Dalziel Lianne: Budget Debate 
Dalziel Lianne: Budget Debate 
[Volume:654;Page:4254] 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 This Budget was apparently signed off by a Government whose front-man had publicly proclaimed that he was ambitious for New Zealand. I ask members whether they remember anyone saying that. I spent the last week traversing my way through different aspects of the Budget in an attempt to find anything that even remotely resembles that ambition given that New Zealand entered the difficult times with the kinds of books that—despite the comments of the previous speaker Nicky Wagner—most nations could have only dreamt of entering a recession with. The unemployment rate was the lowest in the OECD and Government debt was at 17 or 18 percent. The National Government would have preferred to give tax cuts rather than deal with the debt which actually enabled us to enter the recession in better shape than many other countries were. We have a well-regulated banking sector to boot with no need to find the level of bail-out funding that overseas jurisdictions have needed to find. So New Zealand was in pretty good shape to enter into the recession. 
Did the previous Labour Government know we were moving towards difficult times? Well yes we did. During the last election campaign we told New Zealanders that National would never be able to afford the types of tax cuts it signalled would occur if it was elected—and that did not take into account National’s decision to allocate 30 percent of its first round of tax cuts to a mere 3 percent of the top income earners in this country. We said that National was irresponsible in making promises that we knew it could not keep. We backed off from making some commitments that we wanted to make during the election campaign last year because we knew that we could not afford to deliver on them. We thought it would be dishonest to go ahead with those promises. We backed off from making those commitments because we wanted to keep the promises we made. 
Mr Key was not so circumspect; he was given the National Party leadership in order to win the election. That was his job and he would say anything or do anything. He acted on Crosby/Textor advice in order to be elected. It is all very well for that experienced money-market bond trader to say that his experience in the market is one of his credentials for becoming Prime Minister but then he said that he did not know that the recession was going to be as bad as this. Well how bad did he think it was going to be? Was it better or worse than he thought it would be when National passed the tax cuts under urgency before Christmas? Was it better or worse? Or were the tax cuts designed just to be written up by the media as part of National’s 100 days of action? Were they undone by the passing of legislation under urgency on Budget night so that the breach of faith would be removed from the agenda as quickly as possible? 
My message to Mr Key is simply this: he cannot have it both ways. What occurred internationally was already having a flow-on effect on the New Zealand economy. This effect was reflected well before the last election. It was also reflected in the Pre-election Economic and Fiscal Update. There was no damning opening of the books as we saw in 1984 and indeed in 1990. The Pre-election Economic and Fiscal Update was designed to prevent that from happening. It was aimed at stopping a political party from making promises that other parties knew it could not keep. 
All of the information was on the table but that did not stop Mr Key. The people who voted for him do not deserve this Budget. It represents a betrayal of Mr Key’s personal guarantees on several counts but most of all it puts paid to the idea that he was ever ambitious for New Zealand. I think he was just ambitious. Apparently Mr Key has a new persona in the Back Bencher: the “Blue Baron”. I have not been over to see it yet. When I first heard it described I thought the name was spelt “barren” because this Budget is barren. It is bereft of the ideas that one would expect from somebody who put his personal guarantee behind the promises that he made. 
One area that I want to focus on in this Budget response is the impact that this National Government has had on this nation’s fledgling efforts to grapple finally with our lack of savings. This issue has not been addressed since another National Government riding high on a major electoral victory destroyed the last superannuation scheme that a Labour Government had put in place in 1974. I honestly thought that the days of members’ using superannuation as a political football were finally over. I seriously thought we had achieved final agreement. Everyone had signed up. 
My entire political career and even my life before that is tied up with the superannuation issue—the promises the parties’ outbidding of each other and all those things. In 1974 New Zealand had Labour’s superannuation fund and in 1975 we had the famous dancing Cossacks ads. I remember having to ask my parents what that was all about; of course it was an attack on the superannuation policy. I did not get to vote in the 1975 election but a lot of people did and they voted to get their money back. Was that a good thing? No. 
Then in 1984 Labour promised not to introduce means testing as a kind of counter to the Muldoon attack on the Labour Opposition. Muldoon had said that Labour would introduce means testing because he knew that the Government could not sustain universal entitlement at 60 years of age. It was known that it could not be sustained. So Labour promised that it would not introduce means testing. How did Labour get round that when we could not afford universal entitlement at age 60? We introduced the surtax. In my view that was not the right thing to do. When we make a statement that we will not go down one track to then go down it but call it something else does not take away from the fact that we are not doing the right thing. The right thing was not to make the promise. Getting rid of the surtax was actually the right thing to do. That was a core promise made in the 1990 election campaign. Does anyone remember the speech made by Mr Bolger at the time? He said “no ifs no buts no maybes”; he gave a cast-iron guarantee that the surtax would be removed but of course the surtax was not removed until 1997. 
In 1999 we had the cutting of the threshold for superannuation from 65 percent of the average wage—below which it could not fall—down to 60 percent. That was a dishonourable action taken by a very dishonourable Government which paid for its tax cuts by cutting the base threshold for the pension. In 2000 the incoming Labour-led Government restored the threshold to 65 percent. 
Finally we brought together the last two elements of the jigsaw: the Cullen fund which partially pre-funded the cost of superannuation into the future and KiwiSaver. What do we have now? Here we go; it is happening all over again. I think it is important that we think about what this means. 
In 2031 when withdrawals are expected to commence the fund will be short by $35 billion. It is ludicrous for the Prime Minister and the Minister of Finance to say that investing in the fund is borrowing to save when the detailed analysis shows that we will be much worse off if we do not take the opportunity to continue to invest in the fund. By 2031 if we continue to contribute to the fund $124 billion will be in the fund including the tax revenue generated from earnings. With a contribution holiday of 11 years the amount will be $86.5 billion and we will have $14 billion less debt. I can add. We will be $23.5 billion worse off as a result of the decision not to invest in the Superannuation Fund. 
The Government says that people would not have a mortgage at the same time as a superannuation scheme. It says that anyone would pay off his or her mortgage before saving. That is what the Government says. It is rather ironic that this is the Government that decided to cut the mortgage diversion component of KiwiSaver; that shows that it does not believe its own rhetoric. 
I think the National Government has to front up on this issue. It has given up on a mechanism that enables political parties to commit long term to the current superannuation thresholds: 65 years of age universal entitlement non - means-tested with 65 to 72 percent being the range of the proportion of the average wage that the payment represents—the married rate. The decade of deferrals is irresponsible in the extreme. The obvious consequences will not be felt until we have all left this place. The reason that Mr Key will not need to honour his promise to resign when superannuation is cut—and it will be cut—is that he will not be here to resign.