Supplementary Estimates

Hon BILL ENGLISH (Minister of Finance) Link to this

I move, That the Appropriation (2008/09 Supplementary Estimates) Bill and the Imprest Supply (First for 2009/10) Bill be now read a second time. The presentation of these bills to Parliament is an opportunity to reflect on the drastic change in the fiscal outlook that has occurred in the last 8 months in New Zealand. Back in 2008 the Government was forecasting fiscal surpluses with some cash deficits over the next 4 years. In Budget 2009, because of the impact of both the New Zealand domestic recession—in train since the beginning of 2008—and the later impact of the global recession, that fiscal outlook has changed dramatically. The Budget outlined plans that show that the Government now faces 10 years of deficits, and more than a doubling of public debt. That is after making substantial decisions in respect of tax deductions, contributions to the New Zealand Superannuation Fund, and other decisions, including having a smaller operational allowance for new spending for Budgets over the next 10 years.

It is important to remember that surpluses give us positive choices; deficits tend to give us more difficult choices. The Government has started out on a process that reflects the reality that fiscal constraint is now a permanent part of the Government’s plans. That is not a matter of ideological conviction or the democratic choices that the public make about Governments; it is the way the world has changed, and it is a product of past misdirected policy under the previous Government.

A bit of analysis of Government spending shows that the Government’s books are now significantly out of balance. Over recent years entitlements and Government spending have grown rapidly, particularly under the Labour Government since the 2005 election. The effect of this is that when we calculate what is called the primary balance—that is, Government revenue and expenditure excluding finance costs—we see that it is now significantly larger than anything that the New Zealand Government has seen in the last 25 or 30 years. Certainly, the primary deficit is significantly larger than it was in the late 1980s, which was the last time close attention was paid to New Zealand’s fiscal situation and a lot of Government policies were focused on remedying that outlook.

The Government made a critical decision in respect of the Budget, which is reflected in these bills, and that was to continue with the election undertakings that it had made. This has the effect that through this next financial year the Government will continue to grow public spending at a fairly significant rate. We are doing that because we believe that it is important to support the economy through the most difficult part of this recession, which we are in now. This will be a very tough 12 months; we have already seen rising unemployment and dropping tax revenues. At the same time we have set out a plan to get on top of rising debt over time.

It is important to remember just how we got here and whom people should look to when they realise that they have to deal with some difficult issues. The last Government left this economy in much worse shape than its members believed, and certainly in much worse shape than the public were led to believe. It is pretty straightforward: the economy was in recession through 2008, and that recession was caused by domestic excesses. Those excesses consisted of rapid growth in Government spending, a lot of misdirected spending by the Government, an asset bubble in the housing market, a record current account deficit, and appallingly low productivity growth through that time. Those factors left this economy in a weak state to handle the onset of the global recession.

To turn to the Government books I say that this Government has had to deal with the global recession in the context of Government books that were already headed into deficit, despite 10 of the best years of economic conditions that this country could have enjoyed. It meant that in Government we found ourselves starting not from the start line but from way behind. There was a dysfunctional immigration service, a dysfunctional corrections service, and a health and education sector that had been pumped up with large increases in funding and negative productivity growth.

We have had to deal with particularly bad decisions around investment, and a shortfall in accident compensation funding of $300 million a year—or $1 billion over the forecast period covered by the Budget—just because of neglect and bad management. KiwiRail was a black hole if ever there was one. The previous Government decided it was worth $700 million plus a set of concessions to the previous owners, and it seemed to be intent on setting it up as a Government department. We have had to contribute something like $145 million to keep it running. We will have to put some basic investment into it next year, but over the next few years that looks to be nothing like enough. So we have to clean up that particular mess.

Along with that, a whole set of regulatory changes were made that treated businesses as golden gooses that would keep laying eggs but that needed to be punished in case they were too successful. We have had to initiate sweeping regulatory reforms in order to create the kind of business environment where people will invest so that we can have employment, because it is not until businesses invest that we can get the unemployment rate down. There will not be one new job until a business decides to invest and to employ someone.

When people are concerned about the choices the Government is making, they should lay the blame for that concern at the feet of Labour. We are cleaning up a mess left by an economically illiterate and fiscally reckless Government. Cleaning up that mess was always going to involve some difficult choices, but the fact that the global recession has come on top of that will really test our capacity.

I am impressed with the way that much of the Civil Service has decided to shift its framework now that the outlook has changed—not just the change in Government but the change in the economy. However, some parts of the Civil Service do need to adjust a bit more to the realities.

This Government has strongly supported the police. We are pouring millions of dollars into the police force in order to help the police to do their job. We are pouring money into Tasers so that police can be safer, and into DNA testing in order to give them more capacity to resolve crimes. However, I am not sure that the police are in step with the public in looking for a 4 percent pay increase. The police get a 2 percent pay increase regardless. That increase, by any standard in respect of the rest of the community, is quite generous, especially compared with people who are losing their jobs and taking pay cuts. The Police Association is claiming 2 percent above that. This part of the public sector probably has the most secure jobs in New Zealand. The New Zealand Police has the strongest political backing of any Government department, with the Government pouring so much money into the police, and I think the association would do well to check whether it is reflecting the views of its membership and the communities that those members are serving.

This legislation is part of a programme that the Government has embarked on to get the books back in order, but, more important, it is the first step in a 3 to 5-year programme to deliver smarter and better public services to the public for the same or less funding. It is going to be a challenge, but it is one we are up to. Just a few years ago, Government departments were spending considerably less than they are now—in some departments it was 30 percent or 40 percent less—and at that time they were meeting many of the needs of the public. Those needs are going to grow in the recession; we are determined to meet them.

Hon DAVID PARKER (Labour) Link to this

The previous speech by the Minister of Finance, Bill English, should be contrasted with what he was saying before the election as the Opposition spokesperson on finance. He was saying to the electorate that they could have everything that they had under Labour, plus tax cuts. He was not saying that the social spending or tax credits that surround both Working for Families and KiwiSaver were profligate. He told people that those policies were there, they were secure, they were good policies, and people could rely upon National to protect them and superannuation—people could have everything they had under Labour, plus tax cuts.

He was warned before the election by journalists that Lehman Brothers had failed and the IMF was giving warnings of a major slowdown in the world economy. Those facts were put to Mr English when he was the Opposition spokesperson on finance and he was asked whether, as a consequence, the promises that he was making were unrealistic and unaffordable. He denied that they were. He made promises that he knew could not be kept in order to win the Treasury benches. Straight after the election, we were here under urgency passing legislation for those unaffordable tax cuts. Not only were those tax cuts unaffordable, but also they were so weighted to those who were already well off that they were terribly unfair. They were patently unaffordable, and that was proven within 6 short months when we were back here in this Chamber reversing some of those tax cuts that we had voted for, under urgency, prior to Christmas.

The Minister of Finance continues to pretend that his Government inherited a difficult set of cards, but his Government inherited one of the best fiscal positions in the Western World. The third-lowest Government debt in the OECD is a wonderful set of cards to inherit in a time of recession, not a difficult set of cards. The Minister has had more room to move than virtually every other Minister of Finance in the developed world. He should not complain to members of the previous Labour Government that we left a situation that was in a parlous state, because nothing could be further from the truth. When Mr English last left Government—he was Minister of Finance in the last National Government—the Labour Government inherited Government debt of 38 percent of GDP. When the Labour Government gave back the Treasury benches to the National Government following the last election, the National Government inherited Government debt that was less than 18 percent of GDP.

Today the Prime Minister heralded the fact that New Zealand’s unemployment rate is, in his view, not too bad because it is at 5 percent, when some of the rest of the world have higher rates. In a numerical sense that is true, but who should get credit for that? The prior Government oversaw real growth in this economy. That growth saw New Zealand’s unemployment be the lowest or second-lowest rate in the world, a position we swapped from time to time with South Korea. That is the legacy the Labour Government left to the incoming National Government.

Mr English says that productivity growth was low in the period prior to the election. On an annual basis during the 9 years of the Labour Government, growth in New Zealand was higher than it was in Japan, the USA, the European Union, the United Kingdom, and even, although just slightly, Australia during that period. It is true that growth in labour productivity during that period was not high, but that is the statistical effect of reducing unemployment. If we have unemployment going down to the very low levels that we had in New Zealand, the last people who are back in the jobs are the lowest skilled. Similarly, the first who get laid off and cannot get a new job are generally the lowest skilled. Ironically, when we have reducing unemployment, we can also have low rates of increases in labour productivity. Mr English knows that well, but he denies it in this House.

