Budget Debate

CHRIS AUCHINVOLE Link to this

I will say it one more time: 170,000 new jobs over 4 years. That means higher incomes and opportunities for Kiwi families to get ahead in New Zealand.

The tax changes are sweeping. Seventy-three percent of income earners will now pay a top tax rate of 17.5 percent. Let me repeat that: 73 percent of income earners will now pay a top tax rate of 17.5 percent. That statistic makes a mockery of the outlandish and unreasonable statements of the Opposition that this Budget is designed to help the rich. It clearly is not. In fact, we can say that this Budget was done for the majority of people in the country.

Who will pay the cost of Budget 2010? Who will pay for these changes? Most of the extra cost will be borne by property owners, large foreign companies with interests in New Zealand, and people who previously used trusts to reduce their taxable income and gain access to Working for Families. Indeed, we have aligned the top tax rate with the trust tax rate to ensure that the highest-paid New Zealanders cannot structure their affairs to avoid paying the higher rates. This Budget is about helping hard-working New Zealanders and their families to get ahead. It is a once-in-a-generation opportunity to set the economy on the right track, to reward hard-working New Zealanders, to lift economic growth, and to aid us in getting back into surpluses earlier than was expected.

Is it not great for New Zealanders that Labour is not in charge? I do not say that nastily towards the individual members of the Opposition, but if they were in charge we would be languishing in deficits for decades, as they embarked on their fundamentally flawed philosophies of borrow and hope. It would have been a tragedy if they had continued in Government during the period of recession.

CHRIS AUCHINVOLE Link to this

Well, there we are; quite right.

We want New Zealanders to stay in New Zealand. We want New Zealanders to get ahead through living here, working hard, and getting the rewards they deserve. We want Kiwi families to have financial security and higher take-home incomes. This Budget provides that opportunity. The tax changes will improve the lot of every single person. Coupled with a GST increase, we are encouraging savings and investment over consumption. For those New Zealanders who would be most affected by the GST changes, we are offering generous compensation by way of increased superannuation for a start—

CHRIS AUCHINVOLE Link to this

—increased Working for Families payments, increased student allowances, increased benefits, and of course, as my colleague Mr Bennett says, most of all, increased tax cuts. The National-led Government is about improving the lot of everyone, and in particular that of the average worker. After Budget 2010 the average worker will be $15 a week better off, and the average household will be $25 a week better off. That is significant.

However, Budget 2010 is about much more than tax. It is about investing in the future. We are investing $321 million over 4 years into new science, research, and technology initiatives. We are investing an extra $2.1 billion in health priorities, including an extra $1.4 billion going to district health boards. Did we hear today from the Minister of Health? What did he say? Did he tell us that now a greater level of GDP is being spent in the country on health than ever before? I think that Minister deserves some applause, because, goodness me, if any portfolio has really been dynamically seized and dealt to, it is certainly health.

I was privileged to travel with the Minister of Health down the West Coast 2 weeks ago. We visited health facilities in Westport and Greymouth, and met the primary health organisation and other organisations. It was great to be with such a stimulating Minister, who takes his responsibilities so seriously.

CHRIS AUCHINVOLE Link to this

Well, yes, he does wear wonderful ties and shirts. Yes, he really does.

We are investing an extra $1.4 billion into district health boards. An extra $1.4 billion will be injected into better schooling and early childhood education. Savings across the tertiary sector will allow for the purchase of 1,735 additional full-time places at universities, and 3,173 extra full-time places at polytechs and institutes of technology, in response to demand. The Government is pouring money into expanding the Job Ops scheme and the Housing Innovation Fund, and into prisons, State highways, and more.

This Government is a caring, responsible, sensible, visionary Government. New Zealanders voted at the last election because they believed we had ideas that would advance the nation. Budget 2010 was produced on one of those days that the public will remember, because they could see many of our ideas and values coming together. We can see that what we are delivering is a better New Zealand for everyone.

I must say that one of the most heartening aspects of the Budget is that it goes a long way towards reasserting the opportunity for New Zealanders to make their own way and determine their own futures, independent of where they might have been born, what their training might have been earlier in life, and what their life experience might have been. The Budget gives opportunities. It is an egalitarian Budget, and we are an egalitarian country. We lost that for 9 long years, but now, with National, we are getting it back. That means a better New Zealand for the wonderful people of the West Coast - Tasman electorate—a resilient group of people, who will seize those opportunities with two hands. I am very, very proud to be serving them as their MP. That is why I am also proud to be a member of Parliament in the National-led Government. Thank you.

JOHN BOSCAWEN Link to this

I say to Mr Chauvel that that is right. Mr Chauvel is reminding me that we export 15 percent of our product to Europe, and 85 percent to countries that do not have an emissions trading scheme, and that is four times as much as Europe. Europe exports 20 percent of its products to countries that do not put these costs on their own economy. What are we doing? We are exporting 80 percent. It is an own goal, and we are going to tax people up and down the country.

One of my more successful meetings was held in Gore. At 11 o’clock on Monday morning in Gore, 52 people attended to discuss the emissions trading scheme. The meeting was held half a mile from the Deputy Prime Minister’s electorate office. What did those people complain to me about? They complained about the fact that the area is situated around coalfields, and the cost of the coal that they use to heat their homes in winter is going up by 30 percent. That is not a mistake. It is 30 percent. The cost of electricity might be going up by 5 percent, but the cost of coal is rising by 30 percent. Where is the money going? It is going in subsidies to the Japanese owners of forests in Southland; that is where it is going. This Government is prepared to put taxes, penalties, and costs on to its exporters, and to make it difficult for our exporters to expand, at a time when we need them to be expanding, and it is putting jobs at risk. Why? It is so we can pay, in the current financial year, $1.2 billion of subsidies to foresters, both pre-1990 and post-1990.

This is a disgrace, an absolute disgrace, and members of this Government know it. I urge members of the public to contact Ministers, and to contact their members of Parliament, because it is not too late. It is not too late for this Government to acknowledge that it made a commitment to the people of New Zealand not to lead on climate change, not to lead with a world-class emissions trading scheme, and not to bring in the most comprehensive emissions trading scheme that Dr Smith so proudly talked about in this Parliament fewer than 6 months ago. Thank you.

Hon TREVOR MALLARD Link to this

Well, I will say it again. I have been invited to repeat my comments by the former whip, Nathan Guy. How can a Minister of Finance have any credibility at all when he has taken half a million dollars, put it into his own pocket, and used it for his own purposes by declaring that he lives in Dipton when we know that he lives in Wellington? Where is the credibility? I ask where the fiscal rectitude is in that from Bill English. The problem is that the whole Budget—the whole Budget—is tainted because it was delivered by someone whom the New Zealand populace does not believe. People do not believe him, because he made a series of declarations that were just not true. And he did not pay back the money. He did not pay back over half a million dollars. We ask ourselves what sort of a Minister of Finance we have.

He has also absolutely refused to acknowledge the sound balance sheet he got when he became the Minister of Finance. There was nil net debt. How many Governments in the OECD are in that position? Not one. Members opposite cannot name one Government that received a nil net debt position. We had the unemployment rate under 4 percent at the point when those members took office. It was well under that of Australia, and look at it now. Look at those Kiwis. I think that all members in the House know that an enormous exodus across the Tasman is happening in a way that has not happened for quite a long time. People are going back across the Tasman because we know and they know that there are jobs in Australia and there are not jobs in New Zealand. The reason is that in Australia, the recovery was not choked off in the way that it was choked off in New Zealand by Bill English and John Key.

I acknowledge that the member for Taupō mentioned the cycleway, but what she did not say was that not a single kilometre has been built that would not have been built before then.

Hon TREVOR MALLARD Link to this

I ask that member to name the kilometre that was not already planned.

Hon TREVOR MALLARD Link to this

She should name the kilometre. Quickly, away she should go! [ Interruption] No, name it by interjection. Come on.

