Budget Debate 
Budget Debate 
[Volume:617;Page:13398] 
Budget Debate 
Dr DON BRASH (Leader of the Opposition) 
: 
 I move  
That all the words after “That” be omitted and the following inserted: “this House has no confidence in the Labour-led Government because it has squandered New Zealand’s greatest ever opportunity to invest in policies which would restore this country to the levels of prosperity enjoyed by Australians; because it has chosen for New Zealanders policies which promote dependence rather than independence; and because after five years of over-taxing hard-working New Zealanders it has embarked on a programme of cynically-timed election year giveaways to many of those same New Zealanders funded by their own taxes.” 
Perhaps unusually for a Leader of the Opposition I want to begin my speech by saying there are some things in this Budget with which the National Party agrees. For months we have called for relief for low and middle income New Zealanders. For months we have called for the encouraging of people off benefits into employment. For months we have recognised that providing more support for childcare and early childhood education would be highly desirable. For months it has been clear that we need more vigorous steps to reduce waiting lists for elective surgery. To the extent that those priorities have been addressed by this Budget we agree with the objective if not always with the method of delivery. 
But beyond that we can see little of merit. This Budget is at its core a belated series of bribes cynically timed for maximum political effect which fails totally to lift New Zealand’s living standards towards those in Australia. To begin with it is worth noting that the relief for low and middle income families has come in the second Budget of this Government’s second term—in Dr Cullen’s fifth Budget. All through that period New Zealanders have been over-taxed so that Dr Cullen could boast of ever-larger surpluses. Those surpluses represent the extent to which New Zealanders have been over-taxed. Not until this fifth Budget has he seen any merit in providing some relief from that over-taxation. 
Why the long delay? It was because until a few months ago the Government was confident that it could win another term without providing help to the families that need it. Suddenly the Government is contemplating the possibility that it might lose the next election and it thinks that dishing out the dosh is the best way of trying to shore up its diminishing electoral support. But it is even more cynical because much of the dosh will not be delivered until shortly after the election. So the Government is trying to imply that people who want to have that extra help will need to vote Labour in case a National Government comes to power and blocks that extra help. This is a vote-buying exercise of the same character as the policy U-turns that have been typical of this Government in the last few months with school closures the Resource Management Act treaty issues the seabed and foreshore and the age of consent. 
Secondly it is important to remember that the Government itself has no resources to assist anybody. Any assistance it provides to some New Zealanders first has to be taken away from other New Zealanders. Of course for the last 5 years the Government has been taking it away from most of us. Over that period the Government has increased the top tax rate and has increased taxes on cigarettes alcohol and petrol. These and other tax increases now raise more than $1 billion a year and as a result the average household has paid an extra $2600 in tax since this Government came to power late in 1999. In addition the gradual inflation of money incomes into higher tax brackets has added a further half a billion dollars a year to the Government’s coffers. 
For the 1999 election the Labour Party promised that only 5 percent of taxpayers would be adversely affected by its proposal to raise the top tax rate from 33 to 39 percent. Today some 12 percent of all taxpayers are paying tax at the rate of 39 percent including almost 20 percent of full-time taxpayers. One-third of all taxpayers are already into at least the 33 percent tax bracket and more than half of all full-time taxpayers are in that situation. 
 When GST is taken into account more than half of all full-time taxpayers face tax of over 40 percent on additional income. At last low and middle income families with children have some prospect of relief—300000 families in all—but only by 2007. What about all the other hard-working New Zealanders? What about the young couples who are working hard saving hard towards their first home and deferring having children so that they can get the mortgage down—doing the responsible thing? There is nothing for them. 
What about the middle-aged couples who having raised and educated their children are trying to put something aside for their retirement? There is nothing for them. What about the single person who is trying to get a small business off the ground who employs three people and would like to employ one more? There is nothing for him or her. 
There are 1.5 million households in New Zealand. The Budget tries to buy the support of just 300000 of them—one household in five. The other 1.2 million households keep on paying tax and are not even asked to be patient. There is no suggestion at all that this Government has the slightest intention of reducing personal tax rates or the company tax rate at any stage at all. The Government just intends to keep on raking it in and dishing it out to those who it hopes will vote it back into office. In the fundamental sense this is a Budget that punishes the most hard-working the most responsible and precisely those citizens who are determined to ensure that they stand on their own two feet. 
It is perhaps most worrying of all that there is no indication that the Government expects any increase in New Zealand’s trend growth rate. Dr Cullen is fiddling while growth slows. When the Government was first elected it talked about getting New Zealand’s per capita income back into the top half of the OECD within 10 years. In the Speech from the Throne in August 2002 the Government again indicated that it saw “its most important task as building the conditions for increasing New Zealand’s long term sustainable rate of economic growth.” The Government no longer talks of getting to the top half of the OECD within 10 years. It suggests it will do it “over time”. The reality is that it has abandoned the objective as too hard but has not had the intestinal fortitude to tell New Zealanders. 
The Budget documents project that growth will be markedly slower on average over the next 10 years than it was over the last 10 years. This has to be the great tragedy of the fifth Labour Government. It has squandered a unique opportunity to lift our relative living standards to close the gap with Australia and to create a place that our most able innovative and enterprising people want to return to. When the history of this Government is told this will surely be its epitaph: “They dropped the ball.” 
This Government has been the beneficiary of some of the best growth in the last 40 years. That good growth has nothing whatsoever to do with anything the Government itself has done. In part the good growth has been the result of the economic reforms of previous Governments—the policies that this Government has tried desperately to brand as failed. When talking to overseas fund managers Dr Cullen usually admits this himself. In addition the Government came to office at the end of 1999 at a time when the economy was already growing at almost 5 percent per annum. The exchange rate which had started falling in 1997 was falling towards its lowest level in history in late 2000 providing a huge boost to provincial New Zealand and indeed to all export industries. 
Then just as the exchange rate was stabilising and beginning to appreciate the world witnessed the tragic events of September 11 2001. What had been a net outflow of long-term migrants from the country of some 10000 people a year in the 2 years to June 2001 turned into a huge net inflow in the next 2 years. So a domestic building boom followed the strong growth in export industries. On top of this central banks around the world dropped interest rates to levels never seen before sparking a worldwide boom in property prices with New Zealand included. So none of the reasons for recent strong growth had anything to do with policies adopted by this Government. It just reaped the benefits in the form of unprecedented Budget surpluses and strong employment. 
So what does the Government do? It sprays money around to a small minority of households that it hopes will vote for it in the next election. By doing so it converts families that earn as much as $70000 into beneficiaries dependent for part of their income on the grace and favour of the Government thereby further entrenching a debilitating culture of dependency. 
The Government has promised to spend more on health while providing no assurance that further spending on health will actually deliver the shorter waiting lists improved medical services or the improved medicines that all New Zealanders deserve. We know that in the 3 years to 2002-03 Government spending on health rose by 22 percent. 
 Over the same period the number of elective operations and the number of total operations actually fell by 3 to 4 percent. Between December 1999 and April this year the number of people drawing the sickness benefit and invalids benefit has gone from 86000 to 113000—an increase of 31 percent. Simply adding more money to a centrally directed bureaucratic and top-heavy health sector will not deliver the outcomes that all of us want to see. The Government proposes to spend money on a whole raft of programmes designed it says to help business and exporters and to help grow the economy. But in every survey of business opinion the business community gives the Government the same message: it should get rid of the obstacles to growth reduce compliance costs fix the Resource Management Act stop pushing up the costs of operating a business through passing legislation like the Holidays Act and the Employment Relations Law Reform Bill and cut the company tax rate so that all businesses—and not just those favoured by Mr Anderton—can grow and prosper. 
The business community can see that in the last 5 years 21 of the 30 OECD countries have reduced their company tax rate—but not this Government. Back in April 2000—more than 4 years ago—Dr Cullen said that his Government would like to reduce the company tax rate “as fiscal conditions permit”. Perhaps he thought he had to say that to his audience which was in Hong Kong and for whom a 33 percent tax rate seemed inordinately high. Perhaps he thought he could say that in Hong Kong without anybody reporting it back in New Zealand. 
The Government’s Budget seems likely to do nothing to curb the culture of extravagance and waste that has grown up in the last few years: the hip hop tours the gross abuses of the tertiary education funding system that my colleague Bill English has highlighted in recent days and all the rest. There is plenty of money for dopey polytechc courses a bigger bureaucracy and to bribe public servants into joining unions but not enough money to clear the backlog of drug-testing so that the makers of methamphetamine can be prosecuted. There is not enough money to clear the growing backlog of court cases and not enough money—or the will—to keep violent offenders in jail. There is not enough money to treat cancer patients in New Zealand. 
We know that between 1997 and 2000 the number of people employed in what Statistics New Zealand calls “Government administration and defence” decreased by nearly 8 percent. In the 3 years from 2000 to 2003 on the other hand the number increased by over 10 percent and we know that the extra people were not employed in the armed services. The Government is employing more public servants to take money from us so that it can employ more public servants to give it back to us. 
Tragically for hundreds of thousands of New Zealanders and their children the Government is giving it back to us with no expectation or no insistence that we will help ourselves. The Government has provided some carrot to encourage people off benefits but has removed the stick. There is no strong pressure for people to get off their backsides and get jobs despite a desperate shortage of employees in most parts of the country. There is no adequate policing of people moving from the unemployment benefit to the sickness benefit. There is no adequate policing of the domestic purposes benefit; a situation that creates strong financial incentives for a woman not to name the father of her child or children and not to get married. 
