Budget Debate

CHARLES CHAUVEL (Labour) Link to this

When the bell rang last night, interrupting the debate, I was talking about the proposal in the Budget to privatise the power companies Meridian Energy, Genesis Power, and Mighty River Power, and also to sell the stake in Air New Zealand. I was setting out why Labour thought this was such a short-sighted policy. I listened very carefully and with interest to the interchange during question time between the finance spokesperson on this side of the House and the Minister of Finance. The Minister was trying to make some sort of case that the special dividends from Meridian Energy, paid as a result of selling assets that Meridian had acquired in Australia, should be excluded from the valuation, and that somehow this made it sensible to sell off strategic stakes in the power companies. But I want to say to the Minister of Finance that it is ordinary business practice, as he should know as a shareholding Minister, for those energy companies to be buying and selling assets overseas all the time.

If the Minister knew the portfolio well, he would know that Mighty River Power, for example, at the moment has significant geothermal assets that it is working on overseas. There is a joint venture in Chile and some work is being done in the United States. Nobody expects Mighty River Power to hold on to those assets overseas long term. Everybody knows that Mighty River Power’s core business is developing renewable energy in New Zealand, as we saw with its announcement yesterday of a very significant geothermal plant in the North Island, which will take its geothermal production up to significant levels, and also make that manner of renewable production a very significant part of the energy mix in New Zealand. So it is wrong to say that somehow we should take a company’s overseas activities out of the mix when calculating its rate of return to the Crown. That is simply misguided, and it shows a further flaw in the thinking that selling a majority stake in our important and profitable power companies, and selling the stake of about 80 percent in Air New Zealand, is somehow good for the country.

Just on the case of Meridian, I tell the House that the Australian business the Minister referred to was one the company purchased when I was on the board, and sold when I was on the board. That resulted in nearly $1 billion worth of value for New Zealand taxpayers, and accrued no risk to New Zealand taxpayers. While the business was being held in Australia, it meant that we got scale when we were trying to build wind power in both New Zealand and Australia, and that we could sell that activity at a profit in an overseas market with no effect on New Zealand taxpayers, at all, except to make sure they got nearly $1 billion worth of extra revenue in the kitty. That not only was a good deal, and a good example of a business doing something successful in Australia, which unfortunately for New Zealand businesses is not always the case, but also shows the lie inherent in the Minister’s thinking that somehow we should exclude special dividends from the equation when we are looking at the rate of return from State-owned enterprises. The fact is that under Labour there were frequent special dividends. Special dividends are still paid by State-owned enterprises under this Government. The Minister knows that, and trying to cook the books to avoid the half a billion dollars this Government got in special dividends only this year from State-owned enterprises, in respect of which he would sell a stake that once gone is gone for ever, is just absolute folly.

I will talk about what selling the rest of our power companies would mean in practice. I remember when I was on the board at Meridian, and I have to say that it was a very, very good board; I learnt a lot from the businessmen and women who sat on that board and who exercised excellent governance skills in the company when I was there. I think the directors’ fees were $50,000 a year. At Contact Energy, which ran a business of a similar size and with a broadly similarly balanced portfolio of hydro and other generation activities—because they all inherited the old ECNZ set up—the directors’ fees in total in 2010 were $993,000 for doing the same job that State-owned enterprise directors do for a fraction of the cost. That is another thing that will happen if these power companies are sold off. The reality is that it will cost a lot more to run them, because the private sector, which will have a significant stake in them, will demand a lot more to participate in governance, and probably in management.

We see this repeated all the way through in overheads, executive pay, and the general approach to the way in which the business is run. No one should presume that we would have the amount of renewable energy that we now have in New Zealand, or indeed that we would have acquired the additional generation capacity and the efficiencies in generation that we have acquired over the last 10 years, if most of the system had not been State-owned. Most of those directors sit there every day. They know that the Government thinks it is in the general national interest that there should be more and better generation capacity, and that it should generally be renewable. They know that is what the people want, they know it is generally what the Government wants, and they sometimes take what I will say is more than a commercial approach to make that happen. That is a good thing. We should be pleased that our power companies do that, and that they try their best to keep a lid on power price rises.

If this proposal goes through, and if majority stakes are sold, or even if significant minority stakes are sold, in Mighty River Power, in Genesis, and in Meridian, then we will undoubtedly see attempts to put power prices up significantly. Indeed, if we look at the Budget documents, we can see that the Government has calculated a higher rate of return on that very assumption once the sale has occurred. The experience with energy privatisation overseas, particularly in the United Kingdom, is that a country does just get higher prices and greater extravagance, and of course it loses for ever the dividend flow that it currently benefits from. The policy is a foolish policy. It is what this Budget absolutely relies upon in order to make the figures work, but it is something we should not follow at any cost.