Hon TREVOR MALLARD Link to this

While we are doing the procedural thing, for the benefit of the member’s education, I say that she could have asked me to yield. I would have yielded, because she has told us something that we did not know. There is a kilometre. One kilometre has been built in Ōāmaru that was not already planned. And that was the grand plan of the Government for jobs! What about broadband? Members opposite should tell me about fibre core. They should tell me about the Crown fibre corporation and about one inch of fibre that has been laid as a result of the decisions made 15 months ago.

Hon TREVOR MALLARD Link to this

No, we have got this absolutely right. I got it in a briefing yesterday from them. Not a single dollar has been spent and not a single inch of broadband has been laid as a result of the Government’s intervention—not one, not an inch, not a cent. An arrangement has been made and, as a result of that, the bright, shining star of Steven Joyce is beginning to slip. He was the one who was going do it. In fact, I thought at one stage that he would be the Minister of Finance. I thought that John Key would do the right thing and push him in. But, I tell members what, given the progress that Steven Joyce has made, I reckon that Simon Power is the one. When those members finally work out that Bill English is not up to the job, Simon Power will be the one who will get the job.

Hon TREVOR MALLARD Link to this

I notice that Nathan Guy wants to tell us about Richard Worth and the reason that Nathan Guy got into Cabinet. I ask whether that member wants to tell us more about Richard Worth and the reason why he got into Cabinet. [ Interruption] Oh, he is not in Cabinet. Sorry, I thought that National had a talent-based ministry, but then I looked at Pansy Wong.

I say to Aaron Gilmore that I agree with him. I agreed with him when he told that group in the workingmen’s club in Christchurch that he could do a better job than Anne Tolley. That is true. I agree with him. I absolutely agree with him, but I think that Allan Peachey could—

Hon TREVOR MALLARD Link to this

The member should try a bit of cement—harden up. I wanted to say that that might well be true. He might well be a better Minister of Education than Anne Tolley is. That is not a high test. But we know that Allan Peachey knows about education. I do not always agree with him. I think that he has been wrong on a number of occasions. I certainly would not lease a corporate box in the way that that member did when he was the principal of a school, but the thing one cannot argue about is that he knows something about education in a way that the Minister of Education does not. That is the reason why she has made so many foolish mistakes in the time that she has been the Minister. I think that my colleague will talk about early childhood education, and about the Minister’s attack on standards and her cutting of the number of teachers. But in the end, this Budget will be known as the “hip pocket Budget”, because Bill English put his hand into people’s pockets.

JACQUI DEAN Link to this

It was not the only kilometre; it was the final kilometre. What a day it was in Ōāmaru. The sun shone, the temperature was balmy, and the crowds were huge as the Prime Minister of New Zealand walked down to the Ōāmaru harbour and officially opened the final kilometre of the Alps to Ocean Cycleway. I think there were 2,000 people in the crowd in Ōāmaru, which is a huge crowd for our small but very proud town. Half of the town turned up on their bicycles; everyone from little kids through to grandparents was there. There were penny farthings; there was steampunk. It was an exciting day. The town was galvanised, because people understood only too clearly the economic benefit that the cycleway from the ocean to the Alps will bring, not only to North Otago but also to South Canterbury. I thank the member opposite for reminding me to raise in this House this example of the economic benefit and the real, sustainable jobs and industry that will come as a result of this project.

JACQUI DEAN Link to this

The member opposite does not understand; that does not surprise me. She does not understand the need for small rural communities to have a sustainable economic base for their future growth and economic well-being.

This Budget has been good. I will talk about some of the feedback we have received. Labour in 9 years in office did not have the boldness to cut taxes, but now it slams National doing so. Who said that? Well, that was one of the country’s most respected newspapers, the New Zealand Herald. “Does it mean that Labour will reverse this law and increase the taxes if they return to power? If not, then why the gripe? Am I the only one to see double standards here?” asked the New Zealand Herald. Well, the news is that, no, it is not the only one to see the double standard. Most of New Zealand shares the view that Labour has the gripes severely about this Budget. The New Zealand Herald goes on to say: “The worst bit about the Budget was listening to Mr Goff respond to it in Parliament. He has the oratory skills of a robot. Labour, you still look tired. You seem to have no response to National’s obvious plans and your leader cannot even compete on the sound bites with Mr Harawira and Mr Norman.” That has been one slice of the feedback about this excellent Budget.

I will give the House a couple more examples, from what Bernard Hickey said: “This is the most comprehensive and coherent reform of New Zealand’s taxation system in more than 25 years. It goes a long way to tilting the economy back towards productive investment and away from property investment. … Overall I’d give it 8.5 out of 10.” Those are kind words indeed, and they are true. He also said: “The corporate tax cut is the big surprise in the Budget and will give a real boost to business just when it is struggling out of the recession under the weight of tight bank lending.” The reaction to this National-led Government’s Budget has been very, very positive.

Last year, National was busy concentrating on getting the Government’s finances under control. This year, we are squarely focused on the economy and building the recovery for the people of New Zealand. Budget 2010 will help to build faster and more sustainable economic growth. It will contribute to rebalancing the economy, so that all Kiwi families can get ahead. New Zealand has come through the recession in pretty good shape. This is partly due to the measures taken by the Government back in Budget 2009 and partly due to the resilience shown by the many New Zealanders who welcome the measures brought in by this National-led Government.

The Government finances face many challenges. We are spending more than we earn, and over the next few years Government debt will increase significantly. This Budget, however, makes progress in getting back to a surplus much sooner than had been forecast. The bottom line is that we need to rebalance our lopsided economy and correct our fiscal imbalances.

How will Budget 2010 help to achieve those goals? Well, first of all, this Budget puts economic growth at front and centre stage. Its overriding aim is to tilt the economy towards savings, investments, and exports, and away from borrowing and property speculation, and certainly away from excessive Government spending. Secondly, our major tax reform package features across-the-board tax cuts that will help families to get ahead and help to keep more skilled Kiwis in New Zealand. It makes the taxation system fairer and promotes faster economic growth. Thirdly, the Budget shows an improved fiscal outlook where both Crown debt and Budget deficits are better than were forecast in last year’s Budget But, even so, our aim is to do better still—why not?—and to get back to having a surplus as fast as possible. Finally, the Government has stayed within its $1.1 billion allocation for new spending. In addition, we have moved another $1.8 billion over 4 years to priority front-line public services. We are spending significant amounts on health and education, and we are investing in our future with the hundreds of millions of dollars that are being invested in science, research, and technology, in ultra-fast broadband, in rail, and in roads.

I will now turn to health. I will give the House some feedback from the chief executive of the South Canterbury District Health Board, Mr Chris Fleming, who said: “South Canterbury DHB is thankful for the increase in funding announced in the Budget. This money, along with an estimated $1.4 million in efficiencies already planned for next year, will ensure that we can continue to provide a high level of service to the community. Despite difficult times, we are pleased that this funding has left us in a position of not needing to consider any reductions in health and disabilities services for financial reasons within South Canterbury over the coming year. About $295,000 of the new funding will go towards providing extra elective services.” The South Canterbury District Health Board is a relatively small district health board, but it received an extra $5 million of funding through this Budget. That money will be used wisely. That money will be used for the benefit of the people of South Canterbury. I welcome that kind of initiative in the Budget. Similarly, for the Southern District Health Board, which is much larger than the South Canterbury District Health Board and is also within my area, the extra $20 million of funding given to that district health board will provide extra services for the people in my electorate and the southern part of the South Island.

This is a good Budget. I commend this Budget to the House.

Hon NATHAN GUY Link to this

This has been a particularly well-received Budget, and I say to those chipping in from the other side of the House today that it would be worth their while looking at the tax guide website to see how much they will be better off. If they look on the website www.taxguide.govt.nz they will see how much better off they are. Of course, we have made across-the-board personal tax cuts. We are also reducing the company tax rate, and that is absolutely fantastic. The business tax rate has been reduced from 30 percent down to 28 percent. Now we are ahead of Australia, and we hope that will stop the brain drain across the Tasman.

