Debate on Budget Policy Statement 
Debate on Budget Policy Statement 
[Volume:637;Page:7755] 
Debate on Budget Policy Statement 
SHANE JONES (Chairperson of the Finance and Expenditure Committee): 
 I move  
That the House take note of the report of the Finance and Expenditure Committee on the Budget Policy Statement 2007 
. In contrast to what we hear from the Opposition I would like to start by reminding members and those folk in the public who have suffered the mental dandruff from the Opposition during question time and thankfully the very lucid answers from my colleagues on this side of the House that underlying this document is a very clear strategy. The strategy is to ensure that the nation is endowed with a very robust fiscal strategy that actually enables us to deal with future problems—in particular our ageing population. 
At the broad foundation of our Budget Policy Statement are three very important building blocks. Firstly during the 8 to 9 years in which we have enjoyed fantastic opportunities to take a role in growing the economy we have built up assets in our superannuation fund—building block No. 1. What is talked about in our Budget Policy Statement? The statement says how fantastically well the value of that particular asset has grown and that it represents a very sensible and far-reaching investment in the future. 
Secondly how is this strategy to be addressed in relation to the expenditure side of taxes and expenses? The idea is to provide certainty to our households by ensuring that they understand both through transparency and a lack of any surprises what sort of tax system we are running and in what ways it will be improved. Since the time of the last election 15 to 18 months ago there have been substantial improvements to our tax system in the areas of savings and of dealing with the vexed area of overseas taxation. And of course this year we will see a further improvement in the area of business taxation which our Budget Policy Statement refers to. It also refers to our needing not only to continue to refine a sensible and sophisticated taxation system—expenses of running the State—but to pay careful attention. 
I must remind members of the House and members of the select committee—who I must say were constructive in the main—that there was an exchange between our Minister of Finance and the Opposition spokesman on finance Mr English as to whether we were running an expansionary policy. The policy we run is in response to the multiple entreaties we hear from the community to ensure that the deficit we inherited is in a social sense not worsened and that incrementally we invest not only in the physical capital the human capital but in particular in our social capital through large expenditure areas such as health etc. 
Let us talk about what is perhaps one of the crowning definitions of Dr Cullen’s time here as Minister of Finance in relation to managing debt. Debt during the 1990s was a substantial problem. One of the things that certainly defines our Minister of Finance which is reflected in this document is that financial costs are being kept low. How are we managing to do that? We are doing it with high quality stewardship which enables ourselves on behalf of the community and the electorate to play a key driving role in relation to the economy. We see buoyancy huge levels of revenue etc. that were previously virtually unseen. To suggest that that was serendipitous—that it was a positive cohesion of various random forces—is to overlook the high quality of stewardship and the very careful approach taken to managing debt. At a deeper level it is to ensure that our gross debt level never moves far away from being 20 percent of GDP—a very very important feature. 
An additional issue that has been the subject of ongoing discussion in our Budget Policy Statement is the question of what to do with the cash position—how to handle it. The cash position which is referred to in the statement does dip slightly but it fulfils an important discipline so that we do not race off and incur debt and so that our economy is not saddled with a problem that future generations will have to inherit—in very much the same way that our Government inherited a host of deficit problems from the previous National Government. 
Let us talk about some of the other overdue issues that are touched on in our Budget Policy Statement. Revenue as referred to there is up. Why is it up? GST and PAYE payments are up. Why are they up? The reason is that employment is up. Employment is up because it reflects ongoing business confidence. Yes it might be said that company profits have dipped slightly but despite the best efforts of both major parties in this House we remain powerless in the face of currency speculators and the creep upwards of our dollar. Not only has revenue gone up but Crown debt has come down. Crown debt has come down because of the growth in assets. The growth in assets is reflective of the far-sighted decision taken by the Government to invest in what we colloquially call the Cullen fund to ensure that we are building up and husbanding a range of assets to meet future demands—demands that both demographically and naturally we are unable to stand against. Of course I refer here to ageing. 
The New Zealand economy which we heard about in relation to the Budget Policy Statement when Mr Cullen came to see us at the select committee has enjoyed the strongest period of expansion and growth in over 30 years. Unemployment is low growth is up as I said earlier and confidence is up. Let us talk for a moment about why unemployment remains low. It remains low because first employers are willing to take on more workers and secondly to work with the Government on a range of social programmes and human capital interventions in order to see workers’ levels of skill grow. We can contrast that with the experience suffered by workers in the 1990s when that area was chronically overlooked. 
What is in the Budget Policy Statement can be contrasted to the total absence of ideas from the other side of the House other than ongoing niggling disruptive chipping in. We see that particularly in question time. I hope I never have the misfortune to sit directly across from Dr Nick Smith. He reminds me of some fowl moulting; he continues to peck and chip. Nothing constructive comes forward because there is nothing there. On the one hand we have Mr John Key wandering around barnstorming promising all sorts of things to different communities—who are unwise at the moment to listen to him—and on the other hand we have Mr English attacking the document and saying it is too expansionary. They cannot have both: they cannot on the one hand give away lollies and on the other hand—back where the power apparently is—screw the lid on very tightly. There will be no lollies—no expenditure of the nature we have been able to sustain in our time. 
I cannot really go much further in this short contribution without isolating the obvious confusion we will hear about and which our Budget Policy Statement actually highlights. I refer here to where the Opposition will draw its expertise from in order to match what we have done here. The newspapers—very foolishly in my view—recently profiled Mr Groser and Mr Hayes. They have identified these two obscure—I was about to say “skeletal” but that would be very offensive to Weight Watchers—individuals who have been completely overlooked while John Key seeks to get views from first Ruth Richardson and secondly Jenny Shipley. I do have a charitable thought or three for Jim Bolger. He did go out of his way in contrast to Don Brash to uphold the kaupapa of the Treaty and the Maori world. But these two individuals have been superseded—eclipsed. They have hardly even made an indentation in their chairs—well one has. And hello they are being eclipsed circumvented by the very people who drove a toxic mix of policies in our view—I ask about the deficit that we were elected in 1999 2002 and 2005 to overcome. So what do we have? We have a group of advisers hoping to take care of the fresh leader but they are yesterday’s people. Kia ora tatou. 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 This could well be a special occasion because I think we have witnessed Dr Cullen’s last Budget Policy Statement appearance at the Finance and Expenditure Committee. The Government in its effort to refresh will have to do away with someone. Unfortunately Dr Cullen is by far the most capable of the Labour Ministers but equally he has made it quite clear in the last few months that he is past his usefulness to the Government. The Prime Minister is now treating him without respect. The other day when he floated the idea of the mortgage tax—a dopey idea as it was—she simply slapped him down and made him back off. But when Winston Peters goes out and says to the national media something that is directly counter to Government policy in a foreign country with its Minister of Foreign Affairs Helen Clark describes that as an honest opinion about tragic circumstances. Dr Cullen is now a lame duck within the Labour Cabinet. 
Dr the Hon Lockwood Smith 
: A dead duck. 
Hon BILL ENGLISH 
: Well his idea was a dead duck. But he is not dead; he is just lame. He is a lame duck. Of course he is going to be replaced by Mr Mallard who is another lame duck. He has blown his credibility in the finance area over the Auckland stadium before he has even got the job. 
Dr Cullen to his credit over the years has fought the worst spending instincts of the Labour Party but he has left himself confused about just where he is up to. The main issue debated at the Budget Policy Statement hearings was that Dr Cullen has always said his fiscal programme is prudent and that those people who are going around promising for instance to reduce taxes would create expansionary fiscal policy which would drive up interest rates. It turns out that Dr Cullen is describing his own policy because for the first time ever at the select committee hearings Dr Cullen conceded that it is his spending plans that are putting pressure on interest rates. 
He had to do that because the Governor of the Reserve Bank had already said so. In the most recent Monetary Policy Statement the Governor of the Reserve Bank who was sitting there trying to decide about the interest rates that New Zealand households will pay said that Dr Cullen’s fiscal policy was quite expansionary. What does he mean by that? He means that over the next 2 years Dr Cullen and the Labour Party have already programmed $5 billion of new spending. This is at a time when the Governor of the Reserve Bank is worried about the economy not adjusting to the imbalances. He is signalling through the Monetary Policy Statement that one of his problems with setting interest rates is the Government’s spending momentum. That $5 billion is before the election bidding starts—and we know how large scale Labour can get in its election bidding. 
So the Governor of the Reserve Bank is looking out over the next 2 or 3 years. He will decide whether the interest rate on the mortgages that New Zealanders pay from their weekly incomes will go up and he is saying that the Government’s spending plans are making his job harder. That is why it was illogical for Dr Cullen to be proposing the mortgage tax because Dr Cullen was trying to get out of the mortgage levy a situation where he could keep on spending but householders would pay the price directly through a mortgage levy. The Reserve Bank needed that to help cool down the economy. 
When Dr Cullen goes around shedding crocodile tears for exporters he should do what he can to take the pressure off them. The one thing he can do is to rein in the scale of Government spending because who believes that out of the $4 billion of new spending New Zealanders are going to get $4 billion of new services? No one believes that. They believe that Labour might claw back a few of the votes it has been losing. There will certainly be more pay rises for civil servants well ahead of the private sector. There will certainly be higher interest rates for longer for every New Zealand household. 
But we know the one thing there will not be is more and better public services. Because Labour has fallen into the trap of believing that if it spends more money on it then that will fix the problem. Of course it does not. Members should just look at health. The Government now spends 40 percent more than 7 years ago for roughly the same output. Roughly the same amount of health things are getting done and it is costing 40 percent more. Members should look at the problems our leader John Key has been highlighting with that smaller group of people with intense social and economic problems which he has called the underclass. Almost universally the public believe that the Government is complacent about it and more important that its solutions are not working. Spending more money on those kinds of big Government solutions is not going to make any difference. 
