Urgent Debates — Half Year Economic and Fiscal Update 2024—Release

I call on the Hon Barbara Edmonds to move that the House take note of a matter of urgent public importance.

Thank you, Mr Speaker. I move, That the House take note of a matter of urgent public importance.

There was once a time in our country where a child who’d lost their parent could rely on the State to provide a safety net so that they wouldn’t fall through the cracks, where a child whose parents lost their jobs could turn up to the local WINZ and be treated with respect, have dignity, and be asked questions like “How can we help you get into work?” There was once a time in this country where a Government would help their people get into their first home, and would continue to build social housing so that those who didn’t have a home could have access to a roof over their heads. There was once a time in this country where evidence, science, and data would drive decisions by a Government—

Hon Chris Bishop: Point of order.

SPEAKER: Point of order, the Hon Chris Hipkins.

Hon Chris Bishop: Bishop.

SPEAKER: Bishop—sorry. Yeah, OK, let’s start again, shall we?

Hon Chris Bishop: Mr Speaker, you have granted an urgent debate on the Government’s Half Year Economic and Fiscal Update (HYEFU). We are now one minute into the speech of the member who requested the urgent debate, and we’ve had a lot of talk about children, or one particular child, but the HYEFU has yet to be mentioned. So it’s a bit strange that we’re now enduring a general debate speech with two days left to go in the year, when we’re meant to be having a debate about the HYEFU. We’re prepared to debate it, but the member seems unprepared to actually address the issues.

SPEAKER: Well, that I consider to be a pretty unhelpful point of order. I was watching the clock. The member will come to a point very, very quickly, but I suspect that she was setting up the points that she wants to make about the HYEFU, which is not unreasonable from someone who is getting to move a debate.

Hon BARBARA EDMONDS: Thank you, Mr Speaker.

Hon Dr Megan Woods: Economics is about people.

Hon BARBARA EDMONDS: Because it’s all about people. Every single number in the HYEFU is about decisions that impact people, that impact communities, that impact organisations, and that impact businesses in our country.

There was once a time in our country where social service providers could depend on Government funding to serve communities that the Government could not reach. There was once a time where Oranga Tamariki service providers could care for vulnerable children because they knew that funding was coming down the line. They knew that when times were going to be tough, there would be a Government to serve them. There was once a time in our country where Governments made decisions, took responsibility for them, and paved a vision and a future for our country that served everyone, not just their mates in the tobacco companies, not just their mates who are landlords, not just their mates who are getting far higher remuneration than minimum-wage earners.

With the release of the half-yearly fiscal update and the Budget Policy Statement, it’s very clear that those days are over. Let me run the House through the numbers. Net core Crown debt will peak at 46.5 percent. Net core Crown debt will now be 3.5 percent higher than what was forecast in the Budget; $58.7 billion more debt, peaking at $235 billion, than what was forecast at Budget. The economy is shrinking. It is predicted to be $20 billion smaller in 2028. The $19 billion higher net core Crown debt will be higher than what was in the Minister of Finance’s Budget.

If it wasn’t clear, I am pretty sure it is crystal clear now that this Government is borrowing for the groceries, is borrowing for tax cuts, and has made deliberate choices to make it hard on every single body except for their mates. They are giving with one hand, “With tax relief”, the Minister will crow, but, on the other hand, they have reduced the subsidies for public transport funding. It’s going to be more expensive for our kids—

Hon Nicola Willis: What’s this got to do with the HYEFU?

Hon BARBARA EDMONDS: —to catch the train or the bus. And the Minister of Finance is asking, “What’s the relevance of this?” That’s the problem. That is the problem. She is so removed from the connection of her decisions to people in our community, to the families who have to put their children on rail or buses, from the families who have to depend on their schools to pay for their lunches. For the ratepayers who depend on a Government to support them with water infrastructure, to spread out the debt across the generations to help them so that this generation is not crippled with that debt—that is what fiscal prudency is about. But, again, that side of the House fails to connect that this document with numbers is all about people.

Now, I will hear the same spin I have heard for the last year from this Government. We will hear the same spin: “We inherited a mess.” Well, you know what? We take responsibility for our spending that saved lives, that ensured families and employees stayed connected to their workers. We take responsibility for that, because 20,000 people did not die because of those decisions. We take responsibility for the infrastructure spend that we had to do, which I note many Government MPs across the House have been present at to either cut a ribbon or to put a shovel in the ground. And I get it, right—I get it. I get that the infrastructure spending through COVID to fix fire stations across the country were needed. Fire stations help meet the needs of communities, so I welcomed those Government MPs last year when I was cutting the ribbon, because I knew the importance to the community, I knew the importance to people.

What really, really grates me is this particular sentence in the Budget Policy Statement, on page 3: “Second, savings will need to be found, beyond those already identified in the previous Budget.”

Hon Nicola Willis: Yes—absolutely.