Being soft on welfare may sound a kind and compassionate thing to do and it may make the Government feel good but it certainly does not help those locked into a life of dependency deprivation and degradation. 
Two years ago Dr Cullen said that it would be clear by the middle of this year whether New Zealand was on track to lift its growth rate so that it could gradually get back into the top half of the OECD. Well the middle of 2004 is just 1 month away and this Budget makes it clear that Treasury sees no prospect of any lift in our growth rate. In its report last December the OECD suggested that the slide in our relative living standards which was a feature of the 1970s and 1980s had been arrested but “a further acceleration—necessary if New Zealand is to move back into the top half of the OECD ranking as the government is intent on doing—is still not in sight.” 
Dr Cullen cannot be expected to carry all the blame for this deplorable situation. The Prime Minister and other Ministers must share the blame. But as Minister of Finance he must bear primary responsibility for the Budget’s failure to give most hard-working New Zealanders any tax relief its failure to reduce the company tax rate and its continued waste of taxpayers’ money on extravagant and possibly fraudulent programmes. 
 It is little wonder that that same document itself makes it clear that there is no prospect whatsoever of achieving what the Government claims to be its highest priority: namely raising the living standards of all New Zealanders to those enjoyed in other developed countries. Never before had a Minister of Finance and a Government faced such an opportunity to invest wisely in the future of our country. Never before had a Minister enjoyed such capacity to say to hard-working innovative New Zealanders that he saw them as the key to unlocking the country’s potential and that the Government would back them. Never before had a Government enjoyed such an opportunity to say to the half million New Zealanders living abroad—the children and grandchildren of those still living here—that they could have a great future back home. But this Government did not see this Budget as a Budget of opportunity. Asked to choose between self-reliance and dependency it chose the latter. Given the chance to chart a bold and better way forward it had no answers. The clear and overwhelming message in this Budget to all those who believe New Zealand can do better is that the only way to achieve that is to bring about a change of Government in the next election. 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 The only squandered opportunity in sight today was that sad speech. I agree with the Minister of Education: sack Richard Long if that is the best he can do! Where was the policy? Where was it? A response to the Budget is the Leader of the Opposition’s opportunity to set out what he would do. Well I do not know whether I missed something but I must have missed quite a lot. He failed to do that. Most conspicuously he tried to paint economic success as failure when the facts tell a completely different story from that uninspiring dirge. 
I think future Opposition speakers from the National Party should explain one thing: why is it that when Labour supported by United Future puts up improvements to family support family tax credits and child tax credits that is a bribe but National’s tax cuts are not a bribe? Explain that to me! I will credit the National Party with one single policy—not that it was outlined today. The single policy is tax cuts—voodoo economics. The National Party would cut taxes while also doubling defence expenditure cutting expenditure on health education and superannuation bringing back user-pays and privatising. What does all of that do for New Zealand families? Absolutely nothing! The message today is that a Labour-led Government lifts families up; National impoverishes families as it did all the way through the 1990s. 
I congratulate the Minister of Finance on his work in bringing this Budget together. I thank all the Ministers who have contributed to the very significant new initiatives in this Budget—and there are many significant new initiatives. I am very proud of this Budget. I am proud of it because like every single Budget delivered by this Labour-led Government over 4½ years it delivers not to elites but to heartland New Zealand—to our families our superannuitants our workers and to those who need the care and support of all of us and get no sympathy from right-wing parties in this House. 
The Budget does not deliver just by spending on important initiatives; it also delivers by keeping a very firm hand on economic management and this Government with the Minister of Finance in charge of the economy has consistently done that through 4½ years. Obviously what is delivered in this Budget today could not be delivered without economic success. The facts are that under this Labour-led Government economic growth has averaged over 3.5 percent. The facts are that under this Labour-led Government unemployment is at its lowest level in 16½ years. Since Dr Brash likes international comparisons how about our having the fourth-lowest unemployment rate in the Western World? The figures on unemployment speak for themselves. In the March quarter of 1999 under a National Government the figure was 7.2 percent; in the March quarter of 2004 under a Labour-led Government the figure was 4.3 percent. In May 1999 under a National Government close to 144000 people were on unemployment benefits; in May 2004 under a Labour-led Government there were under 68000. That is well under half. 
What is there about that strong economic performance that the National Party does not understand? This is not about squandering opportunity; this is about creating opportunity steadily over 4½ years. From the beginning this Labour-led Government has undertaken to invest the fruits of growth right back into meeting the needs of heartland New Zealand and building a stronger economy. That has been done over 4½ years and it is what this Budget delivers. The earlier Budgets built the platform for stronger economic performance and we began making huge investments in education and skills training including apprenticeships for school leavers. We boosted spending on research and development and I am proud to say that today’s Budget takes the total increase in the Government research and development spend to 45 percent over our five Budgets. That is a staggering figure. We developed Smart Growth strategies working alongside our regions industries and companies to boost economic performance. We changed the immigration policy to recruit more migrants who could meet labour force needs. As unemployment continued to fall those Jobs Jolt policies kicked in to get even more people off benefits and into work and those policies are working. 
From our earliest Budgets we also began very badly needed reinvestments in public and social services and infrastructure. I can say today that for one of those core services the Department of Child Youth and Family Services over the period of this Government with this Budget its expenditure is doubling—and it needed to double. We redistributed to meet the needs of our families superannuitants and workers. Our Budgets have delivered on every one of our election pledges—namely to lift the rate of superannuation to bring back income-related rents for State housing to make tertiary education more affordable and to drop waiting times for treatment in our public health system. All of those things have been delivered on. As well we have invested heavily in education overall in mental health and primary health-care in State housing and in core services like our police. Two years ago a new policy—paid parental leave—helped our working parents to have time at home that they needed with their new babies. 
All along the Budgets of this Government have struck a very careful balance—a balance between investing back into growth people and services while maintaining a solid operating surplus. It is that balance that continues in this Budget today. We will invest back into growth people and services as much and as fast as we can afford and we will invest where it is needed most—not where it is needed least like the tax-cuts policy of the Opposition. 
The big focus of this year’s Budget is on New Zealand’s working families. They have been helped in many ways by our previous Budgets. But for this Budget it has long been our goal to directly improve the household income of our low and middle income families. That is not best done by across-the-board tax cuts. The major beneficiaries of across-the-board tax cuts will always be the top income earners. So how do we help in this Budget? We help by lifting family support lifting the family tax credit changing abatement levels replacing the child tax credit with a large in-work payment for our working families and increasing the subsidies for childcare and for accommodation costs. 
What does this mean for New Zealand families? It means there is a substantial redistribution upwards of wealth in their favour beginning in this financial year and continuing to build over a 3-year period. What a contrast with the big redistribution downwards of the National Government when it took office and cut the incomes of our poorest people! As the Minister of Finance has outlined this Budget means a lift for more than 300000 families—that is over 60 percent of families with dependent children in this country. Who could say that they are not the most deserving New Zealanders? They are the most deserving of a lift in this Budget right now. We know that for our families in the $25000 to $45000 per annum bracket it will deliver an average of around $100 a week in the pocket over the 3 years in direct family assistance. That does not include any gains that may come from accommodation supplement improvements and the childcare subsidies. I am proud that this Budget will significantly drop child poverty. This country should be ashamed of the levels of child poverty reached as a result of the 1991 benefit cuts. 
The fact is that higher incomes and better opportunities off shore in the past have been reasons for our people to leave our country. A low-income low-skilled low-value low-growth economy was a crippling burden on our people’s aspirations. The National Government has to take a lot of responsibility for that. We have set out to change those features of the New Zealand economy. Our economy is growing well and better than those of most Western countries. Our unemployment is lower now than that of most Western countries. Our skills levels are rising and our economy is moving up the value chain. None of that happens by accident. It happens because a Labour-led Government has smart policies. 
The real test of policies is when the benefit is felt in the pockets of our families. This Budget delivers directly a growth dividend to our low and middle income families. It makes them more financially secure. It means they can look ahead to the future with confidence they can better meet their commitments and they can afford some extras for the kids and why not? The Minister of Finance has set out a number of scenarios of how families will benefit. There is one clear message today to New Zealand’s low and middle income families: Labour delivers to their family. That is the message. Families are better off with Labour and they are better off because Labour both runs a strong economy and invests everything it can back in its people 
and its services and in growing the economy. Our pledge to New Zealand families is that we will keep on delivering in that way so that our families can get ahead. 
I think it is very important to emphasise that making work pay is central to this Budget. Yes families on benefits will gain but the biggest gains come to those who are in work and those who move into work. It has long been said that many low-income families with kids are little or no better off in work than on a benefit once one takes a number of costs—abatement rates and so on—into account. There was a different approach to increasing the gap between work and benefits and that was the 1991 Tory approach which was to slash the benefit. Our approach is to make work pay by lifting the incomes of New Zealand’s working families. The message of this Budget to our families is clear: they will be better off when they go to work. 
And we want them to go to work. With low unemployment and skills shortages our country needs more workers now. In particular we need to boost the numbers of women in the workforce. Our country falls well behind top OECD countries in the proportion of women at work. Of course top OECD countries have long done much more to support their working parents and our Government is taking steps to see that this country catches up. A big step forward was taken with the introduction of paid parental leave. This Budget provides for the scheme to be extended this year and next. 
