—have all joined the chorus, saying this minimum wage increase scheduled for April must end.

But, finally, if this Government is serious, it must cut taxes to stimulate the economy. The ACT Party has the numbers and the plan ready. If we want to have businesses succeed and keep employing people, we need three tax rates of 10, 15, and 25, and we can see how we do it—

Chlöe Swarbrick: What about poor people succeeding, David?

Poor people pay taxes, too. Chlöe Swarbrick asked about poor people—they pay taxes, too. That’s why you’ve got to cut the taxes. That’s the kind of management this Government needs.

Madam Speaker, in times of strife, leadership is that that can turn a steady hand and steer the ship, and to that extent, I want to acknowledge the leadership of the Rt Hon Jacinda Ardern and our finance Minister in particular, the Hon Grant Robertson, for doing what they had always said that they would do—they had planned for a rainy day. At a time when the Opposition were throwing darts when things were well, because this side of the House weren’t spending enough, it was the Hon Grant Robertson that said, “Hey, let’s keep some change in our back pocket for when a rainy day comes.”

Now, if we look at the Budget Policy Statement—yep, the Budget Policy Statement was released in December 2019. That set forth our objectives—our vision—for how we would be, and how we are, approaching our economic growth, but also how we weather storms. We held the hearings with the Hon Grant Robertson, and we questioned him in February. Coronavirus, at that time, was already apparent, and it was an opportunity for all of us, from both sides of the House, to ask poignant questions about how New Zealand would weather the storm as we went into a time of uncertainty.

Now, I call on the Opposition to cease fire with the absolute scaremongering tactics because our populace deserve better in a time of strife. We have just heard from the spokesperson for agriculture for the Opposition—somebody who I’ve had time for in the past—but my patience is wearing thin because I have seen that gentleman go into rural communities and stir nothing but fear. The facts are, over the past two years this side of the House has held the keys to the Treasury benches, the rural economy has experienced a surplus of $6.9 billion. That’s not the scare and fear that the Opposition is touting up and down the country. So I implore those on the left, the right, the centre of the spectrum to find the calm and listen to fact.

The facts are that New Zealand has positioned itself to survive whatever it is that would come our way, and here comes that day. The facts are, at a time when GDP was stagnating across the globe, New Zealand survived that period well; our growth has been tracking comparatively to those of our comparable other countries, higher than most others, where we are sitting at around 2.8 percent. Our debt when we took over the Treasury benches, we were sitting up at around 22.4 percent. Well, under the steady management of this side of the House, that has tracked downwards—we’re sitting at around about 19.5 percent. Comparable to other nations, other nations in the OECD, we are well placed to survive today’s storm.

Now, if we look at the position that we actually find ourselves in, we are at a time of unprecedented—over the last decade—unemployment rates. They’re sitting at 4 percent; not once could the Opposition ever claim that statistic.

We are sitting at a time where New Zealanders are confident—and this is a thing that I think that the Opposition are also struggling with—all the polls are saying that there is a confidence in this side of the House.

💬 DEPUTY SPEAKER: Look, I’m sorry, that has nothing to do with the Budget statement. Let’s not talk about polls.

Let me turn to the Budget Policy Statement, because that is what is being said in the report that came back: that we are in a strong fiscal position. Now, we are at a time when we are investing, New Zealand, and I want to turn to what that investment means at a practical measure, not a hyperbolic one that the Opposition wants to cast aspersions across. But I want to turn to a real practical measure: investment in our communities. Rural and regional economies have not seen investment like they have experienced until this Government. I want to take Ōpōtiki as an example of that, to talk about the five criteria that we have hit. Māori and Pacific, we make up over 50 percent of the population in Ōpōtiki, and $79.4 million has gone into the Ōpōtiki Harbour investment, creating 1,800 jobs. That, there, is a country that is invested in its rural and regional communities. Thank you, Madam Speaker.

I’m sort of slightly reluctant to stand up because I know you have delicate ears, and, on this side of the House, we have just endured a speech that I think just demonstrates why this Government shouldn’t be on that side of the House, because that was from a person who did not understand the Budget Policy Statement.

Now, before I start officially, I just want to also acknowledge Sir Rob Fenwick. I got to know Rob about 20 years ago, through a business connection, and, during the 20 years I’ve known him, he was a wonderfully kind and great person to be with, and I know his family will be feeling his loss dearly today. But he was a great New Zealander, and it’s very appropriate that we pay tribute to him today.

