Debate ON INVESTMENT STATEMENT

I move, That the House take note of the report of the Finance and Expenditure Committee on He Puna Hau Pātiki: 2022 Investment Statement.

Before I go into the report back by the committee, I wanted to quickly mihi to manuhiri Ngāi Tahu, who were just in the House. I also wanted to tautoko our Labour Māori caucus—in particular Rino Tirikatene—and our Canterbury caucus for their considered kōrero on the previous bill, the Canterbury Regional Council (Ngāi Tahu Representation) Bill. I also wish I was joining the celebrations because that was a pretty mean haka and waiata.

It’s a pleasure as the chair of the Finance and Expenditure Committee (FEC)—

Chlöe Swarbrick: Great committee.

—to report back to the House on He Puna Hau Pātiki: 2022 Investment Statement. I absolutely agree with the Green member; it is a great committee.

At least every four years, the Public Finance Act 1989 requires the Minister of Finance to present to the House an Investment Statement prepared by the Treasury. With recent changes to the Public Finance Act and the new Public Service Act 2020, the Investment Statement is actually one of four statutory reports. The other mandatory reports are the Long-term Fiscal Position, a Long-term Insights Briefing, and a Wellbeing Report.

Now, it would be quite cynical just to view these detailed reports as a mere tick-box exercise. They could probably sit in the book or magazine shelf in the lobby of 1 The Terrace or in any Minister of Finance’s executive wing waiting room. However, one cannot underestimate the importance of these four reports, and I believe the Treasury summed it up well: that these reports are a reflection of the necessity of the public finance system in supporting New Zealanders’ intergenerational wellbeing through a more modern, agile, and joined-up public system.

In the light of the last two years, it was clear in the almost three-hour hearing with the Treasury—including an hour with the Minister of Finance on 8 June—that the impact of the COVID-19 economic response and the intergenerational impacts was top of both the select committee’s minds, officials’, and Ministers’.

This is the Treasury’s third Investment Statement. Unlike the two previous Investment Statements, the 2022 Investment Statement focuses on the overall health of the balance sheet, as well as the key differences and the new challenges since 2018. This approach reflects two considerations.

One, COVID-19 and long-term structural change. COVID-19 has been an unprecedented economic shock. Its effects—combined with other longstanding trends that are relevant for all Government assets, such as low mutual interest rates and climate change—have driven the focus on the composition and strength of the balance sheet.

The second consideration is the broader suite of stewardship responsibilities, hence the four reports. Overall, the Investment Statement concluded that the overall health of the Government’s balance sheet remains strong. This is despite an increase in the scale, risk, and complexity of the balance sheet as a result of the COVID-19 response.

To break it down for our non-FEC members or accountants like the member Hon David Bennett—who I wish well for his next chapter—the Government balance sheet shows what the Government owns: its assets; and what it owes: its liabilities; at one fixed point in time. The balance sheet also includes the physical infrastructure such as hospitals, schools, and roads that support public services.

COVID-19 re-emphasised the importance of the balance sheet. The Government balance sheet was in good health prior to COVID. At the end of December 2019, net core Crown debt was 19 percent of GDP, while net worth was $143.1 billion. The strength of the balance sheet, therefore, provided the Government with the options in how it chose to respond to the pandemic, including the ability to provide significant financial support to the private sector and indirectly to households through policies such as the wage subsidy and the COVID-19 relief support payment.

Therefore, not unsurprisingly, the Investment Statement claims that given the significant financial support to mitigate the impacts of COVID-19, what it has shown is that the net core Crown debt has increased to reflect this increase in spending. Caralee McLiesh, who is the secretary of Treasury, said as a result of the pandemic, there has been a significant increase in debt: increasing from 19 percent of GDP prior to the pandemic to peaking around 40 percent of GDP—that’s an old measure of new Crown debt—or 20 percent under the new net debt measure.

At the same time, both financial and non-financial assets have grown, leading to higher net worth, with New Zealand amongst the upper end of all OECD economies in net wealth. The sensitivity of the balance sheet to changes in interest rates has also increased; this reflects a change in the composition of debt resulting from the Reserve Bank of New Zealand’s Large Scale Asset Purchase programme, or LSAP.

Members of the committee actually asked Treasury about whether the LSAP contributed to increased inequality, and the Secretary of Treasury responded, “No,” specifically, on the LSAP programme, and it would be incredibly challenging to attribute one particular policy to the outcomes they’ve seen.

💬 Chris Bishop: Wow, come on.

But what was interesting—what was interesting, Mr Bishop—is that there was a slight narrowing of inequality throughout the pandemic. At the same time, financial and non-financial assets such as equities in the New Zealand Superannuation Fund have grown, leading to an increase in the Government’s net worth.

Future challenges referred into the Investment Statement also included public investment in infrastructure and climate change, and the report back from the committee references the deficit and infrastructure investment. It says that there’s evidence that New Zealand has an infrastructure gap and the Infrastructure Commission—which was established in 2019 to coordinate, develop, and promote an approach to infrastructure—was basically established to help improve New Zealanders’ wellbeing.

Now, what I’ve noticed throughout the whole discussion that we had at select committee on this particular Investment Statement is just the importance of, one, making sure that we have strong economic books—or management—and then making sure that we address those future challenges.

What I wanted to be able to reflect on is that throughout the discussion with Treasury, it was really clear that New Zealand’s balance sheet was well positioned to deal with the challenging global environment. We’ve seen, since that, unemployment is at a record low, exports are up, and our economic activity has continued to grow over the past year.

We are carefully managing our spending and keeping debt under control, and that was clearly seen between the two Investment Statements in 2018 and now in 2022. These strong fundamentals meant we were able to support New Zealanders through that tough period, and now this tough period with a cost of living package, fuel tax cuts, increases to superannuation benefits and the minimum wage, and the winter energy payment.

We’re also investing in critical services like health, and that’s so important given that the Investment Statement pointed out the infrastructure gap. We’re also investing in school packages, so some of the property packages that we’re seeing—that has the double benefit of not only creating jobs, but it also provides spending and benefits to our children so that the walls that they learn in are good, are warm, and are able to basically improve into modern learning systems.

By keeping debt in check as the Investment Statement has shown, we’re making important investments in our future. We’re delivering a resilient economy that provides security for all. And again, if the Investment Statement isn’t a good reflection of our balance sheet, then also perhaps our triple A credit rating is—something few countries in the world were able to say during that period.

There’s also our books getting into surplus in 2024 and 2025—it’s one year quicker than National did under the global financial crisis.

So I’d like to thank our members of the Finance and Expenditure Committee for their work on—

Chlöe Swarbrick: Great committee.

A great committee. Of course, I agree with the Greens’ member. Another “Great committee”.

The Investment Statement has shown: basically, if we hadn’t managed the books earlier in the Government’s term, then we wouldn’t have been able to effect the financial support packages that have helped our economy through COVID.

The effectively managed assets and liabilities support the Government’s ability both to deliver services that New Zealanders need today and to ensure we have sustainable and resilient public finances that will bolster living standards for future generations.

I’d like to thank the Minister and the Treasury officials for their time on 8 June that was close to three hours of hearing time, and I thank them for their time and their efforts. I also thank the Treasury for their post-hearings questions and I would like to conclude my report back to the House from the Finance and Expenditure Committee.

The 2022 Investment Statement provides us with an opportunity to think about some of the immediate and long-term risks facing New Zealand. I want to reflect on three key themes. The first is around the effect of the expensive monetary and fiscal policy that we’ve had over the past two years. The second is New Zealand’s debt position and what that means in terms of our risks and exposure. And the final is our infrastructure deficit and how we should be meeting it as a country.

On the first point, in terms of the expansive monetary and fiscal policy that New Zealand has embarked on in the past couple of years, I want to highlight that we are one of the countries in the OECD, in the developed world, that went on the biggest amount of stimulus, both in terms of the amount of bond buying or money printing that our Reserve Bank embarked on and in terms of the amount of borrowing and fiscal stimulus that the Crown embarked on. I think it is appropriate that we reflect on the effects of that, because we just had a Labour member—and I find it a kind of rich irony—arguing that that didn’t have an impact on equality. Now, what we know to be true is that, when we had interest rates at record lows over a sustained period, that led to extreme asset price inflation, such that by one measure New Zealand house prices increased 28 percent in one year. To say that that sort of asset price inflation doesn’t have an effect on equality is an interesting kind of maths, because I think, for those who are outside of homeownership looking in, they would argue that that had a very material effect on how equal their wealth was to others’. Similarly, when we look at the effect that sustained low interest rates and money printing had on the Crown’s balance sheet it’s notable, I think, that a lot of the appreciation that occurred is again a direct result of those low interest rates.

The question we have to ask ourselves is: was that a free lunch? Did we get those higher asset prices as something that we will be able to hold on to for ever? And, of course, we have to examine the cost of that. The cost is a cost of living crisis. We have 7.3 percent inflation in New Zealand today, the highest it’s been in 32 years, and what that means for working people—and I think particularly of those without assets—is that the reality for them is that now, for two years, for eight successive quarters, prices have been rising faster than wages. So the real effect of that is that New Zealanders are going backwards. I bring these points into the debate, because I think we should always reflect on the significant measures that the Crown takes and the impacts they have, not just the immediate impact of us coming through the crisis but also the consequences today. In simple terms, I remember Grant Robertson in the election debates telling us we had an extremely strong economy because of the decisions taken by him and the Reserve Bank. Well, if he wants to claim the credit for that strength, he must also claim responsibility for the hangover that New Zealand is now incurring.