 It also makes very big improvements to childcare. The rates of childcare subsidy are increasing significantly and many more families will be eligible for the subsidy. Overall at least 28000 more families with 33000 children will benefit with gains of about $23 a week per child on average from next year. As well dramatic improvements in early childhood education are signalled. From mid-2007 3 and 4-year-olds will be entitled to have 20 hours’ free attendance at community-based early childhood services. Our kindergartens have long been free and this extends that tradition to other community-based early childhood education and care. We are investing in quality. We are investing in quantity. We are investing a spectacular $365 million more over 4 years in early childhood education. 
I am proud of what our Government is doing in this Budget for families for children and for education because I know that taken together these changes mean more opportunity higher living standards and more Kiwis in work and paying their way. That is a fantastic output from this Budget. 
There are many other significant initiatives in the Budget presented by the Minister of Finance. I announced yesterday with the Minister of Health a doubling of the number of major joint operations to be undertaken in this country over the next 4 years. That will take our rate of intervention for those operations to the same level as that in the United Kingdom and above that in Australia. Now orthopaedics are going to be able to meet the same targets we are meeting in many other areas of surgery. This is very big news for older New Zealanders who have the major call on these kinds of operations. We know how painful and distressing bad hips and bad knees are and how they destroy quality of life and limit independence and mobility. We know the whole new lease of life that comes from being able to have these critically important operations. Our senior citizens deserve no less. 
The other good news for our older New Zealanders in this Budget is the commitment to the New Zealand Superannuation Fund. We in the Labour Party believe in saving now to save New Zealand superannuation for the future. That is why there is another $2.1 billion going into the fund this year. That fund is essential to the future security of income for older Kiwis and this Labour-led Government is totally committed to that. 
Over 4½ years we have worked in many ways to make tertiary education more affordable and for this second term in Government we signalled we would move on student allowances and that pledge is honoured in this Budget today. We will be spending another $110 million a year on student support. That will mean more move from partial allowances to full allowances more who got nothing will get partial allowances and some who have been getting partial allowances will get a higher amount as well. That is delivering on commitments made at the last election. 
Time does not permit me to go into many other areas of the Budget. I note though that it does provide over the 4 years for close to half a billion dollars more to go on strengthening the economic performance. Investments there will range from spending on skills to developing export markets to increasing the research and development spend to attracting quality offshore investment to growing our companies to increasing the value of our industries and to negotiating the very best trade rules we can for New Zealand. 
I say with confidence that this Budget will take New Zealand even further ahead. It is a Budget that is good for families. It is good for the economy. It is a Budget that keeps a balance between economic and social investments. It keeps a strong operating surplus. It is a Budget that is all about growth and opportunity. It is a Budget for getting Kiwis back into work and making work pay. I say it is a Budget that only a Labour-led Government in New Zealand can deliver and I am proud of it. 
Mr SPEAKER 
: Before I call the next party leader I want to say that an undertaking was given which I appreciate that party leaders’ speeches will be heard in silence. I think that is important. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 We gave no such undertaking and I do not mind if people wish to interject while I am speaking. 
I want to tell New Zealanders today that they have just heard it. They have just heard another duel of wits between unarmed economic opponents—two tired old parties that have run out of ideas or to paraphrase a former United States President they have sort of lost that vision thing. There are the same old economic arguments one with a socialist twist and one with a reactionary twist from Treasury. Budgets are supposed to be a time when Governments account for their stewardship and the economy and they outline plans for the future. All we have had is leaks and leaks; all the spin and all the hype. 
That is why I want to move the following amendment to the amendment:  
That the amendment be amended by omitting all the words after the word “House” and inserting the following words: “has no confidence in the Labour minority Government and records with regret that this Government has failed to provide leadership and policy to enhance New Zealand’s export performance and per capita incomes has failed to address New Zealand’s burgeoning balance of payments deficit has failed to deal with escalating crime has failed to provide sufficient numbers of police has failed to deliver a first world health system has failed to curb the burgeoning Treaty of Waitangi industry has done nothing to stop excessive immigration and does nothing to lay the foundations for building a better more prosperous nation for future generations of New Zealanders.”  
What we have heard today is the back-end of a month of leaks and propaganda. This is a Budget to buy votes not a Budget to build a better future for this country. It is a pork barrel Budget aimed at one thing—just keeping oh so definitely political power. It is a cynical statement signed by a cynical group of people. If a public company in this country had published such a document it would be tagged by the auditors. 
The Government boasted of a $7 billion surplus but then it could not prove it had one. Where is the money? Where is the cash? What does a surplus in New Zealand mean any more and what does it mean these days? In the real world people would be saying that it was cooking the books—it was doing an Enron. This duplicity simply would not be tolerated in any other First World country. Worst of all not only does it give false hope to naive National which is calling for extravagant tax cuts for all its rich mates but it gives ordinary people false hope that this Budget will deliver something of substance to them now. This is not a Budget of opportunity. It is simply a Budget for opportunists—political opportunists—and it showed today in the way Government members cheered every small thing that would take away people’s self-reliance and independence. 
Here is the truth. The same slide to dependency that began in 1984 will continue while prospects for real growth and real returns diminish. The core of this Budget and all the hype proves it. It is not about self-reliance. It is about how they can control people’s lives. The Government seems content to let our economy drift along aimlessly on the backs of people importing. It is about people importing this economy and about consumption rather than a prosperous way to the future. 
This Government does not guarantee better educational standards better health services better housing services or ensure that New Zealanders are in real First World jobs with prospects for a real future. The people of this country—the working families—want hope. They do not want slogans. They want something back from their investment— 
R Doug Woolerton 
: They don’t get anything here! 
Rt Hon WINSTON PETERS 
: The member is right. They got nothing back today other than “if you vote for us we might give you this.” They see a Government that has taken them for granted these past 4 years and is now saying: “We will give you a little back but only if you vote for us.” 
 Labour today lost the plot as it has these last 6 months. After all this is taxpayers’ money that it is talking about. It is hard-earned and ordinary people who pay First World taxes expect to get First World services. Let us ask ourselves some simple questions: will this Budget bring First World incomes from better salaries and wages for New Zealanders? 
Hon Members 
: No. 
Rt Hon WINSTON PETERS 
: No it will not. It tries to do that by welfare. Does it seek to make New Zealanders self-reliant and independent of Government? No it corrodes self-reliance and corrupts independence of will and action. Is this Budget pro-business? 
Hon Members 
: No. 
Rt Hon WINSTON PETERS 
: No it simply does not care about an environment to nurture and sustain business and small business in particular. Is the Budget pro-development and pro-infrastructure? No. It is pro-consumption. Apparently in New Zealand we are supposed to eat our way to health. That is the new strategy. Is the Budget pro-education and pro-student? 
Hon Members 
: No. 
Rt Hon WINSTON PETERS 
: No. We live in a society where students sometimes graduate owing over $3000 for every year they have lived—$75000 $80000. What does the Government do? Nothing. This is a high-cost high-tax Government that taxes New Zealanders more than any other Government in our history. The figures prove it. People must be asking themselves where the real Budget is that we never heard about today. Where was it in the telephone books of information? 
R Doug Woolerton 
: It wasn’t here before. 
Rt Hon WINSTON PETERS 
: I will tell members where it is right now. It is right here. It was hidden in telephone books of hype and spin but we have found it. We have the hidden Budget right here and we will present part of it on behalf of the long-suffering New Zealand taxpayer and citizen. First of all there are tens of thousands of unwanted overstayers and at least one convicted million-dollar terrorist living here legally at the taxpayers’ expense. I have here a cheque from the real Budget which goes to Ahmed Zaoui and his associates. As members can see it is a blank cheque. It is for the lifetime support of Ahmed Zaoui Mrs Zaoui Uncle and Auntie Zaoui Grandpa Zaoui and all the other friends relations and bogus asylum-seekers refugees and flotsam that have arrived here in the past 4 years. Labour says: “Te Papa. Make our place your place and we won’t spare the expense.” 
The next cheque is for a one-way ticket for the fat cats and their fellow travellers on the treaty gravy train. I have a few of these cheques. This is the secret Budget. We say to the fat cats in the treaty gravy-train industry that they have been making millions milking grievances whilst genuine Maori claimants miss out. Under both National behind me and Labour they have made buckets of cash whilst the Maori they claim to act for are lucky to get a kia ora or a “kia oree”. We say that they might have a ticket to ride but the last train to the Waitangi station has just left. 
Education is very important in New Zealand. It is so important to the future of this country that this Government is giving it away. Here is the cheque I am referring to: it is a never-ending cheque to tens and tens of thousands of foreign students whilst New Zealand students suffer in their own country. In keeping with Labour’s global one-world vision and on behalf of taxpayers the Government is donating much of our tertiary education system to foreigners. Why have 100 New Zealand graduates when we can have 100000 foreign graduates courtesy of the New Zealand taxpayer? The Government says to those young New Zealanders trying to get an education: “Tough get another loan! The banks are open get another loan!” We say that education should be an investment not a cost. It should be an investment in New Zealand not in Asia or anywhere else. We owe our young people better than that. 
Another group in our society has been given a big boost by this Budget today. 
R Doug Woolerton 
: Who’s that? 
Rt Hon WINSTON PETERS 
: It is the violent offenders the drug dealers the fraudsters the rapists and the predators in our society. They have been given a great deal today and that contribution is tangible support of this Government’s motto: “Crime does pay”. 
