Debate on Budget Policy Statement

SHANE JONES (Chairperson of the Finance and Expenditure Committee) Link to this

I move, That the House take note of the report of the Finance and Expenditure Committee on the Budget Policy Statement 2007. In contrast to what we hear from the Opposition, I would like to start by reminding members, and those folk in the public who have suffered the mental dandruff from the Opposition during question time and, thankfully, the very lucid answers from my colleagues on this side of the House, that underlying this document is a very clear strategy. The strategy is to ensure that the nation is endowed with a very robust fiscal strategy that actually enables us to deal with future problems—in particular, our ageing population.

At the broad foundation of our Budget Policy Statement are three very important building blocks. Firstly, during the 8 to 9 years in which we have enjoyed fantastic opportunities to take a role in growing the economy, we have built up assets in our superannuation fund—building block No. 1. What is talked about in our Budget Policy Statement? The statement says how fantastically well the value of that particular asset has grown, and that it represents a very sensible and far-reaching investment in the future.

Secondly, how is this strategy to be addressed in relation to the expenditure side of taxes and expenses? The idea is to provide certainty to our households by ensuring that they understand, both through transparency and a lack of any surprises, what sort of tax system we are running and in what ways it will be improved. Since the time of the last election, 15 to 18 months ago, there have been substantial improvements to our tax system, in the areas of savings and of dealing with the vexed area of overseas taxation. And, of course, this year we will see a further improvement in the area of business taxation, which our Budget Policy Statement refers to. It also refers to our needing not only to continue to refine a sensible and sophisticated taxation system—expenses of running the State—but to pay careful attention.

I must remind members of the House, and members of the select committee—who, I must say, were constructive in the main—that there was an exchange between our Minister of Finance and the Opposition spokesman on finance, Mr English, as to whether we were running an expansionary policy. The policy we run is in response to the multiple entreaties we hear from the community to ensure that the deficit we inherited is, in a social sense, not worsened, and that incrementally we invest not only in the physical capital, the human capital, but in particular in our social capital through large expenditure areas such as health, etc.

Let us talk about what is perhaps one of the crowning definitions of Dr Cullen’s time here as Minister of Finance in relation to managing debt. Debt during the 1990s was a substantial problem. One of the things that certainly defines our Minister of Finance, which is reflected in this document, is that financial costs are being kept low. How are we managing to do that? We are doing it with high quality stewardship, which enables ourselves, on behalf of the community and the electorate, to play a key driving role in relation to the economy. We see buoyancy, huge levels of revenue, etc., that were previously virtually unseen. To suggest that that was serendipitous—that it was a positive cohesion of various random forces—is to overlook the high quality of stewardship and the very careful approach taken to managing debt. At a deeper level, it is to ensure that our gross debt level never moves far away from being 20 percent of GDP—a very, very important feature.

An additional issue that has been the subject of ongoing discussion in our Budget Policy Statement is the question of what to do with the cash position—how to handle it. The cash position, which is referred to in the statement, does dip slightly, but it fulfils an important discipline so that we do not race off and incur debt, and so that our economy is not saddled with a problem that future generations will have to inherit—in very much the same way that our Government inherited a host of deficit problems from the previous National Government.

Let us talk about some of the other overdue issues that are touched on in our Budget Policy Statement. Revenue, as referred to there, is up. Why is it up? GST and PAYE payments are up. Why are they up? The reason is that employment is up. Employment is up because it reflects ongoing business confidence. Yes, it might be said that company profits have dipped slightly but, despite the best efforts of both major parties in this House, we remain powerless in the face of currency speculators and the creep upwards of our dollar. Not only has revenue gone up but Crown debt has come down. Crown debt has come down because of the growth in assets. The growth in assets is reflective of the far-sighted decision taken by the Government to invest in what we colloquially call the Cullen fund, to ensure that we are building up and husbanding a range of assets to meet future demands—demands that both demographically and naturally we are unable to stand against. Of course, I refer here to ageing.

The New Zealand economy, which we heard about in relation to the Budget Policy Statement when Mr Cullen came to see us at the select committee, has enjoyed the strongest period of expansion and growth in over 30 years. Unemployment is low, growth is up, as I said earlier, and confidence is up. Let us talk for a moment about why unemployment remains low. It remains low because, first, employers are willing to take on more workers and, secondly, to work with the Government on a range of social programmes and human capital interventions, in order to see workers’ levels of skill grow. We can contrast that with the experience suffered by workers in the 1990s, when that area was chronically overlooked.

What is in the Budget Policy Statement can be contrasted to the total absence of ideas from the other side of the House other than ongoing, niggling, disruptive chipping in. We see that particularly in question time. I hope I never have the misfortune to sit directly across from Dr Nick Smith. He reminds me of some fowl moulting; he continues to peck and chip. Nothing constructive comes forward, because there is nothing there. On the one hand we have Mr John Key wandering around barnstorming, promising all sorts of things to different communities—who are unwise at the moment to listen to him—and on the other hand we have Mr English attacking the document and saying it is too expansionary. They cannot have both: they cannot on the one hand give away lollies, and on the other hand—back where the power apparently is—screw the lid on very tightly. There will be no lollies—no expenditure of the nature we have been able to sustain in our time.

I cannot really go much further in this short contribution without isolating the obvious confusion we will hear about, and which our Budget Policy Statement actually highlights. I refer here to where the Opposition will draw its expertise from in order to match what we have done here. The newspapers—very foolishly in my view—recently profiled Mr Groser and Mr Hayes. They have identified these two obscure—I was about to say “skeletal”, but that would be very offensive to Weight Watchers—individuals who have been completely overlooked while John Key seeks to get views from, first, Ruth Richardson and, secondly, Jenny Shipley. I do have a charitable thought or three for Jim Bolger. He did go out of his way, in contrast to Don Brash, to uphold the kaupapa of the Treaty and the Māori world. But these two individuals have been superseded—eclipsed. They have hardly even made an indentation in their chairs—well, one has. And, hello, they are being eclipsed, circumvented by the very people who drove a toxic mix of policies, in our view—I ask about the deficit that we were elected in 1999, 2002, and 2005 to overcome. So what do we have? We have a group of advisers hoping to take care of the fresh leader, but they are yesterday’s people. Kia ora tātou.

Hon BILL ENGLISH (Deputy Leader—National) Link to this

This could well be a special occasion, because I think we have witnessed Dr Cullen’s last Budget Policy Statement appearance at the Finance and Expenditure Committee. The Government, in its effort to refresh, will have to do away with someone. Unfortunately, Dr Cullen is by far the most capable of the Labour Ministers, but, equally, he has made it quite clear in the last few months that he is past his usefulness to the Government. The Prime Minister is now treating him without respect. The other day when he floated the idea of the mortgage tax—a dopey idea as it was—she simply slapped him down and made him back off. But when Winston Peters goes out and says to the national media something that is directly counter to Government policy, in a foreign country with its Minister of Foreign Affairs, Helen Clark describes that as an honest opinion about tragic circumstances. Dr Cullen is now a lame duck within the Labour Cabinet.