Dr Cullen has persisted with the spending programme that will mean interest rates are higher for longer. It is interesting that even though that spending programme is very large the Budget process is creating real tension within the Government. This is where Dr Cullen is really coming under pressure internally. You see when Labour signed up to its coalition agreements it gave away everything to the small parties. Labour was getting such persistent windfalls of new tax revenue that Helen Clark decided she could pay for whatever New Zealand First and United Future wanted. Even with the huge tax windfalls they have enjoyed New Zealand First and United Future are getting most of the discretionary cash out of this Budget round. 
That is leaving the usual hopeless big spenders like Pete Hodgson Steve Maharey and Annette King increasingly irritated. They are finally realising that Labour gave away large amounts and very expensive promises—like 1000 more police plus 250 non-sworn staff and the increase in national superannuation which are all things that New Zealand First campaigned on—and now it has to pay the bills. So Dr Cullen is trying to get the lid on the spending even though there is about $2 billion more spending. Those tensions in the Government are going to become more and more evident. 
In fact it is becoming clear now who is setting the agenda for the Government. New Zealand First has got its promises which are using up most of the Budget. United Future is the champion of tax cuts. We know that Dr Cullen is not in favour of tax cuts at all. So what is he doing now? What actually is the economic strategy of the Government? Because it is not clear at all from the Budget Policy Statement. What we needed to see from the Budget Policy Statement but did not see was a focus on two things. The first thing was quality of Government spending. One million dollars was spent on an Immigration Service website that has two vacancies posted on it. That is one of hundreds of low-quality Government expenditures. 
The second thing we needed to see was a shift in the balance of the economic strategy. The Government has focused almost entirely on strengthening the Government balance sheet and building up savings to manage risks that are 20 to 30 years away. Well that has some merit. But what we need is to balance that up with a focus on growth in the next 5 to 10 years. Because it is that economic growth that will allow us to spend what we need to support and help people and which will provide the opportunities for our young people who cannot wait 30 years. So the Government’s focus of 30 years away is too unbalanced. We need to balance that up with a focus on growth. But unfortunately it is not here. 
Dr Cullen is not able to adapt to the changing times. His thinking is still back in the late 1990s. He is becoming a stick in the mud who is stuck in the mud—that is why his political viability is running down. He is irrelevant to the economic debate. It will soon be time for a change to shift gear to a much more aspirational Budget Policy Statement which unfortunately is still 2 years away when it will come from the new National Government. 
R DOUG WOOLERTON (NZ First) 
: 
 In speaking to the Budget Policy Statement for 2007 I advise members that they should have listened to that speech made by Bill English. I invite members to get the transcript of that speech and come to me because I will interpret it for them. I will interpret that speech for the House and for anybody else listening now. 
At election time the National Party promised tax cuts for everybody—tax cuts that we in New Zealand First and the Labour Party said were unaffordable. Dr Cullen in particular said that time and time again. Bill English is a person who knows about these things and I will give him credit for that. He knows that what the National Party was promising at election time was unaffordable. That speech he just made is the first back-down from the tax cuts that National promised at the last election. They said that those tax cuts were affordable and Dr Cullen said they were not because the money was budgeted to be spent in the future. 
At the Budget Policy Statement meeting where Dr Cullen came before members of the Finance and Expenditure Committee Bill English was asking him in detail what that expenditure was about and trying to make out that it was expansionist. Dr Cullen said nothing at that Budget Policy Statement meeting that he had not said at election time. So Bill English knew what that was all about but he has spent the rest of the time climbing down from that position. 
I draw the public’s attention particularly to the little bit at the end of Bill English’s speech when he talked about the Government’s providing for issues—namely retirement—that will happen in 30 years. When Bill English talked about that my colleague Brian Donnelly said to me: “Doug that is where the National Party will get their tax cuts from.” National will go into the Cullen fund and get its tax cuts from money that has been put aside for our senior citizens. That is where the National members will get their tax cuts from in the future and I had just hoped that they would say so honestly openly and transparently. But they are not doing that which is why I am inviting people to come and see me and I will translate that speech for them. 
That speech was not only full of throwaway lines but also it was a very very deliberate and careful back-down from the tax cut promises of the election and it was an indication of where some tax cuts will come from in the future. The only way—and New Zealand First will say it now—to protect the Cullen fund bearing in mind what Bill English has just told us is to personalise those accounts as has been proposed by New Zealand First over many many years now. 
As far as New Zealand First’s view of the Budget Policy Statement goes we applaud it. We applaud sound financial management. We applaud pragmatic financial solutions. We applaud the slight incentivising of the tax system that Dr Cullen has alluded to in statements he made when he talked to the media in general even though that was not actually in this Budget Policy Statement. So we are in favour of pragmatic solutions and in favour of a fiscally prudent Government. 
I just have to go back to Bill English’s speech because its content sounded so outrageous to a professional politician like myself. He talked about my leader in his speech. That had nothing to do with the Budget Policy Statement but he talked about a statement my leader made. Mr English would like to construe that statement as a split in the Government between the Rt Hon Winston Peters and Helen Clark. 
Hon Clayton Cosgrove 
: Wishful thinking. 
R DOUG WOOLERTON 
: Of course it is wishful thinking; it is not going to happen. That statement was made about the Iraq situation and it should not have been a surprise to anybody familiar with that issue. New Zealand First supported the Labour Government in its stance on Iraq—and it still does to this day. 
On a personal basis the Rt Hon Winston Peters was asked what his views were and he gave them. There was no contradiction and no problem with the Government and he did not suggest that his views were Government policy—nothing of the sort. He is right of course. New Zealand First says that he is right and the Labour Government says that he is right. But the Opposition says that there are problems and the media say that there are problems and on and on they go. Because National is short of solutions it is looking for any issue whether or not it is true to put a stake between the Government and its support partners. I just wanted that to be put on the record. 
I wish to talk about a few things coming out of the Budget Policy Statement. It saddens me to say that we are still in a situation where we have imports exceeding exports and that the deficit is predicted to rise to something in the vicinity of $15 billion. I mention that in order to bring into the discussion Export Year 2007 which New Zealand First believes is critical. No figure better illustrates the fact that it is critical to have exports out of this country than our having a $15 billion deficit. 
It is all very well to talk about economic activity but at the same time we need to ensure that the books are balanced. [ 
Interruption 
] Dr Lockwood Smith as he interjects cannot have it both ways. He cannot talk about tax cuts and then talk about big-spending policies all of which were outlined at election time. I would like to see the National Party outline where it intends to get tax cuts from—and I would particularly like to see it do that in light of Bill English’s speech. I am led to suggest that National intends to take tax cuts out of the Cullen fund. We are not talking about big-spending issues; these issues were all outlined by both New Zealand First and indeed by the Labour Party at election time. 
I cannot as rural spokesperson for New Zealand First go past mentioning that the vice-president of Federated Farmers came along to speak to us when we were taking submissions on the Budget Policy Statement. He said that 2007 will be a difficult year for farmers. That is sad because by and large farmers are receiving very good receipts for their produce overseas. 
Dr the Hon Lockwood Smith 
: Tell that to sheep farmers. 
R DOUG WOOLERTON 
: Yes Dr Smith is right—mainly it is dairy farmers. But I would remind Dr Smith that that is 20 percent of our exports right there in one company alone. So it is not an insignificant amount. 
But 2007 will be a difficult year for farmers. One thing is the dollar and the other thing which will not be mentioned by Federated Farmers or other farming institutions is the high price of land. Most farmers in this country have gone forth and multiplied their acreages and they have done that at a high cost to themselves. A high cost of land means high servicing costs and that means less profit. So nobody knows how to deal with that problem but I just say to the Government that we need to help our farmers in every way we can because that is where the bulk of our exports will come from. 
To sum up I have quite obviously placed a big emphasis on savings. I have pleaded and I still plead with the Government to lock up the Cullen fund in individualised accounts because today we heard the first indication that that fund will be raided by some future Government if National gets to the Treasury benches. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 In speaking to this Budget Policy Statement debate I would like to draw members’ attention to a particularly pertinent table on page 47 of the fiscal outlook. That table figure 2.8 forecasts the Government’s new operating initiatives. It is so important because when we talk about increases in Government spending we so often forget that it actually piles one on top of the other. What I mean by that is that over this next Budget period the fiscal outlook and the Budget Policy Statement identify that the Government will increase its operating spending by $1.9 billion plus 3 months’ worth of the company tax concessions—probably about $100000. So the figure is about $2 billion but the table of course identifies the figure of $1.9 billion. 
Then the Budget Policy Statement identifies $3 billion of extra new spending in next year’s Budget. Often people then look at those figures and say that the Government is increasing spending over the next 2 years by $5 billion—$2 billion this year and $3 billion next year. But as figure 2.8 shows that is not the way it works. The Government is increasing operating spending in this Budget by $1.9 billion plus the company tax concessions but this figure shows that in the next Budget compared with the current one the increase will be $4.9 billion. So the total increase in spending compared with the current level of operating expenditure over just the next 2 years by this Labour Government is an increase of almost $7 billion. That is not my figure; that is the figure to be found in figure 2.8 “Forecast New Operating Initiatives” on page 47 of the fiscal outlook. That is why the Governor of the Reserve Bank in his latest Monetary Policy Statement speaks of the Government’s fiscal policy being expansionary. He states: “This expansion can be seen in the national account measures of government spending but also involves substantial boosts to transfer payments to households. The effect of such a shift to an expansionary fiscal policy is significant at a time when the available pool of resources remains stretched.” 