R Doug Woolerton 
: What about the victims? 
Rt Hon WINSTON PETERS 
: Well if by some freakish accident offenders do go to jail there is extra money to pay for State-recruited “comfort women” to provide all the comforts of home. Jails used to be a place where we punished people; now they are State-run motels with a bit on the side inside. There is no amount on this cheque but it is a “get out of jail free” pass and here it is on the back. [ 
Interruption 
] Especially from the poor boy. 
Marc Alexander 
: I raise a point of order Mr Speaker. I notice that the Rt Hon Winston Peters is actually signing the cheques he is holding up. It is his signature that is appearing on the cheques. 
Mr SPEAKER 
: That is not a point of order and the member knows it. I will adjust the member’s speaking time. 
Rt Hon WINSTON PETERS 
: They do not miss much in the United Future party. They never miss a trick—until it comes to coalition negotiations then it is roll over play the poodle put out the welcome mat and become a doormat. 
I cannot let this chance go by without thanking Australia our nearest neighbour for trying to maintain a First World health system for New Zealand. It would be churlish not to mention it. Our next cheque is made out to the Australian health system and it is coming out in large doses. It is supposed to be a secret but the real reason this Government bought back Air New Zealand was so that it could fly our sick people to Australia—planeloads of them thousands and thousands of them. The cancer patients will be followed by the heart patients then the ear nose and throat patients then cataract surgery patients to name but a few. 
 This in a once-great country is acceptable to those people on the Government benches because they think that by reason of their social engineering they will make it back into office at the next election. It is a fact that it is soon to become Government policy that all sick people will go to Australia and then New Zealand will be disease-free. I bet Don Brash is killing himself that he did not think of that first. 
But he and Simon Power have also run up a fair-sized account with Uncle Sam. National has an account rendered to pay for nuclear policy and defence advice to Don Brash and Simon Power. New Zealanders will have to pay if National ever gets the chance to be in Government. We know that National would sell this country out. The price to pay is New Zealand’s nuclear-free legislation and our ban on nuclear ships. However this is a price we are not prepared to pay. New Zealand is not prepared by any means to pay the cheque National has made out to Uncle Sam. We will have this cheque stopped tomorrow before either Uncle Sam or Don Brash get it. To be honest this cheque will be stopped—to borrow a very secret phrase—before lunchtime. 
Whilst we are on the subject of collecting let me present a cheque to the police and transport Ministers on behalf of all New Zealand motorists who are using our roads today. This cheque is to pay for the doubling of the size of our police force so that it catches real crime and to send the traffic tax-gatherers back to the Land Transport Safety Authority for the rest of their days. We in New Zealand are sick of watching criminals getting away and winning and going free and crime paying whilst the police hide in bushes with speed cameras. New Zealand First will change all that. After the next election the police will wage war on criminals not on little old ladies going to church. 
We cannot let this occasion pass without acknowledging each and every New Zealand taxpayer. They work hard they pay their taxes and they hope they will get a return on their investment in the State. New Zealand people expect to have a decent health system a decent education system a welfare system if things go wrong a roading system that can carry some cars and a rail system that functions. New Zealand taxpayers give the New Zealand Government billions of dollars and we say it is time they got something back. So here is a cheque for one trillion dollars for the long-suffering hard-working New Zealand taxpayer. Unfortunately there are parties in Parliament that have no intention of giving the taxpayer a fair go and they still are in the majority so I am going to cut up this cheque I am holding. That is the way it is so bad luck to the ordinary taxpayers! 
There are some in Parliament who believe that the needs of the rich and powerful are more important than the needs of ordinary people. We say to the elderly people of New Zealand to New Zealanders who are anxious about their incomes and disturbed about the standard of their health care who are fretting for their safety in their own homes and are concerned about their security hang on because help is on its way. 
We say to the students who have left and are leaving our universities with debts three times their age with more debt than their parents have—parents who have jobs while they are without a job—hang on because help is on its way. 
We say to the hard-working families—families where a working spouse is no longer an option but compulsory who are doing their best to bring up their children whilst they make ends meet and who are now being forced even more to rely on welfare and Government handouts—do not give up yet. 
We say to the small-businessmen and women who pay their hard-earned taxes whilst coping with every type of unnecessary compliance cost who carry all the risks and have to suffer the ignominy of having a group of pseudo-academics telling them they know best do not throw in the towel. Help is on its way. 
We say to exporters—the most critical part of our economy the most vital people in this country who look every day at their opponents abroad with envy at all the help they get from sympathetic Governments while they get nothing—do not stop competing and do not feel that no one understands your plight. Hang on because help is on its way. 
We say to the tens of thousands of Maori those who are great citizens who work hard and contribute to this once-great nation only to suffer the paternalism and the scorn of some within this House who treat them with pervasive unworthiness to be strong—kia kaha. Do not slip back now. Hang on help is on its way. 
We say to every New Zealander who is a patriot who still believes in New Zealand despite all the evidence to the contrary who is alarmed at the state of economic decline as we slide into the Third World—and our per capita incomes prove it—that sometimes it seems as though nothing can be done. But do not abandon all hope; do not abandon ambition. Hang on because help is on its way. 
For in this Parliament there is a party that understands their hopes and dreams and believes that New Zealanders and their former glory can be regained. Do not abandon the good fight because at next year’s election—and every poll from hereon will prove it—New Zealand First will become the next Government. That Government is committed to putting New Zealand and New Zealanders first. 
ROD DONALD (Co-Leader—Green) 
: 
 On behalf of the Green Party I would like to congratulate the Labour-Progressive Government on its Working for Families package. It is 5 years late it does not go far enough and it discriminates against some children because of the origin of their parents’ income. But it is worthy of support and it certainly defines the difference between Labour and National. The last major welfare reforming Budget was in 1991 when National cut the benefits of those who were already on the lowest incomes and abolished the universal family benefit. Today’s Budget goes some way but not all the way towards reversing those cuts and addressing the poverty they compounded. National and its sometimes ally ACT still have blind faith in the ability of the marketplace to meet everyone’s needs. Of course that is nonsense. This package shows that Labour not only accepts that the State has a responsibility to look after its citizens but is finally taking serious action to do so. Although we are angry that past Budget surpluses have been built on the backs of kids living in poverty and we would have liked more money to be used right now to end that indictment we are pleased to hear Dr Cullen’s predictions that today’s package will significantly reduce child poverty and we hope it will prove to be so. This is definitely a Budget for families and we applaud that. 
It is also good news that there are measures in the Budget that will make the transition from a benefit to paid employment easier. A likely consequence of those initiatives is that the labour participation rate will increase which ironically undermines one of Michael Cullen’s arguments in favour of the New Zealand Superannuation Fund—that is that there will not be enough future workers to support us when we retire. I accept the Government’s assurances that no one will be worse off as a result of these reforms despite the base rate of some benefits actually dropping. What we are concerned about is that beneficiaries without children will hardly be better off. Ever since National slashed the benefits 13 years ago beneficiaries have been struggling and they all deserve at least an extra $20 a week each. 
We are also concerned that the in-work payments obviously discriminate against the children of families whose parents rely on a benefit whether it is the domestic purposes benefit the unemployment benefit superannuation or the student allowance. We understand the intention of the payment which recognises that going to work involves extra costs such as transport and clothing but we echo the concerns of the Child Poverty Action Group which urged the Government not to punish children because their parents were getting State support. The Government has partially recognised that discrimination by extending the in-work payment entitlement to those on accident compensation. Yet it has not extended the payment to parents in full-time study even though they face equivalent extra costs to those in the workforce. 
I would particularly like to congratulate the Government on ending the ridiculous situation whereby as soon as beneficiaries started jobs their accommodation supplement was cut. That was an extraordinary disincentive to make the transition to employment and the new situation will be welcomed by those who receive an accommodation benefit. But it leaves a big question mark over why the Government has not changed the abatement regime for those beneficiaries who are not getting an accommodation allowance. Being able to earn only $80 a week before one’s benefit starts to be cut is no incentive to get a job. 
Three important initiatives are missing from today’s family package. The first is a universal child benefit which should be paid to every primary caregiver regardless of family income. A universal child benefit is still needed in New Zealand despite the increases in family support announced today. Unless everyone gets a universal benefit we are concerned that not all families will get what they are entitled to under family support because they are not aware they are eligible and more important that some families will get more than they are entitled to because they have underestimated their incomes and will then be faced with an unaffordable debt at the end of the tax year. 
There is also good and bad news for students in this Budget. I would like to acknowledge that 43000 students will be better off as a result of the parental income threshold being increased. On the other hand the Government is taking the extraordinary step of axing the accommodation allowance for married students under the age of 25. Are they now expected to get divorced and go back to living with their parents? If the Government is serious about investing in people and if it wants young New Zealanders to be committed to our country rather than to take their talents and energy off shore it should make the student allowance universal. Instead it is forcing students into debt—a debt that has now reached $7 billion and has more than doubled since Labour came into office. What is more as a result of the Future Directions package students will have to borrow more because it will be harder for them to get any work when they are not studying as more beneficiaries will now have a greater incentive to enter the workforce. For that reason alone this Budget should have included a universal student allowance. At the same time that the Government is sending a signal that it is worth going to work it should be sending a signal that it is worth getting a tertiary education or training. We should be telling young New Zealanders that we value them that we want them to contribute to society and that we will support them during their studies. 