Hon TIM GROSER (Minister of Trade) Link to this

The Budget has to be considered not in a vacuum but in the context of the three Budgets that Mr English has presented. To understand where we are trying to steer New Zealand, I think we have to have a close appreciation of exactly what the fiscal and structural problems are that the Budget is intended to fix. So it is worth spending just a few minutes rehearsing the context of this Budget to understand where I think we want to go as a country.

The context of this Budget—the narrative—is now becoming, I think, a little clearer. By 2004 the froth of the early conditions of the previous Government had been knocked off, and the traded sector—that is, roughly speaking, the competitive part of the sector, the thing that creates wealth rather than spends wealth on our behalf—was already in recession. Not a single job had been added in the last 5 years. There was also massive ballooning of private sector debt, from around $80 billion or $90 billion in 2000 to about $160 billion or $170 billion in early 2009. Inflation was at 5.1 percent—people have forgotten that—at the end of 2008. We had a massive blowout of core Government spending. From memory, it was something like $32 billion in 2000, which had gone up to about $60 billion in 2008; there had been a 50 percent growth in just the last 5 years. The economy had grown by less than 1 percent in each of the previous 3 years prior to our becoming the Government, compared with Australia growing at over 3 percent. As we now know, New Zealand achieved the remarkable feat of entering into recession—it was the only developed country to be in recession—before the global financial crisis was triggered by the collapse of Lehman Brothers. Not just Budget 2011 but also the previous two Budgets taken in conjunction as a suite are designed to fix those problems.

I have to say thank heaven for the election. If New Zealand had continued on that trajectory, I know exactly where we would be today: we would be in an IMF recovery ward along with other countries that have comparable debt-to-GDP ratios. We proved quite conclusively, as the Prime Minister put it, that we can spend like a First World nation. Now is the time to prove that we can earn like a First World nation.

What are we trying to do? First of all, we are trying to manage the current fiscal situation against the background of some very severe turbulence coming out of left field. Not only have we had the global financial crisis, which was the worst economic recession in the last 70 years and has tested—and, let us face it, continues to test—many, many developed economies, but also we have had two massive shocks from these two earthquakes. If anyone thinks this is just an idle comment, I tell them to just look at what has happened in the No. 1 export market of New Zealand and the No. 4 export market to New Zealand. I am talking about Australia and Japan. In Japan, our fourth-largest export market, we have seen exactly the human impact that the dreadful disasters—the nuclear fall-out, the tsunami, and the earthquake—have created. There has been appalling loss of life, but also it has severely impacted on their economy and their production. In case anyone did not notice, although the tornados and floods in Australia did not lead to large loss of life—thank goodness—they have resulted in the worst quarterly GDP outcome for Australia in 20 years.

These extreme events—known as black swans, I think, in technical literature—happen. They do not happen just in New Zealand; they have happened to two of our closest partners. And they have been an added dimension for us to deal with. Nevertheless, this Budget has stuck to the task, and has steered New Zealand through these difficulties while addressing the Christchurch problems in a very coordinated and structured way.

Where are we with this Budget? First of all, we have continued to restore some fiscal prudence on New Zealand. Taking account of the past and new measures to restrain the growth of public expenditure, we now forecast that we will be back to roughly, I think from memory, a $700 million deficit by 2013, and to surplus by 2014. This will allow us to start repaying debt, which many developed countries with very high debt-to-GDP ratios may not be so favourably placed to do. It will be a remarkable testimony, in my opinion, to Mr English and his senior colleagues that we have gone through this most difficult situation with some reasonable prospects in sight.

Nor have we forgotten what I would call the long-term structural agenda. Nothing had been done under Labour to address an outmoded tax system, or to reduce tax and incentive-sapping measures. We have had the most important tax reform in 20 years. We now have a situation where in gross terms—not in net terms, because, of course, a fiscally neutral tax package was introduced—two-thirds of the revenue costs went to reducing taxation on people below the average income. So much for the rich mates’ ritual we hear from members on the other side! They simply will not look at the facts. We now have the highly favourable situation where three-quarters of New Zealand taxpayers pay a top marginal rate of 17.5c. To put it round the other way, they are actually able to keep 82.5c of every marginal dollar they earn.