Hon BARBARA EDMONDS: “And third, with a small number of exceptions, government departments should expect to receive no additional funding in the Budget.” And “Yes”, the Minister of Finance says—but it’s choices. We told the Minister of Finance that the tax cuts were unaffordable. We told the Minister of Finance that that was absolutely irresponsible, but she still gave the tax cuts, she borrowed more for the tax cuts, and as a result she has taken away with the other hand. She has ripped away that relief by making it harder for families to access relief for early childhood education, by making it harder for families for public transport subsidies, by removing universal prescription fees, by ensuring that they’re not putting downward pressure on rents, by giving tax breaks for landlords. This side of the House did have interest deductibility, but it was for the build of new houses. It was to incentivise the building of new houses.

What do we see from the other side of the House—and this is what I need to warn New Zealanders of. Every single MP, when you go to your community, will need to go eye to eye with these social service providers who are dealing with more homeless people, who are dealing with more people who cannot make their everyday budget because of decisions made by this Government. Instead of helping those families being able to access their entitlements—their entitlements—this Government has just made it worse. Dashboards, performance indicators—what about these people’s entitlements? They’ve lost their jobs. It’s quite clear in HYEFU that this Government has no plan to help the economy grow, and that’s why the numbers reflect that. That’s why our economy is shrinking.

No matter how much this Government likes to say productivity will get us out of here, I’m still waiting for that plan. Has anyone seen that plan? Anyone seen that plan? Anyone seen the plan to build infrastructure? I’ve seen plans for potholes—I’ve seen plans for potholes—but what I haven’t seen is a vision, a plan for our country. All we’ve seen is cuts, but then handing out free relief to their mates—taking away from everyday New Zealanders in order to pass the buck on to them another way.

We are having more New Zealanders—almost every five minutes—leave this country because they don’t see any hope. We are seeing grandchildren leaving this country because they will get paid better over the ditch. They will get better work conditions. They will have people that will fight for them. There will be infrastructure projects that are happening. Instead, we have 12,000 fewer construction sector workers because this Government, based on these numbers, based on more cuts to come, will not be building houses. They will not be helping to repair our schools that need repair. They will not be helping to ensure that our infrastructure and our construction sector workers stay here. You need that pipeline—you cannot just wish a pipeline of builders, plumbers, and sparkies. That’s why we are having net record migration from our green shores: because this Government is failing New Zealand, with no plan and no vision for the future.

Well, for the first minute I wondered if that was going to be a leadership pitch, but judging by the faces opposite, that made them feel even glummer than they do when Chris Hipkins is asking questions. What that speech confirmed is that the Labour finance spokesperson is still labouring under the naive illusion that every spending whim can be met from the magic money tree at the bottom of the garden. Well, there is no magic money tree. There is the back pockets of working New Zealanders. While the last Government was happy to treat them like a bottomless ATM, running up the credit card, there’s now a fiscally disciplined team in charge. What that speech demonstrated is that the Labour Party members opposite have not yet taken pause to consider, “How should we differentiate ourselves from the spendthrift, debt-ratcheting lot that preceded us?” Instead, what they are doing is saying, “Everything is fine here.” In fact, it’s like The Lego Movie: “Everything is awesome”. “It’s all fine—nothing to do with us.”

Well, a few facts, because I like numbers—I think that’s good in a finance spokesperson. Here’s the first one: net core Crown debt under the previous Government went from $57 billion to $175 billion; more than $100 billion added to debt in just five years under the past Government, going from 19.5 percent of GDP to over 40 percent of GDP. Here’s another one: the operating balance—the difference between what the Government was earning and spending—was in deficit for five of the years they were in office. Here’s the third thing: what was driving that? Well, spending was so lavish—went up by more than 80 percent on things like light rail phantom projects that went nowhere, three waters reforms that nobody wanted, the idea for a pedestrian bridge over the harbour—that operating Crown expenses went from under 30 percent of GDP, 27 percent, to more than 33 percent. And all of that spending, what did it do? It drove inflation to 7.2 percent, creating the worst cost of living crisis in a generation. What do we get from the finance spokesperson? She says we should have just carried on as we were.

Well, today, what I laid out is that this is a Government with a tough job on its hands. In the half-year update, we are truly seeing Labour’s chickens coming home to roost. Now, we’ve had a chapter in New Zealand political history where the Government’s focus was continuously on how they could spend it—how they could spend more and more and more and add more layers. Well, that chapter now needs to come to an elegant close as we open the chapter called “How do we earn it?” What New Zealanders understand is that, if you want a nicer car, you need to earn more money. On this side of the House, we understand that. For New Zealand to have the public services that Kiwis deserve, for young people to have the opportunities that they need, for us to be able to have the growing incomes we all aspire to, we have to grow the long-term productivity of this economy. Today’s books lay that very bare.

Now, I am a little confused by Labour’s position. I want to take you through a few things. On the one hand, today, we had a focus on the fact that, yes, as a result of the deteriorating fiscal forecasts, we are expecting an uptick in debt as a proportion of GDP. That is something our Government takes very, very seriously. It is why we have instilled a disciplined fiscal stance with very tight operating allowances. It is why we are conducting the good business that small businesses, households, everyday New Zealanders do all the time, which is saying, “What can I reprioritise to make sure my money is going to the most important things?” As a Government, we’re saying, “We want to invest in schools, in hospitals, in police.” To do that responsibly, without creating a monster debt burden, we have to be prepared to look for savings.