The second point that I want to make about that expansive monetary policy is that it is not without cost to the Crown balance sheet, because, of course, the Large Scale Asset Purchase programme has made the Crown balance sheet a lot more sensitive to changing interest rates. In a real effect, that will mean that Treasury needs to shovel between $150 million and $200 million over the Reserve Bank balance sheet each month for the foreseeable future. So the fact that the Reserve Bank embarked on a significant programme of bond buying, or money printing—that is not without cost, and I highlight that point. The second point I want to dwell on is debt, because the speaker previously said, “Oh, look, debt is nothing to worry about in New Zealand.” I want to lay out the numbers, because I think New Zealanders with common sense would listen to these numbers and sit up straight. Going into the pandemic, debt was 19 percent of GDP. It then reached 30 percent, and it’s on its way to 40 percent. That is, by anyone’s judgment, a massive accumulation of debt over a short period. While it is right to say that the ratings agencies have been comfortable with that for now, they have also highlighted some significant risk factors for New Zealand, because, of course, the point of not accumulating too much debt is that we want to have enough capacity to borrow if another rainy day comes—if, God forbid, foot and mouth disease came to New Zealand, for example.

So the external factors that analysts consider when they look at New Zealand’s debt position are the current account deficits, which are pretty high relative to other countries; our negative international investment position; our high household and agricultural sector debt, and I go back to that housing issue; the lack of diversity in our exports; and the high house prices, which create a risk to financial stability in and of themselves because, in the event of a correction, New Zealand would be exposed. So I would caution members of this House against taking a Holly Golightly approach to our debt. We have high debt, and we need to be careful about how we accumulate any more into the future. We need to look at where our future challenges lie. New Zealand superannuation is forecast to rise from currently 5 percent of GDP to 7 percent in 2061, and health spending needed to support demographic change and rising demand is expected to go from 6.9 percent to 10.6 percent of GDP. My point is that we need to ensure we have a resilient enough Crown balance sheet that we can afford these increasing challenges into the future.

Finally, I want to just make a couple of points about the infrastructure deficit which New Zealand has. Here, on the National side of Parliament, we are of the view that growth-enhancing infrastructure investment should be supported. We are also of the view that, where we have social infrastructure that is not performing well, we must invest in improving it. We do believe that, when we take on debt for projects that over the medium term will deliver greater returns for New Zealand, that is worth doing, but it is of great concern to us, even if it’s not of concern to the member Anna Lorck, that Treasury’s analysis is that this Government, this Labour Government, has had a serious delivery problem when it comes to infrastructure. I hold in my hand a report that Treasury released at last year’s Budget, where they said that over half of the initiatives submitted for funding were not investment ready. Treasury had to caution ministers that funding investments that are not ready will not speed up delivery; rather, it will increase the risk of delayed delivery, cost overruns, and negative impacts on expected outcomes. Treasury commented on the need for Government agencies to improve their delivery performance.

This is a theme, of course, that is pretty consistent across this Government: that it is pretty good at making announcements and expressing aspirations, as it has done on infrastructure, but when it comes to the delivery and the execution, it has been very poor. This is significant when it comes to the Crown’s balance sheet, because, if we are going to accept that borrowing for infrastructure is going to occur, we need to be confident that we can look taxpayers in the eye and say we will do that in ways that are efficient, we will select projects that are valuable, and we will execute well. But the documentation from Treasury suggests that they have very real concerns about the ability of this Labour Government to deliver on those expectations. They have noted again and again that a significant proportion of infrastructure projects that Labour signs off for funding don’t even have business cases attached. I think here of the light rail commitment which Jacinda Ardern made in a campaign; it was going to be delivered by 2021. The reason that investment has fallen apart so badly is that Ministers didn’t even know what the objectives of that project were.

So, in closing, I say yes, we in New Zealand should be prepared to invest in infrastructure, but we should do so carefully and we should do so knowing that the debt we take on must be repaid by future generations. We should be very careful indeed with that money.

Thank you, Madam Speaker. I rise as a member of the Finance and Expenditure Committee, and I do so also as a regional, local MP—MP for Tukituki. I think it’s really important when we speak to this 2022 Investment Statement that we bring it back home; bring it back home to what it actually means on the ground, in the regions, like Tukituki. We want to talk about how we can see the Government spending its money—money during the COVID-19 shut down, lockdown, all those things that went on—how did we keep our economy going?

Now, we’ve heard from the National Opposition. You would think that New Zealand, according to the National Party, isn’t going anywhere. They’ve questioned every investment this Government has made. They’ve questioned whether we should have spent as much money as we did investing with businesses, keeping workers employed, doing those things that help make this economy go round. They’ve talked of how the debt level in New Zealand is so high. Well, it’s lower than Australia’s, it’s lower than the US, and it’s lower than Canada’s. So I think New Zealand is actually in a very, very strong position to recover, and recover well.

Look at our unemployment level. Look at how well we’ve been doing in the regions. Look at how well we’ve been doing—loads of jobs—and I’ll tell you how that happened. It happened because, for the first time in over a decade—under National, did Hawke’s Bay see any investment in regional economic development? Tell me how much Hawke’s Bay got in regional economic development under the National Government.

💬 Chris Bishop: Absolutely bucket loads.

No, no. Under the National Government, the Matariki Regional Economic Development Strategy got zip. Hastings got zip.

💬 Chris Bishop: That’s not true.

Yes, that’s right. Hastings got zip.

💬 Tangi Utikere: How much?

Zip. Ask how much the National Government put into the regional hospital over that decade. How much in capital investment? How much? Nothing. Nothing at all. Just like Mr Brownlee said one day, “Nothing. Nothing at all.”

Now, in contrast, what has this Government been investing? What can you see in this Investment Statement on what has been going into the regions? Let’s talk about housing. Let’s really bring it home: housing for Hastings. Now, we’ve asked—I asked—the Minister of Housing, today, a question in the House on how many of the 10,000 new home builds that come under the investment that’s in this statement—how many houses have been built in Hastings? So far, we’ve built 157 public houses in Hastings. That’s right, Mr Bishop—157 houses. Guess how many the National Government built. How many do you think they built? Six. Six houses, and they sold off and got rid of 192 houses. How about that for performance? How about that for outcomes for Hastings? But here we are investing in houses in Hastings, building them with young apprentices coming on board. Business is booming, and we’re getting on and getting the job done. That’s because we are investing in infrastructure.

Now, the National Party are saying terrible things on the other side; how can they defend that? How can the National Party defend six houses and pulling down 192? And back to the business of this Investment Statement, because along with delivering 157 public homes just in Hastings, we’ve also got another 133 being built. How many did the National Government build? Six. That’s what they built—six. How much money did they put into the hospital—capital investment? Zip—zip. And the Labour Government, through this, has invested over $100 million so far. That’s what happens when you back infrastructure. According to the National Party, you don’t want any infrastructure investment. You didn’t even invest in the regions. In fact, I found a front page cover of Hawke’s Bay Today with the two mayors of Napier and Hastings saying National hasn’t been investing in the regions, and this Government backs the regions.

Actually, the mayor at the time who went out and asked the Government “Where’s our money?” was the former National MP Lawrence Yule. So when he was the mayor—

💬 Hon Member: Great guy.

That’s right—that’s right. When he was the mayor, along with Bill Dalton, they were demanding investment in the regions. But, oh no, not the National Government—they don’t believe in infrastructure investment. Not in the regions; never have. And the proof is in the pudding.

Let’s also talk about what we are investing in those shovel-ready projects, because, when it comes to business plans, Mr Bishop, we have them in spades. We had our business plan ready to go, shovel ready, $39 million right into building an Olympic swimming pool in our regional sports park—never would have seen that under National; not even ready to do any investment—and from that, we created another 100 jobs. Let me keep going on the investment that’s come into the regions of Hawke’s Bay. Like Hawke’s Bay, Hastings saw $9 million in the middle of the COVID lockdown to get one of our roads under way. Why did we get that? We had a business plan, shovel ready, ready to go—one of the first off the mark. So, when it comes to shovel-ready projects in our region of Hawke’s Bay, that’s investment in here; that’s what we’re talking about.

Then let’s talk about the spend on investing and backing business, because, on this side of the House, we believe in business. We absolutely do, but not over on that side. They say that business is “soft, soft, soft”. And that’s what you call “business”. The Leader of the Opposition, Christopher Luxon, called businesses “soft”. I can tell you, as a business owner, I know how hard it is to get out there and get businesses cracking. I’ve worked with businesses; I back businesses. That’s what we’ve been doing, and that’s what we’ve seen. These jobs, these infrastructure projects that the National Opposition are against—they say that that’s not doing things for the region. Well, I can tell you, jobs, growth, employment—booming; economic performance—strong and going for it. That’s what you see in the regional economies, where we do have diverse markets. That’s what we do. We use entrepreneurial spirit. We use number eight wire thinking, and we get the job done.

💬 Maureen Pugh: Treasury doesn’t agree.

When you come back and you look at—Treasury loves Hawke’s Bay. Treasury loves Hawke’s Bay. They love coming and visiting Hawke’s Bay. I can tell you that they’d love to come to my region. In fact, Treasury can come to Hawke’s Bay anytime—anytime they like—and when you look at this, as I’ve said, this is where Treasury does the hard work, and yes, we have been working and investing.

Let’s talk about schools; that’s another one. Let’s talk about schools, because, under the National Government, we got nothing for schools—not even in Havelock North. Oh, that’s right, right at the end, after a local campaign, they finally built eight more classrooms. That’s what they came up with. On this side of the House, we’ve invested millions into our houses infrastructure—

💬 Simon Watts: No, you haven’t.

Again, infrastructure—yes we have. Sixteen million dollars to make projects and schools ready to go. That’s what we’ve been doing. We get on with the work, and we’re not negative—not like National; nasty National; negative, down in the dumps. We, over here, know how to back the regions. We know how to back business. We do the mahi. We grow jobs. Madam Speaker, I commend the Investment Statement to the House.

The question is that the motion be agreed to.

Well, well, well, well, well. Goodness gracious me. Now, I do feel sorry for Anna Lorck, the member who’s just resumed her seat. I really like Anna Lorck, but goodness gracious me. Three years. She’s fought so long to get into this place, and she’ll spend her three years here and then she’ll be out the other door. Having skited for the entire 10 minutes about the Hawke’s Bay, when we’re meant to be talking about the Investment Statement, and told a whole bunch of, series of, erroneous things about National’s former record, I do feel sorry for her. I do feel sorry for her, because the simple reality is I’ll put our record on infrastructure investment, the last National Government’s record on infrastructure investment up against this useless and incompetent Government’s record any day of the week.