This will take some time to seep through the economic structures of New Zealand, before we can see the incentive effects coming through in a very positive way. But one thing is very clear: the advice we received from many sources—not just Treasury—was that if we wanted to do something to create a step change in New Zealand’s economic performance, we had to address these tax issues. That is exactly what we have done.

The structural programme has also advanced on a number of fronts. Education is not just a social policy issue; it is also an economic reality. I think there is a wide understanding in New Zealand that at the upper level of New Zealand educational achievement there is nothing wrong at all with our education system. In fact, it is a world-class education system. The people at the bottom of the heap have been underperforming, and we know what those statistics tell us. So although we started a programme of addressing some of the structural deficiencies at the tail end of the New Zealand education system, through such elementary steps as introducing standards by which parents could make some judgments about whether their children are making progress, we are also advanced across a number of areas. As for the suggestion that this might have been a slash-and-burn Budget, I tell the House that total education spending will, I think, reach $12.2 billion this year, which is an all-time high. We are a moderate Government doing sensible things in a moderate way, and I think we have a lot of support from New Zealand for that approach.

I will also focus on infrastructure. I recall the Prime Minister making the point a couple of years ago when he said that New Zealand is, in a sense, a country like a small company, with outstanding assets but under-invested in its own future. We have had to ramp up structural investment in our infrastructure. The State will inevitably play a large role in that; we have no ideological problem with that, whatsoever. So the State has invested very significant money in what everyone calls—I think completely correctly—the superhighways of the 21st century, and this Budget has rolled out another $900 million - plus to complete the next cycle of that investment.

I have the privilege of going around export companies in New Zealand, and company after company always come to me and say what a boon this investment will be to them. One of the things that is becoming clear is that the distinction between manufacturing export companies and service export companies—what we call them—is no longer clear. I went to see a company called FRAMECAD, an outstanding New Zealand export company. It is hard to describe what it is. Is it a manufacturing company? Yes. Is it an information technology company? Yes, and it sends its CAD designs of framing materials, through ultra-fast broadband, to machines it has pre-installed in locations. It is companies like that—and sometimes we will not even be able to predict who it will be—that will take advantage of these things. We are making an investment in our future, out of trust that this is the right thing to do.

Finally, I will focus on investment in water. I think that that will prove to be an outstanding background for us to exploit all the advantages of these new trade agreements. Thank you.

GARETH HUGHES (Green) Link to this

Kia ora, Mr Assistant Speaker. It is a privilege to take a call in this Budget debate. I intend to focus on transport issues. When it comes to transport, this Government, under Steven Joyce as Minister of Transport, is simply on the wrong track. This Government is creating monuments in concrete and asphalt to 1950s-style transport thinking. The roads of national significance—or the roads of significance to National—that dominate the transport budget are memorials to old-fashioned thinking, locking Kiwis into cars, trucks, and an oil-dependent future.

As Wellington debates an appropriate sign for the airport, I would like to propose instead of the “Wellywood” sign a gigantic statue of Steven Joyce near the proposed Basin Reserve flyover in order to remember him, the “Colossus of Roads”.

I intend in this speech to explain the Green Party approach to transport, look at the roads of significance to National, and discuss the smart alternatives we should be adopting. The transport budget is primarily delivered through the Government policy statement, which is currently out in draft form. It is an enormously influential document, determining how we will spend more than $38 billion over the next 10 years.

Firstly, I will state the Green approach to transport. We believe that our Government is wasting our scarce national resources on uneconomic motorways, and locking us into a car, truck, and oil-dependent future. I ask where the balance is, when for every dollar we spend on walking, cycling, buses, trains, and coastal shipping, this Government is pouring $7 into building more roads. Walking and cycling come off particularly badly in this Budget, receiving less than 1 percent of the total transport budget, even though 10 percent of Kiwis cycle or walk to work and would do so even more if it was safer.

This Budget is massively skewed, with $13.7 billion, or 39 percent, of the total National Land Transport Fund going towards State highways, to the detriment of local roads, police safety, transport planning, and public transport infrastructure. It is like investing in a CD store at the dawn of the iPod age. These projects lock us into old ways of getting around, and constrain the smart alternatives.

The Government policy statement allows for an increase of only $90 million in subsidies for public transport services over the next 10 years. Public transport services will receive less than 10 percent of the National Land Transport Fund. This suggests that the Government wants to constrain the high growth we have seen in patronage over the last 10 years.

There is no joined-up thinking in this transport budget. The Government talks about roads of national significance when it should be looking more broadly at transport corridors of national significance. The Green Party believes in smart transport investments that balance roads with sustainable transport options that will future-proof our transport system so that it is more affordable, efficient, and versatile.