Barbara Edmonds seems to think that we should just ignore debt. As recently as March—just eight months ago, colleagues—she told Radio New Zealand that a future Labour Government would consider taking on more debt. That’s her solution. Just two weeks ago at the Labour Party conference, surrounded by her mates, she argued that surplus—that is getting the books back into balance—is a moot point. This kind of mixed position is very hard to take seriously. Of course, I actually feel for her, because what she’s surrounded by is a group of people who wouldn’t know how to run a business and a set of accounts if it rolled them over. Two members of her own party policy council recently burst into print, arguing that the way out of the Government’s economic challenges is to spend more. That was their answer that, in fact, what needs to happen is to simply spend more. Well, when we look at the fiscal position that the Treasury updated today, what it does show is that that position has deteriorated significantly over the past six years. It turns out that the Labour Government’s decision to go on a reckless spending spree has had pretty significant impacts on our economy.

I do want to highlight this for members, because we are going into Christmas and New Zealanders deserve some good cheer. Here I would tell you there is some good cheer in the documents that were released today that Barbara Edmonds is clearly yet to read. The first is this: the economy has reached a turning point. Inflation is back under control. And that matters to every New Zealander who has struggled with rising prices over these past three years. The Reserve Bank has begun reducing interest rates. That matters not just to every family with a mortgage, but it matters to the small businesses who are going to see more money flowing into their tills too as those families have a bit more to spend. What these books also show is that household spending and business activity is expected to lift.

After several years of growth jumping along the bottom, in and out of recession, we are now able to forecast confidently a sustained period of economic growth. I do care about what that means for GDP and I do care about what that means for debt to GDP and the operating balance and all of the measures which we’ve accounted for in these books, but mostly why I care about it—and this is the disconnect with the member opposite—is because when you grow an economy more, you provide better opportunities for New Zealanders. Actually, that’s where higher incomes come from, that’s where better jobs come from. Higher employment comes with higher growth. If you look around the world, the countries with the best health systems, the countries with the best appointed classrooms, the countries that invest the most in science, are the very same countries that are the wealthiest.

That is why, on this side of the House, we take so seriously our duty to take a range of measures to increase the productive capacity of the economy. There’s no silver bullet. It’s not all going to deliver tomorrow. Does that mean we shouldn’t improve human capital by getting the basics back in our schools? No, it doesn’t. It means it should have been done six years ago, and they didn’t do it. We’re going to continue our reforms to cut back the red tape that has weaponised too many of New Zealand’s laws against progress, against development. We are on the side of getting things built and getting things done, and the fast-track legislation today proves just that.

We are a Government that will get into 2024, when it comes to infrastructure delivery, partnering with the private sector, using modern funding and financing tools so that New Zealand can have the infrastructure needed for productive growth. We’re going to get serious about the science system, about making it commercial, because, actually, we need to connect our economic growth objectives with a considerable investment that we make in science. We need to not just sell to ourselves and talk to ourselves about how to spend money. We need to connect with the world. We need to say yes to investment from those firms and countries who want to create good jobs and incomes here, and we need to trade with those countries too.

Where we stand today is in a very stark place, because I recall, in my time in this Chamber, thoughtful debates where people talked about how to solve the problems. What we’ve had from those opposite is simply wilful denial about the challenges New Zealand faces. Well, the good news is this: Kiwis are smart people. They elected a Government who they could trust to get on and solve it. We have laid out a path to get our books back in balance, to bend the debt curve down, and to do it while investing in essential services. And here’s the thing: we’ve closed the chapter that’s all about spending more for spending’s sake, and now we’re getting on and earning it.

E te Māngai, tēnā koe. Tēnā koutou e te Whare. You cannot cut your way to prosperity, and here I just want to point out a few things from the Half Year Economic and Fiscal Update (HYEFU). The fiscal decisions of this Government and of this Minister of Finance have exacerbated the recession. The Reserve Bank initially indicated that we were facing just a light downturn, but now the growth numbers keep on getting worse. This time last year, HYEFU was projecting a 1.5 percent growth this year; now, the actual rate is minus 0.2 percent. Next year’s growth, at the Budget in May, was projected to be 1.7 percent, but it’s now projected to be 0.5 percent. That is because this Government is not even meeting its own rhetoric and metrics of economic orthodoxy. The Government is cutting its spending from approximately 34 percent to 30 percent, but it knows that households and small businesses, and definitely not the oligopoly that we’ve been taking about at the Finance and Expenditure Committee, are not going to fill that gap.

Government decisions, decisions made by the politicians sitting on that side of the House, are diminishing the growth that they so love to talk about. They are diminishing productivity, and they are knowingly increasing inequality and climate-changing emissions—

Hon Simon Watts: Rubbish!

