Budget Debate

Hon KATE WILKINSON (Minister of Labour) Link to this

Budget 2010 is a great Budget. History will show that it is one of the best Budgets that this country has seen. What a great Budget. Labour took us from the best of times to the worst of times, leading us into one of the worst recessions in history, and we are now leading New Zealand out of it. This Government is focused on growing the economic pie and providing the right incentives for New Zealand families to get ahead. We want a bigger pie so everyone will get a bigger piece. Labour seems to be stuck firm and fast in the politics of envy. All Labour members do is pick and pick at the same old pie, complaining that no one trusts them to slice it any more. Well, they are right.

This Budget focuses on lifting long-term economic growth to create jobs, boost incomes, raise living standards, and help Kiwi families get ahead. It keeps us on track to reverse the deficit and get the books back into surplus, notwithstanding the legacy left by Labour, which squandered some of the best opportunities that this country has seen.

The Minister of Finance has pulled off a huge coup with this Budget, as has been shown by the huge levels of support from both the public and political commentators. I think we would struggle to count how many column inches and sound bites have been filled with praise and compliments for the decisive and courageous direction this Budget sets for the New Zealand economy. There is one quote that appeals to me. It is feedback from the New Zealand Herald, and it states: “The worst bit about the Budget was listening to Mr Goff respond to it in Parliament.” I think that probably says it all. Let us look at more quotes. The Dominion Post editorial states, under the heading “Bold step towards a better economy”: “Without changes to make it a more attractive destination for investment and skilled workers, New Zealand was facing a further slip down world economic tables. Mr English has made a promising start to arresting the trend.”

That is one quote; we have others that I would like to put on the Hansard record. Bernard Hickey states: “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.” That is not the only one, though. Another states: “Today’s Budget is a major step in the long-term aim of reversing this resource drain, with the added hope that some of our best and brightest and wealthiest will consider a return home.”

This is a great Budget. It has seen the biggest tax reform in 25 years. It delivers on four objectives. It rewards effort and helps families get ahead—something Labour does not know much about. It helps us attract and retain skilled people in New Zealand—something Labour did not know much about. It encourages savings and productive investment—something Labour did not know much about. It discourages excessive borrowing, consumption, and property speculation—something Labour does not know much about.

This Budget makes the tax system fairer. It strengthens the tax rules about property investment, and it gives the Inland Revenue Department extra resources for enforcement. If we look at the Budget, we can see that it is a good Budget for New Zealanders. We can look at some examples. Let us take a family with a couple of children, earning $76,000 a year. They receive Working for Families and pay $300 a week in mortgage repayments, which do not incur GST. After the tax package, they will get a household tax cut of about $46 a week. They may pay an extra $21 a week in GST, but they will be $25 a week better off. They will be $25 a week better off under National than they would ever be under Labour.

Let us take an average income earner on $50,000 a year. He works as a plumber and earns the average wage. He pays $120 a week in rent, and saves $50 a week towards a deposit on his first home. After his tax package he will get a $29 tax cut. He will pay $13 more in GST, but he will be actually $16 a week better off. Even retired couples receiving superannuation, who have no other investments but who own their own homes, will get a tax cut of $12 a week after the tax package. They will have a $10 a week increase in New Zealand superannuation but will pay, possibly, $11 extra in GST. Overall, national superannuitants—retired couples—will be $11 a week better off.

The Labour Party is a party of envy. Its members say that this Budget is just a Budget for National’s rich mates. Well, I say that for some who are wealthy this is probably not the best Budget they have seen. If a couple is on a high income and has several investment properties, and is claiming depreciation on those investment properties to be offset against their income tax, the chances are that after this tax package they will pay more in income tax, not less. So it is fallacious for Labour members to suggest that this tax package is for the rich and not for the many.

All manner of avenues have been used in the past to avoid paying tax—

Hon ANNETTE KING (Deputy Leader—Labour) Link to this

It is hard to believe that a mere 18 months after the 2008 election people are asking where the fresh start is that they were promised by John Key—“Where is the fresh start?”. What is fresh about this Government, other than its leader, the front man—you know, the one with the flash suit and the smile that is reminiscent of a rat with a gold tooth? After 18 months we have not had a fresh start; after 18 months we have had a false start. In fact, the Government’s entire agenda is based on falsehoods.

I listened yesterday to the Minister for Social Development and Employment, who said that there was a real buzz around this Budget. I say, yes, I agree with that Minister: there is a whiff of something very stale about this Government and about this Budget, but the buzz she can hear is the buzz of bluebottles as they rush around this Budget.

I have to tell members opposite that increasingly New Zealanders are sick of the political sideshows from this Government. There is Rodney Hide with his latest travel itinerary, flags on bridges, toy tossing by Tariana Turia, and bottom pinching by Richard Worth. New Zealanders have had enough of the political grandstanding and sideshows from this Government. Kiwis want a Government that focuses on the issues that matter to them—that focuses on the issues that matter to them. Photo opportunities, appearing on television in America, globetrotting, and cocktail parties are not substitutes for real leadership. They are not substitutes for real leadership, for real policy, or a plan for the future.

This Government has no plan. This Government floats from cloud cuckoo-land to cloud cuckoo-land. The Prime Minister’s views depend on who spoke to him last. Someone said to him: “Let’s have a Job Summit.” He thought that was a very good idea and that it would be a step change for New Zealand. I have to tell Mr Key that it was not a step change, but a step back. If we look at this Budget, we see that the big losers in New Zealand are the unemployed—young people, Māori, Pacific Islanders, and Asian people. It is a roll-call of shame for the Government. The people who are unemployed now will continue to be unemployed.

RAHUI KATENE (Māori Party—Te Tai Tonga) Link to this

The Māori population is a young population, with the median age barely reaching 23 years compared with the median age of 36.4 years in the total population. Putting it another way, some 34 percent of the Māori population is under the age of 15. This demographic profile brings with it a special set of priorities, which we looked for in the Budget announcement made on Thursday. When we consider the disproportionately low median income—in mid-2008, it was $500 per week, compared with $530 for the total population—we see that it provides a particular context for this debate. In the health arena, an additional $51 million was allocated to meet the pressure of the Very Low Cost Access programme and other primary health care services. Why is this important? A Very Low Cost Access payment is intended to support practices that maintain very low fees—practices that typically serve high-need communities. On top of this, we would expect that the $1.4 billion extra funding for district health boards would also include interventions that reduce health inequalities.

When constituents walk in my door, the two biggest issues that they seek help with are health or education. In education, I think that one of the unsung good-news stories of this year’s Budget has been the injection of another $1.9 billion over 4 years, including a 4 percent increase in operational funding for schools. The challenge, however, is to look past the generalities and see what support is available to meet the areas of highest need and greatest demand. Therefore, I am pleased that an additional $91.8 million is being invested in early childhood education participation for families in the areas that are under-represented. The focus is on ensuring that the families in most need have access to these services. The $91 million has been earmarked for Māori, Pasifika, and low-income areas, out of the total investment of $107 million.

A lot has been said about what could at the very least be described as a contentious decision in this year’s Budget about early childhood education, but if there is any doubt as to the value of investment being allocated to Māori participation, this week’s report from the Education Review Office proved without doubt how vital it is to support and promote early childhood education opportunities for Māori. The Success for Māori Children in Early Childhood Services, which was released on Monday, reported that nearly two-thirds of early childhood teachers were not focused on helping Māori to become “competent and confident learners”, and more than half of the services were failing to respond adequately to the expectations of whānau Māori. One of the most pragmatic findings was that playgroups, playcentres, kindergartens, and other services were failing to set Māori education in a Māori context. It is not breaking news, but all the research tells us that children are taught best when the context makes sense to them. For tamariki Māori, that context is one that responds to them as Māori.

The Education Review Office report concluded that centres could do some key things to increase the responsiveness of their service to whānau. They could look at the way in which they consulted whānau, they could ensure that they incorporated Māori perspectives into education, they could provide more professional development for educators and managers in working with Māori, and they could evaluate the impact of their programmes for Māori.

I come back to my starting point of the way in which the Budget responds to the particular and unique needs of the Māori population. While I am talking about the education sector, I will also draw attention to the additional $48 million going into Youth Guarantee, which will raise the number of places available next year, from 2,000 to 2,500. Another $8.4 million is going towards helping kura retain their secondary school students. Another $12.6 million will help Māori medium schools to develop tools to assess the progress of their students. These are all important initiatives that will help to ensure that rangatahi Māori are participating, achieving, and succeeding in school. They will help to pave the way for future employment and further educational opportunities, and, in that respect, will help to build a stronger workforce to face our future.

Another key initiative that was introduced in Budget 2010 was the investment of $91 million for a new quality services fund for non-governmental organisations. This is an important mechanism to support our community groups, to help to enhance their capacity and capability, and to respond to the unique needs of communities across the country.

Finally, I will make some comments about what we may call the unfailing test of a civilisation—that is, how we treat our most vulnerable, our young and our old. Part of the Budget package includes increases of 2.02 percent for all main benefits, for New Zealand superannuation, for veterans pensions, and for the CPI-adjusted Government Superannuation Fund. That is important, of course, in that it helps to provide immediate compensation for the rise in GST, but for those who receive superannuation or a veterans pension, there will also be a tax cut on top of the compensation for GST, thereby increasing their after-tax income quite considerably.

Although such a lot has been said about GST and tax cuts, I received an email yesterday that brought everything back into perspective about Budget 2010. Moyra Bramley, responding to one of the releases we issued on Budget day, shared some of her own unique brand of wisdom to guide our thinking about the difference that Budget day makes. She said: “I understand the reasoning behind the increase in GST and accept we all have to tighten our belts for the sake of those who have no jobs, no fathers or mothers to raise the kids, and although it’s going to be hard, there is a way to better the lot of those who will be affected most. If you have a plot of land, and most do wherever they are living, then plant some vegetables. Take cooking lessons and learn to make meals out of nothing. Nourishing meals do not need expensive cuts or expensive ingredients. Op shops have awesome clothing for a few dollars for everyone of all sizes. Shoes at $2 per pair. So it is just a matter of reprioritising where your money gives you the best value. But in this country, no one should go hungry or without clothing if they spend their benefits wisely and most of all stop smoking and drinking. Buy food for your babies instead. I am so pleased I taught my kids to cook at an early age, even my boys, and now they have no problem stretching the dollar.”