There is no such thing as a free lunch; the question is whether students pay now or pay later. The Green philosophy is that we are all better off if we know that our society will support us when we are young old or sick and that in turn we are expected to contribute to the community chest when we are well and working. We are concerned not just about the plight of individual students. We are concerned about the impact that student debt is having on the whole economy and on our society. Young couples with student debt are putting off buying their first homes because they cannot bridge the deposit gap and meet mortgage repayments. They are also putting off having children because they feel they cannot afford to. That is a ticking bomb that will explode when those couples retire. They will still be paying off their mortgages or trying to pay market rent out of their New Zealand superannuation but they will have no private savings to back them up. In some cases they will actually still be paying off their student debt as well. Meanwhile there will be fewer of the new workers Dr Cullen needs to pay taxes because those families have delayed having children. 
While we support the family package the question needs to be asked: is it the best long-term way to ensure families have enough to live on? I said at the outset that the State has a responsibility to look after its citizens. I also maintain that employers have a moral responsibility to pay their staff a living wage. Even before today’s package the Government was paying over $750 million in the form of family support tax credits subsidies grants and allowances to people in the workforce. Today’s package increases that level of support considerably. There is a strong argument that that is corporate welfare because it subsidises employers who pay their staff less than it costs to bring up a family in decency. That is why the Government should be lifting the minimum wage to at least $10 an hour and taking the lead on the matter of pay equity by implementing it in the public service—starting with nurses right now. 
I can understand why some business people would oppose that when they face increasing competition from sweatshop imports. It is simply not fair that the Government on the one hand increases the minimum wage introduces 4 weeks’ annual leave and sets good health and safety standards and environmental conditions for New Zealand businesses and their staff and on the other hand forces those businesses to compete with importers who can buy goods that are made in appalling conditions by sweatshop workers. More and more companies are simply giving up. Yesterday’s announcement by Sunbeam that it is closing its electric blanket factory in Palmerston North with the loss of 122 jobs is yet another example of a company shutting its New Zealand manufacturing base and shifting production to China. Many more will follow if the Labour Government succeeds in its attempt to negotiate free-trade agreements with Thailand and China and forces through its unilateral tariff cuts. Its making work pay strategy will also fall flat if the only jobs available for beneficiaries are those working at the checkout or waiting on tables because our manufacturers have disappeared off shore. Despite those concerns the Green Party will be supporting the future directions legislation when it is introduced under urgency later this afternoon. 
 We are less impressed with other aspects of the Budget and we remain fundamentally opposed to the Government’s policy of allowing the commercial release of genetically engineered crops in New Zealand. Therefore I move  
That the amendment to the amendment be amended by omitting all the words after the word “has” and inserting the following: “no confidence in the Labour led minority Government because despite there being some positive initiatives in the budget its continued failure to take adequate measures to protect New Zealand from the release of genetically engineered organisms exposes our health our environment and our economy to significant and quite unnecessary risks 
.” Keeping New Zealand GE free is as fundamental to the Green Party as keeping our country nuclear-free. The Labour Government of the 1980s was propelled into legislating against nuclear weapons and nuclear power by public opposition to their use. My greatest disappointment in this Labour Government is that it has refused to listen to overwhelming public opposition including opposition from its own supporters to genetic engineering. Despite Labour’s intransigence we remain optimistic that New Zealand will stay GE free. There is no sign of any company being foolish enough to apply to commercially release a crop here and the GE industry is in worldwide retreat because nobody willingly wants to buy its products. Monsanto’s decision to shelve its GE wheat marks the beginning of the end for GE food crops. 
Genetically engineered organisms are only one of the threats facing our economy our society and our environment. Today’s Budget does little to prepare New Zealand for many of the predictable and not-so-predictable challenges ahead.  
The Day After Tomorrow  
may only be a film but the environmental backlash it portrays is very real. Man-made climate change has already been held responsible for the growing number of extreme weather events. To its credit the Labour Government has acknowledged the need to tackle that global problem by signing up to the Kyoto Protocol. On Tuesday Dr Cullen said in the House that it was very important for members to address the issue of climate change because it may well have an impact on the economy. Despite increasing evidence that that is the case today’s Budget does little to either future-proof the economy or improve the way we treat the environment. In fact some policies such as making our economy more dependent on exports make us more vulnerable rather than more self-reliant. Only the ACT party rejects the reality of climate change. That issue is too serious to wait until the biggest offender the United States of America takes off its blinkers and commits to reducing its use of fossil fuels. 
The other reality is that fossil fuels by their very nature are finite. New Zealand knows that very well as we face up to the Maui gasfield running out 70 years before it should have run out because the Government at the time squandered that precious resource. It is not just environmentalists who are sounding warnings. The chief executives of the big oil companies have made it clear that the world demand for oil is about to exceed supply. Yes there is still a lot of oil in the ground but we are consuming four barrels for every one that is discovered. Soon we will not be pumping it out of the ground fast enough to fill our tanks. The rapidly expanding Chinese economy is speeding up that depletion. As we import more and more goods from China it is using more and more oil in manufacturing transport and travel. The impact of an oil crisis in New Zealand will be dramatic. The latest trade figures announced today show that the cost of crude oil and petroleum imports is up 84 percent compared with April 2003. We are on an unsustainable path of fossil fuel - dependent economic growth and free trade is driving us faster towards the edge of the cliff. 
New Zealand can and should change course before it is too late. The celebrated scientist Professor James Lovelock one of the first researchers to sound the alarm about the threat from the greenhouse effect said on National Radio yesterday that New Zealand could be the first place in the world —after Iceland that is—to get all its energy from renewable sources. The Green Party and its predecessor the Values Party have been pushing the message of energy efficiency and renewable energy for over 30 years and we will keep pushing it until those in power listen or until we have the power to make the necessary changes. This Budget was an important opportunity to protect New Zealanders from sharply rising energy costs by investing in demand management solar power and wind power. The arguments for investing in sustainable energy now in order to insure us against a bleak future are compelling. Last year’s dry winter and this year’s South Island transmission shambles are warnings of what lies ahead which is why the Greens are disappointed that the Government has not taken heed of those warnings by seriously investing more on energy security in this Budget. 
Of course it is good news that there is an extra $2.6 million to assist low-income families to make their homes more energy efficient and $200000 to encourage greater use of solar water heating. But those amounts are so pathetic that I am sure the Minister is embarrassed to claim them as victories for sustainability. They pale into insignificance against the $1.2 billion that Meridian Energy was planning to spend on its destructive Project Aqua scheme. What is needed instead is for the Government to take a lead by immediately calling for tenders to install solar water heating in all Government buildings where it is cost-effective to do so. A 5-year programme to put solar panels into State houses hospitals prisons schools and office buildings would not only reduce energy demand but save the Government money. Free solar hot water would also cut the power bills for State house tenants. While we obviously support the Working for Families package it is an end-of-pipe solution to the problem of income inadequacy which will only get bigger as power prices inevitably rise. A more creative solution would be to help people to reduce their energy costs. The scaling-up of the manufacturing and installation industries resulting from such an initiative would bring down the price of solar heaters for private homeowners and landlords. The Government could also support “solar mortgages” to enable homeowners and private tenants as well as the whole country to get the benefits of upfront energy savings while paying off the capital cost from those savings. Exactly the same approach could be taken to insulating homes so that they are warm dry and healthy. 
The Government has also missed the opportunity to seriously invest in sustainable transport infrastructure in the Budget. We acknowledge and support the Government buy-back of the rail track and the commitment to spend $200 million on fixing the mess caused by the private operators and we are obviously very pleased to have jointly developed and to be now implementing the New Zealand Transport Strategy with the Government. But what we want now is an integrated and a safe responsive and sustainable land transport system and New Zealand - owned and operated coastal shipping services. What we do not need is to pave paradise and put up a parking lot. The National Party’s solution to New Zealand’s present and future transport problems seems to be to build more motorways and to create more congestion. The Greens hate traffic jams. We hate people being stuck in cars when they would rather be at work at school or at home. We want to ensure that businesses can get goods from one end of the country to the other efficiently and in particular we want to solve Auckland’s traffic gridlock. National’s vision for Auckland’s transport is simply a repeat of the 50-year-old motorway madness that created the present problems. It would be an economic suicide note for Auckland at a time of worsening climate change oil depletion and rising concern about air quality. National has not noticed this but the rest of the world has realised that more roads means more cars more pollution and more congestion. 
Instead New Zealand needs first-class public transport services in the cities and throughout the country and we need a first-class rail freight service in order to get heavy freight off the roads and back on the track. We therefore call on the Government to make extra capital available to fix buckled rail tracks faster than it is planning to do to expand Wellington’s commuter rail for example by double-tracking where it is needed and electrifying the track north of Paraparaumu and to commit to stage 2 and beyond of Auckland’s commuter rail network. Transfund New Zealand should also be pushed to fund the rail projects such as spur lines and freight transfer stations that are waiting on its books. We know that the alternatives to roading scheme has $31 million in that fund but it is still not being spent. We welcome that money and we welcome the extra $22 million for passenger transport but we urge the Government to stop Transfund from dragging the chain on rail and to give Transfund a clear message that it is time to act. 