Out of Government, the Green Party has achieved the electrification of the Auckland rail network, we have saved the Overlander train, Johnsonville’s trains, and Wellington’s iconic trolley buses, and now we are working with the Government to roll out the national cycleway. The Greens are not anti-car or anti-road; we love to drive. We are pro transport choice. We do not want to stop all road investment; we just want to stop pouring billions of dollars into white elephant motorways that will make congestion worse.

The roads of significance to National that dominate the transport spend are expensive. We are talking about $10.7 billion over 10 years, and many of the roads are uneconomic under the Government’s own benefit-cost ratios. That is without measuring the true cost: the externalities of climate change, obesity, and road safety. The OECD report reference to the National Infrastructure Plan shows there is no correlation in New Zealand between motorways and economic growth, yet there is a strong positive correlation between investment in other types of local roads and rail.

Recent research from the United States shows that the economic stimulus spending on public transport there created twice as many jobs per dollar spent than spending on motorways created. We hear from the “Colossus of Roads”, Steven Joyce, that motorway projects are good for creating jobs. However, that makes no sense when to create just a single job costs between half a million dollars and $1 million. Even Don Brash, in his latest 2025 task force, said of one of the roads of significance to National that there was no evidence that the project would provide a net benefit to the economy.

Many of these projects are not even needed. For example, the Western Link Road, which was the community’s preferred option over the Kapiti Expressway or, north of Auckland, the Campaign for Better Transport’s “Lifesaver Highway” would cost considerably less and do considerably more for road safety in the short term than the $1.7 billion “Holiday Highway”.

Essentially, the National Land Transport Fund is the Minister’s own discretionary fund to play with and make political decisions with, and he has rammed through these motorways under a shocking process. That is why I call them roads of significance to National. These roads benefit trucks primarily and are roads of trucking significance. They run through iconic and important communities of national significance, and they lock us into an increase in greenhouse gases, which are already up by 70 percent since 1990 in the transport sector, as if the climate was not of significance.

The Government is woefully and wilfully ignoring the price of oil. None of the business cases take into account volatile or rising oil prices nor the huge impact that current world prices are having, seeing road traffic levels declining over 3 percent over the last year. Unlike many businesses, councils, and Governments, this Government has no plan—or plan to start planning—to reduce our dependence on oil, which accounts for 16 percent of our gross domestic product or 99 percent of our transport fuel.

This huge fortune we are wasting on our motorways is based on a fuel of declining significance. These roads of significance to National will not even help motorists stuck on our crowded roads. Building roads to deal with congestion is like dieting by extending the belt buckles. These roads will increase sprawl significantly in low urban housing density, meaning higher infrastructure costs and higher household commuting costs, and constraining public transport more akin to the 1950s than the 21st century.

We are at a turning point. If we keep doing things the way we always did, building more motorways and spending the vast majority of the Budget on roads for trucks, we will not get a different outcome. We need smart transport solutions.

Just before Bill English read out his Budget speech I highlighted the major missing piece of the Budget—funding for the central business district rail link—when I tabled my petition signed by thousands of Aucklanders. Building the link would transform the rail network, whose patronage grew over 20 percent in the last year. It would unlock the rail network, unlock its constrained capacity, and transform the central business district. Primarily, the rail link would benefit motorists by taking cars off the road, massively benefiting the regional economy.

This Government, however, is determined to continue the heritage of previous National Governments by thwarting Auckland’s ambition for a central business district rail link. The Government policy statement contained only $370 million, or 1 percent of the National Land Transport Fund, for building new public transport infrastructure, meaning the central business district rail link will stay just a dream. Auckland cannot do it alone, given that this Government removed its transport revenue - raising options. The “Colossus of Roads” got his officials to produce a negative review of the business case, amazingly identifying only $148 million in benefits, whereas I prefer to go by the internationally reviewed and more robust Auckland Council review, which showed $3.3 billion in wider economic benefits. This Government is holding Auckland back, despite the clear call from the people of Auckland, the strong business case, and the plain need to get the loop now.

In Wellington, funding was missing for another transformational transport project—the light rail system—to link up the region’s rail network with its southern suburbs. The Greens have been champions for rail in Parliament. We love it because it is efficient, better at reducing congestion, safer, environmentally friendly, and, lastly, economically beneficial.

This Budget fails to address the affordability of buses and trains, to develop a smart strategy to see more Kiwis cycling, to encourage car sharing, or to promote better urban design. At a time when New Zealand’s Budget deficit is higher than ever, we should be investing only in transport projects with strong and proven economic cases, like the central business district rail loop or walking and cycling. Steven Joyce has essentially raided the transport pantry and taken all of the money to fund his pet political project—his politically inspired roads of significance to National—in the pursuit of some outdated and misguided vision of economic growth.