I chose to quote extensively from Moyra’s passage to us because so often the greatest advice comes not from the experts and the purchase advisers, but from those wise souls all around us who have been through it and are still going through it. The reality is that there will always be those who say that there is not enough in the Government’s Budget for them. My brief overview of some of the essentials of Budget 2010 proves without doubt that there are some great initiatives included in this year’s approach, which really focuses on those most in need. But there is also the evergreen message that ultimately, no matter how great our wealth, the biggest difference made can be in making the most of our resources and investing in the value of collective responsibility. It is all about whānau ora.

Hon PHIL HEATLEY (Minister of Fisheries and Aquaculture) Link to this

Last year National was very focused on getting the Government’s finances under control, as I think the public experienced. The recession was deepening during that period, and people were threatened with losing their jobs. It was a very difficult time for New Zealanders and their families. This year, of course, we are squarely focused on the economy and building the recovery. As Bill English has often said, the recession did not begin after we came into Government. It was in New Zealand well ahead of the rest of the world. In fact, we had been in recession for some time; it just did not show up until the rest of the world came under pressure.

The Government had a number of approaches during the last year following the last Budget. One of them was a big focus on reining in Government spending where there was no gain and where there was not a dollar of value for every dollar spent. We also looked at ways in which we could curb regulation, so the Building Amendment Act was passed, and the Resource Management Act was fixed, as well, to a very high level. Now we focus on more specific Resource Management Act reforms. Last and most important was the fiscal stimulus package that we introduced in the last Budget. Members will recall that about half a billion dollars was put in as a capital injection to housing, roading, and education. The thought behind that was quite simple. We wanted to spend some money in the economy, but we wanted to spend it on capital items—infrastructure—not operating items. It was essentially an infrastructure package.

We looked at housing, roading, and education, and decided we wanted to inject capital into those areas. We also wanted to do work that was urgent and that had been on the Government’s books collecting dust for a decade. So the Minister of Transport, the Minister of Education, and the Minister of Housing dusted off all the plans for the roads, the houses, and the schools that could have been upgraded in the last decade. They asked themselves whether they were still good ideas, whether it was worth injecting capital into those projects—those schools, those roads, or those Housing New Zealand estates. If so, they asked whether they were already consented, because they wanted the fiscal stimulus package to have immediate effect, so it would be good if the consents were already there. They also determined whether a workforce would benefit from those construction projects. It worked very, very well. The fiscal stimulus package put about $124.5 million into the State housing sector. We have upgraded about 11,000 State houses over the last 16 to 18 months. That was the plan, and it is trucking well on its way to completion on 30 June of this year. So 11,000 houses have been painted, been insulated top and bottom, had clean heating installed, had the kitchen renovated, or had the bathroom renovated. That type of essential work has been done. It was a boost package during the recession.

We focused on upgrades as opposed to new buildings because we did not need consents for a lot of the upgrade work. The $120 million fiscal stimulus could be virtually immediate because we did not have to go through that consenting process. Also, a large number of houses were uninsulated and were in a serious state of disrepair. There were 940 healthy housing upgrades, and, added on to the programme that was already planned to increase the number of State houses, 87 new homes were built as part of the jobs and growth package. It was important that we built new homes rather than bought existing ones. The main reason for that is that it meant people were employed. I can say that Housing New Zealand Corporation, going forward, now has a preference to either build its own homes on land that it owns or lease homes that are newly built on new sections. The reason is that in both those cases that increases housing supply, while only purchasing houses, which might happen on occasion, does not increase housing supply. It is a very significant stimulus package, which, of course, ends on 30 June.

This year, we are focused squarely on the economy—and on some other things. First of all, this Budget will put economic growth at centre stage. Its overriding aim is to tilt the economy towards people working harder and longer, investing more energy into their work, and getting the rewards for that. So it is an economy that will be tilted towards work, saving, and investment, and also towards exports. It will be tilted away from what was the case, which was a lot of borrowing and spending. We are moving away from spending and towards saving. We are moving towards making sure that people are incentivised to work rather than not work. And so it goes.

Secondly, our major tax-reform package features across-the-board tax cuts that help families get ahead. That is where the reward is for work. Thirdly, the Budget shows an improved fiscal outlook, where both Crown debt and budget deficits are better than forecast. Last year there was not good news. This year it is still tough, looking ahead, but there has certainly been an improvement, and we want to do better still.

Finally, the Government and the Minister of Finance have been very, very strict with Ministers to make sure that we keep within our $1.1 billion allocation for new spending, to make sure that we are not increasing spending just for the sake of it but that every extra dollar that we spend is a dollar’s worth of investment. The Minister of Finance has asked Government departments and all agencies to do more with what they have. That is a very significant shift from the previous Government’s approach. We are making sure that we test every programme before it is re-funded or gets a boost in funding. So Government departments and agencies will receive little or no new money for the next few years, unless they are in the area of health, which receives the biggest slice of new money—an extra $2.1 billion over the next 4 years, including $512 million in the next financial year. As we have heard from the Minister of Education, Anne Tolley, schooling and early childhood education will also receive an extra $1.4 billion over the next 4 years, including $417 million in the next financial year. Those are very significant investments.

I have to say that one of the investments that we are most pleased with in the last couple of years has been the Housing Innovation Fund. I acknowledge members across the House who began that fund originally with about $12 million. Much of that money went into the development of housing organisations. We have switched the fund around a bit. We have increased it from $12 million to $20 million, and we have said that the money has to be spent on building or purchasing houses. No longer can the money be spent on the development of plans, organisations, or that type of thing—what people call capacity building. It must be spent on capital expenditure. That is a change that we made, as well as the funding boost. The Housing Innovation Fund has been extended again this year by another $20 million. Of that, $16 million will be spent on grants or loans to support social and affordable housing, and $4 million will be spent to meet the cost of interest-free loans that are provided to community housing providers. The Māori demonstration projects and partnerships will continue also this coming financial year. So far, in the current year, that has resulted in 96 new housing units, and not all the announcements are finished yet.

I can say that the New Zealand Housing Foundation has been allocated $3 million, which goes towards its $12 million project for 30 affordable homeownership opportunities in Auckland. We have attributed $3 million out of a total of $12 million. That shows members how we can leverage input from the private sector or other housing providers. The Salvation Army received $2 million for 15 new rental properties. Other trusts, such as Habitat for Humanity, the Monte Cecilia Housing Trust, and Queenstown Lakes Community Housing Trust, received money through the Housing Innovation Fund. I am delighted to extend that fund into the next financial year.

Hon RUTH DYSON (Labour—Port Hills) Link to this

We can tell when Ministers are enjoying their portfolio responsibilities and their job by the energy and the passion with which they make a contribution to this House. That Minister, Phil Heatley, did not have any. He has clearly got over his excitement, his little puppy-dog love that he used to have for his ministerial portfolio. That was a tragic contribution to this debate.

I am very pleased to be able to support the amendment that has been moved by the Labour leader, Phil Goff. The amendment is: “That all the words after the word ‘That’ be omitted and the following words substituted: ‘this House has no confidence in the National Government led by John Key which has blatantly broken its clear promise not to raise the Goods and Services Tax, has pushed up other taxes and increased prices when working people have had their lowest wage rises in more than a decade, has failed to implement a plan for jobs, lacks any vision for a smart, high skill, high tech and high wage economy, has cut services and assistance to the most needy in our community, and has rewarded the most wealthy at the expense of middle and low income New Zealanders.’ ” Given the 100 percent truth in that amendment, it is not surprising that the Minister lacked any commitment and any passion in his contribution.

This has been a Budget of broken promises. John Key himself personally looked straight down at the camera and promised New Zealand that we would not face an increase in GST. This Budget broke that promise. GST is going up. That is the first of the three broken promises contained in this Budget.

The second was as clear and as personal a commitment from John Key: that National would not borrow to fund tax cuts. That promise was repeated after the election—it would not be borrowing to fund tax cuts. In fact, that is the reason that it had to cancel its tax cuts under urgency, having previously put them through under urgency, because it was not going to borrow to fund tax cuts. This Budget has broken that promise as well. This Budget sees borrowing to fund tax cuts not for low and middle income earners alone, but for the people who least need a tax cut, the people who are getting more in tax cuts than many people earn over the whole year working full-time. Some people are getting more in a tax cut than other fellow citizens earn working full-time. How can that be fair and how can borrowing to fund those tax cuts be justified?

The third broken promise in this Budget was that National would not cut the number of public servants, would not cut front-line health services, and would not cut the level of Government support that people were getting. Every day we have more examples of front-line health service cuts and of cuts in Public Service jobs.

The National Government has been portraying this Budget as a great, fiscally neutral, responsible tax-switch Budget. Well, actually, it has been properly described as a tax swindle. It is making it harder for good, hard-working New Zealanders—not the sort that Mr Key dismissed as being just jealous of the important people, the rich people—who are on low or middle incomes to get ahead with their lives. It has also been noted that the real winners out of this Budget are the people who are on the highest incomes. I have nothing against people who have a very high income. I say: “Good on them.” But they are not the people who deserve and who need the biggest support from Government, particularly in these tough times. They are not finding it hard to pay the power bill every week, and they are not shocked when they learn that the power bill is going up. People on very high incomes can manage very well. They do not get to the checkout counter every week or fortnight and hope they have enough money in their bank account to pay their grocery bill. The people who do are now getting more anxious that they will not be able to afford the power increase, and that they will get to the checkout with their groceries for their families and not have enough money in their account to pay the bill.