There has been a small rise in GST up to 15 percent. It is interesting to hear the Opposition chipping in, because if those members over there had been on the “Axe the Tax” bus, which is running up and down the country, they would know that when it pulled into Levin it was greeted by six people. And now we hear from the leader of the Labour Party, Phil Goff, that he cannot make up his mind whether he would reduce GST. But one thing is for sure: if Labour ever wins an election in the future—and I cannot see it doing that for a long period of time, with the turmoil it is in today—we know that taxes will go up.

We have also tightened the property tax rules, and we are closing a number of loopholes as well by aligning the top personal tax rate with the trust rate. We are also focusing on the Inland Revenue Department and giving it the tools to clamp down on the behaviour of people who, through loopholes, are able to avoid paying tax. We are investing $120 million in the Inland Revenue Department over the next 4 years to ensure that it does more audits and achieves more compliance. The reality is that for every $1 that this Government spends on the Inland Revenue Department we get a $5 return. That investment will make a difference, as well.

This Budget is all about giving people an incentive to get ahead. It is a very fair, well-constructed Budget that has been particularly well received. It is important for members opposite to realise that taxes have come down considerably. For those on the bottom income rate, earning up to $14,000, the rate has dropped to 10.5 percent. For those earning up to $48,000 a year, the rate has dropped to 17.5 percent. That means that 73 percent of our workforce right across New Zealand will not pay any more than a 17.5 percent rate of tax. Finally, a family with two children pays no income tax until it earns $50,000 a year. That is absolutely fantastic. The comment has been made this afternoon on this side of the House that those earning the minimum wage and the average wage—that is, about $30,000 to $50,000 a year—now pay 40 percent and 50 percent less tax than they did in 1996. That is a huge change. By comparison, people earning $100,000 a year are now paying around 20 percent less tax than they were back then. So this is a Budget for the many and not for the few, which is something we have heard Mr Goff talk about in the past.

There is also a real focus on health and education, which get the lion’s share of the new spending over the next 4 years, as well as a real focus, as we have heard from the Hon Pita Sharples, on science and research and development. One focus that is really important in my wonderful part of New Zealand, the Ōtaki electorate, is the focus on infrastructure. We are focusing $7.5 billion on infrastructure across the country and have earmarked another $1.45 billion in this Budget alone for unclogging our roading arteries. Soon I will talk a little more specifically about this investment in roads, schools, ultra-fast broadband, and rail.

The other exciting thing for me as Minister of Internal Affairs, Minister responsible for National Library, and Minister responsible for Archives New Zealand is that my Budget bid to the Minister of Finance for Archives New Zealand was successful, and I am delighted. So $12.6 million of new money goes to a digital archive, which will really help the storage of information by Archives New Zealand and the National Library. This new money shows that this Government values and treasures the work that the National Library and Archives New Zealand do. If we think about how fast technology is moving, about how the zip files, floppy disks, and what have you of the past are now becoming obsolete, we realise that we have to keep up with technology and to make sure that such information is retrieved and stored. This is a very, very positive investment, which I am excited about: $12.6 million of new money to Archives New Zealand and to help the National Library. Of course, we have $52 million flowing into the National Library, as we speak, for the New Generation strategy, we are putting a new roof on the library as part of its refurbishment, and soon a fantastic new library will be opening for the people of Auckland and those regions that encompass it.

This Budget has been fantastically well received. The people of Ōtaki are saying thank goodness the Government is going to look after our superannuitants. We have 16,000 in Horowhenua and Kapiti. They will be compensated for the small rise in GST. We have also announced in this Budget $3 million for land for a new school, which will cater for up to 400 children in Waikanae, and a new early childhood centre will be attached to it, as well. That has been fantastically well received. More money is available for community law centres like the one in Levin, my home town, and there is also a large investment, as I have already alluded to, in the expressway all the way from Wellington Airport to Levin, including Transmission Gully. That investment has been fantastically positively received. I am very disappointed to see that Labour will now oppose the expressway through the Wellington region up into Horowhenua. I cannot believe that Labour has decided to oppose that fantastic investment in roading. Also, we have a turn-round plan for KiwiRail: $250 million will be invested in KiwiRail. Let us not forget that Labour lost $600 million of taxpayers’ money on rail. Budget 2010 has been a well-received Budget and I commend it to the House.

SUE MORONEY Link to this

I know that that is the member’s home town, and apparently he is now saying he has that issue all sorted out. But we will wait and see whether that is the case, because the people of Levin will be voting on that issue next year.

But I will get back to Budget 2010, which was a Budget of price increases and broken promises. Not only was there the broken promise from John Key, who had said he would not increase GST—and in Budget 2010 GST has been increased—but also there was the broken promise from the entire National caucus. The National candidates went out on the hustings and promised that they would keep early childhood education intact, in the way that Labour had left it. But they went further than that: they promised that they would keep the 20 hours’ free early childhood education, and they said they would keep all of the existing subsidies for early childhood education. Well, the National members have broken their promises. When the Budget was delivered they broke yet another promise to all of the families who had believed them. Those families now feel betrayed, because they took the National members at their word and believed them when they said a National Government would keep all the existing subsidies. Those families now find that $295 million has been cut from the early childhood education budget, and that affects 93,000 children and their families.

Early childhood education used to be a high priority, and certainly it was for the previous Labour Government. When National first came into office, it said early childhood education was a high priority for National, too. So what happened between then and May 2010 that has resulted in early childhood education becoming such low-value spending that it has suffered cuts in the Budget? The Minister of Finance, Bill English, said only low-value spending would be cut in this Budget. Early childhood education was cut, so how did it slip from being an important investment under the previous Labour Government to becoming a cost under the National Government, and a cost that had to be cut? That is what has become of the education of our youngest children, yet that is the time when we can make the best improvement in their lives. Labour saw early childhood education as an investment, and it still sees it in that way. One of the best investments that any Government can make is to invest in early childhood education. This Government can now talk about early childhood education only as being a cost, and a cost that must be cut.

So 93,000 children and their families are affected by this funding cut, and the cost will be an average of about $25 per child per week, because this Government wants to put that money into the pockets of wealthy New Zealanders for a tax cut that they, quite frankly, do not need. The Government is taking that $25 per child per week out of the pockets of ordinary, hard-working New Zealand families and putting that money into the pockets of the very, very wealthy, who do not need to be given a tax cut and will spend it offshore.

That cut affects 93,000 children nationwide and that is pretty hard to get one’s head around, so I will break it down. What does it mean in some of our provincial centres? I look at my home city of Hamilton and know that 3,700 children and their families will be affected by this severe Budget cut to early childhood education. In my city alone 3,700 children attend 78 early childhood education services that employ 80 to 100 percent qualified staff. Then there are more children affected by the cut, because the centres that employ between 50 and 79 percent qualified staff will also be affected. So the number of affected children is even larger than the number that the Minister of Education has admitted to.

Many of those services have staff in training right now who are about to become qualified between now and February, when these cuts take effect. Why is that? Members opposite look a bit confused about this. Many of those centres have staff in training now because the previous Labour Government set a target that 80 percent of the staff in the early childhood education sector should be qualified by 2010. So the centres have worked extremely hard and have invested time, money, planning, and effort into getting people into training. The individuals concerned have invested their hard work, their own time and money, and now they come to 2010 and find, when they are about to qualify, that the National Government has pulled the rug from underneath them. National has cut the funding to the sector, but there was no consultation about that and no warning was given of it. Suddenly, come Budget day 2010, the sector found out that it does not have the funds to pay the wages of those qualified staff.

The Government would have us believe that it will put that money into improving the participation rates for Māori and Pasifika children. Well, that is not so. I have here a letter from the Living and Learning Foundation, which runs a new early childhood education centre in Māngere. The centre was officially opened by the Prime Minister, John Key, just last year, but this year the Government has cut the centre’s funding to the tune of $95,000 per annum. There are 113 children who go to that centre, and 98 percent of them are Māori or Pasifika. [Interruption] I know that Tau Henare thinks it is funny that the centre’s funding has been cut, but 98 percent of the children who attend that centre are Māori or Pasifika. I quote from the letter from Michelle Pratt, and the members opposite may want to listen to this: “In order to recover the sums of money that will be lost to us as a direct result of the Government’s Budget we are going to have to increase our fees by a minimum of $20 to $25 per child, per week. This will not leave any profit and we will be forced to trim further service to families. Most families have more than one child at the centre, some even three or four.”