Dr Cullen will ask where the money is to come from for that. He will not be surprised to hear me answer that first up it should come from his beloved New Zealand Superannuation Fund. I know he has been crowing that the fund has done well in the last quarter but I remind him that the net market values of the international equity investments of the New Zealand Superannuation Fund were still worth $31 million less at the end of March than they were when they were first invested in October 2001. In other words gambling our retirement on the international sharemarket is a risk and the more that is gambled the bigger is the risk. What is the use of owning shares in companies like Enron and WorldCom when our motorways are gridlocked our trains do not run on time and the lights go out at night? 
Does this Budget prepare New Zealand for the day after tomorrow? No it does not. The Government needs to kick its fixation with economic growth and instead to focus on sustainability self-reliance and the quality of life. Even Dr Cullen acknowledges that New Zealanders rightly believe that success is defined as much by their quality of life a better environment and more effective health and education services as it is by a narrowly defined economic performance. If he really believes that why is there not a serious increase in funding for biodiversity in the conservation vote? Instead total biodiversity funding has been cut in this Budget at the very time when the Department of Conservation is struggling to fund its new Operation Ark programme for protecting threatened species. There is not a single new environmental initiative in the Budget. Dr Cullen may have rescued some of our children from poverty but he has failed to provide them with a sustainable future. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 We in the ACT party urge Parliament to reject the Labour Government’s Budget and we do so because we believe that this Budget will come to be seen as a turning point where the New Zealand economy instead of taking the upward road to economic prosperity and growth turned away to a path of tax spend and bust. This Budget fails on a number of grounds. It is unfair. Socially it traps New Zealanders into a low-growth low-income Third World future. Economically it is unsound. The Budget is a return to the tax spend and bust policies of the Muldoon years which eventually took this country to the edge of bankruptcy. The Budget will not make us a Third World nation immediately but over time that will be the consequence. 
This is a tax Budget not because of what it does but because of what it does not do. The Budget does not repeal any of the stealth taxes the Labour Government has imposed. The biggest were the two increases in fuel prices but the most insidious tax is fiscal creep. The refusal of the Minister of Finance to change the taxation thresholds has meant that inflation has pushed people into higher and higher taxation brackets and the 39c in the dollar taxation bracket illustrates my point. The Labour Government was elected with the credit card promise. That is the one where Helen Clark—with her digitally perfect teeth—stated: “No rise in income tax for … 95 percent of taxpayers …”. That is the Labour Government’s taxation pledge. This year 20 percent of all full-time workers will pay the 39c in the dollar taxation rate. In the year Labour came into power the total raised from personal income tax was $15.8 billion. This year’s Budget plans to raise $21.25 billion. That is the biggest increase in taxation in New Zealand’s history; it is an increase in income tax of $5 billion or one-third. Taxation from all sources has also risen thanks to the stealth taxes by a third. That is an extra $11 billion in taxation—an increase from $33 billion a year to $44 billion. 
The Minister of Finance himself boasts that this is a spending Budget—tax and spend. According to Statistics New Zealand there are 540000 families in New Zealand with dependants. Around 150000 of those families are benefit-led families. That leaves 400000 working families. The Budget is unfair because although eventually 300000 families will benefit only 150000 of them are working families. One does not have to be an accountant to work out that the majority of working families in New Zealand—some 250000 working families—will get nothing from this Budget. Most households have no dependent children so they are just bystanders in this Budget. Their only role is to pay Labour’s taxes so that the Government can bribe the electorate at the coming election. There are around 1.5 million households in New Zealand; 1.2 million households will receive nothing from this Budget. That is simply unfair. 
Dr Cullen boasts in the Budget that: “Great care has been taken in assembling this package to identify any possible individual losers and to ensure there are none.” Well he cannot have looked very hard. A family on $60000 a year with one child gets nothing. Treasury says that in this country the average two-parent working family with two children earns $72000 a year. Under this Budget average New Zealand working families are the losers; they get nothing and they get nothing next year. They have to wait for the following year for the election of ACT into Government to get a break. This Budget discriminates against hard work and enterprise. It is actually a welfare Budget—welfare wins taxpayers lose. Welfare wins because welfare beneficiaries will get an increase in April next year. Working families for reasons not explained by the Labour Government have to wait until April 2006—it is a wait of 1 year if one is a social welfare beneficiary but of 2 years if one is working to get the new family tax credit. 
I predict that this Budget will have many unintended consequences on our society. The unintended consequence of the new family tax credits and accommodation supplement is—as Green Party members themselves can work out—that it subsidises employers. This measure will encourage employers to pay low wages. It will encourage people who are in work to keep on receiving low wages because they will lose so much if they get a pay increase. The Labour Government is subsidising a low-wage economy. Another unintended consequence of this tax-and-spend Budget is that the Government is encouraging low-income families to have more children. The Budget discourages work because the effect of increasing one’s income is to lose very valuable subsidies. If people are poor the way to increase their income is to have more children. Why is Labour being so socially irresponsible? The reason is simple: the Government’s motivation is not Future Directions; it is future elections. Labour’s own polling shows that the new Maori Party will devastate its electoral base. It is a fact that most Maori families will benefit substantially from this Budget if only because the average number of dependants in Maori families is higher than in the average New Zealand family. But the average New Zealand family of European descent will receive nothing from this Budget. 
The future for both Maori and non-Maori is not in welfare and dependency. It is in having the independence that comes from a strong economy. This Budget will do absolutely nothing to stop the alarming trend of large numbers of skilled New Zealanders migrating. We already know that this year 70 percent of the doctors graduating from Otago University will leave New Zealand. This Budget will encourage that trend. Economically the Budget is unsound. It will not encourage investment growth or jobs. Treasury’s own forecast of the effect of this Budget is that future growth will slow from today’s 2.8 percent rate to just 1.6 percent next year and then to 1.57 percent in the year following. That is the Government’s own forecast. Then we have Dr Cullen saying that there is no evidence that taxation cuts promote prosperity. He can produce no research to support that assertion. When Dr Cullen was out wooing business he said—and he is on record as saying—he would lower the taxation rates when “fiscal conditions permit”. Well we have a $6 billion surplus. 
Dr Cullen is wrong to say that taxation cuts do not work by claiming that when the top personal tax rate was reduced from 66c in the dollar to 33c in the dollar it did not produce an overnight economic boom. The fact is that that cut did work. Despite making the move from being one of the most regulated nations in the OECD—from a system of massive Government subsidies—the New Zealand economy bounced back. Dr Cullen was a junior finance Minister in the then Labour Government and I am sure he was as astonished as the rest of us when we discovered that we were collecting as much income tax from the 33c in the dollar rate as we had been collecting from the 66c in the dollar rate. That is why Roger Douglas recommended the income tax rate be lowered to 24c in the dollar. 
I ask whether Treasury agrees with Dr Cullen’s analysis of the effect of taxation cuts on the New Zealand economy over the last 20 years. We know that Treasury does not. On 22 April of this year the Secretary to the Treasury John Whitehead released a paper titled  
New Zealand Economic Growth: An Analysis of Performance and Policy 
. While it is somewhat dry I recommend that MPs read that document. Treasury in that report states: “Since the early 1990s New Zealand's average per capita GDP growth has increased relative to the OECD mean.” So much for the claims about the failure of the policies of the 1990s! Treasury puts New Zealand's superior economic growth down to a range of policies including such things as labour market reform but it also includes the taxation cuts. With regard to taxation the report states: “A foundational principle for a taxation system that seeks to support economic growth is that it should be ‘broad based - low rate’”. Paragraph 175 of that report states: “… moving to a flat tax rate for both personal and corporate tax rates is likely to have the greatest impact on economic growth”. 
That is precisely the position that the ACT party has been advocating for more than a decade now. The fastest and biggest impact on growth is a low flat rate of taxation. The McLeod Tax Review was set up by Dr Cullen who handpicked its members and wrote the terms of reference. It had the best experts the Government could find in New Zealand and overseas. What did the McLeod report state? Did it agree with any of Dr Cullen’s statements? No it did not. It concluded that a low flat rate of taxation was the best option for New Zealand. 
Hon David Cunliffe 
: They had been smoking. 
Hon RICHARD PREBBLE 
: In that case the member should not have paid them $2 million for the report. In this Parliament the ACT party has always been the voice for sound economics. 
A $6 billion surplus represents a once-in-a-lifetime opportunity to put New Zealand on to a growth path towards becoming one of the most prosperous nations on earth. That is the opportunity that Dr Cullen has today—not because of any actions he has taken but because of the actions of Governments and New Zealanders over the last 20 years that have put this country into a position where the Minister of Finance now actually has an opportunity to take a new direction and path for New Zealand. And what does he choose? He decides to go back to the failed policies of tax and spend of the past. Let us just consider this. Answers to written questions from Dr Cullen have stated that the cost of going to a flat rate of taxation of just 20c in the dollar for both companies and individuals would be $5.45 billion a year. That is $500 million less than the surplus and it is a figure that assumes no change in economic activity. 
As Government members often like to point out I am a director of a number of companies. We directors look at investment opportunities and we look at the rate of return after tax taking into account the risks that are involved in any new project. I am looking at an export opportunity at the moment that in the business plan would pay for the total investment in 3 years. Yet we are very reluctant to give it the green light because there are always risks. A 20c in the dollar flat taxation rate would mean that that project would pay for itself in 2 years and we would certainly give it the green light. There are thousands of projects like that sitting on the boardroom tables of New Zealand—or more accurately sitting on the kitchen tables of New Zealand because that is where most business decisions are made. At a 20c in the dollar taxation rate thousands of projects would get the green light. Just as important it would encourage New Zealand entrepreneurs who have been driven overseas by a high taxation rate to return. In its rich list the  
National Business Review  
has to include New Zealanders who are overseas because there are just not enough rich New Zealanders left in this country. I say to the socialists on the Government benches opposite me that those who returned would then spend their GST and invest in this country and that would have a huge impact on New Zealand. 