There are a number of criticisms that can be made of the Budget. This Budget does very little to set up New Zealand to come out of the recession in a stronger position than we went into it, because it takes money away from the training of people who, through no fault of their own, are normally made unemployed. It does not fund their training whilst unemployed. Sir Roger Douglas presided over the finances of this country in a very difficult time in the 1980s, and he did some good things and some bad things. I congratulate him on floating the dollar and some other good things. One of those good things he and that Labour Government did was that in that period of dislocation when there was rising unemployment, money was put into the retraining of people who were made unemployed. This Budget does not do that; in fact, this Budget reduces payments to a lot of good courses. Let us look at the 9-day fortnight, one of the big three ideas to come out of the Job Summit. It is an idea that I think most people in this House inherently think is a good idea if it is well managed, but there is no skills package around it. The people who are not in work fully are not getting training as a way to improve themselves and therefore improve the future productivity of our economy.

I want to deal with one of the exaggerations that we hear from the Minister of Finance relating to the increase in Government expenditure during the term of the Labour Government; Sir Roger Douglas does this, too. They both include tax credits in the definition of “Government expenditure”. The Working for Families tax credits—effectively a tax reduction for people with families; over $100 a week per family with children was the average of the Working for Families tax credits that were voted by the previous Labour Government—and the KiwiSaver tax credits that encourage people to save are both counted as Government expenditure under the definition used by the Hon Bill English today and at times by the Hon Roger Douglas. They exaggerate the increase in Government expenditure by including the tax credits, which are effectively tax reductions. If they did not agree with those tax credits, they would have campaigned against them. But, of course, the National Party said it would keep them, because it agreed that in the end they were a good way to deliver assistance and effective tax reductions to families with children.

The other big, glaring mistake in this Budget—I will not deal with some of the smaller choices like putting more money into private schools rather than public schools—is the issue of superannuation. New Zealand has an ageing population. We currently have approximately 500,000 superannuitants in New Zealand and a rapidly ageing population. Baby boomers, born from the time of World War II to 1960, are approaching retirement age. Between now and 2030 an additional 500,000 of those baby boomers will move into retirement. At the same time, the number of people in the workforce will decrease proportionately because we will have fewer working-age people as a proportion of our population. It is obvious that in order to maintain future superannuation entitlements, Governments of today need to collect taxes from the people who are working today in order to fund that future superannuation. If that does not occur, we create not just uncertainty as to future superannuation entitlements, and we certainly do that, but also we create intergenerational unfairness because we will have a generation of people expected to fund a million or so people on superannuation from a smaller working population. That would not be fair, and it may not be politically sustainable.

That reality is clear to everyone but it is denied by the National Government, as it has stopped contributions to the superannuation fund not for 1 year but for the decade. So there will be $20 billion plus earnings less in that fund in the future, when that increased number of people will be reliant on superannuation. As a consequence, future entitlements to superannuation are at risk. The likelihood of means testing, or age changes, or decreased generosity of superannuation is denied by the National Government. It has again broken its promise on superannuation.

Hon JUDITH COLLINS (Minister of Police) Link to this

The people most upset with Budget 2009 are those sitting opposite me: Labour Opposition members. They went up and down the country during the last election and told people that a National Government would cut the benefit rates and entitlements of the poorest and most vulnerable, but we did not. The angriest people are people like the Hon David Cunliffe—who I thought was about to have a heart attack, he was so angry—because we did not do that. In fact, the most vulnerable New Zealanders were protected even more than they ever were under a Labour Government. This Budget was not the “Slash-and-burn” Budget that some newspapers had gone to such efforts to have cartoons ready to portray. It was a Budget that was moderate, sensible, and had new core Crown spending of $2.9 billion combined with recent tax cuts. That is the sort of spending that will help keep this economy going.

It is very important that we look at the circumstances of the elderly. This Budget locks in national superannuation at 66 percent of the average wage. Every member on this side of the House who went to all the Grey Power meetings during the election campaign had to listen to Labour Party members say that a National Government would cut national superannuation. National members said time and time again that national superannuation would stay at 66 percent of the average wage, and by gosh it did! National fulfilled its promises.

Benefits, student support, and Working for Families are maintained at current levels, despite the worse economic conditions that this world has seen since the 1930s. Every other country is going through the most appalling situation with their economies, with 9.5 percent of people in the US now unemployed. That is an appalling situation. Yes, we have more people unemployed now than we did a year ago, but this time a year ago it was pretty apparent that things were turning for the worst. I remember the Hon Ruth Dyson standing up as the then Minister of Social Development and Employment and skiting that only 290 people had lost their jobs, or words to that effect. She said that everything was going to be fine. It was pretty obvious that things were not going to be fine this year—the level of how tough it was going to be was never obvious, yet this Government has been able to present a Budget where more money is spent on things that will support the economy and our most vulnerable New Zealanders.

This Budget provides a $3 billion boost for health over 4 years that is focused on front-line services, not on conferences. That is something that really upsets the Labour Party, because its view has always been to have a conference, a strategy, and a report, then that is it. Well, I say that that is not it. Conferences, strategies, and reports do not feed one child and they do not make the sick well. Yet in the last few months we have seen the Hon Tony Ryall as Minister of Health show what happens when we have a Minister of Health who is in charge and is on top of his game.

We have seen $1.68 billion spent on education to raise student achievement. Why do we never hear about that from the Opposition? All those members want to talk about are Moroccan cooking classes that might have be dropped or, as we heard today, some make-up classes that were dropped—I can understand why the Labour Party is worried about that, but the rest of the country is not. People want to know that their money is being spent wisely on creating jobs and in helping New Zealanders to get the education they need. Many New Zealanders will need to retrain, but they will need to retrain for jobs and not for hobbies. Six hundred more police will be on the beat by the end of 2011—600 more than there were when we came into office—and there will be 246 more probation workers.

I will take a little time to talk a bit about the Department of Corrections. When we came into office in December last year, we found that in the dying days of the previous Labour Government Phil Goff had been asked for special help by the parole section of the Department of Corrections. But what had happened? That section did not even get an answer. Instead, this Government was left with an utter mess. We were left with a parole system that was underfunded and completely under-resourced, and that had had a whole lot of community sentences dumped on it without the resourcing for that. For year after year the parole section had cried for help, for some budget assistance and some leadership from its Minister. But he was never there; he was always off overseas, looking to buy cameras somewhere.

Instead, we have had to pick up this problem, and now we have some fantastic results coming out of our parole section. We have some great results. When Mr Goff was last in office, 58 percent of our high-risk offenders were complying with parole requirements; now 77 percent are—a complete turnaround in a matter of months—and that is before all the budgetary considerations have come into it. That is what leadership and some more money does—and, no, I tell Mr English that he cannot have any back. I say we are going to do even better.

We were also left with a crisis of capacity in the prison service because the previous Government liked to lock up people but it forgot that the housing for that had to be provided. What that Government did provide was extraordinarily expensive. It cost $643,000 a bed at the Spring Hill prison. I repeat: $643,000, just in case anyone thought I had that wrong. Now all we hear from Opposition members in relation to other solutions about the burgeoning prison population is that the idea was not their idea, so it cannot be any good. They do not have one solution, despite 9 years of a Labour Government. Instead, they have left us with another mess to pick up, and we will sort that out.

One of the other things we could talk about at this point is education. For the building of new schools and the modernisation of existing ones, we have budgeted $523 million. Which one of us here has not been to a school in our electorate and thought about what could be done to improve education, particularly for our most vulnerable children whose parents do not have any excess money to help their school and for whom their school has to be funded fully, in all ways? Here is $36 million to help students meet national standards in literacy and numeracy. We can talk all we like about tertiary education, and we can talk all we like about Moroccan cooking classes. We can do all of that, but if our children are coming out of school after 10 years’ education and cannot read and write, then that is absolutely a national disgrace. It is an international disgrace for a country like this, where education has been free for primary and secondary schooling since the Great Depression, to have people coming out of schools and, frankly, filling our prisons. About 80 percent of our prisoners are said not to have numeracy and literacy to the level they should do. Many of those prisoners have never had a chance at education because it has been denied for them from the very start.

There is $900 million in this Budget for justice initiatives aimed at improving public safety. It is not about writing reports but about improving public safety. It is not about going to conferences—no, it is about public safety. There will be 600 more police on the streets at a cost of $182.5 million, 246 more probation officers, 29 front-line managers, and 26 psychologists to improve the quality of parole and home detention management at a cost of $255.9 million. There will be a thousand extra prison beds through double-bunking at five prisons, plus planning for additional capacity, at the cost of $385.4 million. That is a lot of money; it is a lot of money at a time when this country should have more money in the bank and when New Zealanders should have more money in their pay. Unfortunately, so much money was wasted by the previous Government. That Government thought it was much more fun to go and buy a train set—KiwiRail—and burden this country with a debt for years to come.