💬 The Budget Policy Statement: that was only released literally a few weeks ago—very glossy and it looks wonderful on the outside, and there’s a lovely photo here. And, you know, it talks about a focus on wellbeing, and the approach involves identifying areas based on their potential to provide the greatest opportunity to make a difference to the wellbeing of New Zealanders.

And, of course, you know, it’s full of hyperbole and it’s full of wonderful statements and glossy graphs, and they always seem to be going up and then they go down, and it’s got all the stuff that you would expect if you’re making a good political speech. But, actually—and if that member who has just spoken had actually looked at it—this is what it also said: it said that the operating balance before gains and losses, OBEGAL as it’s commonly known, is forecast to be in deficit for the 2019-20 year, and lower each year thereafter, than previously forecast. So by 2022-23, net core Crown debt is now expected to be $9.2 billion higher under the current framework that this Government—this New Zealand First - Labour - Greens Government—has put in place.

💬 Darroch Ball: How much debt did National have? Answer that question.

And I’ll tell you what—and I’m just hearing a question from the other side—you know what this figure does not include? Does not—

💬 Michael Wood: I raise a point of order, Madam Speaker. The member has repeatedly and quite aggressively used the personal pronoun, which is out of order, while pointing at one of my colleagues, and I’d bring that to your attention.

ASSISTANT SPEAKER (Hon Ruth Dyson): Thank you.

Thank you. And I’d just like to elucidate on that point. The member was asking about the debt figure. I’ll say to you, even though it’s $9.2 billion higher under your Government—being the New Zealand First - Labour Government—

ASSISTANT SPEAKER (Hon Ruth Dyson): Sorry, Mr Bayly, having had that drawn to your attention by the chief whip, it might be useful if you refrain from it now. Thank you.

Thank you—the Government. This excludes the $7 billion that is actually off balance sheet and not in the figures—which, conveniently by the Minister of Finance, is excluded from his calculations. And that is very, very substantial. So the talk—and we heard it from the Minister before when he made commentary on this Budget that, you know, we’ve been facing these headwinds, and under our Government, prior to us going in 2017, we were averaging over 3 percent GDP, which is just figures to people listening in. But what has happened, and this Budget statement refers to it, we have seen a substantial drop in the GDP—virtually by half. Now, to put that in context, we have seen the economic growth of New Zealand drop by about $4.5 billion a year. That means we are seeing people—businesses, their profits are lower because they simply cannot sell as much as they might have done if National had continued in power.

We’re also seeing that the spending is lower because it simply is not happening. We’re also seeing that incomes of people are reduced because they have simply not had the money, and if you are running a business where your profits are down, you are not earning that amount of money. So all that $4.5 billion that’s just been disappeared out of the economy last year has just vanished. You can never get it back. It has gone into thin air. That is the problem with this Government. It has slowly ground its way down, starting from a position that was incredibly strong.

And the thing that’s most concerning, when you read the Budget Policy Statement—it talks about the record terms of trade. And what that means is that when we sell our products overseas, we’re getting a very high value for them and when we’re buying those products, buying products to come back into New Zealand—imports—we’re paying less for them. That is the issue that we’ve got. We’ve got record terms of trade for our exporters, so we should be achieving much higher rates of growth, and that has been squandered. That is the thing about this Budget Policy Statement that is so bad, that is so disappointing, because we are unfulfilled potential in New Zealand. We are losing the opportunity to grow this economy much faster as we need to be to be keeping in line with all those dynamic economies in Asia that we’re trying to trade with. That is how you create real wealth.

What this Government has achieved is to settle us back into the old sort of slow growth rate that we were achieving back in the 1980s and the 1990s, which was subpar and had left New Zealand behind, and that’s why we’re falling behind Australia. That’s why we need to get back into a fast-growing economy, but the Government has the problem because it doesn’t quite know how to do it.

And of course, all that was before we suddenly have some real headwinds, which unfortunately is known as COVID-19. That is the issue—that is the issue. We now have people very, very worried in the economy. The thing is—and I spoke about this the other day and some members from the Government laughed at it. The real issue at the moment for those 500,000 small businesses in New Zealand—the issue that will be keeping the husbands and wives awake at night—is not the thought of whether they might get a dole payment, but simply whether they’ve got enough money to pay the wages tomorrow morning. That is the primary issue that our business owners in New Zealand, spread across all the small townships in New Zealand, rural New Zealand, as well as in the big cities—that is what’s keeping them awake at night. That is the fear. That is the fear for these people, because their employees are part of their family and they’re worrying about how they’re going to pay for them, how they’re going to pay for those wages.

