2. DAVID BENNETT (National—Hamilton East) Link to this
to the Minister of Finance
What reports has he received on the economy?
Hon BILL ENGLISH (Minister of Finance) Link to this
As I mentioned yesterday, I have been looking at an analysis of real after-tax wages. Between September 1999 and September 2008, real after-tax wages grew by only 3 percent in that 9-year period. I have just seen a report of a comparison with the previous 9 years, 1990-99. When we use the same statistics that are used for calculating New Zealand superannuation, we see that in those 9 years real after-tax wages grew by 15.5 percent, compared with the 3 percent increase over 9 years under the previous Labour Government—and Labour was meant to be the workers’ party.
Again using the statistics employed by Governments for the last 20 years to calculate New Zealand superannuation payments, I find that real after-tax wages have grown by 8.7 percent in less than 2 years since September 2008. Across-the-board personal income tax cuts on 1 October this year will further increase after-tax incomes. We do not pretend that it will be easy to maintain that kind of progress, because further increases in after-tax income in this country will need to come from enhanced productivity, better export performance, enhancements in public sector productivity, and a rebalancing of resources into the private sector.
There are a couple of factors. One is that a combination of low inflation and tax cuts has tended to help faster increases to occur in after-tax wages. There is no doubt, though, that the mix of higher inflation, no tax cuts, and economic mismanagement in the 9 years under the previous Labour Government had the obvious effect of suppressing increases in real after-tax wages.
What do these trends in real after-tax wages tell us about the economy’s performance in these periods?
Again using the statistics that are used to calculate New Zealand superannuation, the increase in real after-tax wages in Labour’s 9 years in power was just 3 percent—quite a staggering achievement in a time of global prosperity. The reason for that extremely poor performance, particularly since 2004, was simply mismanagement of the economy: excessive Government spending, too much regulation, crunching the export sector, and excessive debt. This Government has the job of cleaning up that mess, and then improving New Zealand’s economic performance.
Hon David ParkerIn his reports on the economy, has the Minister received reports that the National Government cut contributions to the Superannuation Fund, cut KiwiSaver, and refuses to run an operating surplus; if so, do those reports indicate that the National Government is responsible for worsening New Zealand’s saving deficit?
Mr SPEAKERThe member should not start an answer by attacking the questioner with “It is a bit rich”. The Minister should make an attempt to answer the question first.
Yes, I have seen reports that every time that National does something to try to achieve a surplus, the Labour members go into a kind of hysteria and call it cuts. They cannot have it both ways. Here we have one spokesperson for Labour saying we are simply refusing to run surpluses, while the rest of the Labour members go hysterical when we try to do that.
In his reports on the economy, has he received reports that the National Government axed the research and development tax credit, axed the $700 million Fast Forward innovation fund; if so, do those reports show that the National Government is responsible for dramatically worsening the research and innovation deficit identified in today’s report by the New Zealand Institute?
I have seen reports that those two initiatives of the previous Government were cut by this Government, and for good reason: we had a better policy. We have put that in place, and we have a more positive attitude towards science and innovation in that sector of the economy than there has been for many years.
Are the savings deficit, the innovation deficit, and the lack of a credible plan or any milestones for the National Government why the New Zealand Institute called its report that was released today A goal is not a strategy?
I have seen reports that the previous Labour Government had—I ask members to listen to this—250 strategies. The Parliamentary Library could not find all of them; those were only the ones that it found. The result of those 250 strategies was an economy that was on its knees, the worst public sector administration we have seen for years, and New Zealand being in recession before the rest of the world even thought about it.