R DOUG WOOLERTON (NZ First) Link to this

In speaking to the Budget Policy Statement for 2007, I advise members that they should have listened to that speech made by Bill English. I invite members to get the transcript of that speech and come to me, because I will interpret it for them. I will interpret that speech for the House, and for anybody else listening, now.

At election time the National Party promised tax cuts for everybody—tax cuts that we in New Zealand First and the Labour Party said were unaffordable. Dr Cullen, in particular, said that time and time again. Bill English is a person who knows about these things, and I will give him credit for that. He knows that what the National Party was promising at election time was unaffordable. That speech he just made is the first back-down from the tax cuts that National promised at the last election. They said that those tax cuts were affordable, and Dr Cullen said they were not because the money was budgeted to be spent in the future.

At the Budget Policy Statement meeting, where Dr Cullen came before members of the Finance and Expenditure Committee, Bill English was asking him in detail what that expenditure was about, and trying to make out that it was expansionist. Dr Cullen said nothing at that Budget Policy Statement meeting that he had not said at election time. So Bill English knew what that was all about, but he has spent the rest of the time climbing down from that position.

I draw the public’s attention particularly to the little bit at the end of Bill English’s speech, when he talked about the Government’s providing for issues—namely, retirement—that will happen in 30 years. When Bill English talked about that, my colleague Brian Donnelly said to me: “Doug, that is where the National Party will get their tax cuts from.” National will go into the Cullen fund and get its tax cuts from money that has been put aside for our senior citizens. That is where the National members will get their tax cuts from in the future, and I had just hoped that they would say so honestly, openly, and transparently. But they are not doing that, which is why I am inviting people to come and see me, and I will translate that speech for them.

That speech was not only full of throwaway lines but also it was a very, very deliberate and careful back-down from the tax cut promises of the election, and it was an indication of where some tax cuts will come from in the future. The only way—and New Zealand First will say it now—to protect the Cullen fund, bearing in mind what Bill English has just told us, is to personalise those accounts, as has been proposed by New Zealand First over many, many years now.

As far as New Zealand First’s view of the Budget Policy Statement goes, we applaud it. We applaud sound financial management. We applaud pragmatic financial solutions. We applaud the slight incentivising of the tax system that Dr Cullen has alluded to in statements he made when he talked to the media in general, even though that was not actually in this Budget Policy Statement. So we are in favour of pragmatic solutions and in favour of a fiscally prudent Government.

I just have to go back to Bill English’s speech, because its content sounded so outrageous to a professional politician like myself. He talked about my leader in his speech. That had nothing to do with the Budget Policy Statement, but he talked about a statement my leader made. Mr English would like to construe that statement as a split in the Government between the Rt Hon Winston Peters and Helen Clark.

Dr the Hon LOCKWOOD SMITH (National—Rodney) Link to this

In speaking to this Budget Policy Statement debate, I would like to draw members’ attention to a particularly pertinent table on page 47 of the fiscal outlook. That table, figure 2.8, forecasts the Government’s new operating initiatives. It is so important because when we talk about increases in Government spending we so often forget that it actually piles one on top of the other. What I mean by that is that over this next Budget period the fiscal outlook and the Budget Policy Statement identify that the Government will increase its operating spending by $1.9 billion, plus 3 months’ worth of the company tax concessions—probably about $100,000. So the figure is about $2 billion, but the table, of course, identifies the figure of $1.9 billion.

Then the Budget Policy Statement identifies $3 billion of extra new spending in next year’s Budget. Often people then look at those figures and say that the Government is increasing spending over the next 2 years by $5 billion—$2 billion this year and $3 billion next year. But, as figure 2.8 shows, that is not the way it works. The Government is increasing operating spending in this Budget by $1.9 billion plus the company tax concessions, but this figure shows that in the next Budget, compared with the current one, the increase will be $4.9 billion. So the total increase in spending, compared with the current level of operating expenditure over just the next 2 years by this Labour Government, is an increase of almost $7 billion. That is not my figure; that is the figure to be found in figure 2.8, “Forecast New Operating Initiatives” on page 47 of the fiscal outlook. That is why the Governor of the Reserve Bank, in his latest Monetary Policy Statement, speaks of the Government’s fiscal policy being expansionary. He states: “This expansion can be seen in the national account measures of government spending, but also involves substantial boosts to transfer payments to households. The effect of such a shift to an expansionary fiscal policy is significant at a time when the available pool of resources remains stretched.”

The outcome of what the Governor of the Reserve Bank has said there is that New Zealanders face higher interest rates over the next few months because of this Government’s increased spending. The table on page 47 shows exactly what the Governor of the Reserve Bank is on about. If members look at the next 3 years—because normally in Budget cycles the Government looks 3 years ahead—members will see that the total increase in spending over the next 3 years, compared with now, is $2 billion plus $5 billion is $7 billion, plus $7 billion is $14 billion. Over the next 3 years there will be $14 billion more Government spending than there is right now. It is little wonder that the Reserve Bank is saying: “Hang on, this will just blow interest rates out of the water.” I want the next Labour speaker to tell this Parliament why the Government thinks it should be spending, over the next 3 years, $14 billion more and forcing ordinary mums and dads in New Zealand with their families to face higher interest rates on their mortgages.

It seems that the Labour Government’s policy is one that expects mums and dads to tighten their belts and pay higher interest rates on their mortgages so that Michael Cullen can loosen his belt and spend a whole lot more just to try to get Labour re-elected. It might have worked once. At the last election, there was a massive promise of extra spending, including interest-free loans for students, masses of increases in Working for Families—hundreds and hundreds of millions of dollars of extra spending leading up to the next election. None of that is included in these fiscal projections. That is what my colleague the Hon Bill English said. These increases in spending that Treasury identifies actually come before the bidding war by this Labour Government, when it starts to try to get itself elected for yet a further term—God forbid!

New Zealand mums and dads ought to think very carefully about how much higher interest rates they want to pay on their mortgages to support this huge-spending Labour Government. If the spending were on something worthwhile, maybe some of it could be justified. The bit that is being spent on roading, for example, is justified, although our roading is hugely expensive by international standards. Let me share with the House where so much of this extra spending has gone. Every year in recent years we know that this Government has put $750 million more into health. That means that over a 2-year period the total increase is about $2.5 billion in spending on health—a bit under that. But we see no more operations, no more delivery of services. What this Government is doing is spending money on bureaucracy, not on services.

If members look at the actual number of employees employed in the central government agencies, they will see that over the years this Government has been in office, since 1999, the increase in public sector employees is 95 percent—almost twice as big a Government bureaucracy. Is it delivering any more service?