Those people are as important to our country, to our economy, and to our society as the people on the highest incomes; they should have got more out of this Budget to get them through the hard times. In fact, they will lose out of this Budget—that is another broken promise. Do members remember that John Key started off by saying that all New Zealanders would be better off under this Budget? Then he toned it down a bit and said that most New Zealanders would be better off. Then he toned it down again and said that no New Zealanders would be worse off. Every time he has talked about the Budget his expectations have got lower. But he was still wrong, even when he made his lowest prediction, because some people are worse off.

Inflation is running at nearly 6 percent. It will destroy most of the tax cuts, and that means that New Zealanders will face an increase of 2.5 percent in their GST with no compensation. Again, people were promised by John Key that if GST went up they would be compensated. He did not tell them, though, that they would face a nearly 6 percent inflation rate as well as the GST increase. If we take an average family with two children, and give the income earners in that family a wage increase, they will be $55 a week worse off after GST, inflation, and the increases in early childhood education charges.

The Minister of Education could not work out those early childhood education charges. She was asked to multiply $1.51 by 40 and let the House know what increase in early childhood education charges that family would face if the increase was passed on from their early childhood education centre. I know that the family is facing an increase of $1.51 an hour multiplied by however many hours their child is in early childhood education; that is the additional charge that family will have to face. I am sure that my colleague Sue Moroney will be asking the Minister to have another go at that question: $1.51 times 40. Perhaps Aaron Gilmore might be able to spend some time this afternoon with his calculator and the Minister of Education explaining how that increase will make families worse off.

As a result of the Budget, we have also seen future health cuts that will make the health cuts of the last 18 months pale into insignificance. As you know very well from your own electorate, Mr Assistant Speaker Roy, these health cuts have not been fair on individuals, and they have not been necessary. In fact, they have been cruel. They have targeted the most vulnerable members in our society: people who are frail and elderly, often living at home on their own, and people who have been getting $20 or $30 a week in home support help have now had that cut because the Minister of Health has told the district health boards that their cuts are not strong enough. He asked them to keep cutting until they got their budget back on track before 30 June this year.

The Budget that has been presented in this House halves the budget increase for district health boards. They do not know how they will survive, and I am certain that older people and more vulnerable people, in particular, will be feeling the weight of those health cuts. There is, effectively, a $300 million hole in the health budget. That is how much extra they needed on top of what the Minister of Health announced on Budget day in order to just stand still. They needed that not in order to expand services, not in order to give wage increases, and not in order to make better, sooner, and more convenient health services available; that is how much they needed to stand still. That is the hole in the health budget.

CHRIS TREMAIN (National—Napier) Link to this

We know that New Zealanders have received a Budget really well when the Leader of the Opposition comes into the House for question time the very first day after the Budget, and asks not one question to hold this Government to account on the Budget. We know it has been even better received when he comes into the House for question time on the second day after the Budget, and cannot ask a question about the Budget to hold us to account. Literally hundreds of decisions have been made in relation to this Budget, but the Leader of the Opposition cannot come into this House and ask one question to hold this Government to account. The Opposition is in tatters.

We know as well that it has been a successful Budget when the Greens, with two questions to ask day after day, come into the House but do not ask one question about the environment or one question about the railways. It must be a Budget well received by New Zealanders. Where are the Greens holding this Government to account about their core policies? They are nowhere to be seen. They have asked nothing about the environment and nothing about public transport. They have not asked questions on the things they should be asking about. This Opposition is in tatters—in absolute tatters—if its members cannot come into this House and hold this Government to account. The Opposition is an absolute shambles.

That aside, we really know that the Budget has been successful when we go back to our electorates in this wonderful country—back to Tauranga, to Auckland, to the West Coast, and to Christchurch. We listen to the people out there who are the real people in this country and who make the calls. There is no greater test than being on the Saturday morning sports field, when the mums and the dads, the granddads, the grandmums, the coaches, and the volunteers are out there, and talking to them about the Budget. I can tell members that the feeling on the sideline in Hawke’s Bay last weekend was absolutely fantastic. Heaps of people remarked to me about how they felt the Budget was a real step forward and had the right incentives in place. They said that it helped hard-working Kiwis in our country.

One dad and his son from the Pan Pac Forest Products mill cutting room came up to me and said: “That’s a damn good Budget, Chris. We’re really pleased with the way it went, because it is out there and rewarding guys like us for getting out there and working hard.” The son had just bought a home. He said the Budget provisions would make his mortgage payments a bit easier, and that he would save money. I was proud of what he said. I asked them what they thought about the top tax rate coming down. Do members know what they said? They said that if the company does not make any money, they do not have jobs.

People out there get that. We need companies and businesses doing well in this economy. We need the incentives to go ahead; that is really important. Hard-working Kiwis get that. They know that someone has to risk capital to start and to build companies. Outside the Wellington political beltway, people in the provinces know that companies, not Governments, provide jobs.

Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) Link to this

If Chris Tremain truly believed what he said, then why are Māori constituents in his electorate not going up to him in droves, patting him on the back, and saying that this is a great Budget? I will tell members why they are not doing that. It is because 73 percent of people in the member’s electorate earn under $40,000 and they will not benefit from any of the tax cuts he has talked about. National’s Budget will hurt Māori, it will hurt low-income whānau, it will hurt families with children, and it will hurt young people.

This is indeed a Budget of broken promises. It is not a Budget that delivers to the vast majority of people in Hauraki-Waikato, where 73 percent of people earn under $40,000. It is much the same in many of the Māori electorates. There are high rates of non-participation of young children in early childhood education. Youth unemployment has increased; 16,000 young people are unemployed, and that is tragic. Māori unemployment, in general, has increased. In 2008, when Labour was in Government, that number stood at 11,700. Now, in 2010, 22,800 Māori are unemployed. It is double the amount. So something is not happening with this Government to ensure that unemployment does not keep increasing, yet Government members say that this is a good Budget.

The Government is struggling to deliver to the communities that I represent on the issues that really matter, on the bread and butter issues that help whānau sustain themselves. A good job, access to affordable health care, affordable housing, and a good education are reasonable expectations in a caring and responsible society. The Budget has failed many in my electorate on all those fronts. Those people want to make a good go of it; instead, when looking for a job they are confronted with an employment market that can hire and fire in a 90-day period without warning, without reason, and without care. Tīkaokao McClutchey on the East Coast was released from her job within the 90-day period without warning and without notice. She was gone just like that within the 90-day period. People want certainty and protection in the labour market, and slowly but surely this Government is chipping, chipping, chipping away at the rights of those people who are hungry to work and want a job.

This Budget proposes tax cuts that will see greater gains for those on incomes above $70,000. Sadly, many of those people are not Māori. In fact, a good majority of them are not Māori. So how can members opposite propose that this is a good Budget when so many Māori are affected negatively by its consequences? How many in Hauraki-Waikato will benefit from this round of tax cuts? It will be very, very few. Instead, as I have said, approximately 73 percent of earners in Hauraki-Waikato will see little or no benefit at all from the tax cuts that will take effect. They will be net losers. In fact, let us look at the figures. In Hauraki-Waikato the median income is $22,000. After the tax cut is calculated, minus the accident compensation costs and inflation, one ends up with a net loss of $11.65. Members opposite say that this is a great Budget. I say that it is not. They should look at the figures, which speak for themselves. To top that off, an increase in GST will hurt those same people and whānau, who will pay extra for the basics: for their kai, their power, their petrol, school costs for their kids, bus or train fares, rental payments, and mortgage payments. The Government has done a good job of creating an illusion. It is giving with one hand and taking with the other, and that is the swindle. Whānau in Hauraki-Waikato did not vote for giving tax cuts to high-income earners without taking into account the consequent effects in health, education, housing, and employment. They did not vote for increases to GST that will hurt them in the pocket, but they got them.

The Māori Party has a lot of explaining to do. In fact, the Māori Party members cannot stomach the debate and that is why they cannot be here to listen. Hone Harawira needs to know that it is no good speaking out if one’s actions do not follow one’s words. At the end of the day the Māori Party voted for these tax cuts, for the GST increases, and for this Budget. It did not have the mandate to do that, but it did. I bet that every Māori who voted for the party did not vote for the tax cut package or the GST increases that have been delivered. They will hurt in the pocket, and the Māori Party knows it. The party has a lot of explaining to do. Why is that? Hone Harawira tells us that its poor list of achievements shows too many gains to give everything away now. It might happen on 1 October! The Māori Party says that its achievement on the foreshore and seabed issue—the repeal of that Act—is one such reason. What is it to be replaced with? It will be in public ownership. The Māori Party says that its achievements on getting the Government to support the Declaration on the Rights of Indigenous Peoples is a gain, but it means nothing—especially to Tūhoe. I say: “Go and ask them.” The Whānau Ora initiative was proposed as a saviour to all the ills within many Māori communities. Well, it was supported in part—and funded only in part—by the Government. That was far short of the expectation raised by the Māori Party out there in many Māori communities. A measly $134 million over 4 years for Whānau Ora for only 20 providers will fall well short of the expectation that has been created in a number of communities. The GST increase, as I have said before, was not voted for by any of the Māori Party’s constituents. In fact the Māori Party wanted a GST decrease, yet that will not be delivered, because its mates in the National Government will not listen to anything the Māori Party has to say. Yet the party is still prepared to prop up the National Government and its Budget, which does not deliver at all to Māori constituents.