The outcome of what the Governor of the Reserve Bank has said there is that New Zealanders face higher interest rates over the next few months because of this Government’s increased spending. The table on page 47 shows exactly what the Governor of the Reserve Bank is on about. If members look at the next 3 years—because normally in Budget cycles the Government looks 3 years ahead—members will see that the total increase in spending over the next 3 years compared with now is $2 billion plus $5 billion is $7 billion plus $7 billion is $14 billion. Over the next 3 years there will be $14 billion more Government spending than there is right now. It is little wonder that the Reserve Bank is saying: “Hang on this will just blow interest rates out of the water.” I want the next Labour speaker to tell this Parliament why the Government thinks it should be spending over the next 3 years $14 billion more and forcing ordinary mums and dads in New Zealand with their families to face higher interest rates on their mortgages. 
It seems that the Labour Government’s policy is one that expects mums and dads to tighten their belts and pay higher interest rates on their mortgages so that Michael Cullen can loosen his belt and spend a whole lot more just to try to get Labour re-elected. It might have worked once. At the last election there was a massive promise of extra spending including interest-free loans for students masses of increases in Working for Families—hundreds and hundreds of millions of dollars of extra spending leading up to the next election. None of that is included in these fiscal projections. That is what my colleague the Hon Bill English said. These increases in spending that Treasury identifies actually come before the bidding war by this Labour Government when it starts to try to get itself elected for yet a further term—God forbid! 
New Zealand mums and dads ought to think very carefully about how much higher interest rates they want to pay on their mortgages to support this huge-spending Labour Government. If the spending were on something worthwhile maybe some of it could be justified. The bit that is being spent on roading for example is justified although our roading is hugely expensive by international standards. Let me share with the House where so much of this extra spending has gone. Every year in recent years we know that this Government has put $750 million more into health. That means that over a 2-year period the total increase is about $2.5 billion in spending on health—a bit under that. But we see no more operations no more delivery of services. What this Government is doing is spending money on bureaucracy not on services. 
If members look at the actual number of employees employed in the central government agencies they will see that over the years this Government has been in office since 1999 the increase in public sector employees is 95 percent—almost twice as big a Government bureaucracy. Is it delivering any more service? 
One area where I was Minister for quite a long time was education. I was Minister of Education for almost 6 years. I was not only in charge of the school sector but early childhood as well as tertiary—these days that is too hard a job for any one Labour Cabinet Minister; it has about three of them involved. When I ran the tertiary sector when we were involved in a massive expansion of the tertiary sector we went from darn near the bottom of the OECD in terms of tertiary participation in the early 1990s up towards the top. I ran the tertiary sector with 15 officials in the ministry. About 15 officials with me ran the entire tertiary sector. Do members know how many officials Labour needs to run the tertiary sector? Over 300 are needed to do what a National Minister did with 15 and I know Brian Donnelly knows this is absolutely right; I see him nodding his head. 
Hon Member 
: And they’re doing it a lot worse! 
Dr the Hon LOCKWOOD SMITH 
: And they are doing it a lot worse. When I was Minister I had none of the scandals around the wananga. We set up the wananga and they went really well when I was the Minister. There are now 300 officials to do what National did with 15. It is little wonder that we do not see any improvements in productivity. There is a 100 percent increase in bureaucrats but no increase in service. That is why productivity has gone down under this Labour Government. 
These bureaucrats of course have to be housed. The floor space this Labour Government has taken on to house those bureaucrats it has employed is the equivalent of 15 rugby fields. Since Labour came to office it now leases 15 rugby fields’ more office space to employ that massive tribe of public servants that delivers no more service to New Zealand taxpayers. That is why the information presented to the Finance and Expenditure Committee showed that productivity so crucial to New Zealand’s future has halved while this Labour Government has been in office compared with multifactor productivity during the 1990s. This Labour Government has succeeded in halving the productivity of this country’s economy and it is no surprise why. It has poured so much money into massive bureaucracy right across the sector delivering no more service and we now suffer the consequences as our productivity winds down our prospects look more bleak and our interest rates are going to climb. 
Doug Woolerton from New Zealand First says that this is Export Year. Let me tell him that with the exchange rate being jacked up by his Government’s high interest rate policy and big spending our exporters are suffering because the exchange rate yesterday hit a 16-month high or more against the US dollar. I say to Doug Woolerton that if he wants to support exporters he should stop supporting this big-spending high interest rate Government that is jacking up interest rates and crippling our exporters. It is little wonder New Zealanders think it is time for a change of Government. 
Hon CLAYTON COSGROVE (Associate Minister of Finance) 
: 
 That was Lockwood Smith. He gave a wonderfully eloquent display did he not about his career as a former Minister of Education who also had responsibility for tertiary education. What a wonderful dissertation it was. But I say to him that he has a very selective memory of history. I say to that member that he might want it both ways but he cannot have it both ways. This is the member of course who told us that with 15 staff—and he has confirmed the record in the House today—he managed to destroy apprenticeships in 1995. He killed them off there were no more—the Apprenticeship Act was gone. He managed to put every tertiary student into mortgage rate debt with a shonky student loan scheme that he is proud of still. I say that we are in the presence of an absolute genius. That is his record. 
When I became the member of Parliament for Waimakariri in 1999 I visited the 40-plus schools in my electorate. This genius over here that wondrous former Minister of Education with only 15 staff managed to put principals in the back of Skyline garages. A Skyline garage doubled as a library at the school at Ohoka where I met my first school principal. He had books stacked up around him as walls in his office. This was all because this former Minister of Education ran down school funding. He managed to run down operational funding in our primary schools and our secondary schools. 
I ask any member of Parliament on this side of the House—and I include our coalition partners who do go out and visit schools—to remember when the rain came through the roof. It was not because the roof was leaky but because that genius over there Dr Smith as the then Minister of Education refused to fund schools. There was no 5-year property plan. No he just ran down the assets of schools with a view ultimately I believe to selling them off. 
Dr Smith talked about roading. I challenge him or Tim Groser the other so-called superstar to get up. Mr Groser came in here with Mr Blumsky and Mr Finlayson and they were determined they should be on the front bench of course. The problem was that the dead wood—or in their case the dead kindling—was in the way. Mr Blumsky of course is now saying: “I’m out of here. No one cares about me. I’m gone.” I challenge those members to get up today and tell us whether Maurice Williamson’s stated policy of privatising roads is still on the books. 
That member Dr Smith is a huge contradiction. He got up and talked about fiscal probity—tight fiscal management. He accused us of spending everything. In a moment I will read out some of the promises from his own people. Before that we heard from the organ grinder. There was no monkey of course—John Key never spoke. We heard from Bill English. I am told that he got up in the Finance and Expenditure Committee and lectured the treasurer about tight fiscal management. So we have the tight man Mr English over here and then we have John Key wandering around the countryside promising along with his National Party colleagues anything to everybody. 
I will read some of the National Party’s promises. Do not take my word for it—look at the evidence. Here we go. Katherine Rich wants more money to develop the Beachheads programme for economic development. Tony Ryall wants more places for medical training. On education John Key says he will bring back bulk funding—more dough there. Question: “Will National fund at the top rate?”. “Absolutely.” said Mr Key. We know about the charitable deductions and the policy that Mr Key has rolled out with regard to food in schools but it is at what cost? Then we have law and order. Chester Borrows another genius from the National side wants more police and Wayne Mapp endorses that. “Abolish parole.” those members say but at what cost? They want compulsory DNA testing for convicts—and the list goes on. There will be more community law services in parts of the country and electronic signage in transport according to somebody called Colin King. I would have thought a static sign would do the job if one could read but maybe not. 
So on the one hand Mr English stands up and says: “I want tight fiscal management. The Government spends too much.” Yeah we spend on teachers school halls classrooms libraries nurses and State housing—sinners though we are. But Mr English says: “No cut expenditure.” On the other hand every National Party MP candidate and whoever else up and down the country is promising expenditure after expenditure. I estimate that spending at over $1.5 billion to date. How is National going to get the money? 
Yet again National members stand up and treat the outside world and our communities as if they are stupid. Doug Woolerton made a very interesting comment. He talked about the Superannuation Fund. We all know what the hidden agenda with the Superannuation Fund was under Dr Brash. Dr Brash said: “We’ll bump it up to age 70.” then he backed off. Then he said—an amazing statement: “Anybody who is around 50 there won’t be a pension for you. Don’t come Monday.” I pose this question to the National Party geniuses over there. If mum and dad could balance their housekeeping expenses and their grocery bills and if they knew their wages were to be cut by a certain amount what would they do? They would have to contract their expenditure in the same way that if we dish out tax cuts revenue goes down and we have to make cuts somewhere. 
I also challenge National on this point. If mum and dad out there are smart enough and know there is a big expense coming up—they need a new set of tyres for the car or new things for the kids and they know this is on the way—what do they do? They budget. They start putting aside money each week to meet that expenditure. Why can the National Party not be as smart as the average Kiwi out there? 
What have we done with the so-called Cullen fund? We know that a bubble of elderly folk is coming through and we know when the baby boomers are coming through. We know when we will have to plan for a big wad of expenditure so what do we do? We start squirreling money away; we reinvest it in our economy and around the world at world’s best practice to make provision for that in the future. Why can those members over there not be as smart as the average Kiwi who balances his or her cheque book and housekeeping expenses every week? The truth is that those members are not as smart; they are arrogant and conceited— 
Dianne Yates 
: And desperate. 