💬 Anna Lorck: Good grief; here we go.

ASSISTANT SPEAKER (Hon Jacqui Dean): All right. Order! Order! Order! The member will not interject once she has got up from her seat.

Thank you, Madam Speaker. I’ll put our record up against the Labour Government’s record any day of the week, because the thing about the last National Government was we built stuff. We got things done, and, generally, we got it done on time and under budget.

Now, just the other day the Government opened the next section of the Waikato Expressway. Fantastic project. I know David Bennett here has lobbied so long for that project and done such a good job on it. The Waikato Expressway was nothing throughout the 2000s under the Helen Clark Government, and it took a National Government to turn up and say, “We’re going to make this a road of national significance, and it’s going to be a four-lane expressway that you can now even travel at 110 kilometres per hour on; the safest road in the country.” Yeah, Labour got to open it. But you know what? The bulk of it was built under National.

What else did National deliver? Ultra-fast broadband. We all took it for granted during the lockdown. We had ultra-fast broadband rolled out, ubiquitous ultra-fast broadband rolled out around the country, built by National. On time, under budget, thanks to Steven Joyce. Transmission Gully opened the other day. The Prime Minister turned up for the opening; again, another project by National.

But one of the problems with this Government, and this is actually highlighted in the Investment Statement, is this Government’s made two mistakes when it comes to infrastructure. The first is they stopped the pipeline of infrastructure and transport investment—and there’s a reference to that in He Puna Hao Pātiki—by essentially slashing the Transport Agency funding or the National Land Transport Fund State highway budget in 2018. We’ve got Phil Twyford to blame for that. Then they have made a series of dubious decisions, and I would argue economically wasteful, economically destructive decisions, when it comes to infrastructure investment. That’s why the Treasury highlights in the Investment Statement that we need better discipline around what we spend money on.

Because it’s all very well, as Anna Lorck did—and actually Barbara Edmonds did to a certain extent—to stand up and say, “Oh, well, infrastructure, there’s a deficit”. Yeah, I mean, we all agree there’s a deficit. There’s no doubt about that. But addressing that deficit, you know, has to be done in a disciplined way. To give you an example, reopening the Napier to Wairoa train line, which I didn’t hear Anna Lorck talk about, and the reason she doesn’t talk about it is because five trains have been down it. Now, we have Shane Jones to blame for that. He spent, I think it was, from memory, $9 million reopening a train line that no one wanted to use. So that’s the kind of economically destructive policies I’m talking about. That is ill-discipline fiscally, but also ill-discipline in capital spending when it comes to infrastructure investment.

Now, another project that is ill-disciplined that the Government stopped due to the public outcry, before they could spend the money, was the cycle bridge over the harbour bridge. I mean, we all remember that—$785 million I think it was. A staggering sum of money, and, unsurprisingly, every region around the country went, “Hmm, $785 million is a lot of money.” Dan Rosewarne over there, the new MP, list MP based in Waimakariri, he knows what that money could be spent on. It could go on the Woodend bypass, which the local MP for Waimakariri Matt Doocey has spent so much time campaigning for and which this Government will never deliver. Glen Bennett knows all the projects that that money could be spent on in New Plymouth and the Taranaki region. He was sitting there when Michael Wood got up and announced it with Grant Robertson a year or so ago, and said, “We’re going to have a cycle bridge over the harbour bridge in Auckland.”, and a very niche minority of people in Auckland went, “Yes, it’s very exciting”. Every Labour regional MP sat here going, “Oh no, how am I going to defend this?” Because Glen Bennett’s got to go back to New Plymouth and Dan Rosewarne’s now got to go back to Waimakariri, and Tangi Utikere’s got to go back to Palmerston North and defend three quarters of a billion dollars being spent on a cycle bridge, and Tangi Utikere knows it.

That’s what happened. I think I know what happened; it was announced and then there was a massive public backlash and all the Labour regional MPs, all of whom are staring at defeat in their seats in 2023, went to Grant Robertson and the Prime Minister and said, “We cannot defend this. This is indefensible. You’re asking us to go over the top and take one for the team.” They said, “Three waters is bad enough. The regions are in open revolt. Three waters is bad enough. But you’re really asking us to go into no man’s land. You’re asking us to walk into the fire and take one for the team. And you know what? We’re not going to do it”. So the Government didn’t do that. So the fiscal ill-discipline and ill-disciplined investment into that didn’t happen, thankfully.

But we do have a destruction in the pipeline. The most interesting thing is—I mean, I’m National’s spokesperson for infrastructure. I go around the country with my good colleague Simon Watts, and the destruction of value from that pipeline being destroyed in 2018 by Phil Twyford is real. There’s a whole series of projects that got cancelled overnight that were part of the pipeline and, of course, a lot of those companies then shed their staff, they had to change all their plans, and the most economically ruinous thing about it and the most frustrating thing about it is the Government back-tracked after about an 18-month time.

So we’re in this ridiculous position where Phil Twyford comes in and says, “We spend too much money on roads and we’re not going to spend any more on State highways, we’re cutting the National Land Transport Fund”, all these projects get cancelled like Pētone to Grenada, like Melling, like the Tauranga Northern Link. You name it, you pick what—Cambridge to Piarere, that’s another one. And then there’s a big outcry against it and Grant Robertson turns up in election year 2020 and says, “Don’t worry, I’m going to borrow $10 billion on the New Zealand upgrade fund; I’m going to personally hand-pick the projects”, and then all of a sudden they’re back on the pipeline. But of course the costs have gone up in the meantime. We’ve wasted two years. Ōtaki to north Levin: one year it’s on, one year it’s off and, you know, the next year it’s back off again, and, unsurprisingly, the companies who are working on the projects down the road like Pekapeka to Ōtaki, they don’t know if they’re Arthur or Martha. They don’t know if they’re coming or going.

Of course, how do you plan for the long term when you’ve got no certainty of investment? Of course, that is the problem, and it’s all created by Labour—it’s all created by Labour. This is not something that they can blame on National, because every Government, in some respects, you know, will always get things wrong, and the next Government inherits the sins of their predecessors. No one’s disputing that. All of this is blamed on Labour, because Labour inherited a pipeline of infrastructure and transport investment that if they’d just stuck to it, the Minister of Transport would be opening roads around the country. Instead, we’re just getting started on the Tauranga Northern Link after five years of delay. One of the most dangerous roads in the country. Melling interchange in my former electorate of Hutt South will get started next year, five years after it could have started—five or six years after it could have started. It’s intensely frustrating.

💬 Hon David Bennett: At least it’s getting started; it’s more than ours.

Well, David Bennett says, “At least we get started”. I mean, Cambridge to Piarere, and I think they’re doing route protection, but, again, it’s never going to start unless National gets back in to Government.

So the problem with the Investment Statement, as presented, is wholly caused by stupid Government policy—dubious decisions made for political reasons, like reopening the Napier to Wairoa train line. I haven’t even talked about light rail. It’s hard for people to get their head around how big that project is. It’ll never happen. But at least on paper—it’s kind of like 15, 25, 30, I mean, yeah, it’s only money. It’s only taxpayers’ money; $30 billion of money, of which there’s no business case yet, but the Government is, of course, committed to it.

So the Investment Statement is an important and interesting document, and it reflects the fact that we have a Government currently focused on ill-disciplined investments, both fiscally through operating expenditure, but also ill-disciplined in the actual projects that we choose to focus on, before we even get started on how we actually deliver them, which they are totally incompetent at doing.

Anyone can run a surplus if you don’t pay the bills and don’t do the maintenance. Now, a really stark example of that is you might listen to Mr Bishop’s speech, and he’s a very articulate young man and he can put together a good argument because he’s a good debater, but it doesn’t mean he’s right. Your ability to put an argument bears no relationship to the truth of the argument.

Actually, there are two things about that list of projects that he went through. One was that most of them were election promises and were never funded, and it was something that you waived. Not long after the 2017 election, as you drove around the country, there were a lot of billboards there that had been put up by the National Party, and those billboards all said, “Oh, we were going to build a road here, we were going to build a road there.” No, they weren’t. None of those projects were far off from being a press release.

There were many projects, but they certainly hadn’t been funded, which brings us to the matter of how those roads of national significance and those other projects had been funded.

💬 Hon David Bennett: Point of order, Madam Speaker. Now, I don’t want to create a debating point with the member, but he said that none had been funded, and that’s incorrect. Actually, the Cambridge highway was funded—

ASSISTANT SPEAKER (Hon Jacqui Dean): Yeah, that is not a point of order.

💬 Hon David Bennett: But—

ASSISTANT SPEAKER (Hon Jacqui Dean): That is not a point of order. The member will resume his seat. Before the debate recommences and I call Greg O’Connor, can I just invite the House to return a little more closely to the Investment Statement. I have allowed a degree of latitude, but I think the debate is now getting to the point where it is getting a little too wide, and so I’m going to invite members speaking to return very much to the principles of the Investment Statement.

Thank you, Madam Speaker. I was about, as you spoke, to move towards the pertinence of this, because when I did come into Parliament—and many of us come here. We’ve been on all sorts of walks of life and some of us have been involved in running reasonably major businesses, but wherever we’ve came from, we got to know the industry we were in. So we arrive here, and, certainly, in my case, I was, I suppose, somewhat enthused and confident to find that we did have things like this Investment Statement, that we did have a broad overview of where the country is going, where we sit on our balance sheet, and how much we owe, and—more importantly—that we were taking a long-term view, because that had been the problem.

I’ve just come from a meeting where there was a very enthusiastic group who are looking to get a rail line built, a historic passenger line into Tauranga. Now, that’s a great initiative, and good on them—very enthusiastic. But when the discussion that we have is only about one part of what needs to be a joined-up piece of engineering, a joined-up piece of infrastructure, there we come to the problem, and while it’s important that we do have an Investment Statement, really, it’s about ensuring that we are joined up.