How are families possibly going to afford this? This cut puts a cost on families who have three or four children—[Interruption] Katrina Shanks seems to be having difficulty doing the sums. Some children—

SUE MORONEY Link to this

I do not know; has anyone heard of twins? I do not know.

SUE MORONEY Link to this

There you go! Maurice Williamson has twins. Some of these families have three or four children attending an early childhood education centre. Government members are looking very confused, but I can tell them that decision will cost a family in that position $100 more per week. And that is before GST is increased.

I have an example from the community kindergarten owned by the Ōtūmoetai Plunket branch, and it tells me that it will lose $34,000. The examples go on. I have another one from the North Shore, but the member for that electorate is not present.

I am concerned that the Prime Minister has said having 100 percent qualified staff at a centre was a matter of personal choice and if parents really wanted that, then they would just go ahead and pay for it. We all know what that will mean. We will end up with three grades of early childhood education in this country. Families who come from a wealthy neighbourhood will have centres with 100 percent qualified staff, those who come from a middle-income neighbourhood will be able to afford centres with only 80 percent qualified staff, and those who come from South Auckland will have a playgroup. That is the Government’s plan. The children from that area will have a playgroup. The Minister of Education has already washed her hands of responsibility for the funding cut. She says that if centres have to increase their fees, then that is not her responsibility; it is a business decision. But it arises from her funding cut.

In my remaining minute I want to talk about the overall response to this Budget. I have received a letter that will resonate with most New Zealanders. It comes from Wīremu Bayliss of Hamilton, who writes: “Prior to the recession Sunny and I were on track to own our own home, a first time for us in nearly 5 years of marriage. At the time we were both working full time, earning good salaries. Considering our overall financial position, we were able to service the loan as well as other expenses, with enough for savings at the end. We now believe that failing a substantial Lotto win, we will never own our own home in the next 10 years, and it could”—

AARON GILMORE Link to this

Every 1 percent increase in interest rates costs this country $500 million, which is another $500 million that my children will have to pay back at some stage, so getting our finances under control is absolutely critical. You see, pages 76 to 84 of the Economic and Fiscal Update in the Budget documents outline pretty carefully some of the detailed issues we have to deal with, and some of the risks and scenarios that might arise. For example, do members know that if economic growth rises by 1 percent more than we are forecasting, if it is 1 percent higher, that is an additional $3 billion per annum for us to spend—$3 billion? What would $3 billion do?

AARON GILMORE Link to this

It would pay for the Waikato Expressway. All sorts of lolly scrambles would arise. This Budget is about maintaining our debt profile and getting our economy to grow faster. We believe that the best way to control our expenditure is to put money in places where it makes sense to do so.

Today, as I said, we have seen Moody’s give Greece’s Government bonds junk-bond status. There is a risk of other countries in Europe falling over. That is the situation with Ireland, with Spain, and with Portugal, and I can tell members that if any of those countries have the same demise that Greece has had, major riots will occur across the whole of the Euro zone, and that would be a tragedy. Yesterday a new Prime Minister was elected in Japan. Japan is facing debt levels of 200 percent of GDP. The new Prime Minister has announced massive austerity measures, because the Japanese recognise that their financial position is unsustainable.

This Budget is about creating opportunities—opportunities that were lost under 30-odd years of successive Governments, which were maybe a bit misguided. It builds on our recovery, and puts us in a position where we will have a Government surplus, a proper surplus, by 2016. That will allow us to start paying back our debt position, and stop us from borrowing more. This Budget is about strengthening our economy and putting in place tax changes that incentivise work and savings, and that allow people to do things they really want to do and to spend their own money in ways they see fit.

I will touch a little on what the previous speaker talked about—early childhood education. I had the massive good fortune of growing up in a neighbourhood that did not have a kindergarten to choose from; I attended playcentre, and I was very happy that my brothers did, as well. National members respect choice. We respect the ability of people to choose whether they want their children to go to a playgroup, a playcentre, or a kindergarten. I respect the ability of people to choose. I sent my children to the same playcentre I went to as a child. I had enjoyed it. It was an absolute pleasure that my mother had sat on that playcentre committee, I had gone to that playcentre, and my children also were going there. It was a parent-led centre, and it was about choice.

AARON GILMORE Link to this

Not the same teacher, I tell Mr Henare; she is no longer with us, I am afraid.

AARON GILMORE Link to this

Yeah, well. At the moment there is scaremongering from the Opposition about what the early childhood changes may be. I can tell members that a year or so ago early childhood centres were screaming out that they could not get enough teachers to meet the previous Government’s requirement that 100 percent of teachers be qualified. I sat in a meeting with members of the New Zealand Educational Institute involved in early childhood education, who said that they did not believe in choice, they did not believe in parent-led education, and they did not care about the playcentre movement or the playgroup movement; they wanted a monopoly on providing education to children. Members should ask the head of the New Zealand Educational Institute, or come and talk to me in Christchurch.

We have the ability to put in place tax cuts that, for 73 percent of New Zealanders, will reduce their marginal tax rate to 17 percent—17 percent. I can go and talk to my brothers and look them in the eye over that. One of them is on the minimum wage, but I was able to tell him how much better off he would be. He turned round and said that he did not believe me. Do members know where I went? I went to the website.

AARON GILMORE Link to this

The tax website. My brother did not believe me, but I showed him the tax website and he said that it was great that he would get a few extra dollars in his back pocket. Do members know what he did then? He rang up his boss and said that he wanted to do an extra shift on a Saturday morning. The tax cuts will give him a few extra dollars in his back pocket, and that will help him to get ahead. They will allow him to buy his own little car, in this instance, and to start saving, hopefully, for a house for him and his future wife—or maybe for an iPad, like the one our great Minister Mr Williamson has. You see, the average tax rate—not just the marginal tax rate—that those people will pay is about 15 percent. People who are out there working and earning about $50,000 a year, with two kids, will pay zero tax. Their net tax will be zero. I can tell the House that I would be proud to stand in front of any community anywhere in New Zealand and say to them how wonderfully off those people will be because of the incentives being put in place for them to work.

Who will pay for that? Who will pay for what the Labour members say is great smoke and mirrors? Well, it is those big, nasty multinationals—those big, nasty multinationals.

AARON GILMORE Link to this

Oh, you know, the Shells, the BPs, the ANZ banks of the world. Heaven forbid that they should pay some more taxes through the thin capitalisation regime! I am proud to be part of a Government that is putting up taxes on multinationals in order to give something back to average New Zealanders. What a wonderful thing that is; I cannot believe that the Labour Opposition would be against it.

Where else will the money come from? Well, we have taken out a rort that existed involving trusts and companies. We recognised the incentives to stop it from occurring. Thousands and thousands of trusts were being set up all around the country to earn money that would be funnelled through trusts rather than through individual taxpayers, who as workers did not have the ability to do that. I think that it is great that workers will be paying a lower rate of tax, and that people with trusts—that unproductive activity run through many lawyers and accountants up and down the country—will have to use them for productive purposes. I think that is the right thing to do.

I will talk quickly about somebody who came into my office in Christchurch recently. This person lived in north New Brighton. As a result of that visit, I investigated how much better off this person will be. This person was a university student, who received the student allowance for 40 weeks of the year. They flatted and paid about a hundred bucks a week in rent, but got about $40 a week in an accommodation supplement, and earned about $9,000 a year by working part-time throughout the holidays. This person was ropeable, on coming into my office. GST was going up, everything was going up, and they believed that they could not afford it. Well, I had great news for that person. That person was going to be better off by $3.92 a week because of the student allowance going up, and would also be better off through a tax cut of $4.85 a week. Yes, they would pay a little bit extra GST—about $5.21—but overall they would be better off by $2.66 a week. That is only one cup of coffee a week, but it is a start. I am proud to be part of a Government that creates a start, and that puts in place the right incentives for people to get ahead and get skills so that they can work and invest. I am proud to be part of a Government that puts in place incentives that allow working New Zealanders to get on. That person who came to see me is not going to take on more debt; they can reduce their student loan a little bit, or spend a little bit more on their own education. I think that is a wonderful thing.