Hon CLAYTON COSGROVE 
: My colleague says they are desperate. Those members think they will do the tried and true National Party thing. They think that because Labour has been in office for three terms—and we are going for our fourth—they can just promise the world to anyone. What do people want? National says it will give it to them—it will double it treble it no problem. National said that in 1990 but when it got into office it pulled the rug out from under all New Zealanders whether they were beneficiaries in the benefit cuts whether they were superannuitants in the multiple superannuation cuts or whether it was our Defence Force in the biggest defence cut in the force’s history. National pulled the rug out from under everybody. 
But I have some advice for those members. People have been bitten once. People out there are smart. They scrutinise policies. They know we have enjoyed the best period of employment for 30 years—we have the second-lowest rate of unemployment in the OECD. They know despite Dr Brash’s saying all through the election campaign that the economy would go to hell in a handbasket and his praying to the Exclusive Brethren or along with them that it would that the economy slowed—there is one member praying over there—then it bottomed out and then it moved up again. We are targeting 2 percent growth and further economic growth in the future. Over 350000 jobs have been created and the number of people on welfare is going down. Why? Because people are getting into employment. 
I tell the National Party to treat the people of New Zealand as fools as its peril. Dr Lockwood Smith should have stood up and told the world that he and 15 others in his office almost destroyed our primary secondary and tertiary education systems. That is what he should have said. He is proud of getting rid of apprenticeships and he is proud of putting students into debt. Well I challenge him to get out on the stump at the next election and go to a student rally or to tell some of the 9000 apprentices we now have how proud he was when—in 1995 I think it was—he abolished the Apprenticeship Act. I would love to be at such a meeting; I would really love it. It would be a cracker. And it would be good if he went out to pensioners— 
Dr the Hon Lockwood Smith 
: Don’t tell lies to Parliament. 
The ASSISTANT SPEAKER (Ann Hartley) 
: The member knows he cannot call out and accuse a member of lying. Would he stand withdraw and apologise. The member knows he cannot call out that another member is a liar. Please withdraw and apologise. 
Dr the Hon Lockwood Smith 
: I withdraw and apologise. I raise a point of order Madam Speaker. When members get up in this House and speak blatant untruths they invite challenges across the House that they are in fact—I cannot use the word. The records show that the numbers of New Zealanders involved in industry training climbed every year through the 1990s. What the Minister is saying is simply not supported by the records or the statistics of this country. 
The ASSISTANT SPEAKER (Ann Hartley) 
: The member will be seated. The member has done two things. First of all he has contested my ruling. Secondly it was not a point of order; it was a point of debate. The member will withdraw and apologise. He will withdraw and apologise to the Speaker. He contested my ruling when I had made the ruling about withdrawing the comment he made which was quite proper. The member should not have referred to it. I ask him to apologise. 
Dr the Hon Lockwood Smith 
: I apologise. I raise a point of order Madam Speaker. 
The ASSISTANT SPEAKER (Ann Hartley) 
: I warn the member that he cannot contest the ruling again. 
Dr the Hon Lockwood Smith 
: Madam Assistant Speaker I can assure you that I am not contesting your ruling. I sought your advice as to what remedy a member has when a member on the other side of the House— 
The ASSISTANT SPEAKER (Ann Hartley) 
: No—the member is doing it again. The member has been here a long time; he clearly knows that the matters raised were matters of debate. The Speaker cannot rule on those matters; they are matters of debate. Again the member is contesting my ruling. 
Hon CLAYTON COSGROVE 
: I think semantic debate just occurred a few seconds ago—the proof of the pudding is in the eating. We can ask any young person who was sold out by that member. When I came into Parliament I had a mother and father in Kaiapoi come to me and say that they had saved $30000. They were going to go to the local mechanic beg him to give their son an apprenticeship and pay for it. Why? Because National pulled the rug out from under our young people. Members do not have to believe me; they can go and ask the young people whom National dealt to. They can go and ask the pensioners—and he has been found out—whom National dealt to. Members can get the people of New Zealand to compare our record with National’s and they will be able to judge. Whether Dr Smith and I disagree whether he tries to weasel out of his history and whether he is proud of his history that member will be judged by the people of New Zealand—and I look forward to it. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 The Budget Policy Statement was published on 19 December 2006 and that was just 7 weeks after the Prime Minister made a landmark statement to a party conference that New Zealand could be the first truly sustainable nation in the world—that was her goal—and that we could be carbon neutral. So of course 7 weeks later I opened the Budget Policy Statement with bated breath to see what financial provision the Government was planning to make to meet those excellent goals which the Green Party thoroughly applauds. But I could not find anything. 
I looked first at the objectives of the Budget Policy Statement which are “to continue New Zealand’s transformation into a more dynamic knowledge-based society underpinned by the values of fairness opportunity and security.” Policies will also “further enhance New Zealand’s economic transformation continue to improve wellbeing for families … and strengthen our sense of national identity.” Of course there is nothing anyone could object to in those objectives but they do not align with the Prime Minister’s statement of just 7 weeks before. They say nothing about carbon neutrality; they say nothing about sustainability. 
I thought that possibly even though those goals are not in the objectives they would be in the mechanisms that the Budget Policy Statement foreshadows for the 2007 Budget. So I asked Dr Cullen at the Finance and Expenditure Committee what impact there would be on fiscal policy in the Budget as a result of the Prime Minister’s statement and what he anticipated doing. He said he thought we now have to face up to competition from other spending priorities. It would seem then that when the Prime Minister made her very excellent statement on 28 October to a party conference she did not tell the Minister of Finance about her goals so that Minister has not in the Budget Policy Statement made any allowance in the Budget for 2007 to deliver on them. We find that really sad. 
The Budget Policy Statement prefigures a business tax package and we understand that we are talking about a billion dollars worth of tax cuts for business. The Greens are very much in favour of using the tax system to incentivise the sort of behaviour we want from business and to disincentivise the sort of behaviour that is not in the national interest. So we are not opposed to the concept of some targeted business tax cuts. But when we look at what they are to be used for we see that again sustainability is not one of the criteria and carbon neutrality is not one of the criteria. The criteria are productivity gains competitiveness with Australia and business investment—and research and development staff training and exporting have also been mentioned. Sustainability is simply not there. 
I asked the Minister of Finance again whether he anticipated that by the time the Budget came out sustainability would have been added to those criteria and along with those other goals we would also be trying to incentivise the behaviour that the Prime Minister had announced as the key issue for her Government in this term. But the Minister of Finance answered that it was far too late this year to do the kind of detailed work that could lead to sensible conclusions around that area. So the billion dollars is to be spent without any consideration at all of sustainability. He suggested that possibly in future years we could look at this matter but if the billion dollars has already been spent in the 2007 Budget on things that have nothing to do with sustainability where do we find the money from next time to go further? So that was a big disappointment. 
I looked in the Budget Policy Statement for the policies that would start New Zealand towards that very long-term and aspirational goal of being carbon neutral and I could not find those either. The only thing I can find in the statement that relates to incentives—or not—for carbon emissions is that the carbon tax has disappeared so we are down by $360-something million on the revenue we might otherwise have expected. Given that the operating surplus is only $1.9 billion and that that has mainly got to go Dr Cullen says towards funding increases in things like health and education—increases that do not increase the level of service but just deal with growth in demand—that $360-something million would have been really useful for trying to deliver on some of the other things the Government wants to do. But it has gone. 
What do we have instead? Actually nothing! 
Gordon Copeland 
: Good riddance! 
JEANETTE FITZSIMONS 
: Well the United Future member over there thinks that it is absolutely great that the taxpayer in 2012 will have to pick up the bill for all the energy inefficiency right through the economy that could have been turned around by an incentive. It is interesting is it not that across the economy every business I talk to is now saying that in order to deal with climate change it has to have a price put on carbon. But where is it? There is no sign of one in the Budget Policy Statement; there will be nothing in this year’s Budget. 
In fact the only thing really that affects carbon emissions in this Budget is the announcement that has been made since the Budget Policy Statement of the largest road-building programme this country has seen since the 19th century. I tabled in the House this afternoon two peer-reviewed papers from the international literature and they are just two out of a great many that show that the cities with the most roads have the highest carbon emissions the greatest traffic congestion and the highest cost of transport. The cities that have the lowest cost of transport the lowest emissions and the best air quality are those that have developed their rail system and their public transport system. So where is the money in this Budget Policy Statement to do that? Unfortunately it is totally absent. Huge infrastructure bonds and borrowing are to go into roads on top of the $1.5 billion put into additional roading in the last Budget—and that was on top of the $500 million that Dr Cullen found in his back pocket for roading just before the 2005 election. So we can expect an extremely negative effect on our carbon emissions and our 2012 Kyoto position as a result of the Budget Policy Statement and the forthcoming Budget. 
The Budget Policy Statement goes on to say that the most significant influence on the 2007 Budget is that demand remains strong. Dr Cullen is talking there about his squeeze between a rock and a hard place in that if he spends too much more it will be inflationary yet if he gives tax cuts it will be inflationary and the issue that we have an overheated housing market and also very strong consumer demand. A way to deal with that situation is to put a price on carbon which will cause some of that spending to go into capital things like home insulation and more efficient equipment rather than into day-by-day spending and energy waste. That would make our economy more efficient and would at the same time yield a return to the Government. But we do not have a price put on carbon. We have absolutely nothing to incentivise energy efficiency or the research and development that we need in order to make us eventually carbon neutral. 