So what we need is a Government that knows what it’s doing. And, you know, when you look at situations like this, and they are trying—you need to be able to look at what you are going to do to help. We’ve heard the Minister talk about how we’re going to make it easier for the IRD, more flexible about you paying your tax. Well, actually, if you’re worrying about your wages tomorrow and if you can’t pay your wages and you’re going to have to fire your best friend tomorrow, it’s actually a bit of an academic argument. And, by the way, the thing that tips businesses over is the inability to pay their wages, not actually whether they can pay their tax. It’s the wages that tip New Zealand businesses over. So having this Minister of Finance talking about “We’ll make it a little bit easier for you to pay our tax to us, who earn $83 billion as the Government.” is just the wrong thing and it shows a Minister who does not understand business.

We’ve also heard about these social welfare payments, about on the dole payments. Again, they’re academic. We need people in work, staying in work—staying in work. We don’t want people on the dole going home and telling their wives and their husbands that they have been made redundant, that they’ve lost their job of 20 years, and that’s the situation we’re looking at.

We need a Government that actually knows how to spend, and the trouble with this Government is that it has underspent on infrastructure, particularly on big projects. We’ve lost all the capability, so they’ve underspent at the time we should have been spending, and now when we want to do it, they talk about shovel-ready projects, which basically are National roads, but unfortunately all the people have left. It’s going to take a long time.

💬 Dr Duncan Webb: Bridges to nowhere.

Dr Duncan Webb says “No, it’s not.” Go and talk to Fletcher’s. They lost most of their people from Christchurch who went off to Australia because that’s where the current infrastructure boom is.

We also need a Government that will cut unnecessary spend—[Time expired]

Tēnā koe, Madam Speaker. It’s so disappointing to hear the usual old stuff: “Cut wages. Keep those minimum wages as low as we possibly can. Let’s have a year of austerity.” That is exactly the wrong thing to do. The Budget Policy Statement is called a policy statement because it sets a tone. It sets a signal.

What has happened? What this shows us is the wisdom of our Minister of Finance, who through good times was having a steady hand on the tiller, saying, “Let’s not be hasty. Let’s prepare. Let’s be in a good position should things turn sour.” And let’s be honest, there are some risks facing New Zealand. COVID-19 is a significant risk, but New Zealand is well placed. It is probably better placed than any other nation in the world because of the responsible management of the economy.

And as for minimum wage, this is exactly the right time to stick to our plan. There is a plan. It’s set out in the Budget Policy Statement and we will stick to it because it’s a good plan. It’s not one that’s going to change simply because circumstances change around us. That’s why it’s a policy statement. The minimum wage increase will ensure that workers are not alarmed, can still spend money, will still stay in their jobs, will go down to their shops, will go out on local trips in the holidays, and will keep the economy turning over. And what’s more, our health system—thank goodness our healthcare system is in good shape.

This Government has invested and will continue to invest in our health system. Our nurses are being paid more. There are, in fact, now 1,699 more nurses than there were, 677 more doctors than there were, and more health workers ready to respond than have ever been in New Zealand.

We’ve put $1.7 billion into a capital spending in our broken hospitals. Thank goodness we’re going to have hospitals that are equipped for any eventuality that comes forward—$1.9 billion into mental health. That’s just as important. Look, we’ve heard about the fear, the panic, the anxiety that’s out there. We need to be prepared. This Government is prepared. The Minister of Finance has rightly identified the weaknesses in our economy, has set a path to address those weaknesses, and that’s what we’re going to do. There is $2.9 billion into district health boards (DHBs), funding that has been desperately needed to make sure that our health workers and our DHBs are prepared for anything that may come their way.

What’s more, the economy isn’t going to come to a standstill. The $12 billion infrastructure programme will absolutely make sure that we have work, that our economy is moving, and not only that but that it’s the right infrastructure, infrastructure not only into some roads but, really importantly, into rail, walking, cycling, but also into clean energy. These are all absolutely fantastic projects that are going to keep our economy going. We’ve got an economy that’s got full employment. We’ve got an economy with low debt, one that’s been running surpluses. But there are clouds on the horizon. Now is the time to absolutely use those resources, with the tax packages, with the Ministry of Social Development, but keep on course. It’s not time to run away. It’s not time to change the programme, because the very thing we were allowing for has come upon us.

This Minister of Finance has prepared us well. This Budget Policy Statement sets out our plan and we are going to stick to it.