So if, for example, we build some flash new roads—which Chris Bishop, the previous speaker, talked about—that’s all very well. You can have a multimillion-dollar opening for the Waterview Tunnel, but the problem, of course, is where did that money come from? It came from the maintenance budget. Right now, and this was one of the things we didn’t hear as a Government when we arrived—this very much comes to the Investment Statement that we’re talking about here today, Madam Speaker—was that all of a sudden, the maintenance hadn’t been done. So you have these flash, new roads going nowhere, because if you drive on the safest highway in New Zealand and all of a sudden you’re on potholes because nobody’s had any money to do it—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! The member will not bring the Chair into the debate.

Sorry, Madam Speaker?

ASSISTANT SPEAKER (Hon Jacqui Dean): The member will not bring the Speaker into the debate.

Oh sorry, Madam Speaker. I hadn’t been aware that I had, but I’ll certainly be very careful of that. So if we do allow ourselves to focus, and even if I look at what’s going to be happening this year in local body elections, we’re going to get a whole lot of potential mayors, potential councillors, and they’ll all be up there promising flashy stuff—all the stuff that the wekas love and that the magpies love. No one will be getting up there and saying, “We’re going to build better infrastructure. We’re going to build better sewers. We’re going to build better water.”, because that’s not the nature of the beast. It’s in our nature—we’re all looking for the sugar fix. So this is what brings us back to this Investment Statement, where we can actually soberly sit and take cognisance to balance where we are going as a country to ensure we are going to be able to pay those bills in the future.

Again, I go back to the discussion I’ve just been having, where we’ve got the ACT Party and we’ve got the National Party who stood up and did nothing but criticise, for example, the current rail service from Hamilton to Auckland—which would naturally extend into Tauranga—but without having any sort of an alternative. This is exactly what we’re talking about.

So if you pick up the 2022 Investment Statement, it sits alongside our long-term fiscal statement, the long-term insights briefing, our wellbeing report, and then there is the Investment Statement. Actually, what is the Investment Statement, because if you’d listened to this debate so far, you actually might be quite confused as to what it is: every four years, the Minister of Finance must present to the House of Representatives a statement prepared by the Treasury that describes the state and value of significant assets and liabilities. Well, that goes back to what I spoke about before, where, at the end of the day, whether it’s our household budget or whether it’s the business we run, we’ve got to, basically, balance our books. If we don’t, we’re trading while insolvent, and there are all sorts of regulations and there are all sorts of laws to ensure that we don’t do that.

So it is absolutely appropriate, absolutely necessary and actually, now, absolutely legal to ensure that we as a country—but we are only the guardians. We are here now; we get to own our little piece of history. There are not many here—many are older, some are younger, some are brand new. Mr Rosewarne, I welcome you here. You, no doubt, are going to be here for many more years; I may not be here quite that long. But what we must ensure we do is that we own our piece of history while we’re here, and owning that piece of history ensures that we have the financial ability. There would be nothing worse to leave to those who come after us not only an excessive debt but a debt that actually is not going to be able to be serviced by anything we’ve built with it, and that is where I’m very happy to have a look at the planning of this Government and at the things that we’re doing now.

One of the main things we do—and, again, it’s touched on here, and, in fact, it’s more than touched on; it’s actually highlighted in here—is making sure we invest in our people, because if we were to do what we did in 2008 and stop investing in our people, then with that infrastructure pipeline, we could have that all that we liked, but all we would end up with is nobody to work in our infrastructure now. If we closed down our polytechs, if we closed down all our training institutions, and if we sacked all our apprentices—actually, those people are one of the biggest investments we can make for our future, so what this Government did when we were faced with a similar situation to the one in 2008 was to ensure that we did invest. Again, if you have a look at this document, one thing that is highlighted is to ensure that we are investing in our people.

Yes, we’re going to need to build more rail and we’ve got to ensure that we have coastal shipping, but we’ve got to have people on it, and what’s the biggest problem we have around the world? I recently had COVID and it meant that I had to sit and watch a little bit of television—the BBC, Fox, CNN, Al Jazeera—and it didn’t matter what you watched, you were actually watching the same thing in every country. Every country had exactly the same problem as we have now: shortages of people; supply lines.

In fact, it’s interesting. A friend of mine was on holiday in Hawaii recently and he had a chat with someone from Texas, and this person from Texas was telling him that they’ve got major problems in Texas and supply-line issues. They can’t get the people to work and they’ve got massive oil prices and inflation, so it doesn’t matter where you are, you have the same problem. So in that time, when we’re looking at that, it’s the countries that actually invest best now and invest best in their people that will be the ones that in the future will do well.

It is interesting. During this conversation, we’ve talked about those members opposite who talked about the folly of building any more rail. I said that, well, when Sir Julius Vogel was looking at putting our rail infrastructure in place in the 1890s, wasn’t it lucky we didn’t have an ACT Party then and wasn’t it lucky that we didn’t actually have a National Party then, because we were actually able to do it, and are we not benefiting from that today? The rail corridors that were laid out then are those very things that we are benefiting from today.

So when we balance and we look at the Investment Statement, these are the things that we look at to make sure that we look beyond just today, beyond the current electoral cycle, to ensure that we are leaving a better place for those who come after us. The best way we own our history is to ensure that the financials for the future are in good shape. Thank you, Madam Speaker.

Members, the time has come for me to leave the Chair for the dinner break, and the House will resume at 7 p.m. this evening.

Sitting suspended from 5.59 p.m. to 7 p.m.

The House is resumed.

E te Māngai, tēnā koe. Tēnā koutou e te Whare. We’ve become increasingly well versed in talking about the social determinants of mental and physical health—that is, the things that determine whether you are more or less likely to be healthy. We know that those determinants for poor mental and physical health include things like poverty, lack of access to opportunity, and lack of security in the likes of housing. However, we are far less familiar with the political determinants of those social determinants—that is, the reality that poverty is a political decision in a wealthy country like ours, where, on 2021 estimates, the top 10 percent hold 70 percent of the wealth, and the bottom half, that is 2½ million New Zealanders, are told to fight over the scraps of just 2 percent of that wealth. The economy that enables that unfairness, let alone that rewards land banking over hard work, is a political decision.

Today, we are talking about the Investment Statement. These are published by the Treasury every four years, so a debate like this is a pretty rare occasion. So the question is: what is an Investment Statement? Well, it is supposed to make, based on the legislative underpinning of it, the Government of the day do three things. The first is to formulate a fiscal strategy with regard to its interaction with monetary policy. This is the theme that I want to return to soon because it has been one of the key points of contention in the wonderful Finance and Expenditure Committee throughout this term. The second is to formulate fiscal strategy with regard to its likely impact on present and future generations. I’ll also expand on this requirement as weaved throughout the Investment State, particularly on the issue of climate change. The third legislative requirement is to ensure that the Crown’s resources are managed effectively and efficiently.

Now, here, of course, those words are open to interpretation, and for that, I think that we all need to recognise that they are open to that dirty word in this House, “ideology”, because economic theories are not value-neutral, they come with a vast range of assumptions. Since before I was born, successive Governments have imbedded deeply individualistic, conservative, and short-termed views, despite legislative frameworks like this. This is, again, despite an ostensible requirement to look long-term baked into the law that prompts these Investment Statements in the first place. Now, we have started to see this ship turning around, but it is simply currently not turning around anywhere near fast enough. That is, the iceberg is still in our view—a peculiar analogy, I guess, for climate change.

So let’s unpack these issues, and let’s talk about fiscal and monetary policy and their interaction. For those poor souls who are tuned in at home, monetary policy is the stuff of the Reserve Bank, our central bank. It’s the stuff that they do with an eye to their dual mandate as also outlined in law. The first of that dual mandate is financial stability, traditionally considered keeping inflation between the 1 and 3 percent mark. The second is maximum sustainability employment, something inserted in the last term of Parliament, a measure which has proven itself in many hearings in our Finance and Expenditure Committee—a great committee—to be rather vexed in its subjective application and interpretation. The Reserve Bank does this—that is, the dual mandate—through some pretty blunt instruments, like the setting of the official cash rate, which impacts interest rates that people get on their debt. In a nutshell, the Reserve Bank’s main way of doing their job of managing financial stability and that maximum sustainable employment is by influencing the cost of debt.

Fiscal policy, on the other hand, is the stuff that the Government does. Basically, it’s what the Government spends money on; where, what, and how much it taxes; and the amount of debt that it is willing to take on. These two tools, wielded, on the one hand, by the Government, and, the other hand, by the Reserve Bank, aren’t used in isolation of each other. Each impacts the effectiveness of the other and they both have different consequences, again as a reflected in this 2022 Investment Statement.

So in January 2020, echoing some of the international concerns about interest rates potentially, at some point, looking like they hit zero, the Reserve Bank prepared some advice for the Minister of Finance about unconventional monetary policy, which I know is not particularly unconventional any more. The Reserve Bank noted that one of the major components of this at the time unconventional monetary policy was large-scale asset purchases (LSAP), otherwise known as the LSAP programme the other speakers have referred to. The Reserve Bank, in this advice in January 2020, warned that the LSAP may, and I quote, “increase wealth inequality by more than conventional monetary policy by raising asset prices more directly.” It called these concerns about inflation, particularly house prices and spiking inequality, distributional impacts. The Reserve Bank called on the Government more than two years ago to consider how it would deal with these distributional impacts—that is, where LSAP would be deployed potentially, at some point. It noted, and I quote, “externalities can only be addressed by other policy areas, particularly fiscal policy.” That is, of course, the stuff that the Government does.

The Greens started raising concerns about the over-reliance on unconventional monetary policy when the Finance and Expenditure Committee returned at the beginning of the 53rd Parliament, after the election. I can point to dozens of hearings where I put these questions to the Minister of Finance, to the Reserve Bank Governor, and to Treasury, particularly to point out that the LSAP programme, the fiscal costs of which are estimated at around $7.2 billion, have occurred without the necessary intervention that the Greens would argue was necessary of the fiscal policy that, also, the Reserve Bank had warned would be necessary two years ago to deal with those distributional impacts or that inequality. This is, of course, why I’ve continued to fight for a year now for a proper review into the COVID-19 economic response. We in the Greens will continue to fight for it. Not only was the LSAP deployed with the Treasury, the Minister of Finance, and the Reserve Bank knowing full well that it was likely to turbocharge house prices and inequality, it actually did do those things, and it cost billions and billions of dollars.