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

I raise a point of order, Mr Speaker. Before I take a call in this debate, I wonder whether I could remind you of the Speakers’ rulings that prohibit members from moving from their seat to gain an advantage in interjections. Paul Quinn has done that; he has been interjecting not just through David Parker’s speech but also through his own colleague’s speech. It is against Speakers’ rulings. I ask you to bring that to his attention, and to ask him to comply with Speakers’ rulings.

PAUL QUINN (National) Link to this

As has been mentioned to me—under, I think, the Speakers’ rulings on pages 62 and 63; I cannot just place my hand on them—that the rules say that a member cannot move to improve his or her position. I put it to you, Mr Assistant Speaker, that, as I think your office has said to me on a couple of occasions, with my beautiful, melodious, voluminous voice, it would not matter where I was sitting; my support for my colleague on this side would in fact be the same whether I sat here or sat at the back.

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

I am pleased to be able to take a call on this Appropriation (2008/09 Supplementary Estimates) Bill, which Labour opposes. The Budget was a wasted opportunity, and the Minister of Finance should be ashamed of his inability to deliver on quite fundamental issues to New Zealanders. He had 9 years in Opposition to prepare a plan, to prepare some action, and to galvanise support around this Parliament for a Budget that would deliver real opportunity for people, but he wasted that opportunity.

The Budget did nothing at all either to protect or to create jobs for New Zealanders. The biggest opportunity that can be given to New Zealanders is the chance for them to walk out of the door in the morning and go to a paid job, but the Minister of Finance has made that chance harder for New Zealanders, rather than easier. The Budget fails totally to invest in people, our country’s biggest asset. It ignores the opportunity to develop our innovation, our skills, and our training. During a recession we should be investing in skills, investing in people, and doing everything we can to give them more security and more opportunity in the future, because we will move out of recession into growth again. We could have had a better skilled, able workforce ready to take up the chances that improved growth will offer to New Zealanders in future. But that was entirely squandered. There was no investment in the skills and innovation of New Zealanders, and not a single thing done to give more security and protection in existing jobs, let alone to create additional jobs.

The Budget repealed, under urgency, the tax cuts that National bribed its way into Government with prior to the election. This Parliament put those tax cuts through under urgency, prior to Christmas, and we repealed them under urgency. I have not heard of one single New Zealander who believed Bill English when he said: “We thought tax cuts were affordable, but then we found out they were not.” In fact, that is not quite correct. I have heard of one such person, but he is a member of the National caucus and that does not really count. He fell for that line, but he is the single New Zealander who believes the excuse that Bill English and John Key gave to the country. They promised tax cuts when they knew they were unaffordable, they rammed them through this House under urgency, when they knew they could not be delivered, and they repealed them under urgency.

What opportunity did the ordinary New Zealander have to contribute to that debate? What opportunity have the people earning less than $40,000 a year, who did not gain 1c from National’s 1 April tax cuts—those ordinary, hard-working New Zealanders—had to have any input at all into “now you see it, now you don’t” tax cuts? None at all. That is because we know that one-third of the $800 million worth of tax cuts that National did keep in place went to the top 3 percent of income earners in New Zealand. One-third of the total tax cut package went to the top 3 percent of income earners. Are those the people who every week find it hard to pay their electricity bills or their food bills? Are those the people who cannot afford anything at all extra in their houses? Are the people in this Parliament struggling on their incomes? I do not think so. But I know that many of my constituents, who work just as hard, if not harder, than members of this Parliament and do not earn a fraction of the money that we earn in this Parliament, got nothing from the tax cuts. They got nothing at all from the National Government’s tax cuts.

I say that is a disgrace, but it is not nearly as bad as the dangling of hope that the Job Summit gave to New Zealanders. People were really hopeful about the commitment to get all the key stakeholders, except anyone who voted for Labour or the Greens, in a room together, get them focused on the fact that we have increasing unemployment in New Zealand and we want to tackle that issue, and then drive an action plan, led by the Prime Minister. People were really hopeful about the opportunity that the Job Summit gave New Zealanders, and now we know that not only were people like the leader of the Labour Party and our employment spokesperson excluded solely because they were Labour but also that we clearly should not have an opportunity to contribute about jobs, despite Labour delivering the best employment record in New Zealand’s history during our term in Government.

But what happened after the Job Summit? Well, nothing happened after the Job Summit. The 9-day fortnight? It affected fewer than 350 jobs. For every single job that has been saved, that is good. But we are talking about the New Zealand economy, where 1,000 people each week are losing their jobs. Every week 1,000 New Zealanders lose their jobs, so 325 people in total is not even half a week’s worth of unemployment, under the National Government’s regime.

People expected something to come out of the Job Summit. Then, we thought, there is the national cycleway. That was John Key’s idea, right at the end of the summit. It did not arise in the workshops, nor in his introductory comments, nor in any conversation with people who might talk about it, think about it, and contribute to this idea. Right at the end John Key came up with this idea of having a national cycleway. But Bill English, who holds the purse strings, said that we would not be having a national cycleway—not this week, not this month, not next year, not ever—under his stewardship. Those were the words that Bill English used in support of his leader and the cycleway. But in the Budget we saw the money for that.

The money that was taken out of adult and community education and out of scholarships, such as scholarships for medical students—genuine investment in skills training for New Zealanders—went into a cycleway that is now being described as a little ride around some regions of New Zealand. I think New Zealanders have already been taken for a ride. They were misled and bribed by National, which said before the election: “You can have everything that Labour put in place. We won’t touch any of that, and we will give you tax cuts, as well.” That was the mantra. That was the Crosby/Textor mantra that went around the country from the National Party: “We will leave everything in place from Labour, and by the way, you can have tax cuts as well.” People bought that. Now the only part of the cycleway that has been delivered is the ride that New Zealanders know they have been taken on. They were misled, in order to bribe National’s way into Government. New Zealanders are rightfully resentful of that. They feel as if their trust has been broken. In my view, it certainly was broken.

We had no investment in skills, we had no investment in jobs, and the worst trick of all was the one played on superannuitants—not the superannuitants of today but of the future. If the member who resumed her seat immediately prior to my speaking thinks that current superannuitants do not care about the future of the superannuation needs of their sons, daughters, and grandchildren, she is wrong. I am very proud to have been to more Grey Power meetings than any member in this House. Grey Power members are not interested in their own personal well-being as a priority. They care much more about the future security for their children and for their grandchildren. They know that without the investment in the Cullen fund, which has been taken away—not just for this year, but for a decade—in order to fund the future superannuation needs of New Zealanders, when there will be more people over 65 and fewer people under 65 paying taxes to enable us to afford superannuation, either the age of entitlement will increase or the rate will go down, or it will be a combination of both. We will not have that investment, which was developed specifically to partly fund the future needs of superannuation in New Zealand, and that is the worst trickery of all.

ALLAN PEACHEY (National—Tāmaki) Link to this

In this opportunity to contribute to the Appropriation (2008/09 Supplementary Estimates) Bill, I begin by referring to the Labour member who has just resumed her seat, Ms Dyson. She described the 2009 Budget as a wasted opportunity, but let me tell this House what the 2009 Budget was. It was a brave attempt to rescue this country from the wasted opportunities of 9 years of socialist rule. It was 9 years of some of the most sustained prosperity this country has seen being wasted. That crowd over there, the Labour Party, was more interested in taking that prosperity, built up on the backs and the shoulders of decent, hard-working New Zealanders through the 1980s and the 1990s, to build up a sum of money to buy the 2005 election. The tragedy was not just the buying of an election but also that we then had to put up with 3 years of a Government that had lost its moral compass. That contributed even further to the difficulties that this Government is dealing with in the Budget.

Members might like to reflect on the Thursday afternoon when the Budget was delivered in this House, and on the offerings from the Leader of the Opposition. There was huffing and puffing, and puffing and huffing, but nobody was listening. Certainly, on this side of the House we were not listening. There was pathos in seeing members on the other side of the House not listening, but most important of all, the people of New Zealand were not listening. The people of New Zealand wanted a very simple speech from the Leader of the Opposition, and it needed to comprise only three words: “I am sorry.” He could have said that he was sorry for the mess that the previous Labour Government left the economy in. That is all the New Zealand people wanted to hear: “I am sorry.” Instead, we have heard speech after speech from members opposite demonstrating that, firstly, they do not understand the damage they did to the New Zealand economy during their time in Government, and, secondly, they are totally bereft of ideas. When the Opposition’s finance spokesperson, Mr Cunliffe, was asked on Radio New Zealand National when Labour would offer an alternative plan, the best he could do was to say it would be sometime before the next election. That spokesperson knows that he is bereft of ideas, and has not got a clue about how to get New Zealand out of the mess the previous Labour Government left.