In my electorate the constituents who voted for the Māori Party have been sadly let down and had the wool pulled over their eyes. No one is talking about the Budget with the same fervent glow as members on the other side of the House; Māori know that they will be hit in the pocket and slapped in the face. What about leadership on the real issues that affect Māori? Making sure that our kids get a good start in life is absolutely necessary. The Government has chosen to cut funding for teachers in early childhood education centres. That will seriously affect the ongoing quality of teaching in those centres, which are charged with making a difference to the lives of our children. I heard a member from the Māori Party promote the gains in Youth Guarantee, but I say there is too little funding for the large number of young people who are currently unemployed and who want to go into the workforce. That is not enough of a gain. Those people want a real job and a real wage. They do not want to be part of a training-go-round scenario. There is nothing in the Budget on Modern Apprenticeships training or increasing investment in that area, where young people increasingly want to take up the option to earn while they learn. What about supporting single parents? There is nothing in the Budget to ensure that those with children, who are unsupported by a partner, have access to the training incentive allowance to enable them to take up study beyond level 4. There is nothing whatsoever for them.

The Budget is a sad indictment on the direction in which this Government is going. Constituents in Hauraki-Waikato want a fair go. They want to work but do not like being kicked in the guts. They want a good education to get ahead, but increasing fees may prevent that. They want a good quality of life, but the cost of living through increased GST will hurt them. They want to build a strong whānau, strong marae, and strong communities but not at the expense of creating winners and losers through contracting rounds. This Budget has broken promises and it does not care for the many at all; instead it cares for the few. It is not the kind of Budget that I would stand up in front of my electorate and promote. I am sure that many members on the other side of the House would not go into many Māori communities and promote the Budget in the same way that they do in this House. They know it just does not hit the mark, at all.

Finally, I say to the Māori Party that it has a lot of explaining to do. I wait for 2011 to roll on because the shallow and hollow gains that the Māori Party thinks it has achieved will all be undone by a Budget like this. The Budget continues to undermine vulnerable and needy families and low-income families. More important, it undermines the majority of Māori who want to get ahead, want a job, want to make a go of it, and look to the future. They know that the Māori Party has let them down badly.

PAUL QUINN (National) Link to this

I seek leave to table a graph that was prepared by that eminent researcher and political scientist David Farrier, which shows the change in the average tax rates between 2008 and 2010.

Hon TREVOR MALLARD (Labour—Hutt South) Link to this

I raise a point of order, Mr Speaker. The member said David “Farrier”; does he mean David Farrar?

SIMON BRIDGES (National—Tauranga) Link to this

I did not want to start this way, but I have to say, after listening to Nanaia Mahuta and her comment that the Māori Party is “shallow and hollow”, that all the speeches from Labour members have been shallow and hollow. They have been shallow and hollow because Labour members were wrong-footed on this Budget. They thought this was going to be a Budget for the “rich, fat cats”, as they put it—

DARIEN FENTON (Labour) Link to this

I am pleased to support the amendment proposed by our Labour leader, Phil Goff, as outlined on the Order Paper. I can tell the previous speaker, Simon Bridges, that over the last week, since the Budget was announced, Labour MPs have been out there talking to a lot of people in the community. It is fair to say that people are absolutely underwhelmed by this Budget. They are underwhelmed, and they are deeply concerned.

John Key called the increase in GST in the tax package a tax switch, but for middle and low income earners, it is a tax swindle. The truth is that most New Zealanders’ tax cuts will be wiped out by inflation of nearly 6 percent, and most Kiwis will not be compensated for the GST rise that this Government has introduced. The Government knows that. That is based on their own numbers, but they are not admitting it. They are not fronting up to the New Zealand public. They need to start telling the truth about this Budget.

On the North Shore, where I work—people have a view that it is a very affluent area—I came across a family with two young kids. Even after the wage increases factored in for the next year, they will end up being $55 a week worse off after the GST increase and the cuts to early childhood education.

The tax cuts are not only a tax swindle but also unfair. They fail John Key’s fairness test, because one-third goes to the top 5 percent and 15 percent goes to the top 1 percent. The people in the middle and at the bottom are going backwards under this Budget, and the people on the bottom—people on unemployment benefits and on the minimum wage—will get a pay cut. But of course, that has happened before. In the next year, as inflation goes up to record levels, and with it the cost of food, petrol, power, childcare, and accident compensation levies, we will see just how awful the swindle is.

This is also a Budget of broken promises. John Key told New Zealand that he would not raise taxes. He was unequivocal about that. He stated: “National is not going to be raising GST. National wants to cut taxes, not raise taxes … If National was to do a half-decent job, it wouldn’t need to either raise GST or raise taxes.”

Hon GEORGINA TE HEUHEU (Minister for Courts) Link to this

The true measure of Bill English and John Key’s Budget 2010 will be realised slightly further down the track, although some of it is coming to fruition now. It will be realised when we register 3 percent growth over the next 4 years, when the 175,000 jobs that Treasury is forecasting start to come on stream, and when the public continues to feel the absolute benefits of better, more efficient public services, rather than having to look at the bloated public service that was the legacy of the party opposite when it was in Government.

It will be realised when our best and brightest decide to stay at home and contribute to our growing economy, and when those who are now overseas look back at New Zealand—and I am sure some of them are already making plans to move back now—and decide to bring their skills back home. A whole lot of other things will flow from last week’s Budget in the next year and in the years after. Why would that not be the case? Because this Budget was a Budget for the long term. National managed the country through the recession, and we have come out the other side in a pretty good state, and we are predicting, obviously, better things in the years to follow.

Talking about the party opposite, I think the most immediate measure of the success of Bill English’s Budget was demonstrated by the deafening silence on the Opposition benches on Tuesday, at the start of this sitting week, when question time opened. It must be absolutely unheard of at question time, when most of the focus is on this House, for members on the other side of the House to be absolutely silent. There were no questions about the Budget. Members opposite were wasting time on other things. There was a deafening silence, with no questions and no comment about the Budget. Their heads were down.

Even when members on our side of the House were asking questions about the Budget, we got an absolutely free run. Nobody from the other side interrupted our questioners on the Budget. Nobody on the other side of the House had the guts or the wherewithal to challenge the questions that were put to our finance Minister and our Prime Minister by members on this side of the House. That must be an absolute record. There was not a peep out of them, and not a bang, but an absolute whimper. It was pathetic—and as I said earlier, why would that not be the case? The members opposite had nothing to say. Did we wrap up quite early last Friday afternoon on the Budget debate? I think we did, and that is also unheard of. They ran out of steam. They did not know what to say. The support from outside—

Hon LUAMANUVAO WINNIE LABAN (Labour—Mana) Link to this

Kia ora, talofa lava, and warm Pacific greetings. I welcome the opportunity to contribute to this Budget debate, and to offer some substance to the previous speaker, the Minister of Pacific Island Affairs—to offer some facts versus her fiction.

This Budget sets out clearly the Government’s economic direction for the next year, and it clearly demonstrates whom and what this Government values. I had hoped to see a Budget that was fair to all New Zealanders; a Budget for the many and not for the few. But we have an unfair Budget, a Budget for the “me”, not the “we”, and a Budget that is not fair for Pacific Island New Zealanders. It is a Budget that is not fair for elderly New Zealanders, and a Budget that is unfair for most of the people in my Mana electorate.

This Budget will hit Pacific Island people hard, after what has already been a very difficult 18 months for Pacific families. The lion’s share of the tax cuts go to the wealthy at the top; for the rest, the much more modest cuts will very quickly be swallowed up by the increase in GST and the highest inflation rate in decades. This is not good news for Pacific people, whose average wage is $24,000. The majority will feel themselves going backwards. By the Government’s own figures, a family with two young children on an average income will be $55 worse off, once GST, inflation, and cuts to early childhood education subsidies are factored in. On top of this, the Budget has left a $1.2 billion hole in health funding over 4 years. This will mean reduced services for those in need, and that will also hit our Pacific community hard.

As well as this Budget’s general bad news for our Pacific communities, what was truly offensive in Bill English’s Budget speech was his boast that New Zealand’s unemployment rate, at about 6 percent, was good news. I ask who it is good news for; it is not good news for Pacific Island New Zealanders. The unemployment rate for Pacific Islanders is more than double Bill’s “good news” rate of 6 percent. In the last 18 months under National the Pacific Island unemployment rate has shot up to 14.4 percent. This has undone all Labour’s good work during the last 9 years. Labour reduced the unemployment rate for Pacific people, from 15 percent in 1999 when we took office, to 6.3 percent in 2008. But in 18 months National has undone a decade of progress. If John Key really wanted to help Pacific Islanders in New Zealand to advance, he would have focused on growing jobs for those who are out of work, and on growing their incomes, instead of robbing them through GST to help fund tax cuts for his rich mates.

The only extra funding for the Pacific community in this Budget is now under question. It has been given to a private company that nobody in the Pacific community knows about, nor whether the company has a track record of job upskilling, job placement, or creating jobs. Is this money for John Key’s rich Pacific mates? This Budget is unfair for Pacific Island New Zealanders.

I turn to the people of Mana. By the time inflation, GST increases, and the increased costs for childcare are passed on, most families in Mana will be worse off under National’s tax swindle. This Budget means that low and middle income earners in Porirua City and on the Kapiti coast will be significantly out of pocket at the end of the day. The many families in Mana with two young kids who will end up $55 per week worse off after GST, inflation, and early childhood charges are all taken into account. If they are renting, the problem only gets worse. Property tax changes will result in higher rents. Infometrics predicts that rental inflation will be at 5 percent by March next year and will increase beyond that. How can these families possibly afford this? The reality is that people on very high incomes are much better off following Thursday’s Budget, and people on average incomes are worse off.

This year accident compensation premiums have gone up, health services have been cut, and now GST is being increased, as are childcare costs. It is simply not fair that the majority of New Zealanders are paying for the tax cuts of a few people on very high incomes. To add salt to the wound in Mana, it seems there is a drop of more than 80 percent in State housing acquisition and maintenance. Over $20 million will be lost with the demise of the Healthy Housing programme, and the acquisition of new State housing units has fallen dramatically. Mana is an area that relies heavily on State housing. Of the 10,000 people on the waiting list nationwide, nearly 500 are in Porirua; that is one in twenty. To know that new units and further improvements to make houses warm and healthy will not go ahead will cause great concern and stress. With rents set to rise, we should be supporting families into affordable accommodation, rather than shutting them out.