AARON GILMORE Link to this

It is $2.66, I tell that member over there—$2.66. Students could have got together, saved it up, and gone to the meeting in Palmerston North where Craig Foss spoke.

Look, I think the incentive is there for people to work a little bit harder—people like my brother. The situation with early childhood education is that parents can have a choice; parents’ choice is respected. I think that is a good thing. I think that it is a good thing we have bent back the debt curve; we will not be like the “PIGS”. Our finances will come under control, and we will have the ability one day in the future to again catch Australia’s income stream. I am proud to be part of a Government that enables that.

DAVID BENNETT Link to this

—yeah, and golf clubs, and other things. The thing is that the National Government has tackled the hard issues. We have looked back and seen the inequalities in the economy and the tax system, and dealt with them. We had to deal with some of our own people in doing so. That is hard, but it shows a fair-minded and successful Government. I think that is what the public have liked about what they have seen from National in this Budget. They have seen a Government that is willing to tackle the hard issues and put the right signals and incentives in place, and one that is not afraid to make the right call for New Zealanders. This Budget will go down in history for setting up the direction that we need.

Let us look at some of the directional facts. Two-thirds of the tax cuts have gone towards reducing the bottom two tax rates, taking the lowest rate from 12.5 percent down to 10.5 percent, and the 21.5 percent rate down to 17.5 percent. In other words, two-thirds of the tax cuts apply to people who earn less than $48,000. Basically, those on an income of less than $50,000, with two children, do not pay any tax in New Zealand. In what other country in the world can people say that they do not pay tax if they are part of a hard-working family and need that support from the Government? We are very proud as a country and as a Government to be able to offer that to our New Zealand citizens.

The other thing is that 73 percent of income earners will now face a tax rate of 17.5 percent or less. Nowhere else do we see those kinds of figures. That is great for people. It gives them the opportunity and desire to succeed. We are putting in place the structures that will ensure New Zealanders can compete and have the lifestyle they desire. That is something the previous Labour Government ignored. Its policy would have been to increase taxes and make people pay more, so that the Government could redistribute money. That policy is made on the basis that Labour knows how to spend somebody else’s money better than that person does. That is the philosophy that a Labour Government would have brought into its Budget at this time. It would have increased taxes so that it could spend more money. The last thing that the economy needs is increased taxes. What is needed is the right incentive, and that is what the National Government has done.

Some people may ask why we would make tax cuts at this time. That is the question Labour has been asking. It is done to send a signal. A lot of young New Zealanders out there have a choice between staying in New Zealand and going to Australia. That choice will be determined by a number of factors. Some of them will be financial; some of them will be social. On the financial factors, the Government can have a big influence, through providing the right dynamics in the economy. We want to see those young New Zealanders stay here and make their home and future in this country. To do that, we are giving them an environment where they feel valued, rewarded, and on a par with their colleagues in Australia. We will catch up with Australia, because we are making the right financial decisions at this time, whereas unfortunately Australia is not, and it will pay the price in terms of its economic growth. New Zealand’s economic growth will be better than Australia’s on a per capita basis as we go forward, looking at the position we started from. That is the success that we see and that New Zealand will inherit as a result of this Budget.

There will be some impact on those who have invested in the housing sector for reasons other than basic income growth, and that is understandable. But at the same time, it is something that people who have made that investment are very much aware of, and they are not necessarily finding it so problematic. They would rather have had that than the potential of a capital gains tax or something similar, which had been floated earlier in the year by other parties, and which just would not be a reality in the present economic environment.

Taxation was a huge part of the Budget, but there were other very strong features in it. In health and education the National Government continued to increase expenditure. Today at question time we heard from the Minister of Health, Tony Ryall, that the highest-ever percentage of expenditure on health has been made this year. That is a very strong statement to be able to make in recessionary times—to be able to say that we are spending more on health than any previous Government has ever done. That will deliver the kinds of services in surgery, primary care, and tertiary care that Kiwis have been looking for in their health system.

In the education field, changes to the operational grant for schools have been very welcome. Schools like the idea of the 4 percent increase, but, more important, they like the idea of staggered funding, which means they can get paid throughout the year, rather than having to wait for one lump-sum payment. That is called listening to the sector, delivering for the sector, and making practical changes that provide some reassurance and delivery for the sector. Those are things the sector has long been waiting for, and now it has been delivered.

We are also strengthening our investment in infrastructure. Infrastructure is key to building growth, because we have to give New Zealanders the tools for growth. A lot of the work on infrastructure will be related to the technology for growth. Our investment in broadband and other technology will deliver an environment where New Zealanders can work and take part in the global village, we could say, in a way that will deliver to them a prosperous future.

We are also building on the future that we see for families and working New Zealanders in this country. We are giving them incentives through the tax system. We are giving them structures through things like infrastructure so that they can take advantage of those incentives. We are giving them the social services that they desire in education and health care, and which are crucial to maintaining the future they wish to see.

New Zealanders are seeing that the brighter future is becoming a reality. The brighter future on which we campaigned is now becoming the future of New Zealand. The National-led Government can take a lot of pride in this Budget, because it is a Budget that delivers results. It delivers what we said we would set out to deliver for New Zealanders, and it does so in a manner that most New Zealanders have found exciting and beyond comparison with the previous Government, which just went out there from election to election. This is a long-term Budget. It sets up a long-term direction, and it will be a strong point for National as we work towards long-term success in Government. Thank you.

CRAIG FOSS Link to this

No, capped at $1.1 billion. We are talking about spending, I say to the colleague over there on my extreme right. I recall an Opposition member who interjected when I was talking about this in another debate. He did not think we could stay within the cap, but actually we have achieved that already in these Estimates of Appropriations. We are well within it. Surprisingly—and this is where the Opposition does not get it—even though we are being disciplined about spending, and we are refocusing, we have found $4 billion - odd of spending over the last 2 years that can be reprioritised, and that is why there is more elective surgery going on in New Zealand than ever before, particularly more than under the previous administration.

I will touch on a couple of points that have been raised in previous speeches. I am very, very disappointed, because I have just learnt that Labour will not be endorsing Transmission Gully. I am particularly saddened about that. As people driving home listen to the radio tonight, stuck in a traffic jam somewhere going up round the coast, they will note that I now understand that Labour is opposed to Transmission Gully. That is very, very sad news to me, and it is very, very sad news to people up and down the coast.

I will also pick up a point that an Opposition speaker was talking about. That speaker spent a bit of time on early childhood education. Members should just note—because this is where the discipline comes in, again, about fiscal spending and prudent management—that the total spend on early childhood education about 5 years ago was about $435 million, and it is now $1.3 billion. Have we had three times the improvement? Members should remember we are borrowing $240 million per week, as a country, simply to keep the lights on and to keep early childhood education funding.

I also note that we are paying about 5.5 percent interest on that $240 million. About 5.5 percent interest is being paid at a cost to the taxpayer on new debt of about $10 billion or $11 billion a year. So when we wander through the balance sheet and the appropriations, it is a very, very fair and prudent question to ask and address, whether we are getting at least that return from the spending that the Government makes in various votes. I am not talking about just the social spending—let us put that aside. Anywhere where the Government is involved in financial assets or financial investment, are we in fact getting more than 5.5 percent? Because if we are not, that is a direct loss to the taxpayer. I note that the Opposition continues its spend, debt, and borrow theme. Members will note on page 136 of the Estimates of Appropriations, which are on the table in front of us, there is an increase of $3 billion in interest payments this year—over $3 billion of payment of interest and other costs relating to the Crown debt. So as an investment now and in our children’s future, we should be doing all we can to minimise that, because for every single dollar that is borrowed and paid in interest, that is one less dollar available to fulfil some of the aspirations of all parties in the House. If you ain’t got the money, you cannot spend it.

I make one final point. A lot of noise has been made about GST. Nominal wage growth over this forecast period will actually increase more than inflation as forecast in the Budget. In fact, if we look at the consumer price index—I just cannot believe some of the lines of the members opposite—we see that real wage growth after the forecast period will be well ahead of inflation. Thank you.