Clearly the overheated housing market continues to be a concern for Dr Cullen. It is certainly a concern for the Reserve Bank and it should be for Dr Cullen as well. The overheated housing market and the speculation in housing by people who are not living in those houses but are buying them as an investment could quite easily be cooled if we had a comprehensive across-the-board capital gains tax on that speculative investment. That however is always seen as too hard a political bullet to bite and not surprisingly it has not been bitten here either. 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 Today is a day of reckoning for iwi Maori. It makes fascinating timing to be debating the Budget Policy Statement for 2007 on a day swirling with court action injunction and repossession and with tribal calls for rangatiratanga hot in our ears. This morning at 9 a.m. the Hauraki Maori Trust Board sought an urgent hearing in the High Court in Wellington for an interim injunction preventing the sale of the 1100-hectare Whenuakite Station near Whitianga and we understand that the hearing has been called for this Friday and that Minister Mallard has intervened. An hour later the Minister of Maori Affairs witnessed by our co-leader Tariana Turia signed a deed of settlement with Whanganui iwi to formalise transfer of the Whanganui courthouse to the iwi; an auspicious day to do so as it marks the day some 12 years ago in 1995 when Whanganui Maori repossessed the site of Pakaitore which is Moutoa Gardens out of frustration at the lack of progress with their land claim. It was a call for action that spanned some 79 days before it was evident that resolution for their claim could be taken up with the Crown. 
Against such a context to read that the Government’s Budget intentions for 2007 and future years are underpinned by the values of fairness opportunity and security is indeed ironic. How fair is it for tangata whenua to be dispossessed of their sovereignty and to be stripped of their identity and their resource base? What opportunity does the Treaty partner have to express the ongoing concerns about the process of negotiating Treaty settlements the terms of settlements the amount set aside for settlements and the agency charged with managing settlements? What security can Maori ever enjoy when they know that the Government keeps to a fixed formula that puts aside a mere $1 billion for Treaty settlements despite the fact that the 2005 Budget listed a $7 billion surplus? 
The Budget Policy Statement in referring to the current economic situation refers to the concerns of Federated Farmers who noted that farmers’ confidence has fallen to a 10-year low. The Maori Party is also aware of the concerns that farmers have raised about the actions of Government and State-owned enterprises including the country’s biggest farmer Landcorp. In an article last October in  
New Zealand Farmers Weekly 
 
the opinion of farmers was clearly put. In referring to Tuwharetoa’s experience with a 1500 hectare Taurewa block south of Turangi Landcorp chief executive Chris Kelly referred to progress as moving at a glacial pace staggeringly slow even under the threat of global warming. To summarise the view of farmers: “Landcorp [is] not winning many plaudits among rural landowners or Maori in the region during the past 12 months”. It is because of this longstanding ongoing frustration that this morning the Maori Party declared our support in listening to the intentions of iwi and doing what we can to advance their call for justice in this fraught area. We well understand the building resentment and concerns from iwi who are determined to follow due process to take their concerns through appropriate hoops yet are frequently being blocked. 
One would think in the climate of crisis of confidence that attention would be given to making a difference through strategic investment. Yet the policy statement confirms there will be little room for new Government expenditure in this year’s Budget. The recurring theme of Budget statements for Maori has been “no go no show no go no dough”. The 2006 Budget was the one where the Minister of Maori Affairs failed to even ask for any allocation for Maori. I remember the day he told the select committee that on the advice of his chief executive he had failed to submit any bid for new spending—no go. But it was worse than performance anxiety. One of the biggest groups to actually lose out from last year’s Budget was Maori tertiary students who lost $2.1 million from Maori student scholarship funding with the announcement that the manaaki tauira funding was cut. That is 9000 Maori students who since 1991 have been supported each year with financial assistance for student support. 
The Budget before that was a “no show” Budget when the word “Maori” did not even appear once. So when we read on page 5 of the report of the Finance and Expenditure Committee that there will be no dough in 2007 and that things were extremely tight it is not as if we have not been there before. The reality is that the 2007 Budget must heed the advice as the select committee reported it of the Public Health Association that a whole-of-Government approach is required to improve the social well-being of New Zealanders. Over the last 18 months we have tried to bring the voices of the Treaty partners to the House. We have highlighted the abject poverty and the growing disparities between the haves and have-nots which is part of the context in which too many Maori live. Early last year the United States Department of State report on human rights practised in New Zealand submitted to the United States Congress a report card on New Zealand that highlighted “a continuing pattern of disproportionate numbers of Maori on unemployment and welfare rolls in prison among school dropouts in infant mortality statistics and among single-parent households.” 
It does not please me to outline these negative disparities. Mid-year in 2006 the  
New Zealand Living Standards 2004: The Report 
 described Maori and Pacific peoples beneficiaries and low-income families with children as showing significant increases in the proportion of people in severe hardship. We have had other reports that describe Maori patients as being at a higher risk of preventable adverse events in hospital than patients of non-Maori or non-Pacific origin and as being more likely to receive suboptimal care. It is not much better in the education sector with the unacceptable high rate of Maori student expulsions and suspensions and a dramatic increase in Maori truancy rates and statistics for Maori school leavers who exit school without even a level 1 qualification in the National Certificate of Educational Achievement. 
On top of that the Budget Policy Statement confirms the significant problem of children being underfed which has emerged due to what the report describes as “inadequate family incomes and the proportion of the incomes being spent on housing”. The Minister of Finance told the committee that if we concentrate on one measure to the exclusion of others we may well end up with policies that are not maximising overall welfare. The Maori Party absolutely agrees with this advice and accordingly will be looking for targeted outcomes that do indeed address the widespread disparities in social opportunities and goals. In actual fact we would recommend that in the light of the dismal performance to date it could well be useful for an “Outcomes for Maori” section to be specifically included in the Budget so as to be straight up about the commitment to raise living standards. We want to see explicit proof of funding targeted towards Maori immersion education for example which provides the experience of success that our whanau deserve. Either we are serious about closing these gaps and we target them or we are not serious. 
Finally I note the comments referred to in the committee’s report about sustainability and carbon neutrality. The Maori Party is of course alarmed to read: “The Minister told us that resources would have to be found elsewhere to implement the Government’s commitments in this area but that they would not include a large component of spending in the next year.” Resources found elsewhere—is this code for sausage sizzles and cake stalls outside the Beehive or perhaps we could all have a whip-round and do something about climate change? 
Once again either we are serious about developing a strategic approach to ensure the well-being and the future health of the environment or we are not. The Maori Party believes in the efficient use of water the conservation of energy and the need for active environmental management and we know that investment now is necessary to ensure long-term gain. We should not stand by and witness more empty words policy platitudes and “no go no dough” Budgets. Let us take today—which is Pakaitore Day in Whanganui—as a signal to make a real commitment to achieving change. Thank you. 
GORDON COPELAND (United Future) 
: 
 The best news by far in the Budget Policy Statement is that in this year’s Budget there will be tax cuts for New Zealanders of $1000 million—commonly known as $1 billion. The plain fact is that these tax cuts would not be occurring at this time were it not for the fact that United Future won three vital seats in the 2005 election which eventually led to our being able to negotiate in exchange for support on confidence and supply matters that there would be tax cuts in this term of Parliament. 
I will set this in some sort of context because it is a red-letter day in that we will at last be announcing tax cuts of that magnitude. One of the incidents that happened in the last Parliament that will endure for me for the rest of my life was the time when Kenneth Wang arrived here as a new member of the ACT party to replace Donna Awatere Huata. On the first occasion that he got to ask a question in the House he addressed it to the Minister of Finance. His question asked the Minister of Finance if the Minister could please advise the House how many “taxes levies or duties” he had reduced since he had been the Minister of Finance and for the first and only time the Minister of Finance was speechless. He eventually told Mr Wang that he the new member had a point: “I cannot think of a single one …”. That was still Dr Cullen’s attitude during the 2005 election campaign whenever the question of tax reduction for business was raised. It was not on the Government’s agenda in any debate. Yet here we have in this Budget Policy Statement a commitment to $1000 million worth of tax cuts—and that is good news. 
One other thing in the Budget Policy Statement objectives is also good news—that is personal tax cuts. There are personal tax cuts through the adjustment of the thresholds which were announced by Dr Cullen in Budget 2005 of $360 million. When Dr Cullen announced that what did he say? He said he had decided to do that because he had to accept the logic which United Future—and he specifically mentioned myself Gordon Copland—had been advancing to him since we came into Parliament that it was blatantly unfair to leave the thresholds unadjusted for inflation. So if we put the two moves together we can see that United Future will be delivering at or about the time of this Budget tax reductions for New Zealanders of $1360 million—and it is indisputable that these things would not be happening without our presence here in Parliament. 
I say too that when I talk about business tax cuts a lot of people think that they are just for businesses and that they will not receive them if they have not formed themselves into companies. But I tell members that New Zealand is officially the easiest country in the world in which to form a new company. Self-employed people who are not incorporated can incorporate for a few bucks and then they can enjoy these tax cuts. Every business in New Zealand really can get in on the act. Tax cuts will mean that those businesses will have more scope to reinvest and to increase productivity and they will also have more scope to be a little more generous in terms of pay settlements for their staff. So I have no doubt whatever that this $1000 million we will see in the Budget will filter down into the pockets and purses of many many hundreds of thousands—if not millions—of Kiwis and that is really great news. 
I go back to the question of the adjustment of the threshold for inflation which I have argued for since I came into Parliament in 2000. I have a long history in this area which I will not go into but I tell members that we asked for the thresholds to be adjusted for the movement in the cost of living since 2000. The current thresholds were established by Dr Michael Cullen on 1 April 2000 and from that day to this—which is now 7 years—they have not been adjusted. They should have been adjusted not by the amount that Dr Cullen is promising in the forecast but by the actual cumulative movement in inflation since that date which is now around 19 percent. That would mean under United Future policy that the $38000 tax band would now be lifted up to $45220. So the 19.5c in the dollar rate would continue for people right up to $45220 at which point it would go to 33c in the dollar. The current level of $60000 would be moved up to $71400 at which people would move on to the top tax rate of 39c in the dollar. We continue to advocate that those adjustments should be made. 