People who are already struggling will continue to struggle, following the Budget. Labour strongly opposes the increase in GST, the cuts to health services, the cuts to State housing acquisitions, and the increase in childcare costs for parents. In Kapiti, people are losing their employment with local businesses. Last week over 50 jobs were lost when a call centre in Paraparaumu signalled it was relocating to the Philippines. In Porirua, unemployment statistics have gone up by 500.

Families in Porirua City and on the Kapiti coast realise that although National has offered them tax cuts, price increases mean they will be no better off. The real winners in John Key’s Budget are the very highest earners, because most New Zealanders’ tax cuts will be wiped out by inflation before they even get to the checkout. This is based on the Government’s own numbers. Inflation of nearly 6 percent will destroy most of the tax cuts, and Kiwis will not be compensated for the GST rise. To fund these tax cuts, National has massively increased borrowing. The Government will have to borrow an extra $1 billion over the next 3 years. This Budget is unfair for most of the people of my Mana electorate.

I want to quickly talk about the elderly. In the last 2 weeks the first five of 19 Grey Power meetings were hosted around New Zealand. There is increasing concern about what is happening. Since we announced the investigation into aged care last month, we have been inundated with calls of support from people of all ages from around the country. The sheer number of people attending the first five meetings further reinforces the pain and what is going on. The biggest concern coming through is the Government’s cutting of health funding, to which several district health boards have responded by cutting home help for the elderly. We are hearing some horror stories. I am very worried about the standard of care some of our most vulnerable elderly are receiving in aged-care facilities, and the way the Government is targeting the elderly and reducing access to vital support. Just this week we saw that MidCentral District Health Board is looking at cutting its overnight district nursing service. This will hit our elderly the hardest. People who have blocked catheters or oxygen supply break downs, and patients lying in pain are among those who could suffer. The board is considering laying off 5.5 jobs. The most significant change will be dropping the 11 p.m. to 8 a.m. night shift. This feature is unique to New Zealand, and it is important that the elderly, even if they are unwell, are supported as much as possible to stay in their own homes. This is too big an issue to ignore. Clearly, there are deep-seated problems in this sector, and we want greater scrutiny and accountability.

The Budget is unfair for elderly New Zealanders. It is unfair for Pacific Island New Zealanders and for most of the people in my electorate of Mana. I had hoped to see a Budget that was fair to all New Zealanders, that would lead us to a brighter future, and that was for the many, not the few, but I was very disappointed with what Bill English and John Key dished up on Budget day.

Hon Dr JONATHAN COLEMAN (Minister of Immigration) Link to this

Listening to the contribution of the previous speaker, Winnie Laban—and she is a very fine, well-meaning member—emphasised for me the real gulf between Labour and the National-led Government on issues relating to the economy and the future direction of New Zealand. I do not know what sort of unpatriotic groupthink is pervading the Labour Party research unit, but just because Labour keeps on telling New Zealanders that the Budget is unfair—and it keeps on repeating that over and over—does not make it so.

In this Budget we saw the Prime Minister and the Minister of Finance lay out a very clear vision and direction for New Zealand. It is about growing the economy, addressing wasteful public expenditure, and growing opportunities for the Pacific Island people of the Mana electorate. It is about growing employment and growing jobs. We have seen a clearly articulated pattern and a clear plan. We know how that plan will bring down levels of debt. It will grow and stimulate the economy over time because more New Zealanders will have more money in their pockets to put back into the economy to grow it.

Quite frankly, this Budget has gone down excellently out in the electorate. No matter how often Labour members say it is unfair or how much they bully elderly people into thinking they will be worse off—

COLIN KING (National—Kaikōura) Link to this

It is a pleasure to follow my colleague Dr Jonathan Coleman, the Minister of Immigration and an Associate Minister of Health. When Bill English finished reading the 2010 Budget speech, which had the theme of building the recovery, the Leader of the Opposition got to his feet and moved an amendment to the motion. I make it very clear to the House that members on this side of the House do not support that amendment to the motion. The Leader of the Opposition made the statement that he believed that the Government had failed to implement a plan for jobs and that it lacked any vision for developing a smart, highly skilled, high-technology, and high-wage economy. That is as far from the truth as we could possibly get. To the contrary of what he said, this Government is all about creating the necessary environment to effect the step change that this nation needs. We need to have a first-class economy that will provide the citizens of New Zealand with jobs and careers that are highly skilled, high-tech, and high-waged, because that is what the hard-working citizens of New Zealand deserve.

When we look at the Leader of the Opposition’s speech, we see that it failed to resonate with New Zealand, in much the way that the tired previous Labour Government failed to resonate with the citizens of New Zealand leading up to the last general election. That Government lacked the inspiration that New Zealanders require. At a quick glance, we see that the speech made by the Leader of the Opposition failed in one very important area. It is an area that I will take the House through, because I believe that it is a centrepiece of the 2010 Budget, along with the tax provisions. The Leader of the Opposition failed to refer to the contribution that science will be able to make. When we look at the speech of the Leader of the Opposition, we see that it made accusations that were unable to be substantiated. Effectively, the speech was very much like Labour was before it went into Opposition: it lacked fresh thinking, and there was no evidence of that coming.

I will take the House through Budget 2010 and show how it contributes enormously to taking New Zealand forward in the field of research, science, and technology.

MOANA MACKEY (Labour) Link to this

It is a little bit difficult to sit here and be lectured on science and research and development funding by National members, because National, when it first came into Government, cut the programmes that the previous Labour Government had put in place, and sent us, with one swift sign of the pen, down to the bottom of the OECD when it came to investment and research and development. In one move New Zealand went straight to the bottom of the OECD. I note that with National’s much-lauded new grants for business, Fisher and Paykel Healthcare has said that it will be getting a couple of million dollars out of those grants, but that is only half as much as it would have got out of Labour’s research and development tax credits.

The other important thing about Labour’s research and development tax credits was the fact that small businesses were eligible—small businesses. Under National’s programme, small businesses miss out. In fact, small businesses get only a paltry few crumbs from that research and development package, despite the fact that they are some of our most innovative companies, and despite the fact that they are the very ones who cannot afford to invest in research and development so need that extra assistance. But the National Government has said no; it has said that it will cut small businesses out of those grants entirely, and they will not be eligible for any of those research and development benefits.

National members have also gone on about their Primary Growth Partnership, which is a ghost of a policy because no money has ever been allocated out of it. There was $700 million sitting in a bank account for Labour’s Fast Forward Fund to fund agricultural and horticultural science. It was sitting there ready to go, but National transferred it back into the consolidated account and said sorry to the science community. National was going to put it in a place that so far—as far as we are aware—does not even exist. So I say to National members that they may want to be very careful.

National has renamed a few of Labour’s policies as its own, and “reprioritisation” is the new catchword after National was caught out calling a “cut” a “change”. It now calls a cut a “reprioritisation”. National has brought back some of the policies it cut out of last year’s Budget, and it is now trying to claim them as great, new, brilliant ideas. But—and there is a theme of broken promises in this Budget; this is a Budget of broken promises—where is the money it promised to Crown research institutes? It promised them $350 million, so where is it this year? Oh, the National members have all gone quiet now. But that is another broken promise in this year’s Budget.

I come to Jonathan Coleman, and I say to that member that the only way Iain Lees-Galloway would lose his seat in Palmerston North would be if Jonathan Coleman became his campaign manager. That is the only way he would lose that seat. Jonathan Coleman spent 8 minutes personally attacking every single member on this side of the House, but when one person interjected on something to do with policy he told us not to get personal. The Hon Jonathan Coleman said that Labour was bullying elderly people, because we had been sticking up for them while the National Government had been cutting their home help. He said we were bullying them.

DAVID CLENDON (Green) Link to this

Kia ora koutou. The Budget is very much a document about money. It is a very practical document. But it is also a way in which a Government can express its vision. It can share its vision for this country by the way in which it assigns funding. Each Budget has its own unique character; something that defines and differentiates it from other years. This year’s Budget clearly will enter the record as the inequality Budget—a singular statement that it is OK to transfer wealth from the least well off to the most well off. That is a very unfortunate vision for the Government to have. It is not the vision that we have heard being spoken of, but we must go by what people do rather than by what they say.

We are told that this Budget is about improving growth and improving the country’s economic performance, but it is very hard to see anywhere in this Budget any net benefit for the small and medium sized enterprises that are the heart and soul of this country’s economy. They always have been, and we can expect that they always will be. The big headline treat on offer—the lollies, as it were—for business is the cut in the tax rate for companies and for high-income earners. But as any hard-working small-business owner knows, in order to pay tax a business must first make a profit. That has been very difficult for many of our smaller businesses to do over the last year or two. There is not a great deal in this Budget that will help them to achieve that profit and start to pay any tax at all.

The figures tell us that the tax cut will leave on average about $365 million a year in the pocket of businesses. On the face of it, that is a good thing. But we have heard less about the fact that the rise in other costs will quickly erode the value of that tax cut. In fact, that erosion has already begun. The rise in the accident compensation work levy will come out at about $150 million a year; something like 40 percent of the tax cut will be gone before businesses even see it. That 40 percent increase in the accident compensation levy was based on the back of an entirely bogus so-called accident compensation scheme crisis, which was manufactured by the Minister for ACC over the last year. The increase in GST will hurt business, and we know this. There will be a one-off cost to all retailers, and particularly to our smaller retailers. There will be the one-off cost of changing computer systems and relabelling, but also ongoing consumer resistance as retailers will need to renegotiate. Reassessing pricing points for various products means that either businesses will lose because they will be unable to absorb the cost, or consumers will lose because retailers will feel obliged to put up their ticket prices. A recent survey of over 400 retailers revealed that more than 80 percent of them expect the rise in GST to be bad for business.