KELVIN DAVIS Link to this

It was not long ago that over in the Grand Hall we honoured all the excellent teachers. The head teacher from Ruawai Kindergarten received an award for being an excellent teacher. She was recognised for the great work she was doing up in Ruawai. Sitting there, she said that she wondered what would happen in the Budget, which was to be announced that very afternoon. Ruawai Kindergarten had $46,000 ripped out of its annual budget. How is that money going to be made up? That money is going to be made up by charging parents. Ruawai Kindergarten has only 22 kids on its books. That is how many it can enrol at any one time. There are 40 kids on the waiting list. Those 22 families will be charged to send their kids to Ruawai Kindergarten. It is the only kindergarten for about 20 kilometres. If those parents cannot afford the charge—$46,000 divided by 22 families—if they cannot afford to make up that money, they will have to send their kids 20-odd kilometres away, which they probably cannot afford to do, or not send their kids to early childhood education. That is a crying shame.

What we are doing here is re-emphasising, or reinforcing, the fact that low and middle income people who cannot afford education will not be educated. It is reinforcing that whole cycle of underachievement, and that is the fault of this Government. It was interesting to hear David Bennett over there say that National members are listening to the sector, and that schools are happy to have a 4 percent increase in their operations grant. Well, if the Government had really listened to the sector, it would have got a 5.9 percent increase in the operations grant, because that is how much inflation is going up by. In fact, a 4 percent increase in the operations grant and a 5.9 percent increase in inflation is actually a 2 percent loss. It is about time that the National Government members got their heads round education. The only person opposite who has any experience in education is Allan Peachey, who is so out of favour that he is sitting on this side of the House, amongst us. He is the only person in the National Government who has any idea whatsoever about education.

Then we have the sad story about the wharekura. Anne Tolley said in this House that she was really rapt that the wharekura were happy with the amount of funding that they have got, but that is because they do not know how much they are missing out on. Under the previous Labour Government the kura in Taumarere, in my own patch of Moerewa, where I grew up, would have received $451,000. Unfortunately it will receive almost half of that. The wharekura at Whangaroa would have received $234,000, but instead it will get $140,000. This is the Government’s investment in Māori education. Te Kura Kaupapa Māori o te Tonga o Hokianga should receive $324,000, but instead it gets $218,000. I ask how the Minister of Maori Affairs, who is also the Associate Minister of Education, could allow that to happen. What is it that he does not like about Māori education? Why is he is prepared to support the National Government, which is underfunding Māori education to such a horrific extent? It is wrong, and both the Minister of Māori Affairs, who is also an Associate Minister of Education, and the Minister of Education, Anne Tolley, need to be hauled over the coals or held to account by Māori educators throughout New Zealand.

If we are going to raise children’s achievement, we need to invest in professional development. We need to make sure that our teachers are the most skilled. Every child in every class in every school or early childhood centre has the right to an excellent teacher. That is up to the Government. It is the Government’s responsibility to create conditions where excellent teachers can weave their magic. Those excellent conditions can be attained only by giving teachers the right training and the right professional development. But what do we see? We see cuts made to professional development. We see professional development on how to implement national standards, but let me tell members that national standards are about reporting achievement; they are not about teaching. So reporting is over here on this side, and teaching is over there on that side. The interaction between teachers and students is where learning occurs. That is where the investment needs to be made, not just in professional development on how to implement national standards. National standards on their own will not raise achievement. In fact, if they are implemented wrongly, and I believe that they are being implemented wrongly, they will have a detrimental effect on achievement in New Zealand.

I met with wharekura the other day and they are concerned about ngā whanaketanga, which are the Māori national standards. They do not feel that they have had enough time to implement them properly. Fair enough, they are only halfway through the trial year, but mainstream schools also deserve that trial year. It is not fair.

I believe that this Budget is a tax swindle, it is a Budget of broken promises, and it is a Budget for the few, not the many.

Hon TAU HENARE Link to this

Oh, there we go—we can talk about that.

I love the Budget debate, because it is a time for nationalism. Personally speaking, I say that Budget debates are a time for nationalism. When we are talking about nationalism, we know that nationalism demands certain things from Governments. I think that the Budget should do four or five things. It should build on the recovery that we are in at the moment. It should strengthen the economy. It should, where possible, assist every family. We also need to keep people within our borders, because the strength is in keeping that capacity, that critical mass, in our own territory.

I suppose that one of the last things that nationalism demands is a fair tax system. It demands a tax system where the Government is not always putting its hand in the back pocket. I can understand Labour having its hand in the back pocket of the worker for so many years, even when times were tough, but I cannot understand what happened during the 9 years the Labour administration was in power. Those were good times. It was not the Depression; it was a boom time for New Zealand. What happened? We had higher taxes, higher taxes, and more higher taxes. That is what happened. Labour members have stood up in the House today and said that workers need a bit of extra money, a bit of extra this, and a bit of extra that. Well, that is what should have happened in the boom times. Now it has been left up to this administration to come up with a fairer tax system.

I will quote something that my colleague from Hamilton, David Bennett, said in his speech on the Budget. He spoke about two remarkable facts. First, two-thirds of the cost of personal income tax cuts has gone towards reducing the bottom two tax rates. We have taken the current 12.5 percent rate down to 10.5 and taken the 21 percent rate down to 17.5 percent. In other words, two-thirds of the tax cuts apply to people on income below $48,000. Secondly, 73 percent of income earners will now face a statutory income tax rate of 17.5 percent or less—73 percent of income earners will face a statutory income tax rate of 17.5 percent or less. I tell members that not even Roger Douglas in his heyday as Minister of Finance for that lot over there would have believed that New Zealand could have had such a good tax system. It is the beginning of a good tax system; the beginning of one of the fairest tax systems in the Western World. For those near the top of this income range, that tax rate is almost halved. It is down from 33 percent in just 2 years. This rate will also apply to income and savings, including KiwiSaver.

I will come back to the five points that I was making about nationalism. When I talk about the setting of a Budget, any Minister of Finance will tell us that it is a pretty difficult job, especially when the global economy is not doing too well. We had to make sure that we focused on good fiscal management. Everybody knows that we cannot spend more than we earn, so our Minister of Finance has shifted us from a decade of deficits, and we are on our way and are on track to record some modest surpluses in the next few years ahead. We are moving in the right direction. It would be a long time in New Zealand’s history since we thought that the corporate tax rate could be as low as it is today, and that is thanks to the Minister of the Finance, his Cabinet colleagues, and the Prime Minister.

This Budget is all about giving our country the tools to do the job in really tough times. Let me make no bones about it: these are tough times. Our small country of 4 million people is on the other end of the world, watching countries like Greece, Spain, Italy, and Portugal, and we are doing rather well. We are doing the things that need to be done. What things need to be done? [Interruption] Oh, OK. I could talk about all the stuff that has been happening over the last week but I will not, because that is just a distraction. This country is on the road to a good recovery. This country is on the road towards, to coin a phrase, getting up the ladder in the OECD. The previous Prime Minister used to rant and rave on about our country going up the ladder in the OECD. Admittedly, she did not talk about it too much in the last 2 or 3 years of her reign. But, however—

Hon TAU HENARE Link to this

It is going great. It is going great; fantastic, in fact. We are a small economy. We know which buttons to hit. We know not to put our hands in the back pocket of the workers. We know that every little amount of money that we can give back to the workers says that they have the ability to go and spend it as they like, instead of being told by Labour how to spend it. For goodness’ sake! It is Economics 101: let them have their own money. How simple is that? We let people have their own money so that they can make decisions for themselves. The left love to do nothing else but spend other people’s money. It is rampant in the unions and it is rampant in the teachers’ union, and Kelvin Davis knows it. The New Zealand Educational Institute, with all of its fees, loves to spend other people’s money. That is what that mob over there is about: those members love to spend, spend, and spend, and to put it on the card.