One area where I was Minister for quite a long time was education. I was Minister of Education for almost 6 years. I was not only in charge of the school sector but early childhood as well as tertiary—these days that is too hard a job for any one Labour Cabinet Minister; it has about three of them involved. When I ran the tertiary sector, when we were involved in a massive expansion of the tertiary sector, we went from darn near the bottom of the OECD in terms of tertiary participation in the early 1990s up towards the top. I ran the tertiary sector with 15 officials in the ministry. About 15 officials with me ran the entire tertiary sector. Do members know how many officials Labour needs to run the tertiary sector? Over 300 are needed to do what a National Minister did with 15, and I know Brian Donnelly knows this is absolutely right; I see him nodding his head.

Hon CLAYTON COSGROVE (Associate Minister of Finance) Link to this

That was Lockwood Smith. He gave a wonderfully eloquent display, did he not, about his career as a former Minister of Education who also had responsibility for tertiary education. What a wonderful dissertation it was. But I say to him that he has a very selective memory of history. I say to that member that he might want it both ways, but he cannot have it both ways. This is the member, of course, who told us that with 15 staff—and he has confirmed the record in the House today—he managed to destroy apprenticeships in 1995. He killed them off, there were no more—the Apprenticeship Act was gone. He managed to put every tertiary student into mortgage rate debt with a shonky student loan scheme that he is proud of still. I say that we are in the presence of an absolute genius. That is his record.

When I became the member of Parliament for Waimakariri in 1999, I visited the 40-plus schools in my electorate. This genius over here, that wondrous former Minister of Education, with only 15 staff, managed to put principals in the back of Skyline garages. A Skyline garage doubled as a library at the school at Ōhoka, where I met my first school principal. He had books stacked up around him as walls in his office. This was all because this former Minister of Education ran down school funding. He managed to run down operational funding in our primary schools and our secondary schools.

I ask any member of Parliament on this side of the House—and I include our coalition partners, who do go out and visit schools—to remember when the rain came through the roof. It was not because the roof was leaky but because that genius over there, Dr Smith, as the then Minister of Education, refused to fund schools. There was no 5-year property plan. No, he just ran down the assets of schools, with a view ultimately, I believe, to selling them off.

Dr Smith talked about roading. I challenge him or Tim Groser, the other so-called superstar, to get up. Mr Groser came in here with Mr Blumsky and Mr Finlayson, and they were determined they should be on the front bench, of course. The problem was that the dead wood—or in their case the dead kindling—was in the way. Mr Blumsky, of course, is now saying: “I’m out of here. No one cares about me. I’m gone.” I challenge those members to get up today and tell us whether Maurice Williamson’s stated policy of privatising roads is still on the books.

That member Dr Smith is a huge contradiction. He got up and talked about fiscal probity—tight fiscal management. He accused us of spending everything. In a moment I will read out some of the promises from his own people. Before that, we heard from the organ grinder. There was no monkey, of course—John Key never spoke. We heard from Bill English. I am told that he got up in the Finance and Expenditure Committee and lectured the treasurer about tight fiscal management. So we have the tight man Mr English over here, and then we have John Key wandering around the countryside promising, along with his National Party colleagues, anything to everybody.

I will read some of the National Party’s promises. Do not take my word for it—look at the evidence. Here we go. Katherine Rich wants more money to develop the Beachheads programme for economic development. Tony Ryall wants more places for medical training. On education, John Key says he will bring back bulk funding—more dough there. Question: “Will National fund at the top rate?”. “Absolutely.”, said Mr Key. We know about the charitable deductions and the policy that Mr Key has rolled out with regard to food in schools, but it is at what cost? Then we have law and order. Chester Borrows, another genius from the National side, wants more police, and Wayne Mapp endorses that. “Abolish parole.”, those members say, but at what cost? They want compulsory DNA testing for convicts—and the list goes on. There will be more community law services in parts of the country, and electronic signage in transport, according to somebody called Colin King. I would have thought a static sign would do the job if one could read, but maybe not.

So on the one hand Mr English stands up and says: “I want tight fiscal management. The Government spends too much.” Yeah, we spend on teachers, school halls, classrooms, libraries, nurses, and State housing—sinners though we are. But Mr English says: “No, cut expenditure.” On the other hand, every National Party MP, candidate, and whoever else, up and down the country, is promising expenditure after expenditure. I estimate that spending at over $1.5 billion to date. How is National going to get the money?

Yet again, National members stand up and treat the outside world and our communities as if they are stupid. Doug Woolerton made a very interesting comment. He talked about the Superannuation Fund. We all know what the hidden agenda with the Superannuation Fund was under Dr Brash. Dr Brash said: “We’ll bump it up to age 70.”, then he backed off. Then he said—an amazing statement: “Anybody who is around 50, there won’t be a pension for you. Don’t come Monday.” I pose this question to the National Party geniuses over there. If mum and dad could balance their housekeeping expenses and their grocery bills, and if they knew their wages were to be cut by a certain amount, what would they do? They would have to contract their expenditure, in the same way that if we dish out tax cuts, revenue goes down, and we have to make cuts somewhere.

I also challenge National on this point. If mum and dad out there are smart enough and know there is a big expense coming up—they need a new set of tyres for the car or new things for the kids, and they know this is on the way—what do they do? They budget. They start putting aside money each week to meet that expenditure. Why can the National Party not be as smart as the average Kiwi out there?

What have we done with the so-called Cullen fund? We know that a bubble of elderly folk is coming through, and we know when the baby boomers are coming through. We know when we will have to plan for a big wad of expenditure, so what do we do? We start squirreling money away; we reinvest it in our economy and around the world, at world’s best practice, to make provision for that in the future. Why can those members over there not be as smart as the average Kiwi who balances his or her cheque book and housekeeping expenses every week? The truth is that those members are not as smart; they are arrogant and conceited—

JEANETTE FITZSIMONS (Co-Leader—Green) Link to this

The Budget Policy Statement was published on 19 December 2006, and that was just 7 weeks after the Prime Minister made a landmark statement to a party conference that New Zealand could be the first truly sustainable nation in the world—that was her goal—and that we could be carbon neutral. So of course 7 weeks later I opened the Budget Policy Statement with bated breath, to see what financial provision the Government was planning to make to meet those excellent goals, which the Green Party thoroughly applauds. But I could not find anything.

I looked first at the objectives of the Budget Policy Statement, which are “to continue New Zealand’s transformation into a more dynamic, knowledge-based society, underpinned by the values of fairness, opportunity, and security.” Policies will also “further enhance New Zealand’s economic transformation, continue to improve wellbeing for families … and strengthen our sense of national identity.” Of course, there is nothing anyone could object to in those objectives, but they do not align with the Prime Minister’s statement of just 7 weeks before. They say nothing about carbon neutrality; they say nothing about sustainability.