Now, the Greens have never shied away from how we would have preferred the Government took the political responsibility that it has to utilise fiscal policy to not only minimise these so-called distributional impacts but to improve peoples’ lives and to invest in our incredibly underfunded infrastructure, whether that be in public housing, public transport, public education, public health, or otherwise. As Labour members have pointed out, they’ve done some of those things. And sure, they have. But unless they’re willing to tackle the tax bogeyman, that old wealth tax, deep inequality and under-investment in these necessary investments for our future will continue.

So let’s talk about infrastructure and another long-term trend identified in the Investment Statement. Well, estimates by the Infrastructure Commission, which other members have bandied about, set out in the Investment Statement, say that there is an historical infrastructure gap of $104 billion, and a future infrastructure gap of $106 billion. That is a total of $210 billion, and that is only for our built infrastructure. It is a fiscal strategy attached to the 2022 Budget, and the Government has started, with some good Green influence, to shift away from arbitrary debt targets which have meant that successive Governments have delayed these critical investments in infrastructure.

That said, we are still nowhere near where we need to be because there’s still, as outlined in that document attached to the Budget, a peculiarity in the way that the Treasury identifies and differentiates the blurry line between capital expenditure and operating expenditure, which means that it’s still more comfortable investing in carbon-intensive motorways than in nurses, teachers, and social workers. This is something that we must continue to scrutinise because it is not a natural phenomenon that we make these demarcations, but, again, the product of economic theories and the assumptions that underpin them.

Which brings us to the planet that we live on. Despite these long-term Investment Statements happening every four years, supposedly with a focus on future and present generations, the words “climate change” were not mentioned once in the debut 2014 Investment Statement. The word “climate regulation” was once, in passing. How times have changed, and, boy, how much work we have to catch up on. Just today, our Green Minister for Climate Change, James Shaw, launched the country’s first National Adaptation Plan grappling with the real-world impacts of climate change. Now, this Investment Statement has a whole section on the risks to the balance sheet from climate change. There are significant fiscal risks which we can see with the extreme weather events that we’ve experienced here in Aotearoa New Zealand in just the past few weeks, and, obviously, with Europe currently burning. Some of the investments that the Investment Statement talks about as necessary are, and I quote, “investing in Social assets such as public transportation infrastructure and energy-efficient buildings such as schools and hospitals.”, and “taking on additional debt to support climate mitigation or adaptation to redistribute anticipated costs in a more equitable manner between central government, local government, Iwi and Māori as Treaty Partner and the private sector.”

In the 21st century, poverty and anthropomorphic climate change are not natural phenomena, they are political consequences of political decisions. If some of the things that have be begun to be unpacked in this Investment Statement speak for anything, it is that there are still political choices to be made necessary to meet these challenges.

Thank you, Mr Speaker. It is a pleasure to rise tonight on behalf of the ACT Party to take a call on the report of the Finance and Expenditure Committee on the Investment Statement. I just want to give a quick shout out to the ACT Party member Damien Smith, who sits on the Finance and Expenditure Committee, who couldn’t be here tonight—so you’ll have to bear with me as I go through the Investment Statement with a little less Irish charm. But I know that if he were here, he would love to be giving this speech.

The ACT Party welcomes the debate into the Government’s books, because I don’t think we talk enough about our operating budgets and our balance sheets and how much we earn, how much we spend, how many assets we have, and how many liabilities we have. I think for a lot of people it sounds a little dull, but it’s incredibly important because that is, essentially, how this Government operates, how everything happens in this country, how things are borrowed, how much debt we have, how much money we’ll have in the future, and, importantly, how much debt future generations will be paying for bad investments today. This debate only comes around once every four years, so having ten minutes every four years is really not enough and we should do this debate far more often, because we’re squeezing a very important topic into a short amount of time.

But if we look at 2018 to now, which was the last debate on this topic, my how things have changed. You could not predict how things would have changed. Back in 2018, Treasury forecast that net core Crown debt would track downwards. Well, that certainly hasn’t happened, because now debt is higher than it’s been in the early 1990s, closer to when I was born than now, and it is increasing. This is the chance we have to debate the state and value of significant assets and liabilities, how they’ve changed over time, how they’re forecast to change in at least the next two years, and how the changes have looked since the last statement. It’s a chance to take stock on the Government’s balance sheet. That is not how much money the Government is taking in, in tax; that happens in a different debate. And it’s not on how much we spend on health and education or on the wasteful spending that the ACT Party finds—there is $6.8 billion that we could cut, and if you’re more interested in that, please head along to the ACT Party’s alternative Budget on our website. This is a debate on what the Government owns and what the Government owes, so let’s take stock of where we are to date.

There has been a significant increase in debt. In 2017, 19 percent of GDP was debt, and now that’s gone up to 30 percent of GDP at the end of 2021. That’s also forecast to grow to 40 percent in the 2022-2023 fiscal year. Our assets have grown since 2017 by 40 percent and our liabilities have grown by 43 percent, but what the Government probably doesn’t wish to tell you is that of the growth in assets, most of this was in land prices. The biggest beneficiary of inflation and Government borrowing and spending has actually been the Government itself—the biggest beneficiary of the increase in land prices and asset inflation. And the biggest growth in liabilities, unfortunately, was Government debt and Government borrowing. I think we need to be more honest about the debt, because the Government is mortgaging our futures and mortgaging the futures of our children and grandchildren, because that’s money that needs to be paid back by somebody at a future date.

The Large Scale Asset Purchase (LSAP) programme that the Reserve Bank and the Government were running had the effect of converting fixed rates of debt to short-term floating debt and making debt-servicing costs more sensitive to changes in interest rates. What that really has meant is that it means that the future is riskier for us than it would have been if we had not done the LSAP programme. We moved from fixed to floating right when interest rates were about to rise, and that means, according to Treasury, that the loss on the balance sheet and the reduction in debt-servicing costs are no longer expected to cancel each other out or offset each other, and, based on the interest rate expectations, the net direct fiscal cost from the LSAP programme was expected to be $5.1 billion—and even that is out of date, and it’s now around $8 billion. The real question is then: why is it that the Reserve Bank of New Zealand kept doing LSAP despite our economic performances actually being strong by global standards? You know, they have set us up for future risk, much more risk than we should have had. And there is no such thing as a free lunch. People will have to pay that back, and it will be future generations.

So that’s debt. Now, let’s turn to some of the assets. The Government owns many, many, many assets, and I think we need to run a ruler over what we own and why. The Treasury secretary says the changes to the balance sheet underscore the need for effective investment discipline and careful consideration of ownership rationale, and I couldn’t agree more. You know, the Government currently has a portfolio of many company assets, unlisted companies, commercial assets, and they’ve underperformed at their cost of capital. They are far too comfy, because the only people that they are accountable to are the Government. That’s 10 percent of Government net worth that is not performing well, and what that really means is, essentially, we’re putting money into companies where we could have just invested that money somewhere else that was just as risky and maybe had a better return.

By contrast, some of the company assets that the Government does own that are mixed ownership models have done better, so the ACT Party says that we should really subject those same company assets to the same amount of transparency that we have under the mixed ownership model. That would significantly increase the performance, like we’ve seen with the electricity companies, so let’s list 49 percent of the shares of New Zealand Post, KiwiRail, Transpower, and use those funds to pay down that growing debt. At the same time, it would subject those companies to the transparency and accountability that other commercial entities have to be held accountable to. If you’re more interested in that, please go along to our alternative Budget and have a look in more detail as well.

For other assets: we also invest a lot in infrastructure but we don’t do a great job. There was the report from Treasury and it said that we actually do a pretty terrible job of investing in infrastructure. We have a historical infrastructure gap of $104 billion. I think the real problem here is that because decisions are being made by politicians, they are bad investment decisions. You just have to look at light rail. What a terrible, terrible project. You only have to cast your mind back to Bridges’ 10 bridges and all of the other political bribes that happen when it gets closer and closer to election time and politicians start pulling out what sort of infrastructure projects they can have in their own towns to get them re-elected, and realise that that is not a good model for investment in infrastructure. ACT says we need to do better. We have 30-year infrastructure partnership plans that would strengthen accountability by devolving revenue and responsibility to regional government, and allowing for accountability and monitoring to be held by central government. These 30-year plans would allow for that real gap in infrastructure to be closed in New Zealand. These are things that we need to have for a healthy balance sheet.

In closing, our debt is far, far too high. We can solve the problem by sharing some of those assets and companies through a mixed ownership model, and get a better dividend for the Government because those companies will perform better. We need to fund infrastructure better. And, most importantly, we need to get our balance sheets and our books in order. We deserve better as a country. Thank you, Mr Speaker.

Mr Speaker, thank you very much for the opportunity to speak this afternoon and, also, I just want to acknowledge those that have been on the Finance and Expenditure Committee, who have produced this report, He Puna Hao Pātiki. It’s been a while since I did have the opportunity to sit on the Finance and Expenditure Committee, in the previous term, and we got to debate and, I guess, be stewards of some of the amendments that were required to be made and that we did make under the Public Finance Act.

Tonight, I will briefly touch on some of the points and some of the highlights that the select committee have made, but in particular I wouldn’t mind turning to He Puna Hao Pātiki, particularly with a focus on some of the measures that we’ve introduced—obviously, this is our fourth wellbeing Budget in a row—to look at how those have changed over time, what’s guiding them, what we’re hoping to achieve from that approach, and how we’re tracking.

In terms of where we’re at as a small Pacific nation in the context of a global world, we’re all acutely aware of the economic pressures and strains internationally. Inflation rates around the world are very significantly high. We’ve got supply chain issues. We’ve got a whole range of issues that are impacting on us. And our fiscal and economic position here domestically, as He Puna Hao Pātiki observed, is that we’ve had a significant increase in debt over the last year—19 percent. COVID-19 set the environment for that.