GRANT ROBERTSON Link to this

It is worse than nothing. This Budget has increased costs in electricity. It has increased the cost of food through the increase in GST. It has made the cost of living far, far worse for ordinary New Zealand families. The Budget fails the test to give them inspiration and aspiration. If the Government cuts education and cuts into health, then that cuts into the social fabric of New Zealand. We have seen accident compensation charges go up. We have seen early childhood costs go up. Any benefits derived from the tax cuts are wiped out. We have had examples in this House of families who are $55 a week worse off, once we factor in early childhood costs and accident compensation costs.

So what is the Government’s reaction to all of this? What can it do? Well, straight after the Budget speech Bill English started talking about asset sales, because, quite clearly, that is the agenda he wants to get to. John Key is not so sure. But the shine of the Budget wore off very quickly in my electorate, and I am sure it has in a lot of other electorates. This Budget has failed the aspiration test. It has failed the test of inspiring New Zealanders to get out there and be proud of their country, to work hard, and to be in a sustainable economy. But far worse than that, in my opinion, it fails the moral test that says that a society should be judged on how it treats the young, the old, and the vulnerable. If we look at how this Budget treats the young, we see cuts to early childhood education and to childcare support. Is that really the message we want to send? Is that really the moral message we want to send about the importance of young people? This Budget fails that test.

Let us look at how this Budget treats the old. The health budget does not even meet inflation and the increased costs of an ageing population. It goes backwards. There are home-care cuts. In my own electorate, I have had people in tears in my office about cuts to the care of their elderly parents. We have seen the rates rebate cut back. That fails the moral test in terms of supporting the elderly. It also fails the moral test in terms of supporting the vulnerable. There are mental health funding cuts. There are no new State houses. Pathways to Partnership and the refugee study grant have been cut back. How mean can the Government get in this country? Refugees, whom we have traditionally supported into study, have had their tertiary education funding cut by this Budget. This Budget fails the clear moral test of supporting the young, the old, and the vulnerable. It fails the test of aspiration. It is a very poor Budget, made up of very poor choices, broken promises, and a failure to support New Zealanders into the future.

KATRINA SHANKS Link to this

Certainly I will talk about GST. When we said we would put GST up we made adjustments absolutely everywhere else to counter that increase. We have cut tax for people who work, we have increased superannuation, and we have increased Working for Families. People might listen to the spin of the Opposition, but this Government is doing a good job. We listen to the people of New Zealand. Was there a huge outcry after the Budget? No, there was not. Did Phil Goff’s ratings go up after the Budget? No, they did not. He is sitting on a nice, flat—what is it—6 percent preferred Prime Minister rating.

I do not think this Labour Opposition has any fresh ideas to offer this country. The Opposition is lost. It is like a boat without a rudder. It is just floating along, depending on where the tide will take it. Those members have no good arguments against this Budget. They have no fresh ideas, because they are tired. We may see this Labour Opposition slowly, slowly get a new idea, but now it has none at all. It needs some fresh blood as it is extremely tired.

It was my pleasure to take a call in this debate this afternoon.

DAVID SHEARER Link to this

I tell Mr Quinn that it stays up there because if GST goes up 2.5 percent, prices do not come down the next year; they stay up there. People have to pay increased power prices. They have to pay increased tobacco prices. There is the increase in accident compensation costs and in early childhood costs. I have been to three or four early childhood education centres in my electorate in the last week, and they all tell me exactly the same thing: the parents who are sending their kids to that centre will be paying more. Many of them will be dropping out and not sending their kids there any more.

Also, we will have an inflation rate of 5.9 percent. That inflation rate will push up interest rates. We are one of the only countries in the OECD that has had interest rate hikes in the last few years.

DAVID SHEARER Link to this

We are one of the only countries with interest rate hikes.

DAVID SHEARER Link to this

In the US and Europe—all of those countries have not had interest rate hikes. Wages might be predicted to rise by 2.5 percent, but they will be undercut by the little amount of money that people will get in their hands. Overwhelmingly they will be paying more taxes, more costs, more inflation, more on their home loans, and more on accident compensation, and they will get 2.5 percent. If people happen to live in Auckland, there is a bill of about $500 each that is coming for them to pay for a new Auckland super-city they do not want. The ratepayers in my electorate will be paying more. It will cost $200 million to pay for the super-city. If we divide that by the number of ratepayers out there, it is about $500 each. We can ask anybody on the street whether they will be better or worse off, and they will know really well that they will be worse off. That is what we hear and that is what is in the polling. I can guarantee that the Government’s polling is no different from our polling. Those members know that this is a huge swindle and we will be going backwards.

This Budget is being touted as the thing that will stop people crossing the Tasman to live in Australia. As my colleague Grant Robertson said, people do not cross the Tasman because the tax rate is marginally lower; they go for better jobs and better wages. What will we find on 1 October when we go to Australia? We will say: “My God, it’s cheap here. It’s really cheap in Australia.” That will be because they are paying only 10 percent GST, whereas we will be paying 15 percent. The average person will think to move to Australia because it is a whole lot cheaper. This will increase the flow across the Tasman, not reduce it.

As if we will not get closer to Australia! One day after the Budget, the Minister of Finance said: “Let’s see what we can do with Kiwibank. Let’s flog off Kiwibank. Let’s sell off some shares in Kiwibank.” That man wants to rename Kiwibank “Koalabank”. That is what will happen. As soon as we put that bank on the sharemarket, it will be Australian banks that will buy the shares because they want to dominate the New Zealand market. We will have “Koalabank”, not Kiwibank. Kiwibank is the very pride and joy that people want to hold on to, but the Minister of Finance is willing to flog it off.

I ask what this Budget will do for the economy. According to Treasury, this Budget package will improve GDP by an accumulative 0.9 percent over 7 years. That 0.9 percent over 7 years is pathetic. That is simply pathetic. What about the jobs? This Budget, according to Treasury—this is not me, this is according to Treasury—will generate 10,000 jobs over the next 7 years; 7 years to generate 10,000 jobs!

DAVID SHEARER Link to this

I thank Mr Parekura Horomia—

DAVID SHEARER Link to this

Absolutely! We will need to borrow $1 billion to finance these tax cuts over the next few years. We have to borrow money to finance the tax cuts. When we were talking about putting money into the Cullen fund, the idea of borrowing to put in the Cullen fund and investing was completely rejected out of hand by the Minister of Finance, but we will borrow money to finance tax cuts for the 5 percent at the top of the scale. That is what we will do.

But let us look at what will really generate growth in this economy: research and development. The increase in research and development is the big success story of this Budget. It was so headline-grabbing that it was announced a week before the Budget. The increase in spend in research and development is 7 percent, we know that the inflation rate will be 6 percent, so we have an effective increase now in research and development in science of about 1 percent. The $56 million a year is new money. Most of that new money is tied up in grants and vouchers. The 15 percent tax credit that Labour offered has been scrapped. We have had nothing for more than 18 months—actually we will have had nothing for 2 years by the time this comes into being. A bunch of businesses will have to go on their hands and knees to a bureaucrat to apply for a voucher or a grant.

What an incredibly inefficient way of administering research and development! No other country in the world does this. Australia gives 40 percent tax credits to its most innovative companies, and here we ask our companies to apply for a voucher or for a grant. Look at universities and tertiary education. What do we have there? Effectively their budgets have been cut for the last 2 years because they have not been keeping pace with inflation. So for research and development the Budget has absolutely no effect. We have a real generator of highly productive jobs and the best opportunities for New Zealand for the second year running—

MELISSA LEE Link to this

It was the Dominion Post; I am sure it was. Everyone knows that the media are not very kind to the Government; the media are not exactly the Government’s public relations spin doctors. But they said: “Lollies for all”. The media have been so positive about the Budget. I have to say that people like those in the Employers and Manufacturers Association are talking about the tax cuts being fair and saying that the Budget is the best thing since sliced bread.

It has been interesting since 20 May to sit here in Parliament and listen to members opposite do their best to pick holes in this Budget. But from what I have actually listened to so far, they are having a difficult time of it. Do members know why? They know they cannot pick holes in it, because it is a good Budget. They know that it is a good Budget because two-thirds of New Zealanders will pay a maximum tax of 17.5 percent. That is more than Labour has ever done for its voters. People who have traditionally voted for Labour are getting a better deal with this National Government. New Zealanders who earn less than $48,000 per annum will have to pay no more than 17.5 per cent tax.

