Parker David: Budget Debate 
Parker David: Budget Debate 
[Volume:639;Page:9637] 
Hon DAVID PARKER (Minister of Energy) 
: 
 One of the good things about MMP of course is that it means there is a proliferation of parties. That means there are many more people at this time of night to listen to speeches such as this so I greet my fellow members of the House. 
I am very pleased to be taking a call in the Budget debate 2007 because this Budget is a bold and important milestone in the history of New Zealand. It addresses the priority of improving savings and it does this in a way that creates financial incentives and economic security for New Zealanders for decades to come. It encourages investment and it improves business settings. We will see more business and we will see more growth in our economy as a consequence. It supports moves to a sustainable economy. It advances us towards carbon neutrality and it does all this while investing appropriate amounts of money in maintaining our core services—be they superannuation health services education services or transport. It puts additional money into the infrastructure that we need to keep our country running. 
How have we done this? Well since 1999 this Government has overseen an economy that has been growing at above our historical norms. We have had growth since then of 3 percent per annum on average over and above the rate of inflation. That growth rate of 3 percent per annum is faster than that of Japan faster than that of the United States faster than that of all European countries on average and as fast as that of Australia. Australia of course is one of the well-performing economies of the world at the moment with a wonderful richness of natural resources that can be dug up and sent overseas. This economy has grown at the same pace as the Australian economy since 1999. 
Our unemployment rate is lower than that of Australia and it is lower than it has been at any time over the last 25 years. We have gone from having mass youth unemployment in New Zealand in the early 1990s. The number of under-20s on the dole has fallen by a massive 92 percent—92 percent. There are now 28 Work and Income centres in New Zealand where there are no young people on the dole at all. What a wonderful outcome! 
Profit growth in the business sector has grown by an impressive 20 percent a year in 2003 in 2004 and in 2005—proof again that the Labour-led Government is a good economic manager. By comparison the growth in corporate profits during the previous 8 years was between 5 and 7 percent per annum under that weak National Government. The Government’s fiscal position is also strong. Let us not forget that the last National Government to borrow in order to fund tax cuts and to borrow funds was the National Government under Muldoon. He left the economy in tatters—in tatters. New Zealand Government debt was equal to 60 percent of GDP. It was amongst the highest—if not the highest—in the OECD. One dollar in five of taxes was being spent on interest. That would have risen to one dollar in four had it not been for the wise stewardship economically of the subsequent Labour Government. 
This Government has reduced Government debt to 20 percent of GDP—that is gross Government debt at 20 percent of GDP. If there were a change of Government it is absolutely clear that the only way substantial tax cuts could be funded would be through a combination of significant cuts in the core services of health education and superannuation and—and not or—an increase in Government debt. National would squander away the wealth of current generations in order to pay for unsustainable tax cuts. 
This year’s Budget has an emphasis on savings. The Government is supporting that to the tune of $40 a week for employees. Every person who contributes a saving of $20 through a KiwiSaver account will get a tax credit from the Government of $20— 
Hon Member 
: Opposed by the Tories. 
Hon DAVID PARKER 
: —which is opposed by National. In addition employers will get a tax credit of $20 towards their contribution to workplace savings. So for every $20 a week that people in this situation save out of their pay packets they will be saving $60 a week. This is an incredible shift in New Zealand savings. It will be of benefit throughout the economy not only for the security of people in their old age but also because the pool of investment capital available to business will increase. Interest rates over the decades will decrease and the cost of capital will decrease. Labour productivity will improve. 
One of the cries we hear from National is that labour productivity is not going up at a high enough rate. Well we actually agree with that. But we have a solution; we do not just sit there and complain about it. We recognise that in order to improve labour productivity we have to have more investment in labour productivity more investment in plant more investment in automated processes and more investment in research and development—and this Budget hits that from three fronts. First of all we have higher rates of saving. Therefore the pool of capital that businesses will have to use will increase. Secondly we have research and development tax credits. Thirdly we have the decrease in the company tax rate—something again that National voted against. Who was it that last decreased taxes for companies in this country? It was the Labour Government. We did that in the 1980s. Who did not decrease the rate of tax for companies during the 1990s? National! Who is now decreasing the rate of taxation on companies in the year 2007? Labour! It is Labour that knows how to grow this economy it is Labour that knows how to improve labour productivity and it is Labour that knows how to improve the wages and living conditions of New Zealanders so that New Zealanders stay in this country and add to its wealth. 
I want to turn briefly to the issue of sustainability. John Key has said that sustainability is all talk and no action. What a load of rubbish! This Budget has $800 million of sustainability funding in it. Why do we have that focus on sustainability? It is because our leader the Prime Minister the Rt Hon Helen Clark has rightly said that there will be no prosperity without sustainability but that a commitment to sustainability will help us to lock in prosperity. And it will. We believe in sustainability. We have been pursuing climate change and sustainability issues during a very difficult period politically in the last 6 years. It was made difficult by the fact that Australia did not commit to the Kyoto Protocol and that National criticised us for doing so. Now that sustainability and climate change are suddenly popular issues National has changed its spots on them. But National talks; it does not deliver. 
We have delivered $800 million worth of spending and the electrification of rail in Auckland and Wellington and there has been a ninefold increase in support for public transport under this Government. In addition we have $30 million of spending for sustainability from household sustainability programmes to public recycling facilities for business partnerships and for sustainable Government procurement schemes. The Government can take a lead in this; we can change business practice not just for the Government sector but for the benefit of all sectors. There is $72 million for improved energy efficiency $23 million for an interest-free loans scheme to further roll out retrofits and energy efficiency in homes an additional $15 million for grant-based schemes for those on the lowest incomes $15 million for a home energy ratings scheme and more research into energy efficiency technologies—and that is in addition to all of the work we are doing through the New Zealand Energy Strategy. 
I will come back to the big issue for the future here which is how to fund the sorts of unreasonable tax cuts that National proposes. Well the only way that National can do it is the way it proposed to do it at the last election: to cut services and borrow like Muldoon. National members are already saying that workplace savings schemes mean they might have to look at traditional superannuation. So they are already saying they would do again next time what they did when they were last in Government which was to cut the rate of superannuation for the elderly. They would cut superannuation they would cut spending in health and education and those are the only three big votes. Unemployment payments and sickness benefits are already at low levels. There is not much that can be cut there. The only areas that can be cut are superannuation health and education and as well as that National would have to borrow. It would have to undo the good work of this Labour Government. It would have to increase the rate of gross Government debt above the 20 percent of GDP where it is now and where it is placed sustainably under this Government. A National Government would bankrupt this country; we grow it.