We know that small and medium sized enterprises had no opportunity to comment on, or to inform the Minister of Finance or the Government of, the potential effects of GST, because we asked the Minister that question. He confessed that prior to making decisions about GST there was no consultation with small business, there was no acknowledgment, and no opportunity for them to say their piece or to influence that decision.

This is very much a business as usual Budget. It tweaks here and there, it changes things around the margin, but it completely misses the point that business as usual is not an option, given the changes in the national and international context in which our business people must operate and will operate in into the future. The market, nationally and internationally, is crying out for products that deal with the very new challenges we face, such as the challenges of climate change and peak oil. There is also the challenge of the changing preferences and expectations of consumers both here and overseas, and, in particular, in the high-end consumer markets—those who have disposable income and those who have choices about where they spend their consumer dollar. That is the way of the future for New Zealand, and there is very little in this Budget that will in any way fulfil the vision of building an economy and a business sector that can meet these new needs. We know that there is a demand for safe food, for organic food, and for novel fibres. We know this because some of our small-business owners, and not-so-small business owners, are already endeavouring to meet that demand.

One of the keys to unlocking the potential in our economy is in research and development to find new products, new materials, and new processes that are resource-efficient, environmentally benign, or that enhance the environment and meet the demands of socially responsible consumers. In New Zealand, as elsewhere, consumers are becoming more socially and environmentally conscious. Research undertaken in New Zealand tells us that over one-third of consumers now look at the environmental and social characteristics of a product before they purchase that product, and that number has been growing demonstrably over time. The research that has been carried out over the last decade or so tells us that.

The so-called Lifestyles of Health and Sustainability—LOHAS; there is even an acronym for these people—is a market place for consumers in North America, Japan, and Germany, and, indeed, here in New Zealand. This is the growing market for New Zealand - manufactured and designed products. Nothing in this Budget contributes or supports the businesses and the innovation that might help to meet this growing demand.

Small to medium sized enterprises in New Zealand, the small and creative businesses that have historically been the producers of ideas and innovation, will look in vain for any real assistance in this Budget. A significant chunk of the increased funding for research in there, the so-called new funding of $321 million was, in fact, stolen from environmental research—reprioritisation, I believe, is the phrase that has been used. We are already under-investing in environmental research. We were embarrassed when we produced our first state of the environment report in 1999 that the most common phrase in that report was “We don’t have the information. We don’t know.” By the time of the second environmental report, in 2007, the situation had not improved. This country lives and dies by its green brand, its “100% Pure New Zealand” brand; that is what our economy rests on. If we do not do the basic environmental research and monitoring we will lose the integrity of that brand, and our markets will diminish accordingly.

To suggest that new research funding is supporting business endeavours when, in fact, a large chunk of it is removed from a key area of Government activity is a sham. In any case, the research funding that has become available is very much targeted to the large companies—those with a track record in research, and those with a large spend already. I do not think those companies ought not to be supported, but relatively small amounts of money could be disbursed to small growing businesses. We see the voucher system proposed as being overly bureaucratic and difficult; most businesses will look at it and think the opportunity cost of applying for those small amounts of funding simply will not be worth the candle. The likelihood is that it will be underutilised.

This is a time when the Government should be investing as it never has been investing before and supporting companies that want to break into new products, new markets, and innovations. The Government should know this because in a matter of weeks of National being elected to Government, the Prime Minister was written a letter by some of New Zealand’s most successful and well-known business people. They were pleading with him to grab the vision of green technology, and of new technologies that will deal into the future with the very real problems that are faced locally and internationally. They were people like Phillip Mills, who took a successful local business and turned it into a larger and very successful international business; people like Geoff Ross, who developed 42 Below from very humble beginnings; people like Jeremy Moon, who saw the opportunity in the research around fibres and turned that into a multimillion dollar international business; people like those running Ecostore—a gentleman and his wife started making soap by hand at Mangawhai and they now have their product in every supermarket in the country and are exporting to the US and the UK.

These success stories were, in part, built on support from the previous Government through funding streams to support non-governmental organisations, and to support environmental development agencies in large ways and small. There was active support from the Government to enable these companies to grow, to fill the gap, and, critically, to assure them they were actually supported by this Government. The challenge for this Government now is to demonstrate that it has some vision, and to model best practice around Government procurement, and around its own actions; not to talk about supporting business and, critically, small business, but to actually put the policy settings there, to put the funding there, and to provide the practical assistance that will grow our small companies, grow our economy, and really give us some genuine growth, and some genuine prosperity, which this country needs—growth that is sustainable, growth that meets the needs of current demands. Kia ora koutou.

Hon STEVEN JOYCE (Minister of Transport) Link to this

I am very proud and privileged to serve in this John Key - led Government, and to stand up to support this Budget. It is a fantastic Budget from a Government that is determined to help New Zealand grow faster. It is a Budget for building a brighter future. It is a Budget that delivers the statistic the Opposition does not like to hear—170,000 new jobs over the next 4 years.

I welcome, unexpectedly, the contribution of the previous speaker, David Clendon, about businesses, because I think that far too little is spoken about businesses in this House. Last week and the week before I was privileged to attend and speak at two award ceremonies: the New Zealand Hi-Tech Awards and the Wellington Gold Awards. Both ceremonies were full of entrepreneurs, innovators, and ideas people. Being at both events reminded me of why we do what we do. It reminded me once again of how jobs are created and growth is achieved.

Governments do not create many jobs. We can help a little in the short term with the initiatives we have, such as Job Ops and Community Max, but Governments cannot hold up the sky. Ultimately, jobs are created by businesses, and not just any businesses but businesses where we have a competitive advantage in this country to create ongoing jobs and wealth. New Zealand is a small country at the bottom of the world. Just about everybody who is here has ancestors who came here and survived on their wits and their ingenuity. As a country, we traded to get ahead. We are a nation of traders.

The previous Labour Government forgot that. It thought that New Zealand could grow and grow by increasing the size of the public sector and that the traders would look after themselves. The Government sector, the services sector, and the household sector all grew and grew while the people who traded went backwards, and when the global recession came so came the financial reckoning. As a country we were up the proverbial without a paddle.

Warren Buffet has a saying about recessions: when the tide goes out we see who is swimming naked. As a country, we surely were. Suddenly, at the apex of the biggest Government spending boom in this country, companies and people had stopped paying taxes, and we inherited a huge fiscal hole and a decade of deficits. We had to act, and we did last year with a very careful Budget. It was done carefully and well. As a result we had a milder recession in this country than most countries, and we have borrowed one of the least amounts of additional funding for stimulus packages. And Labour criticised us. Then we set to work to help the economy grow faster and to encourage our traders so they trade more goods, they trade more food, they trade more resources, and they trade more bits and bytes.

How do we do that? We do that by building a tax system that encourages initiative and rewards hard work. It is done by reforming regulations and ensuring the country’s laws give more people more room to do more things to encourage industries to grow and add more jobs. It is done by unlocking responsible mining opportunities for jobs, unlocking irrigation opportunities for jobs, and unlocking more aquaculture space. All those things are challenging to do, but we are determined to do them and in so doing get New Zealand to grow faster.

Meanwhile Labour is in the rut that it led New Zealand into. Labour members lecture the Government about creating more jobs but they did nothing to tackle any of these issues. On tax, they are even worse. They remain completely in denial about the impact their 39c envy tax had on New Zealand. They made everybody pay it if they earned more than 60K a year. The Labour Government started a raft of tax avoidance, a flight of skilled workers across the Tasman, and it removed any incentive for people to better themselves and get ahead. It choked growth in the tradable sector, and New Zealanders know it. A majority of New Zealanders know that that tax should go, and that is what has happened.

What are Labour members saying now? Have they seen the error of their ways? No. They say they would keep the GST increase and put the envy tax back on. They have not learnt a thing. It strangled growth in the productive sector, it created massive incentives for people to spend their time avoiding it, and it sent record numbers of Kiwis overseas, but they say they would bring it back.

What do Labour members say about Government expenditure? Surely they would support the Government’s reasonable efforts to stop the growth in Government spending in the face of the world economic recession. Have they seen that uncontrolled increases in Government spending have to stop? No, they have not. They have criticised every single Government move to curb spending, every decision to stop low-quality spending, and every move to put fiscal discipline back in the Public Service. They oppose every move to cap the massive rise in the size of the core Public Service that happened under their watch. They oppose it all. They still bleat on about Labour programmes that we had to stop a year and a half ago.

The only conclusion we can come to about Labour members and spending is that they have not learnt a thing. Controlling public sector spending is one of the key ways in which the Government can help to get the tradable sector to grow. Uncontrolled public spending means more borrowing, borrowing means higher interest rates than we would have otherwise, and higher interest rates make it harder for firms to invest and raises the cost of living.

Higher than necessary interest rates from higher than reasonable public spending means something else, too: it means higher exchange rates. So here is the irony. The Labour Party decided last year that exchange rates were too high. It declared that it would break the consensus on monetary policy, which is a bit like breaking the consensus on gravity. It does not know what else to do, but it is raging against high exchange rates. What is the main lever that Governments have to achieve sustainable interest rates? It is Government spending. That is right. If we keep spending under control we keep interest rates on a lower track, less money flows in, and over time the exchange rate is lower and more sustainable. That is how one does it. So that is the irony. The party that is the last of the big spenders rails against the exchange rate, yet wants to turbocharge Government spending and increase our debt again.

God forbid that Labour gets back in charge of Treasury with David Cunliffe as the finance spokesman. That is the Labour Party—it has not learnt a thing. Labour members still think that losing the 2008 election was a cruel hoax. One would think that they would be over it a bit by now. They have not woken up to the stifling effect they had on the New Zealand economy.