At least the National Government understands the importance of a credit rating. One of this Budget’s many successes was protecting New Zealand’s international credit rating.

METIRIA TUREI (Co-Leader—Green) Link to this

It has been reported today that some 1,000 New Zealanders are joining the dole queue each week. The official unemployment rate in this country has more than doubled in the past year. We have seen major job losses in areas like the manufacturing, agriculture, forestry, and fishing industries, which are key productive industries in this country. We have also seen, as we expected, a major increase in the unemployment level of young New Zealanders; in particular, those aged between 15 and 24. This recession is having an impact similar to that of the late 1980s and early 1990s, when unemployment rose sharply and viciously, leaving ordinary working people without incomes and homes, and being treated by the then National Government as if they were without dignity. We are heading that way again, with some projecting 20 percent unemployment among young people, again under a National Government with no heart and no plan.

Today in question time the Prime Minister was asked specifically about his plans to protect and create jobs for New Zealanders. He treated the questions about unemployment with contempt, choosing instead to treat unemployment as a side issue so that he could crow about his latest polling. Polling is not a plan. It will not create jobs, protect families, or see us through to the long-term economic sustainability and stability that this country needs. The Prime Minister had no plans, and, indeed, many of the ideas that he proffered this afternoon have already proven to have failed.

The Job Summit, which was lauded at the time as the great hope for new and innovative ideas, has failed to produce anything like enough real solutions. It is true that one idea from the summit was successful: the Green Party’s home insulation fund. It was funded to over $300 million in the Budget and will create 2,000 new jobs from the programme and protect 700 existing jobs, thereby protecting and creating 2,700 jobs in total. The Prime Minister might not have any plans, and I do not believe he should feel that it is a problem to admit he does not have any plans and that his solutions have failed. But it is a problem if the Prime Minister continues to ignore the solutions that are on the table to protect New Zealanders into the future.

This Budget desperately needed to address three key issues for our communities. We need to create jobs now through wise infrastructure investments, we need to invest now in our communities and our people to create the environment for longer-term sustainable economic stability, and we must provide New Zealand families with real income relief right now.

The Green Party and our Green New Deal—The Green Stimulus Package have solutions that will contribute to all three key goals. Our home insulation fund is one such solution, and we will see the benefits of those 2,000 extra jobs rolling out over the next year or two. But we have other solutions that we have proffered for this Government. The Greens have calculated that investment of $600 million dollars in the clean-up and protection of our waterways—mainly through the planting and fencing of the banks of waterways—would create over 2,000 jobs directly, and about 4,500 new jobs indirectly. It would have the added invaluable economic return of cleaning and protecting our clean, green image on which our tourism is so heavily dependent, thereby enhancing our primary production market access, restoring tourism opportunities like trout fishing, and reducing the dollar and human cost to local communities and farmers of flooding and drought. Those are key solutions to protect the environment and our economy and to create jobs.

The current waiting list for Housing New Zealand Corporation houses is around 10,000 families and rising, and it will continue to rise as unemployment kicks in and more and more families lose their homes. Yet half the residential construction capacity is idle in this country. New residential consents have fallen by half since June 2007, which means that about 6,000 new homes per year are not being built. That situation is devastating the construction sector. Investing $500 million in the first year and $750 million in years two and three in the building of new homes would give us something like 6,000 new State houses for our families. That investment would save 10,500 full-time direct jobs and create 18,000 new full-time jobs in total across the economy. That would be an investment to keep our families warm, dry, and housed and to create further jobs across our whole economy.

Because new road construction is highly capital investment intensive, not a lot of new jobs are created for the amount spent. Motorways are the least jobs-intensive of transport projects and make us much more dependent on oil, with higher greenhouse gas emissions. Our stimulus package spend creates 40 percent more jobs for every $1 million spent than the equivalent spend on new motorways. Forty percent more jobs could be created. A raft of other transport projects would employ far more people, make our cities more liveable, improve our transport choices, reduce our carbon emissions, and make us less oil dependent. They are key solutions to protect the environment, keep our families well, and create jobs.

Our solution is to shift the low-quality spend that this Government will make—the $1 billion low-quality spending on motorways—into a range of transport projects: rebuilding and upgrading railway stations and bus exchanges so that people are kept safe, warm, and dry in them; integrated ticketing; and increasing cycle lanes and walking paths, particularly for the many hundreds of thousands of children who want to cycle to school safely, thereby reducing emissions, reducing cost to their families, increasing community safety, and creating jobs, all through the same solution.

The Crown loan programme is another example. The lack of sufficient Crown loan funding over recent years has meant that hospital and other efficiency upgrades have not occurred. The savings to our hospitals from efficiency upgrades would go directly into front-line health services. For example, $25 million loaned per year for 3 years would create 390 full-time direct jobs, multiplied to 874 full-time jobs across the economy. By the same logic, the same investment in energy efficiency in Government assets like schools, prisons, and other Government buildings would continue to build on that job creation, thereby protecting the community, protecting the environment, and creating jobs.

We need to invest in our communities and our people to create an environment for long-term economic stability. One core means for this is in education. We know that young people will suffer the most from unemployment, so we must invest in their future by enabling greater access to educational opportunities. But instead this Government has slashed education funding, particularly across the community and adult education sector. We have had a reduction of funding to universities of over $22 million per annum, cuts in funding to regional polytechs without any kind of mechanism for other technical institutes and polytechnics or tertiary education organisations to take up the students, and about a 50 percent cut in adult and community education funding, thereby cutting jobs, as well as reducing access to retraining that is so desperately needed.

The Tertiary Education Union recently described how the Australian Budget put $7 billion extra into tertiary education to deal with the recession in the long term.

Hon Sir ROGER DOUGLAS (ACT) Link to this

New Zealand has two classes of citizens. In New Zealand we all pay taxes, yet some people get a bad deal for the money they pay. The people who get the rawest deal are those who are the least well off and the least able to provide for themselves when the Government fails to deliver. We have two classes in New Zealand not because the Government is not doing enough for the poor but because what the Government does for the poor denies them choices, destroys the incentive they have to get ahead, and subjects them to political abuse. The past 80 years of political control has achieved a larger welfare budget, more people on welfare, and barriers for those at the bottom to get ahead. Personal taxation in New Zealand takes $25 billion; 54 percent of that amount goes to health, a third goes to superannuation, and 13 percent goes to welfare.

Let us look at some of those areas. Superannuation costs everyone one-third of the personal tax we pay. For people who earn a little above the average wage, that is almost $4,000 a year. Superannuation is not free; it costs, and it delivers poor results. Despite the average person paying $4,000 every year in tax for superannuation, a single pensioner gets $311 a week and a married pensioner gets $239 a week. They pay in well over $200,000 during their lifetime for a miserable pension. Our superannuation scheme is designed so that people pay today for the retirement of their parents. If we simply adjusted the system so that the money people pay went towards paying for their own retirement, most would get a cushy retirement. If that money was put in the bank and was earning 7 percent nominal interest and 5 percent real interest, then the average worker would retire with $1.8 million in the bank. It would like winning Lotto and then retiring. The interest on that money would give you far more per week than you are currently getting. After tax, the weekly income of a superannuitant would be around $1,210 a week. The difference when compared with current Government superannuation is around $900, and that is without any capital contribution. The present system creates second-class citizens. So why do National and Labour not alter this when they are in Government? It is because National and Labour want to make the people of this country dependent upon them. If the average citizen had $1.8 million in the bank, he or she would not want politicians interfering in their lives.

Let us look at health. Of your and everyone else’s personal tax, 54 percent goes towards health care. Saying that it is 54 percent can hide what this means. If you earn the minimum wage, you will pay about $2,500—

Hon TARIANA TURIA (Co-Leader—Māori Party) Link to this

Kia ora, Mr Deputy Speaker. Tēnā tātou katoa. Last weekend, on Saturday night, was a chance to sit in front of the fire, cheer on the All Blacks, and laugh as the painted rooster outsmarted the security team at the Cake Tin. It was a bittersweet victory. A win on the night was not enough to secure the 6-point margin we needed to win the trophy, but we got over it. But for five young New Zealanders it did not stop there. They took their anger out on an unsuspecting member of the French rugby team, punching him and throwing him to the ground in an unprovoked assault, which left the player with a suspected broken eye socket and stitches to the face.

So what does this have to do with the additional expenses in capital expenditure required for the financial year? Is it just an isolated attack that bears no further comment? If we were to read yesterday’s papers we might find a different story, with the headline “Surge in violence during recession”. We could read that the Christchurch women’s refuges have seen a huge jump in the number of women asking for help as the recession bites. The Battered Women’s Trust described an extraordinary increase of 60 percent in the number of women asking for help, from about 200 community clients a year ago to about 360 now.

