Parker David: Budget Debate 
Parker David: Budget Debate 
[Volume:673;Page:19080] 
Hon DAVID PARKER (Labour) 
: 
 I could take 10 minutes debunking some of the spurious claims made by the previous speaker the Hon Kate Wilkinson but I think I can do it by addressing one of them. That was the economic illiteracy shown by the Minister when she claimed that asking farmers to pay for 10 percent of their agricultural emissions the cost of which is currently borne by taxpayers and other sectors of the economy would put up the price of milk. She said that increasing New Zealand costs of farmers by a small amount would put up the price of milk when Fonterra and the Government have recently been on record saying the price of milk is set by the international price paid for milk and other commodities. One cannot have it both ways I say to Ms Wilkinson. The reality is that aside from some question as to whether there is monopoly pricing New Zealand’s milk price is set by the international price for milk. 
This Budget was an important Budget for this country because it came at a time when New Zealand needed a Government to lead it to build our nation and our economy. New Zealand really is at a crossroads. This election will provide a stark choice for electors because they will see on the basis of this Budget that National is taking them in one direction and Labour would take them in another. The choice is very stark. On the one hand we have an outcome from a National Government that says pretty much that the approach should be “easy go”. The Government will cut a bit of spending here but other than that it will leave the settings of the economy pretty much unchanged and that will do. We might have to sell a bit of the family silver and we will end up not owning many of our productive assets. We will sell a bit more of our land and our dairy farms—the Government is not too worried about that. It will sell off half of the energy companies that are currently owned by the Government and similarly it will sell Air New Zealand. National would have us believe that that approach will lead us to nirvana. 
On the other hand we have the Labour Party which is saying that it is time we accept that New Zealand needs to act differently and that we need to earn our way in the world by exporting more goods and services. That is my message today. If we want to have some hope that we will have a country that grows in prosperity in the future we have to change the settings of our country in a way that leads to our exporting more goods and services. The reason for that is quite simply that for some decades now we as a country have spent more than we have earned. We have run current account deficits we have borrowed money to fund consumption and as a consequence we are in a worse position than a lot of other countries and we are in a worse position than we should be. In order to stop that happening again we have to change the economic settings of the country otherwise the same thing will happen again. It is no secret. Like every other Western country in the world New Zealand binged on consumption fuelled by rising levels of private debt. It is true that because of the prudence of the Labour Government between 2000 and 2008 we substantially reduced Government debt—very substantially. Otherwise New Zealand would be in the position of Greece Portugal Spain Great Britain Ireland—all those countries that are in a very dire position at the moment. 
For a start let no one be fooled. The truth is that Labour was contrary to the rhetoric of National fiscally responsible. We always have been as we see when we look at our history. It was National that over that period opposed every Budget surplus and called for unaffordable tax cuts that would have further fuelled inflation asset bubbles and debt bubbles. It is National that since the election has had a failed economic policy for this country that is largely based on income tax cuts 42 percent of which have gone to the top 10 percent of the population. It is that economic prescription that has led to us as a country this year facing a $16.7 billion deficit. 
It is clear that the Government has only one major plank to its economic policies and that is tax cuts. Tax policy is important. I do not deny that tax policy is important. But economic policy has to be more than tax policy and it certainly has to be more than tax policy with those income tax cuts weighted to those who already earn the most. It is plain that the economy has stalled and the reason there is little good news in terms of new export sectors which we need in this country is that the Government has no economic plan other than tax cuts weighted to those who already earn the most. 
The Budget makes for dim and dismal reading. It projects that the current account deficit will rise to over 6 percent and in fact close to 7 percent over the next 4 years. The Government is trying to convince New Zealand that we are now in such a hole that we should sell the family silver—half of all of the electricity State-owned enterprises and Air New Zealand—to fill the hole. But the reality is that changing who owns those assets that already exist does not change the output of the New Zealand economy. Again it shows how bereft the Government is of vision. 
I say that after 3 years of management—I would say mismanagement; let other people assess whether it is mismanagement—by the National Government it is fair to ask Government members whether they are doing OK. What measures should we use? The measures they chose themselves! The first was closing the wage gap with Australia. Is that getting better? No it is getting worse. The second was the promised aggressive recovery from recession. That has not occurred despite record prices being paid for our mainly primary produce exports in buoyant economies in Australia and China our major trading partners. The promised step change in the economy has not happened; in fact it has disappeared from their language. 
There is one thing I agree with the Hon Bill English on. He says that New Zealand’s total indebtedness to the rest of the world is the metric upon which we should measure our long-term success. He says it is a serious problem and I agree. What does this Budget show? This Budget projects those figures out for another 4 years. That is by the end of this Budget document National will have been in power if it has its way and is re-elected—which we obviously disagree with—for 6 years. What does the Budget project? [ 
Interruption 
] It projects that every year from here on in New Zealand’s net investment position gets worse I say to Jacqui Dean. Every year. Currently New Zealand’s net international indebtedness—that is everything we owe to the rest of the world less what they owe to us—is 78.6 percent of GDP forecast for this year. [ 
Interruption 
] Every year from here on in in the forecast period it gets worse and worse I say to Jacqui Dean. By 2015 in the words of the member’s Government’s own Budget New Zealand’s net international debt rises to 85.3 percent of GDP. In other words using the Government’s own predictions and assuming National wins the election it gets worse from here on in. It really is fair to question the Government’s management of the economy. 
The Labour Party agrees with the New Zealand Institute in its report  
A goal is not a strategy 
. New Zealand in order to lift its economic fortunes has to do more than sell primary produce. Primary produce—forestry agriculture and aquaculture—are all very important and will be the mainstay of New Zealand’s economy for a while yet; indeed for ever. But New Zealand cannot get ahead on those exports alone and that is where we need policies that will drive the breadth and value of our exports. That is the sort of economic policy that Labour is bringing forward. 
Already we have more policy out there in terms of substantial change to economic settings than National has after 3 years in Government. Labour has proposals to change monetary policy in a number of ways that will improve the outcome for New Zealand exporters. Do members know that New Zealand’s currency is more speculated in and more traded than the Russian rouble the Indian rupee and the Brazilian real? Those economies are all massively bigger than New Zealand’s yet our economy is speculated in more in part because of our monetary policy. Labour would change our monetary policy. 
The other thing we need to have a burgeoning new export sector is depth in capital markets. Therefore we need more improvement in savings to have more investment. How can we do that if KiwiSaver is cut? We need fair tax systems not income tax cuts weighted to those who are the wealthiest and a number of other changes including a research and development tax credit which we have already announced.