I thought that possibly, even though those goals are not in the objectives, they would be in the mechanisms that the Budget Policy Statement foreshadows for the 2007 Budget. So I asked Dr Cullen, at the Finance and Expenditure Committee, what impact there would be on fiscal policy in the Budget as a result of the Prime Minister’s statement, and what he anticipated doing. He said he thought we now have to face up to competition from other spending priorities. It would seem, then, that when the Prime Minister made her very excellent statement on 28 October to a party conference, she did not tell the Minister of Finance about her goals, so that Minister has not, in the Budget Policy Statement, made any allowance in the Budget for 2007 to deliver on them. We find that really sad.

The Budget Policy Statement prefigures a business tax package, and we understand that we are talking about a billion dollars worth of tax cuts for business. The Greens are very much in favour of using the tax system to incentivise the sort of behaviour we want from business, and to disincentivise the sort of behaviour that is not in the national interest. So we are not opposed to the concept of some targeted business tax cuts. But when we look at what they are to be used for, we see that, again, sustainability is not one of the criteria, and carbon neutrality is not one of the criteria. The criteria are productivity gains, competitiveness with Australia, and business investment—and research and development, staff training, and exporting have also been mentioned. Sustainability is simply not there.

I asked the Minister of Finance again whether he anticipated that by the time the Budget came out, sustainability would have been added to those criteria and, along with those other goals, we would also be trying to incentivise the behaviour that the Prime Minister had announced as the key issue for her Government in this term. But the Minister of Finance answered that it was far too late this year to do the kind of detailed work that could lead to sensible conclusions around that area. So the billion dollars is to be spent without any consideration at all of sustainability. He suggested that possibly in future years we could look at this matter, but if the billion dollars has already been spent in the 2007 Budget on things that have nothing to do with sustainability, where do we find the money from, next time, to go further? So that was a big disappointment.

I looked in the Budget Policy Statement for the policies that would start New Zealand towards that very long-term and aspirational goal of being carbon neutral, and I could not find those, either. The only thing I can find in the statement that relates to incentives—or not—for carbon emissions is that the carbon tax has disappeared, so we are down by $360-something million on the revenue we might otherwise have expected. Given that the operating surplus is only $1.9 billion, and that that has mainly got to go, Dr Cullen says, towards funding increases in things like health and education—increases that do not increase the level of service, but just deal with growth in demand—that $360-something million would have been really useful for trying to deliver on some of the other things the Government wants to do. But it has gone.

What do we have instead? Actually, nothing!

Dr PITA SHARPLES (Co-Leader—Māori Party) Link to this

Today is a day of reckoning for iwi Māori. It makes fascinating timing to be debating the Budget Policy Statement for 2007 on a day swirling with court action, injunction, and repossession, and with tribal calls for rangatiratanga hot in our ears. This morning at 9 a.m. the Hauraki Māori Trust Board sought an urgent hearing in the High Court in Wellington for an interim injunction preventing the sale of the 1,100-hectare Whenuakite Station near Whitianga, and we understand that the hearing has been called for this Friday and that Minister Mallard has intervened. An hour later the Minister of Māori Affairs, witnessed by our co-leader Tariana Turia, signed a deed of settlement with Whanganui iwi to formalise transfer of the Whanganui courthouse to the iwi; an auspicious day to do so, as it marks the day, some 12 years ago in 1995, when Whanganui Māori repossessed the site of Pākaitore, which is Moutoa Gardens, out of frustration at the lack of progress with their land claim. It was a call for action that spanned some 79 days before it was evident that resolution for their claim could be taken up with the Crown.

Against such a context, to read that the Government’s Budget intentions for 2007 and future years are underpinned by the values of fairness, opportunity, and security is indeed ironic. How fair is it for tangata whenua to be dispossessed of their sovereignty and to be stripped of their identity and their resource base? What opportunity does the Treaty partner have to express the ongoing concerns about the process of negotiating Treaty settlements, the terms of settlements, the amount set aside for settlements, and the agency charged with managing settlements? What security can Māori ever enjoy when they know that the Government keeps to a fixed formula that puts aside a mere $1 billion for Treaty settlements, despite the fact that the 2005 Budget listed a $7 billion surplus?

The Budget Policy Statement, in referring to the current economic situation, refers to the concerns of Federated Farmers, who noted that farmers’ confidence has fallen to a 10-year low. The Māori Party is also aware of the concerns that farmers have raised about the actions of Government and State-owned enterprises, including the country’s biggest farmer, Landcorp. In an article last October in New Zealand Farmers Weekly,the opinion of farmers was clearly put. In referring to Tūwharetoa’s experience with a 1,500 hectare Taurewa block south of Tūrangi, Landcorp chief executive Chris Kelly referred to progress as moving at a glacial pace, staggeringly slow even under the threat of global warming. To summarise the view of farmers: “Landcorp [is] not winning many plaudits among rural landowners or Māori in the region during the past 12 months”. It is because of this longstanding, ongoing frustration that this morning the Māori Party declared our support in listening to the intentions of iwi and doing what we can to advance their call for justice in this fraught area. We well understand the building resentment and concerns from iwi who are determined to follow due process to take their concerns through appropriate hoops, yet are frequently being blocked.

One would think in the climate of crisis of confidence that attention would be given to making a difference through strategic investment. Yet the policy statement confirms there will be little room for new Government expenditure in this year’s Budget. The recurring theme of Budget statements for Māori has been “no go, no show, no go, no dough”. The 2006 Budget was the one where the Minister of Māori Affairs failed to even ask for any allocation for Māori. I remember the day he told the select committee that on the advice of his chief executive he had failed to submit any bid for new spending—no go. But it was worse than performance anxiety. One of the biggest groups to actually lose out from last year’s Budget was Māori tertiary students, who lost $2.1 million from Māori student scholarship funding with the announcement that the manaaki tauira funding was cut. That is 9,000 Māori students who since 1991 have been supported each year with financial assistance for student support.

The Budget before that was a “no show” Budget, when the word “Māori” did not even appear once. So when we read on page 5 of the report of the Finance and Expenditure Committee that there will be no dough in 2007 and that things were extremely tight, it is not as if we have not been there before. The reality is that the 2007 Budget must heed the advice, as the select committee reported it, of the Public Health Association that a whole-of-Government approach is required to improve the social well-being of New Zealanders. Over the last 18 months we have tried to bring the voices of the Treaty partners to the House. We have highlighted the abject poverty and the growing disparities between the haves and have-nots, which is part of the context in which too many Māori live. Early last year the United States Department of State report on human rights practised in New Zealand submitted to the United States Congress a report card on New Zealand that highlighted “a continuing pattern of disproportionate numbers of Maori on unemployment and welfare rolls, in prison, among school dropouts, in infant mortality statistics ,and among single-parent households.”