We could implement a 20c in the dollar flat rate of taxation without making any cuts to any Government expenditure and we could do that tomorrow. None of those figures take into account the dynamic effects of doing that. Our own New Zealand experience is that cutting the top rate of income tax from 66c in the dollar to 33c in the dollar resulted in more income tax being paid within 3 years. I tell this House that if the top rate of personal tax was reduced from 39c in the dollar to 20c in the dollar and if the company rate of tax was also reduced to 20c in the dollar within 3 years we would be receiving the same taxation revenue that we get today. However New Zealand would be a very different country and a much more prosperous nation than it is currently. 
The real security for New Zealand families comes not from tax spend and bust Budgets. It comes from the prosperity hard work and enterprise of our people. New Zealand did not need a tax-and-spend Budget. New Zealand does not need more welfare. We certainly do not need a “welfare wins taxpayer loses” Budget. This Budget is not a Future Directions package. We all know that this Budget is a future elections bribe package. A $6 billion surplus is a once-in-a-lifetime chance for a prosperity-creating taxation cut that would put New Zealand back into the First World where we belong. That is why the ACT party will support the amendment moved by the National Party and that is why we urge the Government’s minority partners to turn down this Budget. Why do we not turn down the Budget and have an election? Let us find out whether New Zealanders want to spend the taxpayers’ $6 billion surplus on yet more welfare or whether the taxpayers of New Zealander want to see a prosperity-creating taxation cut. That is the challenge and the ACT party is quite prepared to take it up. 
Hon PETER DUNNE (Leader—United Future) 
: 
 When the Leader of the Opposition began his speech today and moved his motion of no confidence in the Government he indicated that one of the reasons he did so was that—and he said this several times—for months the National Party had been advocating this position or that and that for months the National Party had been concerned about the plight of middle-income earners etc. I say to the Leader of the Opposition that for years I have been concerned about the plight of middle-income earners. For years I have made speeches in this House often as a lone voice about the plight of middle-income earners and for years I have urged successive Governments to provide a better deal for middle New Zealand. Now here is a Budget that starts the process of delivering that better deal. 
The point I begin on is this: the divide that has been drawn between the parties today is not so much one on whether the resource is there to pay for this better deal but on the way the better deal should be delivered. For too long middle New Zealand has been quiet uncomplaining and perhaps compliant in terms of the way it has been dealt with by successive Governments. It is the group of people that pays all the taxes but seldom gets any of the benefits. Now after 20 years those people are saying it is time they received a dividend. Where I think other parties are missing the point in this debate is that New Zealanders are not a dogmatic people. They are not a profoundly ideologically driven people and they are getting just a little tired of seeing the debate about their future always being promoted in terms of this ideology or that ideology. What they are most interested in is where they fit into the equation. That is why I am delighted to see a Budget that for the first time in a generation puts the concerns of decent New Zealand families upfront. 
It has been a dramatic transformation over a relatively short period of time. Two years ago the Budget of the then Labour-Alliance Government did not mention the word “family” once. Last year 15 specific family initiatives were introduced—a number as a result of the negotiations between the Government and United Future. This year just 2 short years later we have the most dramatic family-friendly Budget in a generation. I think that middle New Zealand and those families earning a combined income of up to around $80000 a year who will all benefit in some shape or form from this Budget will not be as interested in the arcane arguments about whether it is delivered through the taxation system or any other system as they will be in the fact that at last they will get a dividend for the hard work of economic reform under successive Governments in the last 20 years. That is what the debate should be all about. Around the world today economic and political debate is shifting away from the abstract and moving much more towards how the gains that are being produced benefit societies and communities. Perhaps it is a result of September 11 but certainly there is a much greater recognition abroad today that the purpose of Government and society and of all those abstract terms like “economic growth” “performance” “employment” or whatever term is used is to create better conditions for families to get about their business. That is the core point of this Budget. 
I do not necessarily think the Government has got it absolutely right in terms of the way this assistance will be delivered. I think there are some issues regarding sequencing and timing but frankly they are secondary to the fundamental point of doing something positive for New Zealand. There are about 480000 families in this country with dependants. Over the course of the programme that this Budget introduces just over 300000 of those 400000-odd families will benefit. That is a hugely significant part of social progress. I think it is mean-spirited to be arguing about the mechanisms when families out there today will be looking bluntly at the dollars and what they mean to them. Some issues here need to be taken further. But as I said I am pleased to see the attack made on dealing with the circumstances of middle New Zealand families in particular. I am delighted that as a result of the discussions we were able to have with Dr Cullen Mr Maharey and other Ministers the package is perhaps a little broader in its intent than was first intended. That is good and positive. I am also pleased to see some movement in some other areas. 
It is significant that an initiative promoted by Gordon Copeland last year which received some limited recognition in last year’s Budget has been picked up to a much greater extent in this year’s Budget. It is the basic and sensible point of indexing a lot of the payment rates to movements in the rate of inflation. Part of the difficulty that we have experienced for so long with abatement rates on all the various forms of payments that have been made has been that the gap between their introduction and their review has been years. Consequently it often becomes too costly to keep up with progress. I am rapt that Dr Cullen and the Government have now agreed to index those payments. That will make matters significantly easier not just for Governments in the future but also for those who benefit from those forms of assistance. We see a significant example of that in the big problem the Government still has with tertiary education and student loans in particular. It is good to see that the threshold at the top end of about $50000 has been raised to $62000 in terms of family income before the under-25 parental income test threshold applies but the problem is that that cures about 10 years of no movement. I sincerely hope we will not see another 10 years go by before that aspect is addressed again. 
There was a cryptic line in the Budget that we ought to be aware of. Dr Cullen made reference to the fact that there would need to be some consequential changes to the provisions of the Human Rights Act. I think that is a matter of grave concern and is one area where the Government may need to think again about the impact of its policies. I say that because that reference related to the fact that under the Human Rights Act married students without dependants under the age of 25 who are currently exempt from the parental income test now apparently ought to be included under that test. We will have the absurd situation whereby a couple of married students who may well have been married at 18 and at the age of 24 are living their own separate lives will still be subject to a parental income test as to whether they can get student allowances because of the provisions of the Human Rights Act. That is absurd and I give notice that that matter will need to be reviewed before we go very much further down the track. There are other issues that need to be dealt with in that area. Part of the problem that could be addressed is the 25-year-old age limit itself. I would have liked to see some movement in bringing down that threshold age because that would have had a significant impact as well. That is work to be done in the future. 
There are a number of other initiatives contained in the Budget that I am very very pleased to see. I say that from the focus of wanting to see a Budget that makes New Zealand a better place for our families and for those who are raising children. We know of the stresses and the pressures that our young people face today and in that context the move to increase the Social Workers in Schools programme is a good one. It is perhaps a commentary on the state of our society that we need to even contemplate such initiatives but I am delighted to see that move is being extended. I know my colleague Judy Turner who pushed for that will be equally delighted. I know too that she will be pleased to see the Government has made significant movements in terms of increased funding for mental health support with a $200 million increase over the next 4 years. My colleague Marc Alexander will perhaps rest a little easier at night and maybe leave Phil Goff alone just temporarily with the increase of $4.4 million for restorative justice and the additional $1.5 million for victims’ rights but I suspect that will only embolden him to try for more gain in that area for the victims of crime in the future. Another initiative that we spoke of last year which we are delighted to see carried through in this year’s Budget is the continued increase in the schools operations grant and we are particularly delighted to see the increase in support to the New Zealand Qualifications Authority in terms of its administration of the examination system. All those measures contribute to making the system that affects a number of our children and our families more user friendly more positive and more geared towards their needs. In a period where we have gone through a long stage where Budgets were often quite abstract from the reality of most people and the moves that were introduced seemed to be at such a high level that for most people they had no immediate impact the sorts of basic measures that this Budget building on last year’s Budget introduces are positive and they will be welcomed by many many New Zealanders. 
It would be wrong to conclude that this Budget is an end in itself. From listening to the debate I think there seems to be a feeling that the Government has somehow missed an opportunity as if this is the only opportunity that will exist for any Government to make significant social change. I believe that is a wrong and false attitude and it is perhaps symptomatic of the thinking that has led us to see a series of stop-start measures over the last 20 years or so. One of the issues we do need to consider in the light of the current debate about the most effective way of assisting our families is whether our existing taxation system delivers to them in the most fair and equitable way. United Future has long argued and will continue to argue for the concept of income splitting for taxation purposes. We have argued for income splitting because it will allow people a fairer slice of the action if one likes by recognising the concept of household income. Ironically of course we used to recognise household income as the basis of our income tax system. We only moved away from it in 1957 not for any sound policy reason but because the PAYE system was introduced and there would have been difficulties in administering source deductions because of differing incomes. 