CHLÖE SWARBRICK: —which, Minister of Climate Change, will only make things worse for future generations. Treasury’s forecasts have only massively deteriorated since the Government took power. In just one year, the Crown’s forecast operating balance for 2025 has worsened by 50 percent, from a deficit of $6.6 billion to $9.9 billion. This is unprecedented outside of global financial crises, and it’s self-inflicted because the Government has decided to contract its spending so much.

HYEFU shows us what all of us know—that is, that tax revenues have stalled due to unemployment, which Government decisions have exacerbated, and company failures and a deep recession; that the Government expenditure is climbing due to that unemployment and those company failures, and there is no evidence whatsoever, no plan that we are hearing from this Government, to get us out of that. This is the austerity playbook. It is to defund public services to failure, to watch them fail, point that out to the public, and then say, “Hey, we should privatise that.” Mark my words: that is the next thing on the agenda. Treasury notes that the Government’s planned road-building frenzy, which the Minister of Transport was crowing about in question time today, has no believable source of revenue other than to widen the deficit faster than Waka Kotahi can widen those lanes.

We heard just before, from the Minister of Finance, about how if you want a nicer car, you’ve got to earn more money. I think the Minister, who was doling out to members of the Opposition some orthodox economic speaking notes, should in fact reflect on the fact that the economy is not a car. The economy is all of us, the stuff that we create, and the rules that we put in place in order to try and get certain outcomes, and what this HYEFU underscores is that we are setting up for a two-track economy—that is, wage and salary earners, beneficiaries, and small businesses all going backwards. Meanwhile, the oligopolies—that is, our banks, our supermarkets, and our gentailers—will continue to compound their power and their profits under decisions made by this Government.

We can have a better world. It is entirely within our grasp. In fact, all members of this Chamber know that, because all members of this Chamber were across the Inland Revenue Department report released last year which told us that the top 311 households in this country hold more wealth combined than the bottom 2.5 million New Zealanders. That is not an accident; that is a conscious decision made by politicians in this place to entrench a tax system that, we all know, sees those at the top pay an effective tax rate less than half that of the average New Zealander—that is, our teachers, our nurses, our doctors, and those public servants at the front line, who are paying double the effective tax rate of the wealthiest. This landlord Government is laughing their way to the bank.

Thank you, Mr Speaker. I want to talk about this Budget Policy Statement and Half Year Economic and Fiscal Update, but first, I just want to remark on a couple of comments I’ve just heard from Chlöe Swarbrick.

She said that this is an austerity Government that’s spending so little money so that it can make businesses go broke and then point to the failure. Now, I just want to bring some facts into the debate. In the back of this document we’re debating today, it says very clearly that in 2018, 2019, when Chlöe Swarbrick was on the Government benches, voting for every Budget, the Government spent 27 percent, 28 percent at max; today, in this statement, the Government is spending 33 percent of GDP. Only Chlöe Swarbrick can point to a Government that’s spending five percentage points more of the economy than she was responsible for spending and then say that this is an austerity Government. What I’d say to Chlöe Swarbrick is that a political career is a little bit like one of those polaroid photos: slowly, people see your true form. Chlöe Swarbrick is increasingly being found out for having great-sounding rhetoric, but when you look at even the most basic facts of what we’re debating, she doesn’t stack up.

I want to say to Barbara Edmonds, who stood up and said, “These numbers are about people—these numbers are about people.” Yes, we know that, Barbara Edmonds, but the fact that people are facing such a tough time at the moment is precisely because we had a Government that was happy to lock people down—to lock people down in their homes, to stop them from seeing their loved ones, and she said, “Oh, I’m so proud of our spending that saved people’s lives.” Actually, the spending was made necessary by the excessive response to COVID. Here’s the really interesting thing about that argument from Barbara Edmonds: the spending kept on going, even after COVID had ended. That is what this Government now faces. That is what we hear from the Opposition. I didn’t want to spend the first half of my speech talking about the Opposition, but people need to see what the alternative actually is: people that are profligate and wasteful and put us in a position where, yes, Barbara Edmonds, real people are having hard choices going into Christmas because the predecessors spent it all.

I’m proud to stand on this side of the House, where we don’t sugarcoat it; we face up to the reality that these are tough times. These are tough times for the New Zealand economy. They are tougher, it’s been revealed in these documents, than the Treasury had previously reported. They’ve had to point out that the economic conditions five years ago were not as good as they were reporting back then. That is because we have a productivity problem in New Zealand. No matter how hard people work—and we’re some of the hardest-working people in the world—people aren’t getting the increase in productivity.

What are we going to do about it as a Government? Well, two things. We are going to reduce wasteful Government spending. I predict we’re going to have to reduce it by around $6 billion and find ways to do stuff better and smarter. I know what the other guys will say; they’ll say, “Oh, well that means you’re going to cut services.” No, actually, spending money is not its own objective. Our objective is to deliver better and more efficient outcomes for less money, just like people in farms and firms and families have had to do while they were in Government, and continue to as we turn the economy around.