It does not please me to outline these negative disparities. Mid-year in 2006 the New Zealand Living Standards 2004: The Report described Māori and Pacific peoples, beneficiaries, and low-income families with children as showing significant increases in the proportion of people in severe hardship. We have had other reports that describe Māori patients as being at a higher risk of preventable adverse events in hospital than patients of non-Māori or non-Pacific origin, and as being more likely to receive suboptimal care. It is not much better in the education sector, with the unacceptable high rate of Māori student expulsions and suspensions, and a dramatic increase in Māori truancy rates and statistics for Māori school leavers who exit school without even a level 1 qualification in the National Certificate of Educational Achievement.

On top of that the Budget Policy Statement confirms the significant problem of children being underfed, which has emerged due to what the report describes as “inadequate family incomes and the proportion of the incomes being spent on housing”. The Minister of Finance told the committee that if we concentrate on one measure to the exclusion of others, we may well end up with policies that are not maximising overall welfare. The Māori Party absolutely agrees with this advice and, accordingly, will be looking for targeted outcomes that do indeed address the widespread disparities in social opportunities and goals. In actual fact we would recommend that in the light of the dismal performance to date, it could well be useful for an “Outcomes for Māori” section to be specifically included in the Budget so as to be straight up about the commitment to raise living standards. We want to see explicit proof of funding targeted towards Māori immersion education, for example, which provides the experience of success that our whānau deserve. Either we are serious about closing these gaps and we target them, or we are not serious.

Finally, I note the comments referred to in the committee’s report about sustainability and carbon neutrality. The Māori Party is, of course, alarmed to read: “The Minister told us that resources would have to be found elsewhere to implement the Government’s commitments in this area, but that they would not include a large component of spending in the next year.” Resources found elsewhere—is this code for sausage sizzles and cake stalls outside the Beehive, or perhaps we could all have a whip-round and do something about climate change?

Once again, either we are serious about developing a strategic approach to ensure the well-being and the future health of the environment, or we are not. The Māori Party believes in the efficient use of water, the conservation of energy, and the need for active environmental management, and we know that investment now is necessary to ensure long-term gain. We should not stand by and witness more empty words, policy platitudes, and “no go, no dough” Budgets. Let us take today—which is Pākaitore Day in Whanganui—as a signal to make a real commitment to achieving change. Thank you.

GORDON COPELAND (United Future) Link to this

The best news by far in the Budget Policy Statement is that in this year’s Budget there will be tax cuts for New Zealanders of $1,000 million—commonly known as $1 billion. The plain fact is that these tax cuts would not be occurring at this time were it not for the fact that United Future won three vital seats in the 2005 election, which eventually led to our being able to negotiate, in exchange for support on confidence and supply matters, that there would be tax cuts in this term of Parliament.

I will set this in some sort of context, because it is a red-letter day in that we will at last be announcing tax cuts of that magnitude. One of the incidents that happened in the last Parliament that will endure for me for the rest of my life was the time when Kenneth Wang arrived here as a new member of the ACT party to replace Donna Awatere Huata. On the first occasion that he got to ask a question in the House, he addressed it to the Minister of Finance. His question asked the Minister of Finance if the Minister could please advise the House how many “taxes, levies, or duties” he had reduced since he had been the Minister of Finance, and for the first and only time the Minister of Finance was speechless. He eventually told Mr Wang that he, the new member, had a point: “I cannot think of a single one …”. That was still Dr Cullen’s attitude during the 2005 election campaign whenever the question of tax reduction for business was raised. It was not on the Government’s agenda in any debate. Yet here we have in this Budget Policy Statement a commitment to $1,000 million worth of tax cuts—and that is good news.

One other thing in the Budget Policy Statement objectives is also good news—that is, personal tax cuts. There are personal tax cuts through the adjustment of the thresholds, which were announced by Dr Cullen in Budget 2005 of $360 million. When Dr Cullen announced that, what did he say? He said he had decided to do that because he had to accept the logic, which United Future—and he specifically mentioned myself, Gordon Copland—had been advancing to him since we came into Parliament, that it was blatantly unfair to leave the thresholds unadjusted for inflation. So if we put the two moves together, we can see that United Future will be delivering, at or about the time of this Budget, tax reductions for New Zealanders of $1,360 million—and it is indisputable that these things would not be happening without our presence here in Parliament.

I say, too, that when I talk about business tax cuts a lot of people think that they are just for businesses, and that they will not receive them if they have not formed themselves into companies. But I tell members that New Zealand is officially the easiest country in the world in which to form a new company. Self-employed people who are not incorporated can incorporate for a few bucks, and then they can enjoy these tax cuts. Every business in New Zealand, really, can get in on the act. Tax cuts will mean that those businesses will have more scope to reinvest and to increase productivity, and they will also have more scope to be a little more generous in terms of pay settlements for their staff. So I have no doubt whatever that this $1,000 million we will see in the Budget will filter down into the pockets and purses of many, many hundreds of thousands—if not millions—of Kiwis, and that is really great news.

I go back to the question of the adjustment of the threshold for inflation, which I have argued for since I came into Parliament in 2000. I have a long history in this area, which I will not go into, but I tell members that we asked for the thresholds to be adjusted for the movement in the cost of living since 2000. The current thresholds were established by Dr Michael Cullen on 1 April 2000, and from that day to this—which is now 7 years—they have not been adjusted. They should have been adjusted, not by the amount that Dr Cullen is promising in the forecast, but by the actual cumulative movement in inflation since that date, which is now around 19 percent. That would mean, under United Future policy, that the $38,000 tax band would now be lifted up to $45,220. So the 19.5c in the dollar rate would continue for people right up to $45,220, at which point it would go to 33c in the dollar. The current level of $60,000 would be moved up to $71,400, at which people would move on to the top tax rate of 39c in the dollar. We continue to advocate that those adjustments should be made.

From our point of view it is not a question just of affordability; it is also a question of doing the right thing, of doing the fair thing, and of doing the just thing. As Michael Cullen pointed out, all the other things—excise duty on tobacco, cigarettes, alcohol, and gambling; the whole list of levies—are all automatically indexed upwards every year for inflation. But when it comes to income tax rates, there has been no movement since 1 April 2000. That is blatantly unfair. It means that in real terms most Kiwis have been paying increased taxes since that time, because the value of the dollar has been eroded by cumulative inflation at 19 percent. So we will continue to press for that policy.