In summary, these uneconomic and, in many cases, unneeded roads of National Party electoral significance and roads of trucking significance rammed through under a terrible process through communities of national significance based on a fuel of declining significance—as if the climate was not of significance—must be stopped. We need real transport leadership and a balanced approach to transport spending, but all we have is a monument to the 1950s—a “Colossus of Roads”.

Hon PAULA BENNETT (Minister for Social Development and Employment) Link to this

I am pleased to take a call and to stand up and support this Budget. I thank the Hon Bill English for the work he has done—and might I say that it was not easy. It has been a hard process to go through this but there is no doubt that this National-led Government has presented a Budget that is about building our future as a country, it is about building a stronger economy, it is about a stronger workforce, it is about a platform for growth, and it will make a substantial difference to where we go as a country. It is a responsible approach in these times, which are our times, and which, indeed, are a bit tougher. In Vote Social Development, I am proud to say, we found savings but avoided wholesale cuts to services and to programmes. We have done so through a continued focus on finding efficiencies and getting smarter at what we do, how we run it as a business, and how we do our business.

Vote Social Development has a total appropriation of $21.7 billion—one-third of all spend is under that responsibility. In this Budget, fiscal constraints meant that we had no new funding. So we have focused that funding and that spending on who needs it most. I am going to talk to members about youth employment, children in care, parenting support, employment assistance, the Christchurch rebuild, community organisations that have had our support, and, of course, our wonderful superannuitants. On those wonderful superannuitants we are projecting to spend about $9.5 billion in the next financial year—$9.5 billion just on superannuation. On top of that, we also project to spend about $288 million in supplementary support to them. That is through disability allowances, accommodation supplements, and also through special needs grants and special needs loans.

In Budget 2011 we set aside or reprioritised $250 million for social initiatives. This included, of course, the $55.2 million that is going into youth employment, and a $43.7 million package—and I will talk to members a bit more about those wonderful children in care who need every bit of help they can get. The $55.2 million that has gone into the youth employment package is to help those youth who make up about one-third of our current unemployment benefit numbers. Currently we have about 17,100 young people on the unemployment benefit. We all know that they need better lives. We all know that getting them at that age and making sure they have a future and a way forward is one of the best investments we can make as a Government. That is why we have built on what works. So we have evaluated and looked at what has worked and then we have progressed that.

We have the Skills for Growth programme in which we subsidise an employer who takes on a young person for a minimum of 12 months, and attached to that is a whole training and skills growth programme. The young people are attached to an industry training organisation. They are attached to a target industry where the jobs are needed. The intention of that policy is to make sure that those people do not come back on a benefit in their lifetime. That gives them a skill for life, real job experience, and also that training alongside of it. We think that is pretty exciting and will make a difference.

We took the very, very successful Job Ops youth employment scheme, which currently has seen over 11,000 young people in work. Those 11,000 young people are in work due to the $5,000 subsidy for 6 months. The scheme takes those young people in, gives them a job for 6 months, and most of them stay on for a lot longer. We now have training attached to that scheme, so it is now Job Ops with training. That means those young people also having training systems alongside them for those 6 months. It is $13 million, but funding places for 3,000 young people is certainly a worthwhile spend and one that we have come up with in this Budget.

Of course we have the Limited Service Volunteers, which occasionally gets mixed up with the military-style activity camps, and I do not like that. They are very different schemes. The Limited Service Volunteers scheme is for those on the unemployment benefit. It is a 6-week course that is about motivation and self-responsibility, and clicking into what young people can do. It gives them those sorts of skills, gives them career advice, and then follows their progress afterwards. However, the military-style activity camps are very, very different in that they deal with very serious youth offenders. I am really rapt that the Limited Service Volunteers scheme has come along, that we are putting a lot more into it, and providing a lot more places. There is ongoing funding for 1,500 places a year.

I turn to community responses. We knew the recession was hitting as we came into Government, and we knew there would be an increase in demand for our services that are out there, with people working on the ground. However, there was a decrease in funding because the foundations and the various philanthropists were not able to give the same amount of money to those services. We wanted to fill that gap. We have spent more than $55 million over the last 2 years on 700 organisations. More than $55 million has been spent on more than 700 organisations. What we really notice, though, is that those organisations are still feeling that pressure. As we went around and spoke to them, they said “It ain’t over yet. We need a bit more help.” I am absolutely delighted that this Budget has put $25 million more into those community organisations. There will be three rounds of funding. It will be available as it is, and I know that the funding is much needed. We are getting a fantastic response from the people out there in the community. I love that it is community-led organisations as well. It is people in the community on that forum who are taking these funding applications and deciding who gets them and where they are needed most.