However, I guess one of the things I reflected on, and it’s come through in this report, is some of the challenges that we have been engaged in, as a consequence of COVID and, of course, the war in Ukraine is doing its fair dash as well—I think that one of the things that’s stood us in good stead, and this is highlighted in the report itself, is that our economic position, coming into the pandemic, was sound and it’s meant that our economy has come through COVID and the COVID shock almost better than anywhere else. The evidence for that is in the fact that we have received two triple A credit ratings from two leading agencies, and that’s in the middle of a pandemic. It’s not something that too many countries have the privilege of being able to say.

Our GDP is up. Our unemployment is at record low levels. We’re all well familiar with the 3.2 percent that we’re across nationally, but today we had some good results for the Māori unemployment rate specifically. I think it’s down to about 5.5 percent. I think I saw the Pasifika unemployment rate was down at about 5.4 percent. So these indicia are all, I guess, benchmarks of a sound economic position, despite the strong winds that have been in our face.

The next measure we can look at is wages. Our wages have outpaced inflation up until this recent inflation spike, and they are forecast to do so again in every year after 2022. So that means, obviously, that households will be better off and, in particular, better off under Labour. And of course our debt is set to peak at about half of Australia’s, around a third of that in the UK, and around about a fifth of the US’. That’s measured consistently as a percentage of GDP.

Probably because I’ve been knee deep in it for some time, I want to look at the impacts of the Living Standards Framework and the relatively newer framework He Ara Waiora. So a part of Treasury’s vision, and this was covered off in He Puna Hao Pātiki, has been to lift living standards for all New Zealanders and, to achieve that vision, the Living Standards Framework and He Ara Waiora have—well, they’ve both evolved over time. And as each Budget has come through over the past four years, we’ve seen a growth in terms of different iterations in how they’re measuring our wellbeing across the board, how they’re measuring the wellbeing of New Zealanders. The Living Standards Framework reflects the local and international developments in how we are conceptualising and how we are measuring wellbeing. Now, it’s slightly evolved since I sat on the Finance and Expenditure Committee a little while ago, but the four—

💬 Dr Duncan Webb: We’ve missed you.

Yeah, it’s gotten better, a lot better. I was like, huh! It’s a little more nuanced and you can tell that that’s growth, isn’t it! But the four wealths that underpin it—that’s the natural environment, that’s the social cohesion, the human capability, and the financial and physical capital—those spread out into a range of different measures by which we can assess how people are going.

One of the things that’s been really interesting over the past year or so is that we’ve been asking, from the Government side of things, agencies and asking Government departments to move beyond the silo, to move beyond the silo when it comes to achieving these wellbeing, move beyond the silo when it comes to setting—we’re requiring agencies to bring together cluster budgets so that they are, (1), prioritising across sectors, (2), working towards shared outcomes that are important across sector, and, (3), ultimately so that we can see the tangible outcomes in whether we use the Living Standards Framework, but through that holistic wellbeing lens.

I think that’s something that’s steered us really well as we went through our COVID recovery. I think it steered us really well in terms of where we invest money, how we look at the overarching—it wasn’t just bottom lines that steered our investments over that period. It’s not just those bottom lines that are how we assess where we are at as a nation. But I remember, when we were looking at things, it was: what does bring about wellbeing in those times of real challenge? People being able to come together as communities in various different ways was a part of it.

I remember one of the key things that we all decided collectively was that the arts were so fundamental to wellbeing across the board that that was one area that we didn’t want to see fall off—one of the things that often can fall off when we’re going through economically challenging times. I’ve just been over the weekend to the largest ever kapa haka festival, Te Matatini. We made decisions to invest in those types of communities, those types of performance—well, cultural bastions—because we decided that a pandemic shouldn’t obliterate those communities. And actually, if we encouraged those communities to come together, we would see benefits across health, housing, knowledge and skills, cultural capability, and belonging—all of those types of indicia that perhaps for some on the other side of the House aren’t as important, but, to us, it has been.

As I look across the country and have been able to see how this framework has driven our mind-set in terms of where we decided to support, I can see that it’s landed. Really, in my mind, we’ve been quite privileged to be able to see how communities have come together and that being manifest across a range of different wellbeings. I’m really proud of the fact that Minister Robertson did that for us as we were going through the pandemic.

One of the other key areas that the committee looked into was, obviously, the net worth across the board, but also the large-scale asset programme and whether or not that had had some successes. I’ll leave it to my other colleagues to pick up the ball on that one. But just again, thanks for the work that you did, team. It’s a good piece of work and it’s a great report.

Thank you very much, Mr Speaker. Well, it’s an absolute pleasure to get up and speak on the 2022 Investment Statement. I think the Minister—it sort of felt like she was doing a hospital pass across to her colleague to try and finish off that speech. But let’s bring it back to some of the key issues that the Finance and Expenditure Committee (FEC) had the pleasure of listening to, because, as much as that other side of the House paints this rosy picture of how everything is great, the reality, sadly, for the New Zealand public is not quite that. And I’m going to explain a little bit about the reality of where we are fiscally. When you start getting into the detail of the Government’s balance, actually, there is a large number of warning signs coming up already; and Kiwis across this country should be very, very concerned around that.

The first aspect is around the debt levels in this country: $162.5 billion. That’s a big number. People don’t quite know, well, what does that actually reflect and what does that look like. But if you get to the element around the cost of debt, people understand how big their mortgage is, but what they really understand is the repayments they make every month or every fortnight in order to pay that debt. This Government is paying $4.7 billion every single year—$4.7 billion—in interest costs alone in that debt. That is just below the entire budget for law and order for this country. It is one quarter of the budget for health services across this country.

When we talk about debt, the greater the debt the less that we have as a country and pay for public services. So there is a clear correlation. You can spend today but you have to pay it back tomorrow. The correlation in regards to the fact that the more that that debt level is, the less that we have to spend on public services. And as a reality of that, this country, as a result of the increasing debt, is continuing to go backwards. That interest cost alone is just over $2,000 per annum for every Kiwi household. That is a heck of a lot of money. And that amount is only going to increase with the increasing interest rates, because that’s based on an interest rate of around 2.8 percent. Well, I can tell you what, you can look in the back page of the Herald and the financial section and see what mortgage rates and interest rates are sitting at. Of course, the Government don’t pay what you pay in terms of a mortgage, but you’re absolutely going to see, probably, a 1, 2, potentially 3 percent increase in regards to that. That will all correlate in terms of pressure on the public purse, and it will all create pressure in terms of the affordability of paying for public services. That is what is coming down the track at the moment.

The other element talked about in the investment statement was around spending. The Treasury actually made some pretty key statements in regards to that. They obviously said that the most significant component of the Government’s liabilities is the borrowings that I’ve just articulated. They also said that net Crown debt has increased significantly, reflecting a large increase in spending. Right, there is a clear correlation. This is not money that is coming from some magic place. This is money that is being borrowed. This is funding and spending that is funded out of debt. As I’ve said before, there is a cost to that. And we’re seeing the sensitivity in terms of our balance sheet going to be heavily impacted by the changes of interest rates as well.

The question here is so who pays for that debt? Well, the reality is I think it’s morally wrong for us to expect future generations to fund that addiction to spending that we’re seeing today. But that is the reality of what is happening at the moment. And when you see lack of prudence around fiscal spend, examples like cycle bridges in Auckland, you’ve got examples all over the place—three waters—it gets to the heart of this money is money out of the pockets of hard-working Kiwis. It is taxpayer’s money that is being wasted. And Treasury has highlighted, as I’ve said, that the increase in debt reflects a large increase of Government spending.

I want to also touch on, in terms of the time, around what most Kiwis will understand as just Government money printing. It’s called quantitative easing. There’s a big, long word that they use for it in this paper, but it’s basically where the Government prints money. And the reality of this Government is that throughout the COVID dilemma, they jumped on the bandwagon with every other reserve bank around the world and said, “Well, let’s get into the pack. And everyone else is printing money so let’s print money as well. And let’s use that opportunity to sort of spend a little money on pet political projects.”, which they’ve done—well, they’ve announced. They haven’t actually necessarily delivered any of those, but that’s the reality.

The correlation between that Government printing of money has actually led to a decrease in interest rates, and that decrease of interest rates has correlated to an increase in house prices. They are all linked. And it was mentioned by a previous speaker that the Government obviously retains a huge amount of those assets. The Government, actually, has been a beneficiary in terms of the increase in house prices as a result. But the impact for hard-working Kiwis at home—those in the squeezed middle—the impact of that Government spending, which has reduced interest rates, which has led to higher housing prices, has meant they have been locked out of that housing market. And combined with a regulatory reform programme that has not been modified or changed, has led to that increase as well. One would hope, actually, that in most cases rent prices would decrease as well under those circumstances. The reality in New Zealand, because of the regulatory environment that we have in play that this Government has failed to fix, is rents have also held hard. So Kiwis at home have been squeezed as a result of that.

Infrastructure is a significant enabler of economic growth and productivity—the Treasury refers to the fact of some concerns around that. It says that there is evidence in New Zealand that infrastructure spend is not as effective as it could be in delivering on infrastructure plans. Well, that’s a pretty clear statement in regards to that. And the element that they say is that the Treasury informed us that under-investment in some infrastructure in many cases may lead to reduced wellbeing and productivity. The number one issue in this country over a period of time is poor productivity. That is because we have not invested capital in the areas in regards to per labour unit in order to make sure that—as a labour unit or as employees—we’re able to deliver productivity. We are one of the lowest compared to other OECD countries. So the need for targeted infrastructure investment that drives economic growth, that drives productivity, is absolutely essential. And when we see a Government that puts on hold key roading and infrastructure projects that are enablers of growth that opportunity cost of those projects being delayed for one, two, three, five years can never be recovered. As a result, we’re going to need to play catch-up with that infrastructure deficit, and that is going to hold and continue to hold Kiwis back.