The second thing we’re going to do is we’re going to reduce red tape and regulation so people can spend more time doing the things that make their lives better and allow them to provide for themselves and their loved ones, and less time in compliance and administration activity or being dissuaded from using their creativity whatsoever. That’s what we have to do.

We cannot afford to listen to the rhetoric, the empty and—as I’ve shown—inaccurate rhetoric of the Opposition. We must confront the reality that this Government faces alongside New Zealanders and make our own operations more efficient in order that New Zealanders can see the Government taking a smaller slice means having more for themselves. The Government places less red tape and regulation on them so that New Zealanders can use their time and talents for the good of our nation and themselves and their families. Under those conditions, I’m confident we will see a turn-around that will keep these people far away from any levers of power for a generation to come. Thank you, Mr Speaker.

The value of today is that the New Zealand public has been given access to data which reflects that Treasury itself realises it needs to do better. This is a revision of forecasts where Treasury itself says that it’s had to go back and rework its own modelling, and this document says that those forecasts reflect nothing in terms of what this Government is doing to remedy and turn around the situation that the Government has inherited.

Yes, you’ll hear all sorts of strange, bizarre rationalisations from the cooker, lentil speakers from that side of the House. This has got nothing—nothing—to do with the changes that we are making because they are overdue. Go no further than page 8—growth strategy. The growth strategy is necessary because we’ve come out of a recession. We’ve come out of a period of time where the Reserve Bank has maintained extraordinarily high interest rates to deal with the legacy that we inherited: too much money chasing too few goods.

If you’ve got any doubt as to whether or not the recipe we are pursuing viewing will or won’t deliver, look no further than the massive growth in export income coming from the primary sector announced last week. Fisheries up. Horticulture up. Farming up. Forestry increasing. What does the other side of the House want us to do? They don’t want a growth strategy. They want us to halt our regulatory green, brown, red tape - busting efforts, but unless we free the economy from the calcified rules and regulations we’ve inherited, we will not see the growth.

Sure, we are going through a struggler’s gully dip, but then all Kiwis know that, because they’re managing their own household budgets. No one believes the green soup, the cultural promises that have been put about by the Opposition. It is only by building confidence and certainty with new investment, which will flow and blow forward into our economy like leaves in an autumn storm, and the effect of the fast track will be like a storm—blow away all the cobwebs of complacency, blow away all of the insects trying to eat and gorge upon our own ability to pay and govern ourselves with a surplus.

I say to you Kiwis, the reality is that this is a day of a turning day. We are confident that we have the policies, we have made the decisions—yes, we do need to make an effort to take the public with us, but we’re justifying why we’re doing these things because it leads to economic surplus. The economic surplus is the only way the hospitals, the schools, the nurses will thrive. That will not take place unless we boost innovation, change the regulatory framework, and also invest in education. Strip out of our education all of these marginal issues to do with gender and such matters. Go back to science, go back to mathematics, go back to reading and writing, because that’s where we’ve got a deficit.

Of course, these are contestable ideas, but there are things that you cannot contest—i.e., we have inherited a system where costs are consistently understated and risks are overstated. For those reasons, the recipe, the changes, and, indeed, the options that will be outlined later today inside the fast track—and it’s a tragedy that they won’t vote for it, but they will all be present when the projects are opened. They will all stand and cuddle the workers when they have new jobs. They’ll all stand and use the new infrastructure—bridges, roads, new infrastructure that will define a new era of prosperity in regional New Zealand.

My plea: New Zealanders, dismiss the empty promises, and, as I’ve described earlier, the cooker, lentil Green thinking. Kia ora tātou.

Well, we’ve heard a lot of rhetoric coming from that side of the House—

Debbie Ngarewa-Packer: Harry Potter.

RAWIRI WAITITI: —and that was like listening to a Harry Potter movie, not that I’ve watched many. I would suspect that’s what it sounds like: “That we’re doing the best we can for all of New Zealanders, and the growth strategy, but it’s important to work now to create conditions for future growth!” They talked about employment, but unemployment is up. It’s the furthest up it’s been in a generation, at 4.6 percent. For Māori, it’s double that: 9 percent unemployment—shame! Shame on you.

Māori debt—no surplus. There’s more debt, no surplus. It’s different Government, same story for Māori. This is what happens when you put a landlord who flips houses for profit in charge of the country. This is what happens. I’ve got a bit lost with David Seymour’s kōrero. I know he’s not lost because he’s got an “atlas”. He’s got an atlas to show him the way, and when you hear the rhetoric coming out of that side, they’ve all got an atlas. You hear “elite Māori”, you hear all of that. All of that has been orchestrated by their atlas you use to ensure that you don’t get lost when you’re using the mother of right-wing think tanks—when you’ve got the mother of right-wing think tanks and the mother of the past chairperson of Atlas Network giving money, donating money to ACT. Dame Jenny Gibbs—absolutely: $50,000. You can tell that they have an atlas that makes sure that they don’t get lost, and lost in a way that continues their policies to benefit the 2 percent of the population that control 50 percent of this country’s wealth. That is what we’re dealing with.

