Young Jonathan: Budget Debate 
Young Jonathan: Budget Debate 
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JONATHAN YOUNG (National—New Plymouth) 
 In response to the member’s question about what is happening to superannuation I say that nothing is happening to it. It is not going away. Budget 2009 has locked in national superannuation and it is set at 66 percent of the average wage. This Budget the first of many Budgets by the new Government in dire economic times has to make changes simply because of the economic situation that the Government inherited. Obviously Opposition members are very unhappy about those changes because the Budget reorders and reprioritises some of the things they sought to do. But we believe that we have presented a prudent and responsible Budget that will bring New Zealand to a place of recovery after the worst economic times since the 1930s. 
The Budget is both pragmatic and prudent in its approach and it will have a powerful effect. It will address the deepening situation that New Zealanders face in the long term and it will address short-term issues. The response of New Zealanders has been overwhelmingly positive. They support this Budget. Members should never underestimate the common sense of the voting public which is something Labour forgot last year. The Budget is pragmatic in that it is aimed specifically at building the economic base of New Zealand through creating an environment where jobs and growth can occur. 
In previous months this Government has passed a strong raft of legislation to support businesses—to the tune of half a billion dollars in relief—which is something that Labour never did. Last year the previous Government as we understand it was looking at a $1 billion surplus. From the Pre-election Economic and Fiscal Update we recognised that that surplus had become a $1.3 billion deficit in just a short number of months. Three months further on that deficit grew to $4.1 billion and in May this year New Zealanders in businesses homes and the workplace were facing a $7.7 billion deficit. 
The National Government caught a hospital pass and we have not dropped the ball. New Zealanders are saying that National has safe hands. When I hear people speak of what is happening I hear even staunch Labour people saying: “Well done John Key. You’re doing a good job.” The deterioration of the public accounts shows the enormity of the challenge facing this Government. In the midst of this Bill English presented a Budget that carries a strong sense of social responsibility but also attends to the critical necessity to turn round the New Zealand economy. That is why New Zealanders are glad to have a National-led Government. It is turn-round time. This is essential so that when we begin the climb out of the bottom of the trough we will be ready for the challenge and the opportunities that are before this nation. 
There is a world of difference between a decade of surpluses and a decade of deficits. It is easy to govern in good times. It takes real prudence and pragmatism to govern in difficult times. That reminds me of a story from some years ago when a friend of mine sought to buy some personal life insurance. A bit like overseas financiers the insurers wanted to know whether the investment they were going to make would be risky. This person had experienced more growth in girth than in height so the insurers requested a physical audit. This person was sent to the doctor. The doctor said: “You’re healthy. There are no signs of disease. Your blood pressure and weight are within normal limits.” Then prudently this person went to a fitness instructor who said: “You’re in terrible shape. Your resting pulse and your body fat percentages are way above normal. Your flexibility is poor. You’ve just flunked the treadmill test.” If both assessments are right what does it mean to be fit and healthy? 
The Leader of the Opposition has in effect said that we need not worry about listening to the fitness experts. He has told us not to worry about credit agencies and their ratings. “Ignore them. Things will be fine.” he said. New Zealand according to “Dr Phil” is fine. But after the Budget Bill English was able to report that Standard and Poor’s had removed the negative outlook from New Zealand’s AA foreign currency rating and Moody’s Investors Service said that New Zealand’s rating which is on a stable outlook was not immediately affected by the projected debt path. 
The Opposition of course says that that does not matter. But we know that if our credit rating had dropped we would have seen a 1 to 2 percent increase in interest rates flow through New Zealand businesses and households. Businesses that are already struggling with reduced margins would have found an increase in their costs through an increase in interest rates and they would have had to cut costs. One of the areas where people cut costs of course is in their staffing levels. So we cannot say that negative credit ratings would have no effect. They would have a dire effect on New Zealand. Mr English went on to say: “This is a positive reaction that will benefit New Zealand households businesses and the economy as a whole. It acknowledges that the Budget strikes the right balance between supporting New Zealanders through the recession in the short-term and setting in place a credible fiscal and economic plan for the medium to long-term.” 
There is a difference between an economy that may be called “everything’s fine” and an economy that has to get fit to meet the challenges of a global recession. I was talking just last week to a constituent who made the comment that the recession was forcing him to run his business smarter—that is by necessity. The reason why it is important to do things smarter is that compared with the previous Government’s forecast in the 2008 Budget the forecast this Government is working with shows a decrease in the nominal economy of $50 billion over the next 3 years. That is a sizable contraction and it has a flow-on effect. Not only do New Zealand businesses have less money to work with but also tax revenue will be considerably lower than expected. 
In response to that situation a smart Budget has been presented by the Minister of Finance the Hon Bill English. A decrease in revenue has led him to deliver a prudent Budget that controls Government borrowing and debt but also sees an increase of $2.9 billion in new core Crown spending. The Budget is smart because it redirects resources to areas where they will make the most essential difference. It brings a fiscal reprioritisation so that the most good can be achieved for the most people. 
Of course we cannot change the future without changing the present. When members opposite attack the policy changes that Mr English has brought about in many respects they are not presenting any alternative except to maintain the status quo. Let me tell members where the status quo would have taken us. By 2022 it would have taken us to debt of 70 percent of GDP. The policy changes presented in this Budget bring that debt down to 37 percent in the same period of time. The Budget brings a good balance as Mr English has said. 
Today we have heard a lot about adult and community education as one area where adjustment has occurred. There are of course some social and community benefits in this area but the Government’s investment of $124 million over the next 4 years will focus on skills that will connect people to their workplaces and bring people into places where they can work. As much as I might enjoy making a mug and feel good about it the reality is that very few of my mugs will earn me a living. In terms of priority this Government wants to ensure there is food on the plate and drink in the mug and not empty plates and empty mugs in our nation. Literacy and numeracy is a vital area of investment that will connect people to the workplace. 
On Cape Egmont very close to where I live we have a lighthouse that gives ships a sense of location and direction. Strong leadership is essential when times are tough. The lighthouse does not really come into its own until it is dark and stormy and then everything depends upon it. Leadership is like that. It is most needed when there is uncertainty and when the horizon gets lost in the rise and fall of surrounding circumstances.