At the other end of the motu, a special circumstances court is being proposed to cater for the increasing numbers of homeless living on Auckland streets. The manager of the Methodist Mission’s Lifewise service has called for a 24-hour service hub as an initial contact point for homeless people. Throughout the country the number of food parcels being given out has increased. The economy continues to lose jobs, and people are finding it impossible to stretch the family finances even further. For many of these New Zealanders, the recession signals just more of the same. These are the New Zealanders who live on very low levels of absolute income—those people who represent the extreme end of income disparity.

This is the phenomenon that the Māori Party expected to see addressed in the Appropriation (2008/09 Supplementary Estimates) Bill. Increasing levels of violence, homelessness, food deprivation, and poverty are just some of the effects of the recession that must be spoken about. We have been pleased to support the initiatives that emerged in the Budget process to assist New Zealanders in responding to the impacts of the global economic downturn. The Māori Party has gone on record in looking at the opportunities that may arise for Māori from the $7.45 billion investment in infrastructure or the allocation of up to $40 million for the community responses to the recession.

But there are other areas that could benefit from further analysis, and we have been looking to legislation with poverty in mind. The supplementary estimates go into some detail in specifying appropriations for the Wiri Inland Port’s rail link, a screen production incentive fund, and a contribution to joint venture airports. There are allocations for participation at Expo 2010 in Shanghai, China, and there are more appropriations for State highways and railway development. There is investment in generating reserve electricity at Whirinaki, and even funding for a transformational initiatives fund. But there is nothing in this legislation that is transformational in terms of eliminating poverty. There is nothing to suggest that the earned income threshold for beneficiaries could rise by $80, or that over-crowding or homelessness will be addressed.

Although the changes in emphasis regarding infrastructure and transport initiatives are to be expected, it is disappointing that the estimates contain so little about incentives for our most vulnerable populations. The Child Poverty Action Group spells out in no uncertain terms that “Insisting on fiscal prudence now at the expense of children will prove to be very short-sighted when the future social costs hit high.” The Māori Party will not neglect the rights of our children. We are committed to the long-term view, a view in which whānau ora prevails, and a time when marginalisation is reduced. We will speak the words that others may be afraid to say. We will do what we can to prevent poverty, to address discriminatory language, and to confront social exclusion.

If we have an eye to the long-term view, it will mean that we are clear about the outcomes before we proceed on any policy process. If the problem is that it costs over $600,000 to build a prison cell, the answer may be far more wide ranging than creating a solution out of converted shipping containers. It is about reintegration and restoration of offenders. It is about reducing the recidivist offender rates and putting in place whānau support to encourage offenders not to turn to crime. If the problem is that approximately 5,000 New Zealanders die each year from tobacco use, we should not be putting all of our investment into programmes that tell smokers to quit. We would be far better off investing in early intervention and prevention strategies that discourage young people from ever starting to smoke. One of the solutions might be to remove the tobacco from the shop shelves in the first place. If the problem is boy racers, we might consider working with the boys themselves, which would provide a vital opportunity for change, rather than focusing on the vehicles alone. Better yet, we might consider supporting youth networks and positive youth employment initiatives.

All of the investment in reducing hospital waiting lists is in many ways meaningless if the foundation of health promotion is eroded. We must be open to doing as much as we can for those who have the least opportunity. How do we lift the sights of vulnerable children to let them know that their world can change? What does whānau ora mean for them? It should not be a 21st century version of Oliver Twist, when someone is asking for more when there is no more to be had.

Last week was Volunteer Awareness Week. If there was one message that came through over and over again, it was the demonstration of how rewarding the gift of giving can be. In my role as the Minister for the Community and Voluntary Sector I am constantly humbled by New Zealanders who show their humanity to one another through gifts of time, gifts of money, and gifts of kind so that they can share. There is nothing more inspiring than to see such generosity transform lives. I see everyday people who have rejected the race to clutter their homes with accumulated wealth and who have, instead, dedicated themselves to helping others around them. It does not matter how they give; it is the fact that they give in the first place. Let these people become our models in this Parliament in terms of how to restore that sense of common unity, that sense of community spirit, which will be so critical in our recovery. Kia ora.

Hon TAU HENARE (National) Link to this

I want to give members a bit of a history lesson.

Hon SHANE JONES (Labour) Link to this

Tēna koe Mr Speaker, mōu i pai te tuku māku tēnei wāhanga e kōrero. Thank you very much, Mr Deputy Speaker, for inviting me to make a few remarks. Unlike the speech of the previous speaker, Tau Henare, my remarks will actually relate to the legislation we are talking about. Also, they will not be tedious or repetitive, and they will probably be instructive for Mr Quinn.

Let us come to the first thing that one would really want to say about the Government’s stewardship to date. There is no doubt that we confront very large, dangerous issues. There is no debate about that. We also know that debt—Government borrowing—will rise. That means that the Government in the near future has one of two things to focus on. One is that it has to start cutting expenditure. Surprise, surprise, it has held off on its real agenda. The Government was relying on Graham Scott and a host of other advisers, and it has found that the bureaucrats and chief executive officers can find only so many savings. So the Government has to focus soon on where it can slash, cut, and reduce expenditure, or boost revenue.

You see, Labour, when it was in Government, was about boosting revenue. Not only did we undertake great forays to drive international trade but also we worked constructively with key sectors to boost the revenue of those sectors. That is why in 2008, when the party across the Chamber arrived in Government, it inherited a situation that, when one took account of our liabilities and assets, was actually a net positive position, I say to Mr Foss. Admittedly, we work in a dynamic framework, and things have changed. Borrowing will now rise. But this Budget did not outline what the Government will do to boost revenue, nor how it will do it. The Budget recited a host of perceived ills that the Government wants to hold us responsible for, but overlooked the fact that the Government has the waka—it has the car. The voters, who are the ultimate parents of all politicians, have given the Government the keys, but this Budget said not a single word about how revenue is to be enhanced. How will the Government grow the economy? No. Tau Henare obviously read the wrong end of the New Zealand Herald this morning. He started to talk to us about the current account balance. I say to Tau that come Thursday, he will know the answer. Come Friday, he will know the answer in terms of our GDP performance.

We all know that current account problems have afflicted our country for a long time, but what is the Government going to do about that? Where is its plan? What will the Government do? What is its strategy to boost exports and to boost revenue? Members opposite can continue to say the previous Government was slack in some areas and was a little ambivalent in terms of monitoring various pots of expenditure, but the Government has to develop a plan. There is no plan in that Budget. There is nothing that shows how the Government will boost exports.

KATRINA SHANKS (National) Link to this

It is my pleasure to speak to the Appropriation (2008/09 Supplementary Estimates) Bill and the Imprest Supply (First for 2009/10) Bill tonight. I will respond to the member who just sat down, Shane Jones, by talking about education, and investment in education. Labour was in Government for the last 9 years. For 9 years it had the opportunity to invest in education and to lift literacy and numeracy, but it failed. I ask members to look at the number of children who are coming through school who do not have the levels of numeracy and literacy to even get the most basic jobs, to even enter the polytechs, or to enter some of the trades. They do not have those basic literacy and numeracy skills. That is how the Labour Government failed this country and failed our children. This Government is determined not to let any child be left behind. In this Budget in our first year we have invested a lot of money—$1.68 billion over the 2008-09 to 2012-13 period has been invested to improve facilities and lift educational achievement. Of this $1.68 billion, $1 billion is new spending that we will invest in the future and in our children, because they are a priority for a John Key - led Government. We will build new schools and modernise new existing schools with an investment of up to $523 million. We will help our students meet national standards in literacy and numeracy by investing $36 million.

As a mother of three children, I have to say that the literacy and numeracy standards our children currently have is not clear to parents. They are not transparent. Parents do not understand how their children are going. They do not know whether they are improving from one year to the next. They do not know how they are doing against the national average. They do not know how to help their children, they do not know whether they are gifted, and they do not know whether they are falling behind, because there is no transparency from the school to the parents. There is no accountability from the school to the parents.

I have been in the school system for the last 9 years with my children, and it is the same now as it was 9 years ago. There is no reporting back to the parents, and that is what this bit of money will do. This $36 million will ensure that we have a national standard and that those children will sit the tests that they already sit: the progressive achievement test and the asTTle test. They currently sit those good tests and the parents are not informed about them. They never get to see the results. Parents never get to see inner tracking, or how their children are tracking. I speak to many parents around those issues. One of the parents I spoke to recently said that what that parent would love to see is a child’s education graph set out like the graph in a Plunket book. The average is a line going up, the range is another line going up, and the child sits on one side or the other. As long as a child is tracking up, the parents should be comfortable with that and will understand where the child is. But how do people know if they are not told? That $36 million is crucial for me, as a mother with three children in the primary school system, to understand that my children are going to do well when they leave school.