This Budget does four crucial things. Firstly, it rebalances our economy for growth, and it encourages more money into savings and investment and less into property and consumption. That is the first and very important thing it does. Secondly, it lowers tax rates to encourage more people to work hard and get ahead. It lowers the marginal tax rates. Seventy-six percent of New Zealanders now have a marginal tax rate of 17.5 percent. It lowers the top marginal tax rate—and that is important—to keep more skilled workers in New Zealand.

Thirdly, it keeps Government debt under control and puts more of the money that we do have into health and education. It emphatically does that. The health budget from next year, from 1 July until 30 June, will be $13.6 billion. That is the highest health budget ever, but also the highest ever percentage of New Zealand’s GDP to be spent on health. Yet members opposite say that it is a cut. That just goes to show that they cannot count. We have also invested a huge amount in education. Health and education have been the big beneficiaries in spending in this Budget, and that is what spending on core public services is all about.

Finally, the fourth and most important thing that this Budget does is invest in and encourage sectors that will help New Zealand grow faster, like the science sector, the transport sector, the communications sector, and the tourism sector. Extra money has gone into tourism marketing. The Budget also signals other things we are putting effort into, such as reducing regulations, providing more opportunities to private businesses, and putting more resources into aquaculture. These are the things we need in order to get New Zealand to grow faster.

It is so important that this country grows faster, because unless we get a faster growth rate we cannot afford all the things that members opposite rail on about at all times. But no matter how fast the country grows, we cannot afford undisciplined public expenditure, and that is what members opposite have to offer. This Budget is a fantastic Budget for its time. It has been acknowledged by New Zealanders to be a good Budget for this country. I am obviously happy to support it, and I commend it to the House.

IAIN LEES-GALLOWAY (Labour—Palmerston North) Link to this

I am not convinced that the National Party has fully come to grips with the fact that it is in Government. After listening to the speakers from the Government benches this afternoon, one would think they were still in Opposition. They do not have the ability to talk about the Budget, which we are supposed to be debating this afternoon. Mr Joyce has just spent 6 or 7 minutes of his speech talking about the previous Labour Government. He tried to create a mythology as to what the Labour Party is all about. He could not tell us what the National Party believes in or what it has in the way of a plan for New Zealand, because there is no plan. Instead, he spent the bulk of his speech talking about the Labour Party and what it did when it was in Government before 2008.

Hon JUDITH COLLINS (Minister of Police) Link to this

I do not know where the previous speaker, Iain Lees-Galloway, has been spending his time because certainly where I spend my time, in Papakura, people are very happy. In fact, they are extraordinarily happy that we have such a fantastic Government. I have to say this Budget is the best I have ever remembered. It is certainly the best Budget I have seen in my 8 years in Parliament, which, frankly, is not saying much—apart from last year’s Budget, which was pretty good too. But this is a Budget of aspiration, it is a Budget that is fair, and it is a Budget that starts to give people back more of their own money so they can make decisions. The member who has just resumed his seat asked what is happening in health. I can tell him what is happening. We have an awful lot of elective surgery going on.

Hon CHRIS CARTER (Labour—Te Atatū) Link to this

I rise to criticise this Budget. Listening to the previous speaker, the Hon Judith Collins, I thought that she seemed to spend more time talking about her opponent Mr Clayton Cosgrove than she did about the details in the Budget.

It was very interesting to hear that member talk about the importance of science and research. I could not help thinking, as she was trumpeting the miserly amount that was in the Budget for that area, that it was a belated recognition that science and innovation are the only ways that we will lift New Zealand industries to make them even more competitive internationally. The $750 million in the Fast Forward Fund was the very first thing the National Government cut when it was elected to Government. So much for the Government’s commitment to science! The 10 to 15 percent tax credit that companies could get for research and development was gone as well, of course. A little bit of it has come back, but it is nothing compared to what the previous Labour Government had in place.

Today we heard in question time the Minister of Education trumpeting extra spending for education. She was skiting about a 4 percent increase in the operations grant. I have to say that in 2008 when I was the Minister of Education there was a 5 percent operations grant increase. What they did not get then, and what they are getting now, is death by a thousand cuts.

Let us just review some of the programmes in education that have been cut, putting aside that skiting about the 4 percent. We could talk about the $400 million that has been plucked out of early childhood education. The Minister of Police gave a speech a couple of minutes ago crowing about the extra police officers. She did not mention that the Labour-led Government, over 9 years, put in 2,000 extra police officers. Police officers, of course, are not the only answer to crime; we have to address the causes of crime. Almost all of the young men who are in our jails would have had a bad educational start right from the beginning. In Counties-Manukau, which the previous speaker was talking about, only 23 percent of preschoolers go to early childhood education. That might involve one afternoon a week for an hour at the local church hall, so the quality of education of even those 23 percent who are attending early childhood education before they enter primary education is of very variable quality.

The National-led Government has cut out $400 million from the early childhood education budget. That was the very thing that would address a lifetime of crime—getting those kids off to a good start so that they have educational success, and so that they are literate and skilled. Every profile of young and not-so-young people in jail shows the vast majority had a very poor education. Many of them are illiterate or only semi-literate. The failure in the education system is partly to blame for a lifetime of crime. That failure is compounded by poor homes, poor nutrition, and bad life experiences. Those are all cumulative things that are hard to deal with. They are not solved by a few extra police officers; they are solved by investing in quality social services and in quality education.

Four hundred million dollars has been taken out of early childhood education. I recall the last election campaign in 2008, where the then Opposition spokesperson on education fronted up at many meetings with me for the New Zealand Educational Institute, and she talked about the failure of 20 percent of our students—actually, it is about 18 percent and falling. It is about a good start and about programmes in schools that address literacy, not all the nonsense about national standards. How will a national standard catch a kid who is failing? Where are the extra resources in education that will lift a child who is failing in literacy or numeracy? Already in schools—

SHANE ARDERN (National—Taranaki - King Country) Link to this

It is my pleasure to rise in support of the motion moved by the Minister of Finance, and to totally oppose the amendment moved by the Leader of the Opposition, the Hon Phil Goff, that states that he has no confidence in the National Government and in this Budget. Let me tell members why that is the case. Everybody in the community has had a view on this Budget. Based on recent responses, about 85 percent of people support the content of the Budget and the direction of the Government.

SU’A WILLIAM SIO (Labour—Māngere) Link to this

After 18 months of being in Government, I think that the tide is now turning for National, as people see that this Budget was a defining one for this Government. Whether or not National members like it, the true nature of the National Government has been revealed for all New Zealanders to see. It is about big business. Those members have no concern whatsoever about ordinary, working New Zealanders.

I rise to support the amendment moved by the Hon Phil Goff, the leader of the Labour Opposition: “That all the words after the word ‘That’ be omitted and the following words substituted: ‘this House has no confidence in the National Government led by John Key which has blatantly broken its clear promise not to raise the Goods and Services Tax, has pushed up prices when working people have had their lowest wage rises in more than a decade, has failed to implement a plan for jobs, lacks any vision for a smart, high-skill, high-tech and high-wage economy, has cut services and assistance to the most needy in our community, and has rewarded the most wealthy at the expense of middle and low income New Zealanders.’ ” That says it all for this particular Government and its second Budget.

There is a well-known truism in the Pacific Island community that when people are given authority and use that authority to gratify their pride or vain ambition, then exercise control, dominion, or compulsion upon the people to cover up their mistakes, nothing good comes of it and the people end up suffering.

Before the general election Mr John Key looked down the lens of a TV camera and, when asked by a reporter, promised that if he were in Government there would be no GST increase. He broke that promise when last Thursday his Government, under his leadership, announced that the GST rate would increase by 20 percent, going from 12.5 percent to 15 percent, effective from 1 October. This Prime Minister has broken his pre-election promise to all the ordinary families who voted for him, who thought that as he had been raised in a State home he would somehow understand the struggles of ordinary Kiwis and empathise with them. Never did those middle New Zealanders imagine that the smile of the Prime Minister would somehow trap them into facing a GST increase, which has effectively increased the cost of living for all struggling Kiwi families. The GST increase will mean price increases for food, power, petrol, phones, rates, school uniforms, early childhood education fees, and much, much more, all because that man, the Prime Minister, and his Government broke their pre-election promise that they would not raise GST.

His Government has since attempted to pacify the people who supported him—the same people who are now angry about the rising cost of living—by restructuring the tax system and producing tax cuts that will give more money to those who earn significantly higher incomes. These tax cuts come at a cost to the whole nation of about $17.8 billion, which must be paid for in the years to come. The Prime Minister said that tax cuts and an increase to GST is called a tax switch, and that it will be cost neutral. But for low and middle income earners it is a tax swindle. This Budget hurts the most vulnerable groups in our communities right across New Zealand. It hurts low-income groups, especially people on fixed incomes. It hurts solo parents and their children, it hurts workers on the minimum wage, it hurts the disability community, and it will hurt the elderly, young people, and those on invalids benefits. The 81 percent of people in Māngere earning $40,000 or less a year have been swindled by the Government’s tax package, because they will actually be worse off under this Budget. It is a tax swindle because someone in Māngere on the median wage of $20,600 may, on the one hand, get a tax cut of about $9 a week, but after the increases in the cost of living and accident compensation costs are factored in, that person will be worse off by $11 a week.

I blame the Prime Minister, Mr Key, for the suffering that many in my community will continue to feel under his Government. He is the leader, and it is his Government that is responsible. He broke his promise on GST and attempted to hide his mistake by introducing a tax swindle, by manipulating an appeal to the desperation that many families face with low incomes, rising prices, and the genuine desire of all families to get ahead and make ends meet. There is no future for ordinary working families under this Government. There is no future under this Prime Minister for the communities he once called the underclass.