The issue of income splitting is still very much on the agenda and it also recognises a key element as far as we are concerned: that people ought to have choice about their circumstances and how they apply them. I believe that is one of the areas that perhaps this Budget is a little light on but it does not mean that the issue cannot be recognised for consideration in the future. The issue is really about recognising the equal role both parents have in the construction and rearing of the family unit and in the running of a household. Particularly for the parent or partner who chooses to stay at home and therefore loses the ability to earn income income splitting is a way of recognising that contribution much more powerfully. It is very interesting to note in the context of the current debate that a certain article in the  
Sunday Star-Times 
 a couple of weeks or so ago has engendered how many people have raised right up until this morning’s  
Morning Report 
 the notion of income splitting as being the way ahead and the way we ought to proceed. That is a matter that the Families Commission which will be opening its doors in just a few short weeks will want to put high up on its agenda and start to do some good sound policy work on and to make some recommendations on to the Government in the future. 
Where we are today and where this Budget is so important and so valuable is that we have shifted the debate—and I take particular delight in the fact that we have had influence with the Government in doing that—and we are now unashamed as a country it seems to focus on what is good for New Zealand families. We used to be a little embarrassed about doing that because our circumstances were all different and we therefore thought that perhaps to talk about my circumstances as opposed to the next person’s circumstances might be a little unfair or a little inappropriate. We have moved away from that and that is good. We are now in a position where all the issues can be debated thoroughly openly and fully. I acknowledge the work that the Progressive party leader has done in terms of the drug and youth suicide funding that is in this Budget. We thoroughly support that again because it is part of the much more upfront recognition of those issues and how they can be dealt with. We do not want to see this Budget lead just to a self-centred argument about how much money has gone into my pocket as opposed to the next person’s pocket and so on and so forth. We do not want to see the sort of mean-spiritedness that seems to bedevil that type of debate. We want to see a much more fundamental assessment about how Governments in the future use their resources garner their policies if one likes and work to achieve economic growth in the interests of prospering this society and its families. 
I want to conclude by drawing an analogy to the Irish argument which many people still like to laud as being a great example of a way to move forward. What the Irish have done is particular to their own circumstances but the point of comparison for us is this. The Irish have actually set some national objectives that are not too ambitious. But in terms of Ireland being a great place to raise a family the Irish have outlined the sorts of policies that they need to achieve that and have then worked through to the economic policies they need in order to achieve the growth required to fund the social programmes. It is a seamless approach. This Budget lays the groundwork for that type of approach in New Zealand. There is still a way to go. We want to work with the Labour-led Government in the lead-up to next year’s Budget to start to take this focus one step further. As I said at the beginning this Budget is a dividend for low to middle income families and for middle New Zealand in particular for over 20 years of hard work. I want to see the gains that are made for those families in this Budget become a threshold for the future that we can build on. I want us to build a more constructive society where we can truly hold our heads high and say we have done what we have done for the benefit of all New Zealand families and all New Zealand families will be better off economically and socially as a consequence of those moves. If the Budget achieves those objectives then this will have been a watershed in our social economic and family development. 
Hon JIM ANDERTON (Minister for Economic Development) 
: 
 Firstly I congratulate Dr Michael Cullen on this his fifth Budget. The financial management of the two Governments in which I have had the privilege to serve with Dr Cullen has worked towards and resulted in unemployment falling to the lowest level in New Zealand in 16 years—4.3 percent. I am very proud of that figure. In the 1990s the level of unemployment never dropped below 6 percent. When Don Brash was the Reserve Bank governor he used to predict in his forecasts that the unemployment rate of around 7 percent would stretch out forever. He seemed to accept that level of human trauma with equanimity. The number of people receiving the unemployment benefit has more than halved since this Government came to office and 193000 more New Zealanders now have paid jobs than in 1999. When I came into Government I said that my top priority was jobs and that remains my top priority today. I also have to congratulate Michael Cullen on producing Budgets that have enabled that outcome to take place. 
This year’s Budget ensures that a better income for families in need is the top priority for assistance. People have said: “Why wasn’t it done earlier?” and I want to deal with that matter. The truth is that when one is increasing the income of the most needy families in New Zealand by up to $1.2 billion or $1.3 billion that money has to go into the baselines of income support; otherwise one is giving with one hand one year and taking away the next. So one had better make sure it is sustainable. It is only the performance of the New Zealand economy and what this Government’s policies have done for it that enables the kind of certainty that this income support package indicates. 
The only uncertainty is whether the National Party if ever elected would remove it. I think it is important for National members to say something about that. Mr Brash indicated when he started that he supported some of these policies but he ended up looking as though he did not support them at all. The question is whether the National Party is going to go on the road between now and the next election and say it will abandon these policies. If National members do not say that then what on earth have they been saying up until now? I cannot understand and I would like to be made aware by subsequent National Party speakers what its position is. 
This year’s Budget ensures that a better income for families in need is the top priority for this Government. The Progressive Party is committed to ensuring that no one lives in poverty. We are proud to support these initiatives which are of course designed to reduce hardship for the least affluent families and particularly for New Zealand children far too many of whom have been living in an environment of poverty for too long. 
I emphasise that the value of this Budget in transforming the industrial base of the New Zealand economy is part and parcel of the ability of this Government to now make these commitments because this Budget takes as its predecessors have a comprehensive approach to economic development. It is focused on strengthening and deepening New Zealand’s connections to the world economy. In other words it helps us do a better job in selling New Zealand and its production to the rest of the world. It moves us into high-value high-skilled production that customers overseas want to buy. That is the only way we are going to ensure prosperity for all New Zealanders into the future. There is $500 million over 4 years in this Budget to help unleash New Zealanders’ creativity and talent. 
I do not think the House fully understands the importance of the economic development work that this Government is doing and has done. Our broad approach is not limited to the economic development portfolio; it goes across the board including commerce small business finance education science and technology immigration education and so on. The National Party spokesperson on finance calls it corporate welfare so presumably he will advocate to get rid of all of that. I look forward to the National Party telling exporters that it will axe the $35 million provided in this Budget to help find New Zealand markets and strategic partners for New Zealand businesses. Is National going to say that? 
Simon Power 
: Put your back into it! 
Hon JIM ANDERTON 
: I look forward to the National Party members putting their backs into telling New Zealand businesses that they will abandon policies for the improvement of business in New Zealand and for our export community in particular. 
An example of course of the difference between what was done before and what is done now can be seen in the forestry and wood-processing industry and what happened when New Zealand Trade and Enterprise and myself as the Minister for Economic Development went to Europe. We identified Denmark’s furniture-manufacturing industry as a partner in wood processing in New Zealand and that led to significant investment by Zenia House in wood processing and furniture manufacturing of a high quality in New Zealand. The result of that commitment is going to be a very significant investment in jobs and high-value furniture manufacturing in regions in New Zealand. 
I look forward to the National Party telling industry it would cut those programmes that are aimed at improving the capabilities of our managers for example. When the Information and Communications Technology Sector Task Force which the Government initiated last year looked at the future of that industry it determined that it wanted a hundred companies to grow into a hundred million-dollar-a-year companies. The task force identified that one of the biggest obstacles to doing that was the shortage of managers capable of taking a company to that level. So the Government in this Budget is playing its part by providing a significant increase in investment to boost management capability. If the former bond and currency trader who is now the National Party’s deputy spokesperson on finance thinks that is corporate welfare then I invite him to tell industry that National will cut it. I would like to read the speech he gives when he does that—because we cannot cut the tax rate and increase the assistance we are giving to businesses in this country to grow. 
The Government is investing in science and technology and in the education sector. We are supporting the hothouses of innovation and improving their links with the world to help connectedness and New Zealand innovation. 
The performance of this Government in accelerating the economy proves that every economic idea that National and ACT stand for is wrong. The economy has withstood the tech-wreck the United States recession severe acute respiratory syndrome a drought a flood commodity reversals and countless more. Those events used to be the kind of excuse the National Party Government used for not being able to do anything about the future of the New Zealand economy. Members will remember the Asian financial crisis the drought the BNZ issue and all the other excuses it came up with to explain what was wrong with the New Zealand economy and why it could not possibly do anything to fix it. National members claim that it is just coincidence or luck that we have actually been able to fix the economy now. How was it that in 9 years they never got any coincidences or any luck? I cannot believe that we got so lucky and they were so unlucky for so long. 
Maybe there is another explanation for the poor economic performance then and the sound economic performance now—that is that they are over there and we are over here. I think that is a much more simple and plausible explanation than anything I heard from the National Party Government during its term of office. The economy is doing better because Michael Cullen did not blow his budget in the earlier years of this Government on tax cuts that we could not afford. We have improved New Zealand’s economic performance so that we can now afford the social dividend to the families of New Zealand that they so richly deserve. 
Today even after all those floods and pestilences the regional economy of New Zealand is defined as being sharp focused and growing—in every single region. Even the Manawatu with its flood problem has dropped only marginally and even then it has still grown by 3.9 percent. How is that for: “Oh we had a flood. We can’t do anything.”? I mean—really! We have to ask ourselves. At the Smart Business business development celebration in the Manawatu this week every speaker commented on how welcome it was that this Government partners industry and partners the region and people said that without that assistance they would not be where they are today. 
I think fundamentally it is about time we got some acknowledgment that the old ideas—the ideas of Governments staying out of everything not partnering businesses regions and families and not being prepared to get involved in the community of New Zealand and be on its side—have ended and I congratulate Michael Cullen on that. I know that my colleagues are very proud as I am of this future-looking Budget and how well it will serve the interests of New Zealand and its people. 
DARREN HUGHES (Junior Whip—Labour) 
: 
 I move  
That this debate be now adjourned. 
Motion agreed to.