Not only that, we extended the 20 hours early childhood education scheme to include playcentres and kōhanga reo. I went to a playcentre in Johnsonville last week, a lovely playcentre, and I have no idea why they would be excluded from that 20 free hours. Why choose to exclude a playcentre? They add so much value to early childhood education, which is a fantastic, iconic type of early childhood education that this National-led Government understands—and that the previous Labour-led Government did not understand—because playcentres are about families. Opposition members do not understand how parents can be good educators, very powerful educators, in their own right, which is what playcentres are. We put another $69.7 million into playcentres and kōhanga reo because we, unlike the previous Labour-led Government, which put no priority on families, acknowledge that parents are fantastic educators.

These estimates are about helping New Zealanders through the recession, and supporting jobs. We are using the strength of the Government’s balance sheet to absorb much of the shock of this recession. What this means, in plain language, is that we are keeping up spending on public services and on entitlements to income support despite the fact that the Government’s revenue is dropping significantly. Our approach is to provide a considerable stimulus to the economy to stop the country from falling into a further recession. In the Budget we maintained all of the entitlements to income support, including superannuation, benefits, and the Working for Families scheme. We are also increasing spending on front-line public services, particularly in health, education, and justice.

Hon MARYAN STREET (Labour) Link to this

I speak in this debate to draw attention to a number of things the National Government has done that work in exactly the opposite way to its stated aims. National members have said repeatedly their aim is to protect Kiwis from the worst effects of the recession, yet where do they go to in order to make some of their most trenchant cuts in this Budget? They turn to education. At just the moment when a Government should be investing in its people, this Government has chosen to prioritise school buildings. Although school buildings will always require maintenance and development, a time when we are seeing redundancies, forced lay-offs, and the contraction of the economy is the moment when any thinking Government that had a commitment to New Zealanders would be investing in people, by allowing them to have cheap access to programmes where they can upskill and retrain in order to fit themselves to meet the demands of this recession. What this Government has been doing denies New Zealanders access to some of the lowest-cost and most universally available courses in the country for training, retraining, and upskilling themselves.

I will start with adult and community education, because one of the things that members opposite keep saying is that they are investing, and are investing more, in literacy and numeracy skills. The figures do not bear that out; the figures, in fact, demonstrate that in this Budget there has been a substantial cut to the provision for literacy and numeracy projects over the term of the Budget. Apart from that, it is also clear that this Government has no awareness of the number of jobs that are being adversely affected.

Let us just take the adult and community education sector, to begin with. There are other things that I wish to talk about in the course of my 10 minutes, and I will get to them. But I say that in the adult and community education sector, this Government is realising only now, because of the petitions and the postcard campaign that the adult and community education sector is spearheading around the country, that 400,000 New Zealanders access quality, accessible, community-based education programmes on an annual basis.

The Minister of Education, Anne Tolley, seeks to denigrate and ridicule courses that hundreds of people are writing to me about. I refer to all the emails and letters that are pouring in to me about the cuts to adult and community education, and about how those cuts will impede people’s ability to access formal education and skills programmes that give them the confidence, having been made redundant, to re-enter the workforce. After having been made to feel worthless by a forced redundancy, people’s entry back into the paid workforce has typically been through skills training and the courses that have been offered, at a grassroots level, through school programmes. We commonly think of those as night classes, although they are frequently run at other times of the day, as well. But beyond that, people forget, and clearly this Government has forgotten, that 9.5 percent of the funding that goes to secondary schools to run adult and community education programmes has to go forward to other community organisations to enable them to run other programmes.

That brings me to one of the things that I wanted to talk about. The Minister for Social Development and Employment, Paula Bennett, talked earlier this year about the need to have parenting education orders, in place to compel the parents of problematic and troubled children who are presenting in our justice system to attend parenting courses. Those parenting courses are run by a range of providers, but quite frequently they are run as secondary school night classes by adult community education programmes and by community organisations. The money given to the secondary schools is passed on to those organisations to fund those programmes. On the one hand the Prime Minister and the Minister for Social Development and Employment say we should enhance and expand the programme of parenting courses, and on the other hand the Minister of Education is taking away the wherewithal to provide those courses.

I also mention something that really makes no sense in the context of this recession, and that is the cutting of funding for industry training. The Minister of Education proceeds with her offensive and insulting denigration of what she deems to be a “hobby” course, when, in fact, learning Italian at Wellington High School was of enormous benefit to a man who fixes European cars. He specialises in European cars and wanted to learn Italian because the manuals for some of those cars are written in Italian. Why should he not go and learn Italian? But the Minister would have us believe that is a hobby course. It is clearly imperative to that man’s business for him to understand Italian. If I had an Italian car, I would quite like it to be repaired by somebody who understood the manual, as opposed to somebody who had taken a guess at it.

The cuts to the funding for industry training make less sense than anything else that this Government has cut in education. The Minister of Education has chopped $15.1 million from industry training funding, and that includes cutting the CPI adjustment for 2010—that is, $9 million. It means reducing the growth in funding for embedded literacy programmes. I am sorry, but the rhetoric does not match the practice. The rhetoric is all about the need to improve literacy and numeracy skills, yet exactly that kind of programme—an embedded literacy programme—is being cut with the reduced industry training funding. If people cannot retrain and upskill themselves in their workplace, or, if they have lost their jobs, retrain and upskill themselves through additional industry training available through apprenticeships and through employer-assisted programmes, then how will we manage to pull New Zealand out of this recession with a better-skilled, more literate, and more numerate labour force?

The Minister of Education needs to answer those charges, because at best there has been an under-investment at every turn in education, just at the time when investment is important, and at worst there have been drastic and Draconian cuts. Members opposite know that, because they are beginning to get petitions and they are beginning to get postcards like the ones I am holding up—and these do not even reflect the number of email communications I have sitting in an email folder in my parliamentary computer. The lack of foresight and lack of thought in this Budget simply beggar belief. This Government does New Zealanders a disservice in the way it is approaching education. This is the moment in time when education should be the priority, not the poor relation. This is the moment in time when the Government’s Budget ought to reflect education as being a priority for this nation. The Budget is a shame.

JOHN HAYES (National—Wairarapa) Link to this

I have listened to Parliament for some time this afternoon, and it strikes me that any fool can criticise and many have been doing so this afternoon. I stand to congratulate John Key and Bill English on a wonderful Budget, which is full of common sense and leadership, and makes the choices that have to be made. Contrary to comments made in the House this afternoon by luminaries like Ruth Dyson, a perfect example demonstrating that “critics are the stupid who discuss the wise”, I have to say that the Opposition has come up with nothing that should concern our electorate. It is carping criticism for the sake of it.

I want to report to the House that the people of the Wairarapa, in my electorate, stretching from Ngawī in the south to Waipawa in the north, are absolutely delighted with this Budget. They keep stopping me in the street and they say they are really supportive. They say that John Key is doing a great job and Bill English is doing a great job. They are really proud of the Government—

MOANA MACKEY (Labour) Link to this

I am very pleased to stand and take a call in this debate. That was a very telling speech from the member who has just resumed his seat. I do not think he actually talked much about this bill, at all. He talked about how he wants to amalgamate all the councils in his local area, and he blamed all the democratically elected councillors over there in his electorate. That is fine, and good on him, but I suspect that if he keeps passing the buck, blaming everything on his local councillors, and not accepting any responsibility as a member of a Government, he might not be the local member for very long.

This Budget was a real opportunity for the Government, and the people of New Zealand expected to see some vision and a plan—a plan for lifting New Zealand out of recession faster, a plan for ensuring that we do not make exactly the same mistakes the National Government made last time we went through a recession, and a plan that ensures that when we do come out of recession, we hit the ground running and New Zealand is not left at the back of the pack, as we were the last time Mr Carter was a Minister in Government.

I think that New Zealanders hoped that National might have learnt from the failures of the past—learnt what worked and what did not—and might have come up with some kind of concrete, visible, transparent plan to assist New Zealand during this difficult time. But we got no plan. There was no plan for jobs, and the Prime Minister admitted yesterday that 1,000 New Zealanders are joining the dole queue every single week. As we heard in question time today, he has no plan to stem that—no plan to create jobs—

CRAIG FOSS (National—Tukituki) Link to this

I am looking forward to speaking on the Appropriation (2008/09 Supplementary Estimates) Bill and the Imprest Supply (First for 2008/09) Bill, which form part of the “road-to-recovery Budget” as read by the Hon Bill English on 28 May. I have a few notes to speak to, but I cannot resist picking up on some of the points the previous speaker made. Excuse me if I do not quote her exactly, but I think it was that now is the time to invest. [ Interruption] To borrow? Well, I will come back to that in a minute. I think it was to borrow funds to invest. It is very interesting, because under the previous Government’s watch last year the superannuation fund lost $5 billion to $6 billion, accident compensation lost about $3 billion to $4 billion, and the National Provident Fund lost about $1.5 billion to $2 billion. Those members are now trying to give us investment advice.