But wait, it gets better. In addition—

TIM GROSER (National) Link to this

Mr English, our deputy leader, at the start of today’s debate on the Budget Policy Statement made the point—and I think he will be proven correct—that this is probably Dr Michael Cullen’s last Budget Policy Statement. I think that from that perspective it is fair enough to sit back and look at this in the context of the overall policy he has been responsible for coming into the third term of the Labour Government. If we overlaid the business cycle of this country on top of the political cycle I would argue that we would be hard-pressed to find in the last 40 years a Government that has had, at its introduction, a softer ride than this Government. One can run one’s luck for some time, but eventually one’s luck runs out. And luck, like inherited wealth, can be easily misspent and wasted.

When I was a young person growing up in this country, along with all young New Zealanders I learnt the song that is almost an informal anthem—“We Don’t Know How Lucky We Are”. I always understood that there was a sense of irony behind that anthem, but I suspect that the Labour Ministers in particular, if not the Labour caucus as a whole, will appreciate the irony in that phrase only after they have been knocked off their electoral perch and reflect on the moment when they had stewardship and, after coming into office with the best economic conditions any Government has had for about four decades, on what they did and did not do with their time in office.

The roots of this problem started with a deliberate attempt to misrepresent the situation they came into office with. One can have one’s own view on whether this is the result of ignorance or simply blind ideological resistance to market reforms, but the fact remains—and we have heard it today in various speeches made by Government members—that there has been a deliberate attempt to misrepresent the starting point of their time in office.

I have just picked up one of the many statements I could have picked up. It is a statement that Mr Maharey made on 24 May 2006 to this Parliament when he said: “The 1990s … were 9 long years of absolute and utter decline for this country. … every single region in this country was shrinking, … the 1990s will be remembered as an utter disaster”. At least one thing we can ask about that statement is whether it is empirically verifiable. Let us just quickly go through the actual reality.

The rate of inflation was between 15 and 20 percent until 1990. It plummeted down throughout the 1990s to low figures, where it remained until tragically, prior to the 2005 election, a very clear message was sent to the Governor of the Reserve Bank: “Ease back a little, guys. Let this genie out of the bottle just a bit. We’re in trouble and we can now feel the effects of this in terms of a grossly dysfunctional monetary policy compared with its original position.”

The rate of employment fell from over 11 percent in 1990, when Labour came into office, to 6 percent. We have heard today from various spokespersons who reiterated versions of Mr Anderton’s “jobs machine” as if somehow the fact that we enjoy low unemployment is a consequence of decisions they have taken. Policies like this take years to bear fruit. They have been the beneficiaries of a process that they reject for, perhaps, ideological reasons.

One could say the same thing about the growth rate. Thanks to some tough market-oriented decisions taken earlier, we have had a growth rate now of about 3.5 percent for 15 years. That was the actual legacy that Labour members inherited on taking office and on assuming their responsibilities to the rest of New Zealand.

What have they done with the fruits of that inheritance? First of all, they have falsely claimed political credit, like a conductor who jumps on an engine just as it is leaving the station and claims that he was the chief engineer. They have spilt the milk on useless growth of bureaucracy, with deeply dubious consequences from the point of view of the New Zealand community. Let us just look at some of the bigger picture figures. First, there has been huge growth in core Government expenditure—well over 40 percent and way in excess of the level of GDP spending in Australia, even when we take account both of Federal and state Government spending.

I do not have a deep ideological problem with a dollar of Government money being spent. I know that some people do, but I personally do not. But I do want value for that money and I take a different view on a dollar being spent on upgrading, say, the national grid, to a dollar spent on advertising a State monopoly called the Accident Compensation Corporation for no discernible purpose other than a political purpose. I do want to see from the billions of extra dollars spent in health, demonstrable health outcomes that improve the status quo as a consequence.

We have heard in the House today National members ask for the evidence of improved outcomes from this vast increase in spending. When we look at health it is the same underlying picture—an enormous increase in Government expenditure. We still have an education system that I think gives us excellent results at the top end but it has become clearer and clearer that at the bottom end of the food chain, in terms of our education system, we are not getting results, and we have had some shocking statistics that bear this out. So all of this money is being poured in and producing a huge growth in bureaucracy with very little to show for it. Well, we have one thing to show for it and that is a vast increase in the number of bureaucrats. For example, in the education sector the number of bureaucrats has increased by approximately one-third over the life of this Government.

I thought it was fascinating to listen to Mr Cosgrove today—he has been in this Parliament for some time now—attack my colleague Dr Lockwood Smith as if he were the Minister and Mr Cosgrove was the Opposition member. That is the problem. Labour members still have an oppositionist mentality. When will they stand up and take responsibility for being the Government? When will they discharge their responsibilities to the people of New Zealand who put them there in the first place? When will they assume the real mantle of office? I am afraid that time is running out on them.

If we drill a little deeper we find more examples of the same theme. In the area of health, in spite of the enormous increase in spending on health over recent years—I think some $4 billion—what have we seen? We have seen the number of doctors per 1,000 New Zealanders drop from 87 to 73. I personally do not think that the benefit of that is outweighed by the 24 percent increase in the number of health bureaucrats who have been added to the public sector bill.

So in the health sector managerialism has gone mad, the number of doctors has declined, and there are growing waiting lists, all on the back of a huge increase in Government expenditure. If we drill down into some smaller departments, we get the same underlying picture revealed. Inside the more modest Housing New Zealand Corporation, the actual number of State houses has increased by less than 10 percent since 2002, but staff numbers, unbelievably, have ballooned by 42 percent. The number of those staff on more than $100,000 a year has more than doubled in this short period of time. Another example is the Department of Labour. There has been a staff increase of 600 in the Department of Labour over the last 4 years, and again, the same pattern of increasing numbers of those on what would be regarded as very high salaries by the standards of most New Zealanders.

So what we are seeing again is this growth in bureaucracy and expenditure, and very little to show for it whatsoever. Then, of course, what is worse is what has been left unattended. The Government inherited, with its good luck, an economy that was in better shape than the economy any other Government has had to deal with in the past 40 years. Instead of using this as a platform to try to advance New Zealand to the next level of wealth creation, the track the Government has gone down is to redistribute money to its stakeholders, increase the size of the bureaucracy, and increase the number of bureaucrats in control. What it has not done is put forward the agenda that would take this country forward, increase our competitivity, and give the young New Zealanders who are leaving this country some belief that they could make their fortunes here in our own country.

RODNEY HIDE (Leader—ACT) Link to this

It is always a great pleasure to follow my colleague Gordon Copeland. I think it is true: I think United Future has put pressure on the Government to have these tax cuts, and not before time. But we should appreciate that there are tax cuts and there are tax cuts. What interests me in this is the size of the tax cuts. I know that Mr Gordon Copeland says it is $1,000 million, which, to put a picture on that, is $100 bills stacked a kilometre high, which is a lot of money. But when one sees that in the context of Government spending, and the tax that is paid, it is rather small. So I would like to see the tax cuts much, much bigger, please, I say to Mr Gordon Copeland. Maybe when the United Future party has more MPs and the ACT party has more MPs, we will actually have some decent tax cuts.