But I have made no secret that what I am most proud of in this Budget is the assistance we are giving to children in care. These are the children who are removed from their homes because, quite frankly, an adult has treated them appallingly. At worst, the children have been seriously abused or sexually assaulted, and in this instance the best is that they have been hideously neglected. These are our children. They are broken, they are hurt, and we are not doing as well by them as we could. We take about 2,200 of these children from their homes each year, and we take about 90 babies at birth. Literally, a social worker and a policeman or policewoman are waiting outside a delivery room and the baby is taken. What we do with the children is put them into great foster homes and try to work with them to get them the right counselling. In some cases we are doing it well, and in others the truth is we are not.

What we are doing, after running a pilot scheme, is increasing the Gateway assessments for health and education. It is as simple as asking how we can fix their very complex problems if we do not even know what they are. How can we do what needs to be done with these children, when we do not even know what their history is, what their needs are, and what we can do? There is a full assessment, usually led by a paediatrician, with an administrator next to them who collects all of the children’s educational history, which sometimes can go back quite far. The children are often transitional. They have moved from before-school programmes, to after-school programmes, to schools, because they have been moved around. We are making sure that we are going back and getting as much information as we can.

Our pilot schemes have told us that 88 percent of those children who come into care have health needs—40 percent or more have mental health needs. Those children are not being seen, and they are not getting the services they need. Of the more than 40 percent of children who are seen to have either severe mental or behavioural issues, only 7 percent are currently getting assistance through the Child and Adolescent Mental Health Service, and that is not good enough. We then had to make sure that we were getting them the services they needed, so we put $14.5 million into mental health services. To be quite blunt, we can spend so much time arguing about whether something is behavioural, or psychological, or what has caused the major problems that these children have, that we are trying to squeeze them into a gateway that is not there, or it is a mental health issue. The mental health people say it is not their problem, and the psychologists are saying that the child fits more there, and in the meantime this child has grown up and not received the support that he or she most desperately needs.

So I will build them their own little flexible box and I will direct-purchase what they need, without the need of having to slot into those arguments of where they fit. I reckon that is one of the most important things that we can do as a Government. Let us work out what those needs are. Let us make sure we then address them.

We will also fund early childhood care for those children, from the age of 18 months through to 3 years, and then of course the 20 free hours’ care clicks in. I say that this is great for the kids because we know that quality early childhood care makes a difference, but I equally say that this is about respite care for those wonderful foster parents or grandparents who are raising these children. They have stepped in to look after them. Yes, we are funding $2.4 million into Parents Inc. to give support to foster parents and to those grandparents raising grandchildren in our communities up and down this country. They beg us, almost on a daily basis, for help. They take these children on, all through their own means. They live in our very small communities, and they live in our larger towns as well. They want help. I am really proud to be giving that help to them. I am proud of this Budget, I am proud of what we are doing for those most vulnerable children, and I think it will make a difference. Thank you.

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

We have just heard from the Minister for Social Development and Employment. It was interesting to hear her final comments in her speech about children. One of the areas where she has disappointed me most is that she has been more about talk than action in her 2½ years as Minister. Although she has said how much she cares about children, she does not follow it up with action. I am looking forward to the day when there will be some real action, and children in New Zealand will be put at the centre of a Government’s policy.

I have heard the words “bland”, “boring”, “no vision”, “no plan”, “no ideas”, and, “a Budget for yesterday, not tomorrow.” Those are some of the comments that we have heard from around New Zealand on the National Government’s third Budget. I would like to add a few other words to those ones. There has been quite a lot of “creative accounting” in this Budget. There is a fair dose of “dodgy figures” in this Budget. Some very heroic assumptions have been made in this Budget, and the whole lot has been mixed up with a very big handful of fairy dust. I believe that the public, over many, many months, have been played like a fiddle in the lead-up to this Budget. The Government has been assisted by the media, by commentators, and by cheerleaders for National, all playing the same tune as we went into this Budget. People were softened up to expect a tough Budget. There would be no new spending; it was a Budget about savings and growth. There would be cuts to projects that were “nice to have”, although it has never been defined what “nice to haves” are. It was to be about the unaffordability of the growing deficit this country has.