The other element around infrastructure and linked to infrastructure is around the three waters reform, and the Investment Statement made a number of comments around that. It commented here that there is concern around the value for money going into the three waters programme. It referenced the fact that part of the $3 billion bribe fund by this Government given out to councils to try and buy their support—which has failed dismally. Well, in Auckland alone, the allocation of $127 million from that three waters fund that—I think most people at home would think, “Did that go into water pipes? Did that go into infrastructure under the ground?” No. It went to plug last year’s deficit in operating spending. That is unbelievable. That is unacceptable. That is taxpayer’s money. And the comment from the Minister in regards to that is, “Well, that’s not my responsibility.” And that is the culture that we’ve got around poor fiscal discipline, poor allocation of capital, and the cost of that is going to be felt by future generations in terms of lack of investment.

We also challenged, as part of the FEC, around the cost in order to deal with the infrastructure in the three waters space. We were given numbers between $120 billion and $185 billion. Well, it’s interesting that Treasury have assessed the total deficit of infrastructure in this country to be around $220 billion. So obviously the left hasn’t spoken to the right in regards to the total element, but there is an absolute lack of substantiation of these numbers.

The Investment Statement paints a picture of a Government addicted to spending, a Government that has debt levels that are unsustainable, and the reality is the wheels are falling off the Labour bicycle.

I’m not sure if the Opposition have got the same Investment Statement that we have on this side of the House, because it makes great reading, and it’s an impact Investment Statement which shows resilience in the New Zealand economy. That resilience is because of careful financial management from our Minister of Finance. It’s from responding appropriately with a health response to the COVID pandemic, and it is also, of course, because of the hard work and the pulling together of ordinary New Zealanders.

Now, the balance sheet shows what the Crown owns and what it owes, and the balance sheet is a good indicator of our ability to reach wellbeing outcomes. If we look at the numbers, GDP is up 5.1 percent from a year ago. The official unemployment has edged up to actually 3.3 percent, not 3.2 percent, in the three months to the end of June, and wages have lifted to 3.4 percent, which is what the Minister of Finance has predicted would happen. In fact, in the private sector it’s up to 7 percent, which is the largest increase in wages since 2008. House prices are dropping, and so all the indicators are showing that there is a market correction, and that’s from the past three decades where labour productivity growth has almost doubled wage growth.

Now, these are not my words. These are the words of the FIRST Union in Stuff today saying the tight market input is pushing employers a bit harder to attract and retain staff. That’s a good thing, and long overdue. The Capital Economics economist Marcel Thieliant reported in Stuff today that inflation has already peaked, so we are really heading into a period at the start of next year where inflation will either stabilise or fall and wages will trend upwards, and that is exactly what the Minister of Finance had said would happen.

Now, it doesn’t mean that it isn’t tough out there. We understand that it is tough for New Zealanders. We understand that it is tough for workers, and we like to call them workers over on this side of the House, rather than Mr Watts’ word, “labour units”. They are people, and we need to acknowledge that and understand that it’s really difficult for them. But we’re not the only country going through this. The inflationary effects of COVID and of the war on Ukraine have affected virtually every country in the world. And if I look at some research from the Pew Research Centre, it says that inflation rates have doubled in 37 out of 44 economies over the last two years.

Interesting and unfortunate fact: the highest inflation rate is in Turkey—54.8 percent. That’s incredible. Out of those 44 countries, New Zealand is 12th lowest. Now, the bottom three are China, Indonesia, and India. There are some question marks around their figures. Nevertheless, with their low inflation that doesn’t say anything about the deaths. We know in India, for example, they have a death rate from COVID of over 500,000. Now, the reason I’m saying this is because it’s all inter-related. The balance sheet, the COVID recovery, the response to COVID are all inter-related. Economies around the world have struggled with COVID, with supply chains, and we’ve seen what the war in Ukraine has done to petrol prices in New Zealand and around the world.

That’s why this Government has tried to ease some of that pain with the cost of living payment that’s going to 2.1 New Zealanders. It’ll be in their bank accounts about now—that squeezed group that haven’t been able to access the winter energy payment but are still feeling the inflationary effects on things like blocks of cheese. That’s why we have continued half-price transport till the end of January, and we’ve extended the fuel tax cut. And actually, we’ve extended half-price transport for community services card holders permanently. The winter energy payment: massively important for the people in Taieri where I have my electorate—very cold there at the moment. That is making the difference to my constituents, for many of them, of being able to have both a warm house and food on the table and not having to choose between them.

We have moved to disband the supermarket duopoly, an excellent piece of work by my good friend and colleague, Hon Dr David Clark. Lots of feedback coming in about how unfair the million dollars of excess profit per day the supermarkets have been making. That’s going to make a real difference to our constituents.

Free lunches in schools: more than 45 million lunches have been delivered to 921 schools. My son goes to Bathgate Park and it’s a decile 3 school. I’ve seen the huge difference that those lunches have made to many of my son’s friends. And we have also increased superannuation, benefits, minimum wage, and the winter energy payment. These are all some of the really good outcomes that we have been able to achieve by having a good balance sheet. I’d like to quote Dr Caralee McLiesh, who’s the Secretary to the Treasury. She said in evidence at the select committee that “New Zealand has fared really well throughout the pandemic and that’s supported by statements from some of the international organisations and rating agencies as well. So that gives us confidence, then, that both the health and economic response have delivered positive outcomes.”, and she is referring there, of course, to the two triple A ratings that my colleague Hon Kiritapu Allan referred to.

One of the other members raised the idea that perhaps our fiscal policy had not been done prudently. Well, I go on to quote Caralee McLiesh in saying, “One of the lessons from the pandemic is how powerful fiscal policy can be in providing targeted support where it’s needed to keep workers attached to jobs, to help businesses to keep operating and to provide confidence in the market.” If we had a high unemployment rate, those people would simply not be able to meet their mortgage payments. That would be the beginning of a spiralling effect of recession, of people not being able to keep their homes, and it would put us in a deep, dark place.

Now, if I go back to what the alternative reality might have been had National got in when COVID happened. If we look back at March 2020, the then leader Simon Bridges called for a complete border shutdown for non-residents. On 23 April 2020, The Spinoff said that one of the best case scenarios for unemployment was 8 percent. Now, we have seen today’s figures—3.3 percent, very low; 3.2 percent recently. The best case scenario back then was predicted to be 8 percent. It is this Government’s fiscal management which has been able to keep that all important indicator in the right place. May 2020, when the UK death toll was 30,000, Simon Bridges was asking for our borders to be reopened, and I hate to think what would have happened not only to our people but to our economy had that happened prior to the vaccine roll-out.

Now, of course, the rest is history. We had a change in leader in the National Party, then 53 days later, another one. We’re up to the fourth leader. The reason I raise that is we can’t have economic stability in a country that is led by a political party on the other side that cannot even keep its own house in order as far as leadership and political stability. They don’t have a plan. They complain about debt, but the only way that they want to tackle debt is to give tax cuts to the rich, so I’m not sure how that would help. So it’s a bit rich of them to be talking about fiscal prudence and financial management when the leadership has already changed so many times. There’s been a flip-flopping of ideas about whether to keep the borders open, whether to keep the borders closed. Have we got too many people coming in? Have we not got enough people coming in? These are all issues that are related to the financial stability, the balance sheet that needs to be managed prudently and carefully.

That is what our Minister of Finance has done. He knew that this year would be difficult. He has messaged that to people. We have targeted our support for those who need the most support from the most deprived communities, and we know that from 2023 onwards, the wage rise that we have seen in today’s figures will continue to go upwards and that is going to help close the inequality gap, and that is what most of the members on this side of the House came to do when we came into Parliament was to try to make New Zealand a fairer place. My colleague Kiritapu has referred to the fact that, in fact, inequality during COVID even—and the report says this, and I’ve got evidence here, again, from the Treasury. During COVID, it shone a light onto the inequalities in New Zealand, but actually it also helped to marginally close that gap. Now, time will tell, in due course, whether that’s going to be further closed, but I would feel very confident with the targeting that this Government has done, that we have done everything in our power to make sure that New Zealand has been in the best possible position to weather what has been a COVID storm and to weather what has been the really dramatic and unexpected war in Ukraine that has sent the world topsy-turvy. So this is a good statement and I would encourage the Opposition to read it properly. Thank you.

Andrew Bayly—but just as I call the member, I’m just going to remind Mr Bishop, can he please keep his mask on. I know that he was eating something for a period of time, but he shouldn’t be eating stuff to the point where he has to have his mask off. If he’s chewing a lolly, keep the mask on.

Thank you, Mr Speaker. Well, I think that speech just tells it all. Unfortunately, we are all part of a committee called the Finance and Expenditure Committee, and that speech just highlights the deficit in terms of the ability to actually talk to a report, which is what this session tonight in the House is about, rather than give a political rant about National and leadership and things like that.

Look, I just take issue with some of the stuff. The member talked a good game about equality, and, of course, what we do know is that we had 100,000 children in a poverty gap and that number has increased over the last five-and-a-bit years. We are seeing so much hardship and division in New Zealand at the moment at a financial, economic, and social issue that, personally, I find very concerning. Because not only does New Zealand have a huge economic challenge ahead of it but it has a huge social challenge in terms of how we bring people back together, how we actually create an environment that people want to live in in New Zealand and feel that they’re getting a fair shot, because certainly that’s not the case.

And to say that the Government is undertaking targeted support, which we all know in the most recent example has been an absolute disaster. Where if you’re a university student you cannot get access to the so called $300-odd that people have been given, but they’re those type of people who are not earning money, who want to earn money, but, and for some perverse reason, are not getting access to it, and yet people living overseas, as Mr Bishop talks about, lawyers overseas in London are suddenly finding they’re getting money from the New Zealand Government; it’s outrageous.

Anyway, this report is one of four, as no doubt you know having been here an exceptionally long time. So we’ve had a long-term financial statement—

💬 SPEAKER: A lot longer than these reports have been around.

Yes, I know. Yes. We’ve got the local long-term financial statement, which is published every four years. We’ve got the long-term insights briefing, which is something that Treasury does every three years. We’ve got the Wellbeing Report, which we debated not long ago, which is a document published every four years. And, of course, this is the Investment Statement, which I’d just remind, actually, what it’s about, which is: describes the state and value of significant assets and liabilities of the Government, how these have changed over the value over time, which is obviously a four-year cycle, and how they are forecast to change over the next two years, and the changes since the last statement.