But it is also the nature of the tax cuts, and it goes back to what one is trying to do with tax policy. I think it should be something that we understand as a principle of policy that each instrument is trying to achieve one objective. If one instrument is trying to achieve two objectives, it actually falls flat on its face. The difficulty we have with tax policy is that we are trying to achieve multiple objectives. If we think about tax policy, we see that the thing we are trying to do is raise money for the Government to spend on the things that people expect Governments to spend money on.

If one thinks about that a bit further, one says: “Well, what you’re trying to do is raise the amount of money you need at less cost—at less cost to the economy and to society.” That is the principle that should drive tax policy at all times. Notice that I am not actually discussing in that how much money should be raised; I am actually talking about the principle of tax policy. But one is trying to raise the target amount that one needs at less cost. We know the cost is not just filling out the forms for the Inland Revenue Department, implicit in that is the dead-weight cost of the tax. So I want to keep that in mind and jump ahead.

So here we have Mr Gordon Copeland saying: “One of the things that we should address is bracket creep.” He says it is unfair because what is happening over time with inflation and economic growth is that more and more people are finding themselves in a higher tax bracket and therefore paying more tax. That is true; that is unfair. Mr Gordon Copeland was also saying that it is a bit unfair when one taxes individuals because when a couple marry they essentially become one unit, and if there was income splitting that would be fairer. I think that is true, compared with what we have.

But what it does not do is address the fundamental problem here in that we do not have a tax system that is raising the target revenue at less cost. What we know is this. The dead-weight cost of tax rises geometrically with the rate of tax. So as one lifts the tax up and up one creates a bigger wedge between the price that people are paying and the price that they receive. And, of course, that wedge kills off trade, kills off jobs, kills off investment, and kills off retail exchanges. So one wants to lower that wedge to lower one’s dead-weight cost of tax.

The way to do that, if one thinks about it logically, is to have one flat tax. It could be 50c, it could be 80c, it could be 10c. But whatever amount of money one is raising there is no doubt in anyone’s mind that a flat tax is the least costly way of raising an amount of money. Because for any target rate it will be the lowest rate one could have. A flat tax is broad.

Then, interestingly, if one did that there is no argument about income splitting, because if everyone is paying the same amount of tax on the first dollar earned as the last dollar earned, there is no advantage to income splitting. Indeed, if one has a flat tax one does not have any bracket creep because one is paying 20c, 10c, or 50c in the dollar, whatever it is. One can have growth, one can have inflation or whatever, and one is still paying the same amount because one is still in the same bracket because there is only one bracket.

CRAIG FOSS (National—Tukituki) Link to this

I think I may be the only member to have actually read the report on the Budget Policy Statement all the way through. I have not heard anyone pick up on the part I am about to read to members, but I think there will be a lot of nods of agreement. It is a statement that should be considered in the context of 1999, which is when the problem started. Page 5 of the Budget Policy Statement 2007, the report so proudly presented by the chair of the Finance and Expenditure Committee, Mr Shane Jones—and members should listen carefully to this—states that an inappropriate increase in taxation “would also increase the prospects for tighter monetary policy …”. The statement adds that that increase would place pressure on the exchange rate and adversely affect the export sector. Perhaps there might be a typo in there, but if we look at an inappropriate increase in taxation in the context of 1999 we will see that the incoming Labour Government hiked tax rates. It did not need to increase taxation, as we have seen it do year after year for the last 7 or 8 years. Surprise, surprise—a billion dollars here, a billion dollars there! Even Dr Cullen has not been able to spend it all.

The point is that the problem started in 1999 when Labour became the Government, and the document that has been tabled talks about an inappropriate increase in taxation. So perhaps the chair of the Finance and Expenditure Committee, Shane Jones, might want to address that issue later when he and the others come down to the House. I certainly hope Dr Cullen pays attention to it.

The Budget Policy Statement is a sorry tale of two doctors. After I went through it—not quite line by line, but pretty close to that—I was led, as I am sure many other readers were, to question which doctor is actually running the economy. Which doctor has responsibility for the prudent running of our economy? Is it Dr Cullen? Well, he has responsibility for the supposed fiscal management of the economy. Dr Bollard has responsibility for the monetary side of the economy. But Dr Bollard has to take whatever Dr Cullen sends to him. Or, to put it another way, poor Dr Bollard has to go around cleaning up Dr Cullen’s mess—those little bits and pieces he leaves in the corner. He has to carry the can. Dr Bollard is forced to prescribe the diet pills to poor New Zealanders in order to treat Dr Cullen’s compulsive taxation disorder. Dr Cullen cannot help himself. He has to tax, tax, tax. The answer is only ever to tax.

I was interested to hear Mr Hide speak of fairness. The Labour members opposite did not seem to understand what on earth that word meant. Dr Cullen is directly responsible for the core and persistent underlying inflation that is now in New Zealand. Dr Bollard mentions in the December Monetary Policy Statement that there is a worrying, persistent core that is underlying inflation in New Zealand. If we delve deeper, we find that most of it is coming from the expansionary growth—the loose fiscal growth—in the public sector. Dr Cullen is also, therefore, directly responsible for the probable increase in our interest rates, mortgage rates, and credit card rates come 8 March, when poor Dr Bollard will have to try to alleviate the situation and prescribe some medicine for the mess and illness that results from what Dr Cullen is putting on New Zealand.

An increase in interest rates has been forecast, and most commentators believe it will happen—25 points on 8 March and 25 more points after that. That increase will lead to higher mortgage rates, thereby making homes even less affordable. It must be noted that homes in New Zealand are almost the least affordable in the OECD. New Zealand has some of the highest interest rates in the OECD, and those are the countries we compete directly against. So how on earth can our businesses and our people compete with strong competitors such as Australia when the cost of our capital, the cost of our funding, etc., is so much higher than theirs?

Dr Bollard has repeatedly warned against loose expansionary fiscal policy—as recently as in the December Monetary Policy Statement—in writing, in print, and at various briefings and meetings he has given. Dr Cullen has repeatedly taxed, taxed, taxed, and spent, spent, spent, thus leading to the high inflationary state we currently find ourselves in, and, more important—and tragically for our economy—to higher inflationary expectations. That is what is leading to high interest rates and the high exchange rate—and all in this year, which is supposed to be Export Year 2007. Companies that are trying to export are getting totally nailed on the cost of working capital. They get totally nailed when they convert back into Kiwi dollars. I ask my colleagues in the New Zealand First Party, which promotes Export Year 2007, to ask the hard questions of Dr Cullen, and to not let him get away with the rhetoric.

It is precisely because of the loose spend-up and the overtaxation of the past 7 years that has created the pent-up pressure that is now starting to flow through into our economy. The Government has had a dream run on the back of rural New Zealand. My colleague Tim Groser pointed out the luck the Government has had, and he is quite right; it has had a fair bit of luck. But the chickens are coming home to roost.