We were told week in and week out, over and over again, that we were borrowing $380 million a week, and that it was unsustainable, unavoidable, and unacceptable. New Zealanders were told that in this Budget they would have to take the pain. They would have to accept the pain, they would have to swallow the cuts that were coming, and they would have to stop complaining about selling our power companies and selling Air New Zealand, because there was no alternative. The poor Government had to do this because it was forced into this position! That was the mantra we heard week in, week out. I believe that the public were played like a fiddle. The truth is that the public are being fiddled by National, because if we look at National’s Budget we see that it is based on some pretty dodgy figures indeed. They are now emerging. Weeks after the Budget was presented; we are starting to get the true picture of what this Budget actually meant.

Let us take the first dodgy figure: the need to borrow $380 million a week, which is equivalent to $86 having to be borrowed every week for every man, woman, and child in New Zealand. But we have now discovered something after the Budget was presented, and it came out not by the Government being upfront about it. The public has learned that Bill English has been borrowing $100 million more per week than he needed to borrow. But, miraculously, before the election the Government will not need to borrow so much, so good will their management of the economy be. No one would argue that they ought not to borrow when the terms are good, but why not be honest and upfront about what they are borrowing and why they are borrowing it? New Zealanders are clever enough to understand if they are told, but what was happening had to be uncovered and drawn out.

The Government used that $380 million per week of borrowing as a way to scare New Zealanders. It made people much more worried than they needed to be. People worried about their own personal situations. They saw their jobs going, they saw their partners’ jobs going, and they saw prices rising faster than their wages. They saw their food bills, power bills, petrol costs, and rents going up. They could see that the tax cuts that were supposed to help them and the income assistance available were less than the rising prices they were facing. They knew they were not getting compensation in their wages or from those tax cuts, so they were very worried about their own situation. Loaded on top of them, the Government then made them worry about the position this country was in. It was about to implode because we were borrowing $380 million a week.

It has been beautifully orchestrated by National members. They were covering up their own economic incompetence. They used the shadow of the Christchurch earthquakes and the Pike River disaster, along with alarming Kiwis, to set up what I believe is an agenda to push through their old, tired policies of the past. It was all about positioning for the election. There is no denying that we have to reduce our Government borrowing in this country. It needs to be tackled, and a Labour Government would do that, but why not be honest about what we are borrowing? Why not front up to the public of New Zealand and say what money will be spent on? The first step in a recovery plan is to be honest about the situation one faces. We have not had that sort of transparency from this Government. This Government should own up to the fact that it is borrowing for the tax cuts it gave to thousands of well-paid New Zealanders last year. It should stop the fudge about it, and stop the fiddle about it. It is a fact: this Government is borrowing to pay for tax cuts for the top income earners in New Zealand. We could not afford those tax cuts, but the Government gave them anyway.

The irony of it is that Government members made changes in this Budget to Working for Families. I believe the changes they made to Working for Families bring them in about $300 million or $400 million, which affects middle-income earner families earning up to around $80,000 or $90,000 per year in joint income. Government members could have been much fairer if they had just lifted the top tax rate a little for those who got the big windfall in the tax cuts last year, and it would have brought in the same amount of money. But who did they tackle? Who did they hit? They hit middle-income earners with families to grab money off them, but left the high-income earners in this country with their tax cuts and the money in their pockets. There was no fairness in that.

Let us have a look at some of the fairy dust that Government members sprinkled around at the time of the Budget. Let us look at the jobs they said will be created over the next 4 years. They said we will get 170,000 jobs. Was that not the same figure that they promised in the 2010 Budget? I believe it is. In fact, if we look at the Budget’s additional information estimates, we see that 155,000 jobs will come between now and 2015. That is actually 10,000 fewer than they had in last year’s Budget. Those jobs will not be out there unless there is a change in this Government’s direction and a proper plan to create those jobs. In fact, unemployment has gone up, not down. Then we had the fairy dust about how our economy was going to grow by 4 percent every year over the next 4 years. Even Treasury is backing away from that prediction. Guess what? There is more. We can look forward to wage increases of between 4 and 5 percent every year for the next 4 years. Who believes that? The public certainly do not.

Then we had the doozy of them all: the creative accounting in the Budget. We will be allowed to choose whether we sell our assets. We will get to choose by voting at the next election. But when one looks at the Budget documents, one sees that the Government has already cashed up. It has banked the money already over the next 4 years. The Government has sold our assets. It is a con job. There is no choice for New Zealanders. The Government has banked the money from the sale of those assets.