You get $3 billion in tax cuts for landlords while more than 2 million people are earning less than $30,000 per year. You get a tax system that lets the richest New Zealanders get away with only paying 9.4 percent in tax while the rest pay 20 percent. You get a Prime Minister who makes $769,500 in untaxed capital gains while he cuts school lunches. Five more years of deficit means five more years of pōharatanga—of austerity and pain for our people.

This Government is facilitating the biggest transfer of wealth in a generation from hard-working whānau to property developers and landlords, all while putting our country in an economic hole. As people, they are ripping off the working class, the poor, and we’ll have to dig ourselves out of this hole. Talk is cheap—talk is cheap, unless you are the Minister of Finance. When you’re the Minister of Finance, it costs $1 million an hour. That is how much this Government is borrowing to make up the services they cut. This Government can borrow billions for deficits of their own making, cut jobs of hard-working people, cuts to healthcare, and give landlords a free ride. Where is the investment? It isn’t where it should be, in the future of our mokopuna.

Real deficits are staring at us in the face: a housing crisis that leaves whānau in garages, a health deficit that sends Māori to their graves early, an education deficit that is cutting funding to critical areas, an economic deficit of their own making; deficits that keep hard-working whānau struggling and the wealthier getting richer.

The Half Year Economic and Fiscal Update paints a clear picture of the Government entrenched in the deficit and debt, yet blind to the realities that Māori communities face every single day. This Government has a choice: it can perpetuate the deficit for Māori or it can invest in us as the solution. It is time to invest in Māori-led solutions that uplift our whānau. We know the answer: they lie in recognising the value of tikanga, rangatiratanga, and kotahitanga as foundational to a thriving Aotearoa. Our message is clear: there can be no fiscal wellbeing without Māori wellbeing. Deficits will not disappear until Māori are at the table. Thank you very much, kia ora tātou.

Thank you, Mr Speaker. This debate started, within the first minute or so, with the Leader of the House calling a point of order and asking why our finance spokesperson in Labour was talking about people. I think there could be no greater moment in this debate that shows what this Government is about—and it certainly is not about people. It is about the child that Barbara Edmonds was talking about. It is about that child and all the other children whose parents are coming into mine and colleagues’ electorate offices who can’t get into transitional housing. Some of them have major medical conditions, but they can’t even get on the waiting list and they’re living in their cars. When we see in this Half Year Economic and Fiscal Update that transitional housing has been removed as a risk, it tells a story of a Government that has given up on its people. Sure, the expenditure on motels has been reduced, but I can tell you, Mr Speaker—and we have many, many cases—they are living in their cars.

Then we had the Minister of Finance, who spent her time not only talking about the last Labour Government, but so bereft of vision and ideas, she was talking about the Labour Party Policy Council. Now, I haven’t even resorted to talking about the Labour Party Policy Council in a speech I’ve given in this House, but talking about our conference and our policy council, this is some serious inside bull that shows that that Minister has no vision and no plan for New Zealand.

That is a great tragedy because this document that was delivered today tells a very grim story for New Zealand and it tells a grim story for the people of New Zealand. This is what this Government has to understand: economics is not something that sits outside the domain of people’s everyday lives. This talks about rising unemployment—this talks about unemployment rising further into 2025, more people and more families who cannot get by. This document talks about net core Crown debt peaking at its highest level since 1994. That tells a story about us having to spend more money on that borrowing rather than schools and hospitals and houses. This is about choices this Government has made. Let us not forget that they gave $2.9 billion in tax cuts at the last Budget, when faced with many of the forecasts that we’re seeing continuing in this project.

Disturbingly, what it shows is the austere Budgets that are to come in the next two cycles. It confirms the operating allowances of $2.4 billion, but well over a billion dollars of that for Budget 2025 has already been committed. There is $700 million of unallocated operating allowance that remains to be allocated. This means all those things that the Government has yet to deliver on in its coalition agreements and in its manifestos stand next to no chance. We’ve seen the cuts and we see dire warnings in this document that actually the Government is leaving optionality around further cuts—they’re saying, “No, at the moment, but we’ll reassess and see what economic conditions look like in 2025.”

Be afraid, be very, very afraid, of Budget 2025 and what it is going to bring. It is going to bring more cuts. It certainly isn’t going to bring more spending, and Minister Jones might like to reflect when he’s talking about how great the spending decisions are that are outlined in this document, what the document says about his Regional Infrastructure Fund—the fact that it may need to be adjusted, more money—but Nicola Willis has given a clear message to the country today that she has prioritised tax cuts for landlords and tax breaks to tobacco companies over the fact that New Zealand needs more spending. That is what is coming home to roost. This is a Government that does not understand about that child; it does not understand about people. It is a Government that is failing New Zealanders at every turn.

Thank you very much, Mr Speaker. What is clear is that New Zealand, like many other countries, has faced significant economic challenges in recent years. New Zealand businesses and New Zealand households are doing it very tough, and I think the reality is that New Zealand households already know that the results included in this Half Year Economic and Fiscal Update are the reality in which they already face. They see the challenges every day when they go into the supermarket; they see the impacts in their bank account. They see the impacts of what is a result of what has been inherited by this Government—and that is, we have inherited a sick economy.