Earlier one of the Labour members talked about a tax swindle. It was a catchphrase; Labour is very good at catchphrases—things like the “Axe the Tax” bus. What a fantastic flop that was. Where did the bus go? Did anybody turn up? Hardly anybody, not even Labour’s own caucus members, turned up. And what is Labour’s answer for building our economy? It is higher taxes, increased borrowing, and capping public sector salaries. It is incredible to me that Labour wants people to pay more taxes. It complains about what the Government has apparently not done. Is Labour going to reverse the tax cuts? I do not think so. It will not say that.

What is Labour’s position on tax cuts anyway? I think it has four options even on GST. Let us talk about that. What is Labour’s answer? What is Labour complaining about? This is a fantastic Budget delivering for a better economy, and for a better future for our children, our grandchildren, and all New Zealanders. The average person is $15 better off per week in take-home pay and the average family is $25 better off, even if we consider the GST rise. It is a great Budget.

JONATHAN YOUNG Link to this

I will speak of two remarkable facts. Firstly, two-thirds of the cost of personal income tax has gone towards reducing the bottom two rates. That takes the current 12.5 percent rate down to 10.5 percent, and the 21 percent rate down to 17.5 percent. In other words, two-thirds of the tax cuts apply to people on incomes below $48,000. Secondly, 73 percent of income earners will face a statutory income tax rate of 17.5 percent or less. For those near the top of that income range this tax rate has almost halved—down from 33 percent in just 2 years.

One member of the public said to John Key: “Good Budget in my thinking. Get the country earning more than it spends (note to self). As individuals, and as an economy, shift to productive investment. Let’s get the country cranking. Keep up the good work.” There is an inherent sense that in such a resource-rich country with such resourceful people, we can do better, and this Budget aims to enable people to do better. It is aspirational. Not only does it help people right across the board in every tax regime but also it creates incentives for people to upskill, improve their situation, work hard, and be rewarded for their effort. A member of the public said to Bill English, the Minister of Finance: “Keep up the good work, Bill. The Budget you have produced will move New Zealand forward and was long overdue. I appreciate all the hard work you do.”

First and foremost, this Budget is about achieving faster and sustainable economic growth. That is the most important thing, because it is the only way we can get the higher-paying jobs and the opportunities in this country for hard-working Kiwis.

Astonishingly, although we had nearly a decade of very good economic environment, our recent track record has been poor, and that was even before the global recession hit New Zealand. We were already in recession, and, before that, growth was paltry. We relied too much on borrowing, consumption, and unsustainable increases in spending. This Budget will help turn that round so that we have faster growth from savings, exports, and productive investment.

One particular area that we feel is very important is law and order. That remains a major area where this Government is focusing on things that matter to all New Zealanders. The Government promised 300 more police on the streets of Counties-Manukau by the end of 2010, and 300 more for the rest of New Zealand by the end of 2011. Since November 2008 New Zealand police numbers have grown by 350, and we are on track to achieve the 600 additional officers by the end of 2011. This Government is delivering on its promise of ensuring that our police are well resourced, well trained, and well supported. Thank you.

Hon GEORGE HAWKINS Link to this

They both used to be Nats but they saw the error of their ways and left that party.

This Budget has been a disaster for people in my electorate. They see that the chief executive officer of Telecom will save $1,600 a week in tax, but what will happen to people in my electorate who are struggling? To those in Finlayson Avenue in Clendon, the Budget gives just a few crumbs. What they will get, with GST increasing, is $3.30 a week. That is around $170 a year. Is $170 a year going to lift Māori in Clendon out of poverty? I do not think it will. Many people swallowed the line that this was a Budget for them. Well, it was not for the people in Clendon in my electorate, and it was not for the people in Wiri in my electorate. Those people will have to manage with much less money. From the beginning of next month they will find that the price of power has gone up. They will find that the price of petrol to get them to work, if they are lucky enough to have a job, has gone up. That $170 a year will soon disappear.

What is the answer to this? A week ago, at this time, I was sitting in a draughty school hall at a meeting about a new prison to be built in my electorate. It will hold 1,500 people. Where was the Minister of Corrections? Where was the Associate Minister of Corrections, considering that Manurewa is part of his electorate? They were nowhere to be seen. Let me paint a picture. I was in that draughty hall and some 12 or 15 kilometres away a person was sitting around in her blue fluffy slippers, with the heater going; she had her royal blue dressing gown on, her hair was in curlers, and she was holding a sherry, watching Coronation Street, and reminiscing about Ena Sharples. That woman should have been at that meeting. Dr Pita Sharples, the Associate Minister, should have been at that meeting, but neither he nor the Minister of Corrections was there. Instead they sent along Cam Calder, the most junior member in the National Party caucus, who tried to put forward what was happening. He asked us to think about the prisoners. The people there were not thinking about the prisoners; they were thinking about their own families and what will happen to their neighbourhood. Those two Ministers did not turn up. I have seen jellyfish with stronger backbones, and that is the reality. When the going gets tough, they disappear.

The Government came up with a solution: it would not deal with things at the top of the cliff; it would deal with them at the bottom of the cliff. I would have been very supportive if, instead of 1,500 jail beds, many of them maximum security, this Government had come up with 1,500 early childhood education places so that we do not make the same mistake that we have been making year after year. When one tries to get more early childhood education places, one finds that they have gone off the boil. Towards the end of the last Labour Government I was getting more early childhood education places throughout my electorate, as were many of my colleagues. They have dried up, and that is an awful pity. The Māori Party has quite a bit of support in my electorate, and what is it offering the people there? They might get a job in a public-private prison guarding some of their mates. What a promise! This Budget failed to deliver for ordinary people.

In South Auckland we have many problems. We have the largest amount of pokie machines around. People try to win a jackpot to pay for the groceries, but they lose out. There are liquor outlets all over the place. On every street corner, where in the old days there used to be a dairy, there is a liquor outlet, which is open from first thing in the morning to late at night. I want the Government members over there to get up and say how $170 a year will help those people. They might say it will pay for so many bottles of DB or Lion, but that is the problem; you see, we as a community are fighting that problem. I introduced a bill some time ago to enable people to have a say on liquor outlets. I have been supported by many of the Manukau city councillors, especially Daniel Newman, who has taken a real lead on this matter. But Dr Sharples, the Māori MP who covers Manurewa, has been silent. He has been to New York, but will that help the families with $170 extra a year? No, it will not, and I think that is a real pity.

One of the things I do is put out a very good paper, the Hawkins Herald. It is better than the New Zealand Herald, with far more substance. In the autumn edition was an article on the price of cornflakes and what people will have to pay. The cost to a Manurewa family per week—

Hon GEORGE HAWKINS Link to this

Well, Parliament pays for it, and I am proud to use my money to let people know what I am up to. That member does not let his constituents know what he is up to; he is usually scurrying away from a meeting where he has been whipped.

The thing is that those people are going to find things very tough. When we look at what they have to buy, we see that their grocery bills are going up. We have very large families in Manukau: many Pacific families, many Indian and Asian families, many Māori families, and Pākehā families. Not all of them can afford to insure their cars, and putting up GST will just make things a bit harder. People do not pay their power bill on time. The dilemma they have is whether to feed their kids—get in some food—or pay the power bill. That is the question, and that is why this Budget is a very poor Budget. The ordinary people in my electorate have been short-changed by a greedy Government.

TIM MACINDOE Link to this

Opposition members’ hearts have not been in it, in this debate, I tell Mr Parker. Their heads certainly have not been anywhere near it, and most of the members opposite have been going through the motions in this debate, to offer some form of opposition merely for the sake of opposition. But in their hearts they know that the changes that this Government is making are the right ones, and that Budget 2010 is one of the most significant and impressive documents of its type to have been delivered to the House in my lifetime. That is why I will be proud to cast my vote in support of the Budget at the end of this debate—