Where is the future for children in Manukau, where since December 2008 nine early childhood centres have closed? Where is the future for the children in Māngere, where there have been five early childhood centres closed since National came into power? Where is the future for the children of Māngere families when parents could face costs of up to $20 or $40 a week more per child for early childhood education? Some centres estimate that the real cost could be up to $60 per week per child. Last Friday, the Kiwicare Preschool of Tennessee Avenue in Māngere, which the Prime Minister opened last year, sent a letter to its staff stating that it will have to review its staff numbers due to cuts from this Government. Where is the future for these workers, who will possibly be laid off and their lives added to the pile of discarded, unemployed workers who still number above the Australian unemployment figures? There is no future for the people of Māngere under this Government.

I note that leading up to the Budget, and even today, the Minister of Customs has been crowing loudly about the wonderful work of customs officers at our borders. Labour supports the work and commitment of our customs and border officers and the significant number of narcotic interventions that we have heard so much about in recent days. We have not heard so much about how the Government rushed the SmartGate electronic passport control system into New Zealand’s airports against the advice of three Government departments. The House has not heard that, despite warnings from the Department of Labour, Treasury, and the State Services Commission, the Minister of Customs approved the purchase of SmartGate. The three departments had serious concerns about whether the SmartGate system offered value for money and was the best technology to meet the future challenges of border control. I suspect that the Minister of Customs may have wanted to do the right thing, follow the official advice, and put up SmartGate for a public tender process, but it seems that that advice was ignored, because Prime Minister John Key asked officers to give highest priority to advancing the integration of trans-Tasman border clearance. Official documents show that despite reservations about SmartGate, its purchase and implementation were rushed so that John Key could announce its introduction at a meeting with the Australian Prime Minister last August.

I have the same concerns about the way that this Government has approved $4.8 million to a little, unknown private company called the Pacific Economic Development Agency Ltd. There is widespread concern about it from the Pacific Island community, from Invercargill to Kaikohe and from Taranaki to Gisborne. Last week the company’s register showed that there were two original shareholders, but as of this week there is only one shareholder and one director. Labour asked the Minister of Pacific Island Affairs whether the funds underwent a public tender process before being approved for a private company. Only yesterday we finally got an answer, and we heard it on Morning Report. The answer she gave sparks more questions. Why did the Minister not undertake a rigorous tender process? Why was the money not given to the Pacific Business Trust, which has a long and strong track record in the community? Where did this money come from? Who were the people who lobbied the Minister so that she would approve this money without it going through a public tender process? Was she bullied by the Minister of Finance or the Prime Minister into making this decision? Those questions need to be answered because that $4.8 million is public money. We of the Pacific community want to know what outcomes will be achieved from this $4.8 million. It is appalling that on Morning Report yesterday, after announcing that she was supporting this group with $4.8 million, she revealed that she does not really know too much about what this company will provide. We demand those answers.

CHESTER BORROWS (National—Whanganui) Link to this

What a wonderful week it has been to be in Government! It is wonderful to feel the euphoria after a fantastic Budget has been released to the public, and it is wonderful to see the way in which it has been received around the country. It is great to walk down the street and have people come up and say: “Gee, you know, John Key is doing a wonderful job. He is doing a fantastic job.” We have heard that phrase right across the country from people who have worked for years and years without any show of understanding of the pressures on them in making ends meet. They have worked hard, backed themselves, and made a success of themselves, and they never received the time of day from the previous Government. I am so pleased to be part of a Government that recognises that people across the board need some sort of tax relief.

The left continually associates wealth with callousness and cynicism. We continually hear those members say that those who succeed only got there on the backs of the people they employed and that it is time those people received a break. It is interesting to look across the House and listen to those members’ speeches. I have to congratulate the member who has just resumed his seat, Su’a William Sio. That was the most ably read speech out of the Labour Party media unit I have heard for some time. I believe he did that incredibly well. It is a shame he could not remember the lines himself and deliver it with a little more passion, but there we go.

The trouble with the other side of the House is it believes absolutely and fundamentally that it has to keep its supporters poor and pissed off so they do not have to ever look to themselves to stand up under the pressures and the struggles. It was interesting to hear the member who has just resumed his seat talk about the history of our Prime Minister, John Key. He said in a scoffing sort of way that Mr Key believes he understands the struggle of the working class because of his upbringing. The problem with the Labour Party is it has never understood the aspirations of the working class. It has never for a moment understood the aspirations of the people who support it when times are tough. When people manage to stand up, overcome their struggles, and do better for their children they recognise that they will never get better under a Government that comes from the left.

Who does the left call wealthy? Apparently it is anyone who earns over $70,000 a year. We know that 75 percent of those who earn over $70,000 earn less than $100,000 a year, and who are they? They are the detectives, the ward managers—the people we used to call sisters—the assistant principals, and some of the teachers. They are working for that level of pay, and members on the other side of the House—the previous Government—want to tax them at 39c in the dollar. They want to grab every cent they can from those people, and they rubbish their aspirations to get on and do better. That is not on. Labour is not the party of aspiration, because it continually slags off anybody who achieves, who works hard, or who experiences success.

I was in Nelson on the weekend, visiting my family. My dad and mum are 85 and 78. Dad is pretty crook; he is not keeping too well. They still manage to tick over by growing a few veges. They live pretty frugally and all the rest of it. They voted Labour all their lives, until one day they woke up and realised they were not getting ahead. Even as pensioners existing on the pension they found it a struggle and they were kept where they were.

I had a great conversation with my mum on the weekend. She was so pleased she voted National in the last couple of elections, and she will for the foreseeable future because she knows that under National people are being encouraged. For instance, I look at my cousins, who earn an average wage of about $50,000 per year. They are now paying half the tax they paid 2 years ago. A number of members on this side of the House have kids who are in their 20s and want to save up and buy a house. Those are the sorts of people who want to get on. They want to get their ducks in a row and have the hallmark of success in this country by owning a little plot of ground for themselves. They want to put a house on it and raise a family. That is what they aspire to. They hold good and wholesome values. They are being encouraged to do that under this Government, whereas in the past they were seen to be people who were too wealthy for their own good and who were to be knocked as hard as Labour possibly could.

Let us look at who else has been saying a bit about the last Budget. There are those huge apologists for National, like Vernon Small, who stood up and stated: “English can also take a bow for keeping a rein on spending”. Well, good on him. I must admit that I never expected to read that from him. Then there is that other huge advocate for the National Party, the Dominion Post whose editorial of 21 May stated: “the Budget is a coherent document that should encourage saving and investment and discourage consumption and speculative investment in property.” It was great to see some moves being made to pull back those people who are making the sly best of good times by hiding income in property investment and in trusts.

A hell of a lot of us have worked for wages all our lives. We are completely frustrated when people who are employed by a family trust send their kids off to university and their kids can get a student allowance and all the rest of it while people on middle incomes, working for wages, working, say, as a Government servant, and working damned hard cannot do that. I am pleased to see that this Government has been able to tighten a loophole on that. It surprises me that members opposite, who had 9 long years in which to close that loophole and who hate everything that those people stand for never ever had the foresight to do that very simple thing.

It was wonderful to be in this House last Thursday to hear the Minister of Finance deliver his Budget and to hear the speech that was delivered by the Prime Minister after it. The Budget was a celebration of all that Kiwis aspire to. It was a celebration of 18 months of a successful Government in this country, and we can see the reception it has received.

It was sad to look at the reception on the other side of the House. As we looked along the faces on the front and middle benches on the other side of the House, what did we see? We saw some members who thought: “Well, I have been here for a few years and I was really hoping I would be able to beat the hell out of the Government on this, because we promised that the Government would put up a Budget that would encourage only the wealthy. And here we are, absolutely stuffed because 75 percent of wage earners in this country now pay only 17.5 percent tax in the dollar.” That is the top rate, and members opposite were thinking: “I do not know whether I can stand another 18 years of this in Opposition.”, because that is what they will be relegated to, and they know it.

It will be very, very interesting to see who chucks in the towel over the next few months. As we lead up to an election year next year, which members on this side of the House are all looking forward to, it will be incredibly interesting to see which members will throw in the towel and say that they have had enough. I reckon we can speculate as to whom those members will be. Some members are looking forward to the next election about as willingly, openly, and keenly as they are looking forward to the release of the expenses budget for the Labour Ministers who were in Government just a few months ago. We are looking forward to that.

The New Zealand public are looking forward to another 20 years under a National Government, knowing that they can achieve the aspirations that they have held for so long. Those people who were oppressed under the left are looking forward to standing up, with their chins out and their chests out, and achieving under a National Government. Thank you.

Hon STEVE CHADWICK (Labour) Link to this

We allowed Chester Borrows, the member opposite who has just resumed his seat, to walk along the sunny side of the street for a wee while. But we have been out there walking the streets. We are in Opposition, we are out there walking the streets, and we are hearing some very interesting things coming out of the shadows on the street. People are now coming up to us, saying: “We thought that it was a bit of a jammy Budget. It was pretty good. It was spread around tax cuts, tax cuts, tax cuts.”, which is all that National knows to do as a way forward to an aspirational future. But now, not even 1 week later, people are saying: “Hang on a minute. I have got out the calculator and it does not quite work out. It will all be wiped out by inflation increases. My little bit of jam will have a bit of bread splattered on it and it will be wiped out on the bench before us.”

Also on the dark side of the street, which we remember on this side of the House, people are already starting to see that there could be asset sales. Only 1 day after the Budget, after the Government had had its day in the sunshine, Bill English came out and said that the Government was now getting geared up for asset sales, with Kiwibank being the first off the rank. Then the Prime Minister told Government members not to do that. He told them not to get too keen or carried away, and not to bask in the sun for too long and get too puffed up. That is especially good advice when we hear Chester Borrows say that he thinks this National Government will be in for 20 years; I think that 20 years is more than the world could bear of a conservative Government that has no plan and no economic strategy other than tax cuts, tax cuts, and tax cuts.

I am very pleased that the Minister for Senior Citizens is in the House today.

Hon JOHN CARTER (Minister of Civil Defence) Link to this

I move, That this debate be now adjourned.