Then we get to KiwiSaver, the other bit of a fiddle that went on. We get to choose whether we want to change KiwiSaver, but the Government is already cutting the $10 a week tax credit from New Zealanders from 1 July. This Budget is not about a forward plan; it is about pulling the wool over the eyes of New Zealanders.

SIMON BRIDGES (National—Tauranga) Link to this

Since John Key’s campaign before he became Prime Minister in 2008, and since then, he has been relentlessly focused on the things that matter. We have been focused on bringing down debt, bringing down taxes, and really delivering a brighter future for the people of New Zealand. We can contrast that with the Labour Party. We can contrast that with Trevor Mallard, for example. We are told that Trevor Mallard is campaign manager for the New Zealand Labour Party. One would think that in that role he would have a lot to do. But we have a party over there that is more focused on sports events than on the campaign. I understand that Trevor Mallard is in serious training for a cycle race.

CARMEL SEPULONI (Labour) Link to this

If the $300 million per week that the Government is borrowing for this country was going any way towards alleviating the struggles that New Zealanders are feeling, then we could understand it, but that money is doing absolutely nothing to do with that. The three things I want to focus on today with regard to the Budget announcements by the National side of the House are, first, the beneficiary-bashing that has begun under this Government, second, the impact that the Budget will have on Māori and Pacific young people, and, third, the social implications of the high levels of unemployment that are being brought on by that side of the House.

I really want to start with the beneficiary bashing. I see that the Government has set aside $40 million for welfare reform, and the Minister for Social Development and Employment will be convening a group of seven Ministers to look at the Welfare Working Group’s recommendations. I wonder which Ministers will be on that group and what we as a country have to look forward to. Obviously, the Minister for Social Development and Employment will be on that group. She is a solo mother herself, who now looks down her nose at other solo mothers and says she got the training incentive allowance but other sole parents do not need it. She says times have changed now, so sole parents do not need the same level of support that she had.

We have a Prime Minister who likes to go around saying he grew up in a State house, yet in his own electorate, where Labour had planned affordable State housing to be part of the Hobsonville housing development, that Government decided that it did not want that in the Prime Minister’s area—that type of housing there, or those types of people to be living in that specific area. We also have a Minister of Education who, when she first started, increased the fines for truancy, but who in her own electorate recently refused to fund a school bus that would get kids from a poor rural area to the nearest school. We see it does not make for a very good committee if we look at the Ministers who may possibly be on it.

We are very concerned on the Labour side of the House about the beneficiary bashing that is taking place. It is a deliberate attempt to shift attention away from the fact that the National side of the House has done absolutely nothing to create jobs. It would rather put the boot into people who are already experiencing hard times, and shift the attention away from the fact that this Government has done an abysmal job of leading this country. What we know about New Zealanders—and I think this is something that we need to remind that side of the House about—is that generally Kiwis band together when times are tough. We are compassionate as New Zealanders. We lend our neighbours a hand when they are experiencing difficulties. We do not put the boot in when they are down, which is exactly what that side of the House is attempting to do in its beneficiary bashing.

Hon TAU HENARE (National) Link to this

There is a song by that famous rock and roll band AC/DC called “Back in Black”. I tell members that the Budget we have just been given will put us back in black by 2014. By 2014 we will be back in black. Today somebody referred to Labour as being petty and pathetic. I have to agree with whoever said that—

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

That speech was made by the former New Zealand First member for Northern Māori, the former Mauri Pacific member for Te Tai Tokerau, and now the National Party candidate—he has failed three times—for Te Atatū. He said he did the hard yards.

Hon BILL ENGLISH (Minister of Finance) Link to this

After almost 14 hours of debate what is striking is the enormous gap between the Opposition and the people of New Zealand in their understanding of the Budget—an enormous gap. The general public have at worst shrugged their shoulders and said that something had to happen. They are looking forward with some confidence, not just to the Rugby World Cup but to the prospect that after a number of years where they have not had much in the way of wage increases, and where at times they have been concerned about their job security, we will have an economy that picks up speed moderately but definitely. It will demonstrate to them that they have weathered a New Zealand recession induced by the previous Labour Government and its bad policies, followed by a global recession, and come through the other side of it with sound and positive prospects.

The debate, I think, has shown the depth of the disarray of the Labour Party. I do not think it has hit rock-bottom yet. I know it looks like rock-bottom. It looks like it could not get much worse, but it will—it will. It will not turn round until Labour apologises to the New Zealand public. It will not turn round until those members roll out of bed one morning and say to themselves that the New Zealand voters were right to kick them out. How many Labour MPs, do members think, believe that the result of the 2008 election was the right result for New Zealand? Not one.