From our point of view it is not a question just of affordability; it is also a question of doing the right thing of doing the fair thing and of doing the just thing. As Michael Cullen pointed out all the other things—excise duty on tobacco cigarettes alcohol and gambling; the whole list of levies—are all automatically indexed upwards every year for inflation. But when it comes to income tax rates there has been no movement since 1 April 2000. That is blatantly unfair. It means that in real terms most Kiwis have been paying increased taxes since that time because the value of the dollar has been eroded by cumulative inflation at 19 percent. So we will continue to press for that policy. 
But wait it gets better. In addition— 
Rodney Hide 
: There’s more? 
GORDON COPELAND 
: —yes there is—United Future has a policy of income splitting for couples with dependent children. There are 250000 couples with dependent children in New Zealand. We are saying that they deserve a tax cut as well. As is known the Hon Peter Dunne who is now the Minister of Revenue thanks to those important three seats United Future won in the election will bring out a discussion document next year about income splitting for couples with dependent children. This is something that also needs to happen as a matter of equity and fairness. It will not be grossly expensive for the Government because it will actually dovetail with and cut out to some degree payments that are being made under the Working for Families package. Some affected couples will not get income splitting on top of Working for Families but they will get it instead of—in part. So the fiscal cost will not be very great but again it should happen just to recognise the simple reality that when people have dependent children they are not in the same position as a single individual looking after himself or herself. At the moment a father for example supporting a wife and three children is paying exactly the same amount of tax as a single person and that situation needs to come to an end. 
Before I come to an end I want to mention that our policy is also to call on the Government to increase expenditure in relation to Official Development Assistance which is mentioned in the report for the Finance and Expenditure Committee. United Future would like to see the rate of that assistance shifted up to 0.5 percent of gross national income forthwith. The target of Dr Cullen and the Government is much more modest—0.35 percent by 2010. But here is the rub: in 1970 this nation agreed that that rate should go up to 0.7 percent by 2015. In 1970 we had 45 years to get there; we now have only 8 years left. Our amount of Official Development Assistance as a percentage of gross national income is now way way below what it was when Norman Kirk was the Prime Minister of New Zealand. That was the best it ever got. We are saying that we need to get back to that because it is important in terms of generosity to the poor and needy of this world. Thank you. 
TIM GROSER (National) 
: 
 Mr English our deputy leader at the start of today’s debate on the Budget Policy Statement made the point—and I think he will be proven correct—that this is probably Dr Michael Cullen’s last Budget Policy Statement. I think that from that perspective it is fair enough to sit back and look at this in the context of the overall policy he has been responsible for coming into the third term of the Labour Government. If we overlaid the business cycle of this country on top of the political cycle I would argue that we would be hard-pressed to find in the last 40 years a Government that has had at its introduction a softer ride than this Government. One can run one’s luck for some time but eventually one’s luck runs out. And luck like inherited wealth can be easily misspent and wasted. 
When I was a young person growing up in this country along with all young New Zealanders I learnt the song that is almost an informal anthem—“We Don’t Know How Lucky We Are”. I always understood that there was a sense of irony behind that anthem but I suspect that the Labour Ministers in particular if not the Labour caucus as a whole will appreciate the irony in that phrase only after they have been knocked off their electoral perch and reflect on the moment when they had stewardship and after coming into office with the best economic conditions any Government has had for about four decades on what they did and did not do with their time in office. 
The roots of this problem started with a deliberate attempt to misrepresent the situation they came into office with. One can have one’s own view on whether this is the result of ignorance or simply blind ideological resistance to market reforms but the fact remains—and we have heard it today in various speeches made by Government members—that there has been a deliberate attempt to misrepresent the starting point of their time in office. 
I have just picked up one of the many statements I could have picked up. It is a statement that Mr Maharey made on 24 May 2006 to this Parliament when he said: “The 1990s … were 9 long years of absolute and utter decline for this country. … every single region in this country was shrinking … the 1990s will be remembered as an utter disaster”. At least one thing we can ask about that statement is whether it is empirically verifiable. Let us just quickly go through the actual reality. 
The rate of inflation was between 15 and 20 percent until 1990. It plummeted down throughout the 1990s to low figures where it remained until tragically prior to the 2005 election a very clear message was sent to the Governor of the Reserve Bank: “Ease back a little guys. Let this genie out of the bottle just a bit. We’re in trouble and we can now feel the effects of this in terms of a grossly dysfunctional monetary policy compared with its original position.” 
The rate of employment fell from over 11 percent in 1990 when Labour came into office to 6 percent. We have heard today from various spokespersons who reiterated versions of Mr Anderton’s “jobs machine” as if somehow the fact that we enjoy low unemployment is a consequence of decisions they have taken. Policies like this take years to bear fruit. They have been the beneficiaries of a process that they reject for perhaps ideological reasons. 
One could say the same thing about the growth rate. Thanks to some tough market-oriented decisions taken earlier we have had a growth rate now of about 3.5 percent for 15 years. That was the actual legacy that Labour members inherited on taking office and on assuming their responsibilities to the rest of New Zealand. 
What have they done with the fruits of that inheritance? First of all they have falsely claimed political credit like a conductor who jumps on an engine just as it is leaving the station and claims that he was the chief engineer. They have spilt the milk on useless growth of bureaucracy with deeply dubious consequences from the point of view of the New Zealand community. Let us just look at some of the bigger picture figures. First there has been huge growth in core Government expenditure—well over 40 percent and way in excess of the level of GDP spending in Australia even when we take account both of Federal and state Government spending. 
I do not have a deep ideological problem with a dollar of Government money being spent. I know that some people do but I personally do not. But I do want value for that money and I take a different view on a dollar being spent on upgrading say the national grid to a dollar spent on advertising a State monopoly called the Accident Compensation Corporation for no discernible purpose other than a political purpose. I do want to see from the billions of extra dollars spent in health demonstrable health outcomes that improve the status quo as a consequence. 
We have heard in the House today National members ask for the evidence of improved outcomes from this vast increase in spending. When we look at health it is the same underlying picture—an enormous increase in Government expenditure. We still have an education system that I think gives us excellent results at the top end but it has become clearer and clearer that at the bottom end of the food chain in terms of our education system we are not getting results and we have had some shocking statistics that bear this out. So all of this money is being poured in and producing a huge growth in bureaucracy with very little to show for it. Well we have one thing to show for it and that is a vast increase in the number of bureaucrats. For example in the education sector the number of bureaucrats has increased by approximately one-third over the life of this Government. 
I thought it was fascinating to listen to Mr Cosgrove today—he has been in this Parliament for some time now—attack my colleague Dr Lockwood Smith as if he were the Minister and Mr Cosgrove was the Opposition member. That is the problem. Labour members still have an oppositionist mentality. When will they stand up and take responsibility for being the Government? When will they discharge their responsibilities to the people of New Zealand who put them there in the first place? When will they assume the real mantle of office? I am afraid that time is running out on them. 
If we drill a little deeper we find more examples of the same theme. In the area of health in spite of the enormous increase in spending on health over recent years—I think some $4 billion—what have we seen? We have seen the number of doctors per 1000 New Zealanders drop from 87 to 73. I personally do not think that the benefit of that is outweighed by the 24 percent increase in the number of health bureaucrats who have been added to the public sector bill. 
 So in the health sector managerialism has gone mad the number of doctors has declined and there are growing waiting lists all on the back of a huge increase in Government expenditure. If we drill down into some smaller departments we get the same underlying picture revealed. Inside the more modest Housing New Zealand Corporation the actual number of State houses has increased by less than 10 percent since 2002 but staff numbers unbelievably have ballooned by 42 percent. The number of those staff on more than $100000 a year has more than doubled in this short period of time. Another example is the Department of Labour. There has been a staff increase of 600 in the Department of Labour over the last 4 years and again the same pattern of increasing numbers of those on what would be regarded as very high salaries by the standards of most New Zealanders. 
So what we are seeing again is this growth in bureaucracy and expenditure and very little to show for it whatsoever. Then of course what is worse is what has been left unattended. The Government inherited with its good luck an economy that was in better shape than the economy any other Government has had to deal with in the past 40 years. Instead of using this as a platform to try to advance New Zealand to the next level of wealth creation the track the Government has gone down is to redistribute money to its stakeholders increase the size of the bureaucracy and increase the number of bureaucrats in control. What it has not done is put forward the agenda that would take this country forward increase our competitivity and give the young New Zealanders who are leaving this country some belief that they could make their fortunes here in our own country. 
RODNEY HIDE (Leader—ACT) 
: 
 It is always a great pleasure to follow my colleague Gordon Copeland. I think it is true: I think United Future has put pressure on the Government to have these tax cuts and not before time. But we should appreciate that there are tax cuts and there are tax cuts. What interests me in this is the size of the tax cuts. I know that Mr Gordon Copeland says it is $1000 million which to put a picture on that is $100 bills stacked a kilometre high which is a lot of money. But when one sees that in the context of Government spending and the tax that is paid it is rather small. So I would like to see the tax cuts much much bigger please I say to Mr Gordon Copeland. Maybe when the United Future party has more MPs and the ACT party has more MPs we will actually have some decent tax cuts. 
But it is also the nature of the tax cuts and it goes back to what one is trying to do with tax policy. I think it should be something that we understand as a principle of policy that each instrument is trying to achieve one objective. If one instrument is trying to achieve two objectives it actually falls flat on its face. The difficulty we have with tax policy is that we are trying to achieve multiple objectives. If we think about tax policy we see that the thing we are trying to do is raise money for the Government to spend on the things that people expect Governments to spend money on. 