They should think it through, think what the legacy of the—[Interruption] I am more than happy to call it the Cullen fund when it is doing that. That does beg the question, and I know that another speaker said this on the reading of another bill along the way: “Tell us what you would invest in.”. I say to those sages, give us some advice! Should investment be on shares, currency, or in fixed interest, and should it be in New Zealand or outside New Zealand? Would that previous Government have continued to invest in Australian infrastructure with the superannuation fund? Or would it start to invest in New Zealand? What would it have done? Where is the advice? Labour should remember that it lost about $10 billion to $11 billion of net worth off the balance sheet in the last year. Those members should not stand up and try to give investment advice. Please! They should not even attempt to do that. They can talk about the generics, but do not say that now is the time to invest, without coming up with something they think is worthwhile for the taxpayers of New Zealand to invest in.

Opposition members keep forgetting the other side of the balance sheet. I will come back to that again. Under the current set of accounts—the accounts as Labour left them, and the accounts as they deteriorated after Budget 2008—in May, whatever the case, the previous Government would have had to borrow and to continue to borrow. It is worth mentioning that in that Budget, State financial asset sales of $6.7 billion were announced, and an extra borrowing of $6.7 billion was announced. When members on the other side get up and start to claim that it is a new world, or there are new accounts, the previous Minister of Finance had the numbers right in his hot little hand.

It is very interesting and somewhat questionable, I guess, how fast and rapidly the accounts deteriorated post-Budget 2008. Interestingly, in that Budget there was hardly any reference at all to the KiwiRail purchase, other than a mention in the contingent liability of a potential write-down, which I will come back to again. As we know, the negative asset of KiwiRail was paid for at about $1.2 billion all up, and is now worth $350 million. Basically, in the space of under 8 months that supposed asset ended up as something that Wall Street, New York would be proud of. It was bought by the previous administration but $800 million - odd has been knocked off its value. Members opposite should not dare get up and ask questions about why there is no money for this, that, and some other proposal. They should not dare to get up and pass on investment advice when, in fact, under their Government’s watch we lost billions upon billions.

New Zealand entered a recession about a year before the rest of the world. We led the world in beginning the global recession, so a number of reasons contribute to the fact that this Budget has to be in the shape and form of a “road-to-recovery Budget”. It is a Budget that is right for these times and it is a pragmatic Budget.

We did not take on board the unfunded spending of the previous Government, but we did have to take on board its spending. Some hard choices were made. That is quite correct. Some reprioritisations had to happen. Almost all of them were uncomfortable to do, but we are quite proud that we have stepped up and been honest and transparent. If we look at the forward track of this Budget, we see the results of a very strategic Budget as read by Mr English. As I noted, page 1 of the Budget has the debt graphs. If the previous administration had stayed in office, and if their policies as in their press releases and as announced had continued, then the debt to GDP ratio, which was already nudging 70 percent, would have continued to go north over the next 4 or 5 years. In fact, we now see the curve coming down. It will go to about 37-odd percent of GDP.

From that simple graph and those statistics came New Zealand’s upgrade in our credit rating. I will come back to that again, because members opposite do not seem to comprehend one iota how important that is to New Zealand. I was very surprised that their leader, a former Minister of Foreign Affairs and Trade, who I thought had knowledge of these things, had no idea, embarrassing himself on national TV on Breakfast the day after the Budget, saying that it did not really matter. Not long after that, his finance spokesman had another version of events, but, again, we will come back to that.

I will show members the quick statistics, because some members opposite keep saying it is all a surprise about what the Budget shows today. Budget 2008 forecast a surplus of $1 billion. Before the last election, remember, when Labour was still in Government, the figure came down to negative $1.7 billion, which was a deficit. The deterioration was obvious. We have seen it happen around the globe, and the situation was rapidly deteriorating. At that stage the bad scenario from the Treasury forecast looked pretty much where we are now. The December Economic and Fiscal Update showed a deficit of $4.1 billion. As announced in this Budget, unfortunately but realistically we have a $7.7 billion deficit. No, that is not good. No, we do not enjoy that fact, but we are being up front, honest, and open. We are showing New Zealand what has to be done to start the recovery from the previous 9 years of unfocused, unaccountable, non-transparent, unmeasurable announcements that the previous Government made, which had core spending going up and up whilst core revenue was always very vulnerable, and deteriorating down.

That brings me to a very interesting point. A previous speaker, the Hon Shane Jones, kept asking where the revenue boost is and where the hike is. That spoke volumes about that party, because what is revenue? It is an increase in taxes. Right there, he alluded to what would be in the supposed mini-Budget after the election if his party had unfortunately managed to get in. Actually, that party was going to hike taxes because of its concentration on just that side of the ledger, which again speaks volumes, because it is not just about one side of the ledger. It is not just about revenue. There is expenditure, the funny old thing that has put New Zealand in the situation we are in right now, where expenditure is compounding up and up and core funding is going down. It just shows where members opposite concentrate their thinking: “There is a problem. I know, let’s raise taxes.” I guess they are being truthful, because between 2004 and 2009 tax revenue went up about $20 billion per annum.

There has been a lot of attention given to the Government’s reprioritising of spending on adult and community education. I fronted a meeting yesterday. About 70 or 80 people were there, and we discussed it. We all agreed on the unfortunate situation as to why we have to reprioritise so much in the accounts. We gave the example of KiwiRail. We talked about the $1 billion that had been written off and was not available for education, health, or the small, little courses that these people had been signing up to and attending, whether they were hobby courses, personal growth courses, or whatever they were. That is the bit that members opposite do not get. There is the net worth. There are two sides to the Budget, and it comes down to this number I am pointing out. It is a big negative. We inherited one big negative in a decade of deficits.

KELVIN DAVIS (Labour) Link to this

My contribution to the Appropriation (2008/09 Supplementary Estimates) Bill and the imprest supply debate will centre on tourism and education.

Tourism speaks for itself when we look at the statistics. Tourism is our greatest export earner. It contributes 20 percent of our economy. One in 10 New Zealanders is employed in the tourism industry. It makes sense to invest in tourism. When we look at the figures for our investment in overseas marketing we see that we receive $26 back for every dollar we spend in Australia, we receive $11 back for every dollar we spend in the United Kingdom, and we receive $16 back for every dollar we spend in the United States.

The money we spend marketing New Zealand to overseas markets is a return we receive within a season. Members can imagine that people over in Australia now who are looking at the “what’s on in New Zealand” advertisements about the ski season and the snow-covered mountains do not look at those advertisements then decide to visit New Zealand in 10 years’ time in order to enjoy the snow experience. They want to come now, within the season, within 12 months. So it makes sense that New Zealand invests in marketing.

Unfortunately, when we look at the Budget we see that $6 million has been taken off the fund to market New Zealand. I have spent time talking to people in the tourism industry in Kaitāia, the Bay of Islands, Whangarei, Auckland, Wellington, and Queenstown. Every single tourism operator I spoke to said we have to invest in marketing New Zealand so that we maintain market share overseas. Countries such as Norway market themselves as the New Zealand of the north, asking why customers should travel for 24 hours to get to New Zealand to see fiords and snow-capped mountains when they can fly just 2 hours from London to experience the same deal. People from the United Kingdom will take the short option unless we maintain our market share. It is unfortunate that our funding for marketing has been cut.

When we are told that we are in a recession and there is not much money to go around, it just absolutely blows me away that the Prime Minister, in his role as Minister of Tourism, can find a lazy $50 million sitting in his back pocket to build a cycleway. We know now that that cycleway will not be the dream strip of concrete, or whatever it was going to be, running from Te Rerenga Wairua—Cape Reinga, as others know it—down to Invercargill. Instead, it will be a series of great rides. I am a cyclist; I enjoy cycling. The cycleway is not a bad idea, I guess. But the $50 million cycleway was going to create something like 3,000 jobs. So far I know of one job that has been created by the cycleway. I know that somewhere there is a policy analyst who is employed to try to progress the cycleway. So I guess the cycleway has not been a total waste of money; $50 million has gone towards funding some policy analyst somewhere who is trying to progress this idea.