So I think the first thing is there is an absolute enshrined principle—and it’s embedded in the Public Finance Act—which is we need to ensure that we have sustainable and resilient public finances that will bolster living standards for future generations. That’s a crucial pivot or tenant of what we should be discussing about in this report. Because obviously this report lays out the assets and liabilities of the Government, and I think what we’ve seen is, certainly there’s been an increase in the net worth of the Government. We’ve seen the value of assets now, it’s been quoted regularly before, about $440 billion, liabilities total about $281 billion, and now we’ve got a net equity of roughly about $160 billion.

Just as a side note, I wish we would be able to work out what the net equity of the water companies is going to be because no one can tell me what that is. They can tell me what the assets in the balance sheet—and the liabilities. But even the officials can’t. But at least at central government level we do know what the core value of that, which is about $160 billion.

Interesting, I note that if you look at all the balance sheets of the Government, the intellectual-property component has steadfastly remained at about $3 billion-$3.5 billion, and that’s been going in the balance sheet for quite some period of time. As the Minister of Commerce and Consumer Affairs mistakenly said last night in the debate about the statistics and data bill or the Data and Statistics Bill, that in most cases public companies, a significant amount of their value, he said it was related to data. It’s not. It’s actually related to the intellectual property. I think one of the key things in the Government’s balance sheet is the huge undervaluation of its intellectual property. Something that I’ve regularly asked finance Ministers and the Treasury secretary, and for some reason it’s something that keeps slipping through, but I would imagine that if you looked at the intellectual property that resides in every Government agency, State-owned enterprise (SOE), whatever, if it was taken from a private-sector perspective that value would be significantly enhanced because of the embedded intellectual property that sits and resides in those balance sheets, in those operations.

I think my colleague Mr Simon Watts made a good point, current borrowings costs, if you go back a couple of years’ ago it was about $2 billion. It was about the cost of running the New Zealand Police force; now, about $4.7 billion. So, as he noted, about the total cost of the justice costs in New Zealand or just to put it in another perspective, it’s about the same cost as operating Vote Defence, about $4.8 billion-$4.9 billion. So what we’re doing is every year we’re taking what we could have spent on defence or justice and paying it to people, often located overseas, in terms of those who hold our Government debt, and as we all know, most of that Government debt is owned by foreigners. So what we’re doing is just taking that money, which could otherwise be spent on very useful projects and, in fact, taking it offshore.

So this is the central issue about this report, which is: what is a prudent level of debt, and how should you structure the balance sheet. There’s a challenge that, really, we’ve faced over the last couple of years between investing now and preserving our resilience for the future. I think the COVID situation over the last 2½ years has highlighted the infrastructure challenge we’ve got, you know, poor connectivity in rural areas is just one example where it’s just an absolute pressing need for substantial improvements in that service. I know there’s been some investment but it’s of a minor nature. There’s still huge restrictions. That deficit in infrastructure is really, really important.

But the resilience going forward and our ability to invest for the future has, to some extent, been diminished significantly by the increase in debt over the last 2½ years. If you look back 2½ years’ ago to March, our debt was sitting roughly at about $60 billion and now it’s sitting well over $120 billion. It’s doubled over the last 2½ years. Whilst some of that expenditure’s been useful—no doubt we would’ve done the wage subsidy and certain elements of that—there has been an incredible amount of money that literally has gone into the ether and no one can point to. It’s not like it’s been used to build new infrastructure. It has just vanished into the ether. Now what that means is that whilst our debt was a very low rate of 19 percent, it is now well over 30 percent, and likely to increase further over the next couple of Budget cycles. Or hopefully for the Budget cycle 2024 there will be change. But we are seeing our options for future investment seriously diminished as a result of Government expenditure and Government spending. Of course, we’ve had a Reserve Bank alongside that has just undertaken a mass amount of liquidity easing or buying of bonds, which now means that we’ve got $60 billion of additional debt taken on to account into the Reserve Bank, which means that, of course, because Adrian Orr, the Reserve Bank Governor, signed an indemnity with the Minister of Finance we’ve now got a mounting liability, was about $5 billion, was in this report about $7½ billion, now is well over $8 billion, and likely to increase further as interest rates rise. We have got a staggering amount of new debt that’s come into New Zealand. We have reduced our options to spend on good stuff in the future, whether it’s infrastructure, whether it’s social spending, and that is the wasted opportunity that we’ve seen.

It’s a pleasure to rise to take a call and to debate what’s a very important snapshot of where we are in terms of our economy. I am relatively new to politics. I did about 25 to 30 years of law, and I came on to this committee. So what I thought I’d do is give the public at home a snapshot of what I learnt from this report, because it’s a very interesting snapshot indeed.

First of all, I learnt that the Treasury confirmed the overall health of the balance sheet in the face of what have been major challenges—and that is mainly COVID. But also it confirmed that in terms of our long-term challenges. What it did was it talked about what a solid foundation we have had, and that means that we actually have an overall—we owe $438,000 billion. But we have, sorry—sorry. Let’s just—we actually have done well in terms of what we owe versus what we have borrowed.

What we are also facing is a situation where, actually, the fact we went into the crisis as we did was really helped by the fact that we had a finance Minister who had kept a lid on the debt, and that had made a huge difference. What I also learnt was that we have a—sorry, I’m just having trouble with my glasses, and I can’t actually see the page. We have taken a very sound pathway, and that sound pathway that we have taken, in terms of the way we responded to the crisis, is one that involves actually really using the money that we were investing in the places that mattered. So we used it to actually do things that mattered long term. There’s a real confirmation in this report of just how wise that was, because we’ve heard a lot today from the Opposition about the issue over the investment in infrastructure, but actually there hadn’t been enough investment in infrastructure. And what was lost was the opportunity that that would have given New Zealanders. Now the money is going into those places that matter.

So, when we talk about things like three waters, we’re talking about investments in the very infrastructure that’s important, because there had been a real slide in that area. We have not had investment in the pipes and the pure water that we need. As a consequence, we’ve had some terrible crises. We’ve actually had people die; we’ve had people die of water quality. And so those things, when we invest in them, we actually invest forward into our future, because that is actually exactly what a Government is for.

We have got to do that, obviously, with housing as well. There is an acknowledgment in this report that that money needs to be spent in those areas, and it needs to be spent by Government. In fact, there is an encouragement to spend that money in areas that are about climate change, because that actually is a very progressive investment, because those are the risks we face and there’s an acknowledgment of those risks. In fact, the report writers warn that one of the things that we need to do is think very carefully about that climate change situation in terms of what it is putting at risk for us, because it is putting us at risk when we don’t acknowledge that we are going to face some real crises in that area—things like the water pipes that I was talking about. My understanding is that 4,000 of those water pipes will be at risk because of climate change, so we have to build robustly and we have to build things that actually don’t put our children at risk of future debt. And we’re doing that.

In fact, I was interested to hear several, what I would call, ideological comments come in from the other parties about what we should not be doing. There was the suggestion by ACT that we should be selling assets, and there was a suggestion by National that Government doesn’t do this well. What I would contrast that with is actually the report itself, where there is a part of the report that talks about the public investment in infrastructure, and it actually specifically talks about how the international experience is that it’s really important for Government to invest in those areas, because, if it does, actually other parties crowd in—they’re encouraged to actually innovate and to invest as well. So it’s very, very important that our Government takes that kind of role, and that’s exactly what it’s doing.

What they also talk about is the significant opportunities that come out of actually looking at the risks that we face in an area like climate change and responding to them as a Government, because, if we take them on as opportunities, we can do things that actually produce a lot more income for New Zealand. We can look at things like sustainable fuels. We can look at waste minimisation. These are all consistent with our climate goals, but they’re also ways of actually shoring up our economy.

One of the things that is very clear in this report is that there is a robust review process. There’s a discussion of this in the report, and there’s a discussion of this in the report that the Finance and Expenditure Committee made on it, where we talked about the kinds of things that are here at the moment in our system that really keep eyes on the kinds of responses that the Government are making. So Treasury does things like it reviews the economic response, it reviews wage subsidies, it reviews the Business Finance Guarantee Scheme, and it also intends to do a wellbeing report by the end of 2022, which is a very interesting concept, I think, because we’re getting at the heart of matters.

One of the things I’m most proud of, of this Government, is that there is a focus on employment, and that was true in this response. Let’s face it, this Government did spectacularly when it came to keeping people employed. And, while the Opposition likes to talk about self-reliance, what I know from my career in law is that the most important thing that people can have if they want to be self-reliant is a job. They don’t need any job; they need a well-paying job. Today, we had statistics come out that said that Māori unemployment was down to 5.5 percent; Pacific unemployment was down to 5.4 percent. That is extremely important, because that is taking a group that has been marginalised and unemployed in much higher numbers than Pākehā, and they are now working. That’s a sustainable future. That is a totally different thing that is going on when that happens, and it’s a very important thing that’s happened, and I’m very proud of it.

I’d just like to end by saying that, when I read this report, I didn’t feel despondent. I didn’t spend my time worrying too much about the things that have been mentioned by the other side, because it was an overwhelmingly positive report. It was quite a creative report, it pointed us in the right direction, and it talked about things like infrastructure, and some of that was a little devastating that we hadn’t done enough over a very long time over our infrastructure. But it pointed us absolutely in the right direction, and it seemed to me a very robust system of really robust reporting that was going to put us on the right track.

But, more importantly, I was proud of the Government that I’d come into for getting it right as much as they had—for actually making sure that, when the pressure was on to try and spend more, when it was not appropriate, it hadn’t. But, when it was a rainy day, it had spent the money that was required. And, consequently, we just have not had the awful forecasts we had—that people would be unemployed. We haven’t had that. What we have is tough times at the moment, but people have jobs, and that is so, so important to their dignity. It is so important to whether they can pay the mortgage. It is so important in terms of whether they can weather this storm. And that happened under this Government’s watch, and it is absolutely reflected in this report. So I am very pleased to commend this report to the House.

The time for this debate has expired. The question is that the motion be agreed to.