If one thinks about that a bit further one says: “Well what you’re trying to do is raise the amount of money you need at less cost—at less cost to the economy and to society.” That is the principle that should drive tax policy at all times. Notice that I am not actually discussing in that how much money should be raised; I am actually talking about the principle of tax policy. But one is trying to raise the target amount that one needs at less cost. We know the cost is not just filling out the forms for the Inland Revenue Department implicit in that is the dead-weight cost of the tax. So I want to keep that in mind and jump ahead. 
So here we have Mr Gordon Copeland saying: “One of the things that we should address is bracket creep.” He says it is unfair because what is happening over time with inflation and economic growth is that more and more people are finding themselves in a higher tax bracket and therefore paying more tax. That is true; that is unfair. Mr Gordon Copeland was also saying that it is a bit unfair when one taxes individuals because when a couple marry they essentially become one unit and if there was income splitting that would be fairer. I think that is true compared with what we have. 
But what it does not do is address the fundamental problem here in that we do not have a tax system that is raising the target revenue at less cost. What we know is this. The dead-weight cost of tax rises geometrically with the rate of tax. So as one lifts the tax up and up one creates a bigger wedge between the price that people are paying and the price that they receive. And of course that wedge kills off trade kills off jobs kills off investment and kills off retail exchanges. So one wants to lower that wedge to lower one’s dead-weight cost of tax. 
The way to do that if one thinks about it logically is to have one flat tax. It could be 50c it could be 80c it could be 10c. But whatever amount of money one is raising there is no doubt in anyone’s mind that a flat tax is the least costly way of raising an amount of money. Because for any target rate it will be the lowest rate one could have. A flat tax is broad. 
Then interestingly if one did that there is no argument about income splitting because if everyone is paying the same amount of tax on the first dollar earned as the last dollar earned there is no advantage to income splitting. Indeed if one has a flat tax one does not have any bracket creep because one is paying 20c 10c or 50c in the dollar whatever it is. One can have growth one can have inflation or whatever and one is still paying the same amount because one is still in the same bracket because there is only one bracket. 
Hon Paul Swain 
: Kind of regressive though. 
RODNEY HIDE 
: Well it goes back to my point that Paul Swain wants to have an instrument that wants to achieve two objectives—he wants a tax policy that actually redistributes income as well as raises revenue. That is when one gets into a shemozzle and even if one looks at the work that this Government has done it is saying: “No we want to have a tax policy that raises the revenue and we’ll do the redistribution with the spending.” because then one is not actually having one instrument do two policies and one can have a good clean tax system and indeed one can have sensible targeted policy. 
I would be advocating if Mr Swain does not want to have a regressive fiscal policy a flat tax. He would be spending the money through income support or whatever he thinks would be a good way of doing it and one would actually achieve the result one wanted. If we did that we would have a tax system that is simple a tax system that is fair and a tax system that is efficient. It does not matter whether one is a socialist a capitalist a conservative or whatever one has to accept that a flat tax achieves all those objectives. 
What bothers me is that we are getting further and further away from that ideal. We are getting extra rates introduced—a 39c rate—and getting more and more arguments about allowing people deductions. If they do this or do that we will give them a deduction; they can combine things. All that is moving away from the ideal of having a tax system that is designed to raise a targeted amount of money and I think that is a mistake. So when I talk about tax cuts I say “Good I love tax cuts because I think people can spend their own money better than the Government can.” I would have the biggest tax cut that we could possibly get but I believe that that should be done in the context of having good tax policy. 
Again I make the point. We are having a tax cut that will lower the company rate of tax. Well that is great but how silly is it to have a company rate that is not aligning to the personal rate? They should be lined up. In fact why would you not have a tax rate that is the same for every entity? Would not that be the way to run the tax policy? If it was the ACT party taxpayers would have it at 20c. 
Gordon Copeland 
: What about charities? 
RODNEY HIDE 
: What about charities? 
Gordon Copeland 
: Should they pay tax too? 
RODNEY HIDE 
: Well if they are earning income of course they should pay tax. If a charity is making money it should pay tax because the principle is that one is taxing income and the charities are earning income. They should pay tax. Should they pay GST? Of course because they are consuming goods and services and one wants a comprehensive tax system. In fact the way to encourage charity is by letting people have more of their money through tax cuts not by trying to shape the playing field. 
Nandor Tanczos 
: What about taxing resource use? 
RODNEY HIDE 
: Well in a funny way it depends on how one defines resources and on what the issue is. One of the resources is my labour and I do not think that should be taxed beyond anything else. If resources like land are being used then I do not think those resources should be taxed because in a way the market is capturing that. People are buying and selling land and its value— 
Nandor Tanczos 
: What about water? 
RODNEY HIDE 
: Then the question becomes whether we should be taxing water. Actually what we have there is a big externality. Let us assume for a moment that I am going the way of the Resource Management Act: I could pile a bucket of crap into a river and not pay for it. Of course there should be a payment or a regulation on that but not necessarily on my land because I am capturing that externality. 
Interestingly better than a tax on water use is actually a market in the use of water. Why do I say that? The reason is that it is more flexible and adaptive. It is not like the Government setting a particular rate for the whole of the country and saying: “This is it for all time.” The great thing about a market and the way prices get set by supply and demand is that it is able to adjust. So where possible I think we should be charging for all resource use. We should not be able to use scarce resources for free because that encourages waste. But where possible we want a market price and not a price set by the Government. I do not think that is possible for the use of air and things like that but in principle that is what we should be doing. 
I think tax cuts are a great idea but we should not lose sight of good tax policy. Good tax policy is a flat rate of tax and very very good tax policy is a low flat rate of tax. Thank you. 
CRAIG FOSS (National—Tukituki) 
: 
 I think I may be the only member to have actually read the report on the Budget Policy Statement all the way through. I have not heard anyone pick up on the part I am about to read to members but I think there will be a lot of nods of agreement. It is a statement that should be considered in the context of 1999 which is when the problem started. Page 5 of the Budget Policy Statement 2007 the report so proudly presented by the chair of the Finance and Expenditure Committee Mr Shane Jones—and members should listen carefully to this—states that an inappropriate increase in taxation “would also increase the prospects for tighter monetary policy …”. The statement adds that that increase would place pressure on the exchange rate and adversely affect the export sector. Perhaps there might be a typo in there but if we look at an inappropriate increase in taxation in the context of 1999 we will see that the incoming Labour Government hiked tax rates. It did not need to increase taxation as we have seen it do year after year for the last 7 or 8 years. Surprise surprise—a billion dollars here a billion dollars there! Even Dr Cullen has not been able to spend it all. 
The point is that the problem started in 1999 when Labour became the Government and the document that has been tabled talks about an inappropriate increase in taxation. So perhaps the chair of the Finance and Expenditure Committee Shane Jones might want to address that issue later when he and the others come down to the House. I certainly hope Dr Cullen pays attention to it. 
The Budget Policy Statement is a sorry tale of two doctors. After I went through it—not quite line by line but pretty close to that—I was led as I am sure many other readers were to question which doctor is actually running the economy. Which doctor has responsibility for the prudent running of our economy? Is it Dr Cullen? Well he has responsibility for the supposed fiscal management of the economy. Dr Bollard has responsibility for the monetary side of the economy. But Dr Bollard has to take whatever Dr Cullen sends to him. Or to put it another way poor Dr Bollard has to go around cleaning up Dr Cullen’s mess—those little bits and pieces he leaves in the corner. He has to carry the can. Dr Bollard is forced to prescribe the diet pills to poor New Zealanders in order to treat Dr Cullen’s compulsive taxation disorder. Dr Cullen cannot help himself. He has to tax tax tax. The answer is only ever to tax. 
I was interested to hear Mr Hide speak of fairness. The Labour members opposite did not seem to understand what on earth that word meant. Dr Cullen is directly responsible for the core and persistent underlying inflation that is now in New Zealand. Dr Bollard mentions in the December Monetary Policy Statement that there is a worrying persistent core that is underlying inflation in New Zealand. If we delve deeper we find that most of it is coming from the expansionary growth—the loose fiscal growth—in the public sector. Dr Cullen is also therefore directly responsible for the probable increase in our interest rates mortgage rates and credit card rates come 8 March when poor Dr Bollard will have to try to alleviate the situation and prescribe some medicine for the mess and illness that results from what Dr Cullen is putting on New Zealand. 
An increase in interest rates has been forecast and most commentators believe it will happen—25 points on 8 March and 25 more points after that. That increase will lead to higher mortgage rates thereby making homes even less affordable. It must be noted that homes in New Zealand are almost the least affordable in the OECD. New Zealand has some of the highest interest rates in the OECD and those are the countries we compete directly against. So how on earth can our businesses and our people compete with strong competitors such as Australia when the cost of our capital the cost of our funding etc. is so much higher than theirs? 
Dr Bollard has repeatedly warned against loose expansionary fiscal policy—as recently as in the December Monetary Policy Statement—in writing in print and at various briefings and meetings he has given. Dr Cullen has repeatedly taxed taxed taxed and spent spent spent thus leading to the high inflationary state we currently find ourselves in and more important—and tragically for our economy—to higher inflationary expectations. That is what is leading to high interest rates and the high exchange rate—and all in this year which is supposed to be Export Year 2007. Companies that are trying to export are getting totally nailed on the cost of working capital. They get totally nailed when they convert back into Kiwi dollars. I ask my colleagues in the New Zealand First Party which promotes Export Year 2007 to ask the hard questions of Dr Cullen and to not let him get away with the rhetoric. 