I was at the Trenz conference the week before last, in Auckland, where a number of tourism operators came together to sell their wares to companies from overseas. If New Zealand tourism operators can get their businesses in magazines and brochures overseas, then it is really beneficial and lucrative to their businesses. We were told the Prime Minister would make a significant announcement, so people held their breath, waiting for this significant announcement on tourism. What did we get? We got a facelift for Auckland; $20 million is going towards buying Queen’s Wharf. I can solve another problem for the Government with that $20 million. When the Rugby World Cup is over—when party central is over—we can put the containers back on Queen’s Wharf, throw in some windows with bars, and have Queen’s Wharf prison. We can kill two birds with one stone.

I want to ask the Prime Minister how many tourists he will attract who are not already going to be here for the Rugby World Cup at party central. How many people are sitting in their lounges somewhere in the United Kingdom, Europe, or the United States, saying “Wow! New Zealand is doing up its waterfront and doing up Queen’s Wharf. It will fill in the potholes on Jellicoe Street, so let’s go to New Zealand.”? Absolutely nobody is going to come to New Zealand just because Jellicoe Street has been done up. It is a joke. I have to tell members that the delegates at the conference were highly disappointed. They got nothing out of it. I do not disagree with the party central theme for the Rugby World Cup. It will be fantastic for those people who are here for the Rugby World Cup. But I think we are suffering a bit from “world-cup-itis”. No tourism operators outside of Auckland will benefit in any real terms from Jellicoe Street having a new layer of tarseal and a lick of paint. The tourism industry is disappointed. The Prime Minister decided he wanted to be the Minister of Tourism, and he promised so much, yet the tourism industry received so little. I share its concerns, because, as I said earlier, the tourism industry, from Cape Reinga to Invercargill, is saying that marketing of New Zealand is the best value for money we can get. In the Budget, I am sorry to say, funding for marketing was cut.

Moving on to education, I hung my head in shame at question time today to think that some people believe that moving Māori kids who are failing at secondary school to university is the solution to fix schooling. The solution to fix schooling is investing in teachers and professional development. I take the point made earlier by my whanaunga over there, Tau Henare, that teachers’ colleges should be training teachers in skills such as Te Kōtahitanga. It is a fantastic programme; he is right. [Interruption] It is being done. The principles of Te Kōtahitanga are being taught in training colleges at the moment. But the big problem is that a number of teachers who have been teaching for 20 or 30 years have not yet had that experience. They need to be trained. They need professional development to be invested in them. Teachers who have been teaching for 20 or 30 years will not have had the benefit of Te Kōtahitanga. It is important that we understand that. That is why professional development is the way forward.

If we are going to solve the problem of Māori underachievement, we should not shift the problem on to universities. One of the problems in trying to engage Māori kids in schools is that they do not like being lectured to. They do not like what we call “talk and chalk”. Yet Dr Sharples said today that we should move the kids to university, so that instead of being in a class of 25, or whatever, they can be in a class of 500. They will have a lecturer at the front of the lecture theatre whom they can see with binoculars, who will definitely “talk and chalk” to them, and who will basically turn them off. That is the pedagogy that turns kids off. It is very disappointing to see that professional development has been cut, and also that adult education courses have been cut significantly. Thank you, Mr Assistant Speaker Roy.

JACQUI DEAN (National—Waitaki) Link to this

Here we are for the imprest supply debate and the second reading the Appropriation (2008/09 Supplementary Estimates) Bill, talking about a Budget that, in effect, is tidying up after 9 years of a Labour Government, 9 years of Labour mismanagement, with us, the National Government, not only having to deal with the effects of a worldwide economic downtown but also having to spend a lot of time and energy dealing with the mess the Labour Government left behind it. One of the previous speakers this evening, Moana Mackey, who spoke after the dinner break, said it all. When Moana Mackey was speaking on contributions to the Cullen fund she said “Now is the time that we should be investing”. My question to Moana Mackey and members of the Labour Opposition, as we sit on a $7.7 billion deficit, is “Investing with what?”. Moana Mackey’s comment just goes to show that Labour does not understand the times. The economic times have passed Labour by. Once again, the National Government has been left to pick up the pieces after 9 years of good economic times, which Labour entirely failed to capitalise on. “Now is the time that we should be investing”, said Moana Mackey. Investing with what? I would love to hear the answer to that question.

Another previous speaker this evening and other contributions to this bill have raised with some bemusement the subject of the magnificent Budget initiative to invest $50 million over 3 years in a regional cycleway. What a fantastic initiative on behalf of a National Government the cycleway is! I will tell members why the national cycleway is a great investment. The Otago Central Rail Trail has invested $7 million into the Central Otago economy. Over 300 jobs have been created in Central Otago. Pubs that were dying are now back open again. Farmers who were struggling now have income coming into their farm operations through accommodation. People who were previously struggling and looking for work are now employed because of the cycleway.

Labour members do not understand. They do not understand that in provincial New Zealand 350 jobs are significant. An injection of outside money of $7 million is significant. The beauty of this cycleway strategy is that that will be replicated up and down the country. That is good news. But Labour does not like good news. It cannot cope with good news.

There are some good news stories in this Budget. I want to turn to those. This Budget is focused on jobs. In terms of the cycleway strategy, Labour members do not understand. They think there is one big-bang thing that will create jobs. They do not understand that a number of strategies are contained in this excellent Budget and that they are what will drive the recovery of the economy of this great country.

I will start with the excellent home insulation programme. The reason I want to start with that programme is that in the South Island we experience some pretty severe winters. I was in Cromwell yesterday. It was minus 6 degrees, then a shower of rain came at 7.30 in the morning and the roads turned to ice. I can tell members that people are cold in their homes in places like Cromwell, Ranfurly, Alexandra, and Invercargill. The South Island is cold in the winter. This home insulation programme is good news for the people of the South Island and, of course, for people all over New Zealand. So what is the programme? It is a campaign to fit homes that were built before the year 2000 with insulation and clean-heating devices, such as heat pumps and approved wood burners.

About 180,000 households are eligible for grants of up to $1,800 regardless of income. This is good news. It is very good news for the people of the lower South Island. Of course, community services card holders will be eligible for grants of up to $3,000. This initiative starts on 1 July this year, and many, many people are inquiring about it. The best news of all is that it is fully costed and fully funded, unlike the rather pale imitation of an initiative that Labour pulled out in the dying days of its regime, which, as we know, was not funded at all. I move on to health, and this is another concern of the people down in the South Island. If people are not warm in their homes, if they do have good access to health services, they feel it.

The Budget in 2009 includes an additional $3 billion of investment in health services. This is such good news. It includes $750 million in 2009-10. The intention of this is to improve the services of district health boards, and to meet population pressures. The population is growing in Central Otago. There will be 800 more health professionals to increase elective surgery capacity, and that is worth $70 million. The National Government will be improving maternity services. Once again, that is an area where many concerns were brought to me when I was in Opposition. Many concerns about maternity services and access to them were brought to me, particularly from people in rural areas. This initiative of $103.5 million will help to meet that need. That is great news for young women and their partners in places like Central Otago, east Otago, north Otago, and South Canterbury—I could go on—where there has been a level of concern about this.

There will be an upgrading of the health sector infrastructure, including a start to the construction of 20 new dedicated elective surgery theatres. That is good news for us in the south, and that is worth $245 million.

This Government is investing in health and education. There will be $1.68 billion over the years 2010-13 to improve facilities and to lift educational achievement. Our excellent Minister of Education, the Hon Anne Tolley, has been very strong on the need for us to improve on literacy and numeracy. So it is excellent news that from 1 July 2010 the National Government will expand the 20 hours’ free early childhood education scheme to 5-year-olds; the scheme will also include playcentres and kōhanga reo. Many communities around my part of the country have playcentres only. They felt that they were missing out on the advantages of early childhood centres that had access to this funding. Now National is bringing them access to that funding, and that is good news.

There will be $36 million going towards helping students meet national standards in literacy and numeracy. Parents care about literacy and numeracy for their children.

I could go on about the many, many Budget initiatives, but I want to close by saying that this is a good Budget for 2009. This Budget is designed to keep the economy going amidst some severe global turmoil. It is a wide-ranging Budget. It is focused on growth, and it is focused on jobs.

DAVID BENNETT (National—Hamilton East) Link to this

As I follow on from that excellent speech, I have to say it is important that New Zealanders look at the history of the circumstances we are in at the moment. This is not a time when New Zealanders need a Government or a Parliament that is expressing wild views and desires. This is a time when New Zealanders need a Parliament that is realistic, pragmatic, and conservative. This is a time when some major economic issues are facing our country, our people, and the international community. It is not a time to make rash promises. It is not a time to say—