What this Government has been working very hard on, in only 12 months, is to write the prescription to dose the medicine to get this economy back on track, but the reality is, as we’ve heard today, time and time again, the Opposition are in denial. They still deny that they are the problem and that their actions have led us to where we are today, but New Zealanders are not silly; New Zealanders understand why we are where we are today, and they put the trust in this side of the House to get them out of the ditch and get us back to where we need to be.

Slower growth in our economy has resulted in lower forecasts of tax revenue. As the Minister of Revenue, I see this very clearly. Revenue forecast, as a result of that constriction in our economy, is down $13 billion over the forecast period, peaking at around a $4 billion reduction per annum over that period. That is a significant reduction in revenue available to Government to fund the public services which we require. The likely comparative numbers around that are the Defence budget and the Police budget. Together, they do not even add up to $13 billion. That is the quantum of reduction of economic constriction as a result of decisions made by that prior Government.

What it also has shown in the Treasury forecast is that their over-optimistic assumptions in past forecasts have hidden some of the issues. I wish we had had this forecast when we came into Government. I wish that we could have had this perspective of what is the reality in our fiscal situation and what is only now coming to light as a result of over-optimistic assumptions in past forecasts being corrected. Revised economic forecasts affect the fiscal outlook, and the reality is that this fiscal outlook will continue to be challenging.

The Half Year Economic and Fiscal Update reinforces the importance of the trajectory that this Government are leading, which is focused on fiscal discipline around expenditure, getting us back on track, living within our means, only spending what we can afford, and not indebting the future generations of debt that doesn’t deliver anything new—no new significant infrastructure on the increase in debt by that prior Government. That is absolutely disgraceful. And where is the apology? Where is the accountability for the debt that has been laden on future generations by that past Government?

They are like crickets. They are crickets because they do not take accountability for their actions, and that is going to be on this side of the House to tidy up that mess, and by hell, we’re going to do that. We are doing that relentlessly and we will continue to do that. Why? Because we understand the reality of hard-working Kiwis around this country. We’re the first to make sure that we’re going to be putting money back into their back pockets—of hard-working Kiwis—not taking it away, not thinking we know how to spend their money better than they do. That is the change in reality, and that is what we will continue.

What is positive to note is that the outlook going forward is going to be better. We know that the economic growth forecast for next year is increasing. We are at a turning point. We are in a turn-round, and the actions that this Government has taken, on this side of our House, are setting the foundations for a successful future in this country which will see increased economic growth, increased value, and increased benefits for hard-working Kiwis.

This Government is proud of its contribution and we are proud of the efforts that we will be doing to get this country back on track.

There is something quite revealing in this Half Year Economic and Fiscal Update (HYEFU). It’s talking about the new risks to the Government’s financial statements, the new fiscal risks. On page 67, these statements tell us that the Health New Zealand operating deficit is a risk. What does that tell you about the attitude of that Government? It says that people and their health are a risk, a real risk. Now, they’re worried about the operating deficit in Health New Zealand—a deficit that I might add was run up by some very clever accounting. They say, “There is a risk that the Crown may be required to provide further funding to support Health New Zealand”. Colleagues, your health, my health, the health of our families, the health of those mums and dads and their children—that Government regards it as a risk; not something that simply must be done but a risk, and that tells you their entire attitude.

When we dig into this half-yearly economic and fiscal update, let me start with the sentence that sets the framework. It says, “The New Zealand economy is experiencing a prolonged period of flat activity.” How is that getting expressed? Well, sitting on the page which has got the inflation data—inflation that was starting to turn down when we were in Government—it tells us that the Quarterly Survey of Business Opinion reports that firms have a modest uptick in how they feel about the economy, but the fact is—and I quote—“firms are as pessimistic about their current activity as they were during the global financial crisis.” That is on that Government’s watch. They are the Government now; they’ve been there for a year—“as pessimistic now as they were during the global financial crisis.” Confidence is down. We know that unemployment is going up, but it has increased, it says, “at a slower-than-expected rate largely owing to more people exiting the [workforce].”—that is people leaving New Zealand because of that Government, leaving the workforce and leaving New Zealand. It is a sad state that the economy is in.

There are all sorts of figures sitting here, but I want to talk to you about the Government’s plan. Their major plan, which they have set out in these documents but have not particularly talked about, is they want to ensure that the economy grows through lifting economic growth to address New Zealand’s long-term productivity challenge. Again, sitting in this document, how do we lift New Zealand’s productivity? Well, we lift it through education, we lift it through science. In particular, we know that if we lift tertiary education, if we ensure that around about 80 percent of New Zealanders have a diploma or a degree, then productivity will lift, but, sitting in here, we can see the funding for tertiary education projected out over the next few years: it doesn’t change at all. In fact, it stays at around about $5 billion. There is no investment in tertiary education.