It is precisely because of the loose spend-up and the overtaxation of the past 7 years that has created the pent-up pressure that is now starting to flow through into our economy. The Government has had a dream run on the back of rural New Zealand. My colleague Tim Groser pointed out the luck the Government has had and he is quite right; it has had a fair bit of luck. But the chickens are coming home to roost. 
Dr Bollard uses central bankers’ speak. It is very conservative. One has to kind of interpret between the lines. But the bottom line is that he is saying that the blame of New Zealand’s current situation—the problems of inflation interest rates and high overvalued currency—lies directly with Dr Cullen. And all Dr Cullen can do is thrash around looking for someone else to blame. He thrashes around with blunt proposals such as levies on mortgages. He wants to whack our mortgages up even higher even though we will have to pay a higher rate in a couple of weeks’ time. Any time anyone tries to address Dr Cullen’s issues he bullies them and accuses them of ideological burps etc. Yet these are learned people from Treasury the Reserve Bank and the Inland Revenue Department who are trying to cope with the mess he is leaving behind as he furiously writes cheques left right and centre and takes the money out of hard-working New Zealanders’ pockets. 
The inflationary chickens are coming home to roost on the head of Dr Cullen. I suggest he starts to wear a wide-brimmed hat. Dr Cullen has changed his tone over the last few years and I would like to give members a couple of quotes from Dr Cullen. In a  
Scoop 
 article of 15 July 1999 “Government stokes inflationary pressure” Michael Cullen the then Labour spokesperson on finance stated: “Inflation is still under control but no thanks to the Government”. He was also quoted as saying that things were in a right mess and that the New Zealand economy was then at a point where the only factor keeping the lid on inflation was the overvalued exchange rate.” If we zip forward 8 or 9 years do we not see that the chickens have come home to roost? We will be holding Dr Cullen to account for his previous statements. He is in big trouble. He knows it and he is trying to find someone else to blame. 
Before I sit down I will just touch quickly on the current account and one other item. In 1997 Dr Cullen called the current account which was 7.7 percent of GDP back then “horrendous” and said that it was damaging to compare the New Zealand economy to that of Mexico and Asia. I say to Dr Cullen that the current account is currently around 10 percent of GDP so if it was horrendous at 7.7 percent what is it now? 
I will make one final point that I heard an earlier speaker note in the Budget Policy Statement debate. There are 144-odd pages in this document. The lead item outlines the goals that drive Budget decisions and process for 2007. Not once in 144 pages do the words “carbon neutrality” appear. Yet according to the Prime Minister that is supposed to be the most important item facing New Zealand in the coming years. She mentioned carbon neutrality 33 times in her Prime Minister’s statement which was delivered about 3 weeks before these documents were discussed. 
To summarise the inflationary chickens are coming home to roost. Unfortunately New Zealand’s mortgage credit card rates are about to go up and we know exactly where to point the blame. It goes to Dr Cullen. 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 I have just a couple of quick comments to make on Craig Foss’ contribution. He bemoans increases in Government spending but forgets that virtually every single one of his colleagues is promising to spend more wherever they go around the country. I will quote some of those colleagues a little bit later. Craig Foss says it is all about luck. For about 8 years now we have heard from National members that Labour has just been incredibly lucky. I remember the great golf quote: “The more I practise the luckier I get.” That in fact is what the Labour Government has been doing: practising hard in the interests of New Zealand and the New Zealand economy. 
Craig Foss also said that the chickens are coming home to roost and that it is all doom and gloom. To be frank for about 8 years we have also heard National members saying that at last the economy is going to fall over as if in some way economic underperformance is a good thing for New Zealand. He repeated that line as well. Of course this doom and gloom is always going to come. It is always going to be this year next year or the year after. Of course the reality is something different. 
One of the things people might have forgotten is what exactly the Budget Policy Statement is. It is what we have been debating. The Budget Policy Statement is really an indication from the Government about roughly what is going to be in Budget 2007 in a couple of months’ time and beyond. It contains a very important statement that people should reflect on. The basic statement is that the Government’s overall objective is to continue New Zealand’s transformation into a more dynamic knowledge-based society that is underpinned by the values of fairness opportunity and security. New funding has been prioritised for policies that will further New Zealand’s economic transformation continue to improve the well-being of families and strengthen national identity. 
You see there is a vision for New Zealand—and I like that. I will buy that. That sounds pretty good to me. There is a bit of a vision about where New Zealand needs to go to continue the work we have already started and to put funding into some critical areas. Of course we never hear anything like that from National. I will come back to talk about that in just a minute. 
The economy has been performing well—much to the chagrin of the National Party. Employment numbers are up as we all know and tax revenues are up as a result. What is happening as a result of that? Debt has been reduced and we are squirreling away our money for the Superannuation Fund which of course National opposed at one stage I seem to recall. Now it is supporting it and we have heard some comment about the fact that National might dive into that in order to fund its tax cuts which will be a great worry for the voters of New Zealand. We are funding social services health and education which were run down by National when it was last in Government 8 or so years ago. And we are supporting policies and those kinds of things that lead to this vision. 
I think the problem we have in this debate is that it is so one-sided. We never hear anything from National about what it is going to do. If one compares the National Party now say with the Labour Party as it was in 1998 one will see that Labour had been in Opposition for 8 years and we were fizzing. We were ready to go. We had policies for Africa we had leadership settled we had the team organised and we were ready to go. We were actually ready in 1996 but finally we got there in 1999. We set out the path and the agenda and we have not stopped since. 
And here we are with National after 8 years still flogging around trying to get a policy—one would be good—and now the Leader of the Opposition 8 years after National started to be in Opposition says he wants to set up a brains trust to see whether he can get some ideas. The National Party is not ready for Government. That is the point. A party cannot be in Opposition for 8 years and then ring a few mates and ask for some ideas for policy because it does not have any. I want to talk about that in just a minute. 
The problem the National Party has in these kinds of debates is that it is always whinge whine grizzle and groan from the members but we never ever hear what National is going to do. Let us take some examples. What is the National Party’s policy on tax at the moment? What is it? I see we do not know. Is it big tax cuts and now—which I think it was from Don Brash? Or is it little and later which are the weasel words I have heard from John Key and Bill English the co-leaders of the National Party who are slipping and sliding on that issue? 
Here is another example: what is National’s health policy? Could someone give me one policy apart from spending more on everything? Spending more on everything is what the National Party wants to do. No one at all has an idea about what National’s health policy is. In my view it should not be smoking cigars in people’s faces and then bopping someone in the face for complaining. It should not be about that. The National Party should not put that in its policy. Notwithstanding the fact that its health spokesperson sometimes practises that I do not think it should be in the policy. 
Here is another example: what is National’s education policy? Could someone over there summarise National’s education policy? 
Hon Ruth Dyson 
: I don’t think they’ve got one. 
Hon PAUL SWAIN 
: I do not think it has one. National members are all silent because it does not have one. This is after 8 years in Opposition. It has had 8 years to try to sort this out. There is no education policy. I wonder what the National Party’s policy is on the police. It just wants more of them. But hang on a minute was National not the party that cut police numbers when it was in Government? 
Hon Ruth Dyson 
: That’s right. 
Hon PAUL SWAIN 
: Yes it was says my colleague Ruth Dyson. Is this not funny? Eight years ago National cut police numbers and now it wants more of them. 
What is National’s policy on transport apart from wanting more roads? But hang on a minute relatively speaking did it not cut spending on roading over the 9 years it was in Government? Hang on National members criticise the Labour Government but was not a National Government going to sell the roads? That was a great idea! I wonder whether that is still the policy. That went down really well with local government! Local government really wanted National to flog off its roads! Yes that was a great winner! Probably one of the many things that actually saw the demise thank goodness of the National Government was flogging off the roads. That was a brilliant idea! It was one of Maurice Williams’ better ones. I wonder whether we will see that in the National Party policy on transport. I doubt it. 
When will we see these policies? That is what I ask of National members. They should just give us a couple so we can have a debate about it and say: “That might have a bit of merit but what about that?”. Instead all we get is whinge whine grizzle and groan about what the Labour Government is doing and when push comes to shove we should spend more on whatever. That seems to be what National members are saying. 
 We have problems with the co-leaders of the National Party. John Key wants a loose fiscal policy. He wants tax cuts all over the place and then he wants to spend up large because everyone is saying that. Bill English on the other hand criticises Government spending. He wants a tight fiscal policy and he wants cuts in social services. The problem is that the tighthead prop and the loosehead prop both in the same scrum are not pushing together. The tighthead prop is not pushing the same as the loosehead prop. What happens then is that the scrum always wheels and we make no progress because the scrum has to be set again. 
It is hopeless trying to have this debate with the National Party because there is nothing to debate from the National side—whingeing and whining are not going to do it. That will not get the National Party into Government nor is getting a brains trust together made up of people like Jenny Shipley—how is Bill English going to relate to Jenny Shipley? Can members remind me did not Bill English get rid of Jenny Shipley? Oh that is right he did. I also heard that Jim Bolger—a good bloke Jim Bolger—might be invited to be a part of that brains trust. Now did not Jenny Shipley get rid of him? Is that not how that worked? So we have all these people with old grudges hanging around and being invited by the National Party to be a brains trust to help it with policy making. 
Labour has the direction and the vision. The National Party has no policy nor a philosophy. It is trying to get people in to help with its policy making. The National Party is not ready for government. 
A party vote was called for on the question  
That the House take note of the report of the Finance and Expenditure Committee on the Budget Policy Statement 2007. 
Ayes 61 
New Zealand Labour 49; New Zealand First 7; United Future 3; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 48; ACT New Zealand 2. 
Abstentions 9 
Green Party 6; Maori Party 3. 
Motion agreed to.