Dr Bollard uses central bankers’ speak. It is very conservative. One has to kind of interpret between the lines. But the bottom line is that he is saying that the blame of New Zealand’s current situation—the problems of inflation, interest rates, and high overvalued currency—lies directly with Dr Cullen. And all Dr Cullen can do is thrash around looking for someone else to blame. He thrashes around with blunt proposals, such as levies on mortgages. He wants to whack our mortgages up even higher, even though we will have to pay a higher rate in a couple of weeks’ time. Any time anyone tries to address Dr Cullen’s issues, he bullies them and accuses them of ideological burps, etc. Yet these are learned people from Treasury, the Reserve Bank, and the Inland Revenue Department who are trying to cope with the mess he is leaving behind as he furiously writes cheques left, right, and centre, and takes the money out of hard-working New Zealanders’ pockets.

The inflationary chickens are coming home to roost on the head of Dr Cullen. I suggest he starts to wear a wide-brimmed hat. Dr Cullen has changed his tone over the last few years, and I would like to give members a couple of quotes from Dr Cullen. In a Scoop article of 15 July 1999, “Government stokes inflationary pressure”, Michael Cullen, the then Labour spokesperson on finance, stated: “Inflation is still under control but no thanks to the Government,”. He was also quoted as saying that things were in a right mess, and that the New Zealand economy was then at a point where the only factor keeping the lid on inflation was the overvalued exchange rate.” If we zip forward 8 or 9 years, do we not see that the chickens have come home to roost? We will be holding Dr Cullen to account for his previous statements. He is in big trouble. He knows it, and he is trying to find someone else to blame.

Before I sit down I will just touch quickly on the current account and one other item. In 1997 Dr Cullen called the current account, which was 7.7 percent of GDP back then, “horrendous”, and said that it was damaging to compare the New Zealand economy to that of Mexico and Asia. I say to Dr Cullen that the current account is currently around 10 percent of GDP, so if it was horrendous at 7.7 percent what is it now?

I will make one final point that I heard an earlier speaker note in the Budget Policy Statement debate. There are 144-odd pages in this document. The lead item outlines the goals that drive Budget decisions and process for 2007. Not once in 144 pages do the words “carbon neutrality” appear. Yet, according to the Prime Minister, that is supposed to be the most important item facing New Zealand in the coming years. She mentioned carbon neutrality 33 times in her Prime Minister’s statement, which was delivered about 3 weeks before these documents were discussed.

To summarise, the inflationary chickens are coming home to roost. Unfortunately, New Zealand’s mortgage credit card rates are about to go up, and we know exactly where to point the blame. It goes to Dr Cullen.

Hon PAUL SWAIN (Labour—Rimutaka) Link to this

I have just a couple of quick comments to make on Craig Foss’ contribution. He bemoans increases in Government spending but forgets that virtually every single one of his colleagues is promising to spend more, wherever they go around the country. I will quote some of those colleagues a little bit later. Craig Foss says it is all about luck. For about 8 years now we have heard from National members that Labour has just been incredibly lucky. I remember the great golf quote: “The more I practise, the luckier I get.” That in fact is what the Labour Government has been doing: practising hard, in the interests of New Zealand and the New Zealand economy.

Craig Foss also said that the chickens are coming home to roost and that it is all doom and gloom. To be frank, for about 8 years we have also heard National members saying that at last the economy is going to fall over, as if, in some way, economic underperformance is a good thing for New Zealand. He repeated that line as well. Of course, this doom and gloom is always going to come. It is always going to be this year, next year, or the year after. Of course, the reality is something different.

One of the things people might have forgotten is what exactly the Budget Policy Statement is. It is what we have been debating. The Budget Policy Statement is really an indication from the Government about roughly what is going to be in Budget 2007 in a couple of months’ time, and beyond. It contains a very important statement that people should reflect on. The basic statement is that the Government’s overall objective is to continue New Zealand’s transformation into a more dynamic, knowledge-based society that is underpinned by the values of fairness, opportunity, and security. New funding has been prioritised for policies that will further New Zealand’s economic transformation, continue to improve the well-being of families, and strengthen national identity.

You see, there is a vision for New Zealand—and I like that. I will buy that. That sounds pretty good to me. There is a bit of a vision about where New Zealand needs to go to continue the work we have already started and to put funding into some critical areas. Of course, we never hear anything like that from National. I will come back to talk about that in just a minute.

The economy has been performing well—much to the chagrin of the National Party. Employment numbers are up, as we all know, and tax revenues are up as a result. What is happening as a result of that? Debt has been reduced and we are squirreling away our money for the Superannuation Fund, which of course National opposed at one stage, I seem to recall. Now it is supporting it, and we have heard some comment about the fact that National might dive into that in order to fund its tax cuts, which will be a great worry for the voters of New Zealand. We are funding social services, health, and education, which were run down by National when it was last in Government 8 or so years ago. And we are supporting policies and those kinds of things that lead to this vision.

I think the problem we have in this debate is that it is so one-sided. We never hear anything from National about what it is going to do. If one compares the National Party now, say, with the Labour Party as it was in 1998, one will see that Labour had been in Opposition for 8 years and we were fizzing. We were ready to go. We had policies for Africa, we had leadership settled, we had the team organised, and we were ready to go. We were actually ready in 1996, but finally we got there in 1999. We set out the path and the agenda and we have not stopped since.

And here we are, with National after 8 years still flogging around trying to get a policy—one would be good—and now the Leader of the Opposition, 8 years after National started to be in Opposition, says he wants to set up a brains trust to see whether he can get some ideas. The National Party is not ready for Government. That is the point. A party cannot be in Opposition for 8 years and then ring a few mates and ask for some ideas for policy because it does not have any. I want to talk about that in just a minute.

The problem the National Party has in these kinds of debates is that it is always whinge, whine, grizzle, and groan from the members, but we never, ever hear what National is going to do. Let us take some examples. What is the National Party’s policy on tax at the moment? What is it? I see, we do not know. Is it big tax cuts, and now—which I think it was from Don Brash? Or is it little and later, which are the weasel words I have heard from John Key and Bill English, the co-leaders of the National Party, who are slipping and sliding on that issue?

Here is another example: what is National’s health policy? Could someone give me one policy, apart from spending more on everything? Spending more on everything is what the National Party wants to do. No one at all has an idea about what National’s health policy is. In my view, it should not be smoking cigars in people’s faces and then bopping someone in the face for complaining. It should not be about that. The National Party should not put that in its policy. Notwithstanding the fact that its health spokesperson sometimes practises that, I do not think it should be in the policy.

Here is another example: what is National’s education policy? Could someone over there summarise National’s education policy?