Sitting in here, we can look and see the figures for science expenses. Now, that’s where we get some of our innovation; that’s where the new ideas come through. That’s where our talented people are supported in order to do the science which from time to time generates the idea that brings great innovation to this economy. Science funding: it’s flat or decreasing. In fact, the funding, of course, for Crown research institutes disappears, as we know it’s going to, but there is no indication of what this Government is planning to spend on science. They talk a big talk about lifting productivity, but there is no actual substance there behind their game.

I want to end by talking about their novel financial measure, OBEGAL—operating balance before gains and losses. It’s a standard measure. Alas, that standard measure did not show what the Government wanted, so they’ve created a new measure called OBEGALx, which does give a measure that the Government likes. They have engaged in some more creative accounting. It sits in page 9 of the Budget Policy Statement. We can see that by the time the Government finally gets there, they cannot get OBEGAL, the standard accounting measure, over the line, but by creating OBEGALx they can claim a success. I suggest that the Government does this a little bit more. It could have “Dunedin Hospital X” and claim that Dunedin Hospital has been built as promised. Perhaps they could have the “child poverty targets X”. They’ve shifted those around so that they can claim that they can meet them. What about the “ferries X”? There’s going to be an X there as well.

The half-yearly economic and fiscal update—that’s what HYEFU stands for, but I’m going to say it stands for “How You Economically Fouled it Up”.

It is interesting listening to members opposite, because, as various colleagues on this side of the House have pointed out, it is an extraordinary fiscal fantasyland that the Opposition live in. Having taken net core Crown debt from $57 billion—

Hon Rachel Brooking: We can remember wage subsidies.

Hon CHRIS BISHOP: —listen up; this is your record—to $175 billion in just five years, their solution is to borrow more, spend more, and tax more. It’s like the last five, six, seven years just never happened. It is quite extraordinary. How do you come down here to the House, having stuffed the economy, having bequeathed to the incoming Government the Half Year Economic and Fiscal Update (HYEFU) and the Pre-election Economic and Fiscal Update, and the HYEFU that we’re now talking about in this snap debate, and say with a straight face, “Don’t worry. We’ve got the answer”—says Deborah Russell and Barbara Edmonds and all of the also-rans on the other side—“Don’t worry about it. We’ve got the answer. The answer is more debt. The answer is more spending and more tax.”? It’s like the last six years never happened. It is truly an extraordinary fiscal fantasyland that they live in.

The operating balance was in deficit for five years, and now Barbara Edmonds stands up and says, “Nicola Willis is running deficits.” Yep, we are running deficits, and we’re determined to get back to surplus as quickly as we can. Barbara Edmonds stands up and says, “Well, the Government is borrowing more. The Government is in debt. The Government is borrowing more.” Yep, we are, because the last Government left us with this extraordinary spending track that we cannot turn around in one Budget alone. Barbara Edmonds says crazy things, like—

Ryan Hamilton: She does.

Hon CHRIS BISHOP: You haven’t actually heard what I said, but I agree with you; she does. She says crazy things like, “Debt is not the problem.” Her entire question time today to Nicola Willis was to ask a series of questions about increases in debt—after having said, earlier in the year, that debt is not a problem. Well, which is it? Is debt a problem that the Government can be lashed for or is debt something that we don’t need to worry about? The Labour Party need to work out what their best line of attack on the Government is. Is it that we are borrowing too much or is it that we are not borrowing enough? They don’t have their story straight.

Well, this Government has got its story straight. This Government’s story is the economic and fiscal reality that we inherited, which is that years and years of high Government spending, much of it wasteful, has driven Government spending to record levels, such that we ran operating deficits for five of the last six years, debt blew out to 42 percent of GDP, and we’ve got to get the country and the Government books back on track. That’s not an easy task, and the HYEFU that we are talking about in this special debate makes that really clear. I thought it was interesting when Barbara Edmonds led off the debate, because I thought we were going to be talking about HYEFU, but actually we spent 90 seconds with a sob story. It was sort of like a year 10 debating speech that somehow made its way into Parliament. It was quite an extraordinary series of events.

We’ve got our story straight, which is that, at the end of the day, what matters? Fiscal discipline matters. Yep, you can keep spending and laying it on the credit card bill, but guess what; eventually the people who lent you money come calling and you have to show a credible path back to surplus. That is what this Government is focused on. That involves tough decisions. It’s really easy in Opposition—I’ve been there—to stand up and say things like, “We will rebuild the new Dunedin Hospital.” OK. Well, to do that, you actually need to know how much it costs. The Opposition left us a project, with the new Dunedin Hospital, that started life as $1.2 billion and ended up on the thick end of $3 billion. It’s a bit like with iReX—iReX being another paradigmatic example. iReX sounded great when it was first posited: two new ferries for $700 million. Except, they forgot about the $3 billion on top of that to actually house the ferries.

Government involves tough decisions, and until the Labour Party Opposition get their heads around the fact that there is not a magic money tree at the end of the garden, they will continue to fail. And we are getting this Government’s books back on track.

The debate having concluded, the motion lapsed.