Goldsmith Paul: Budget DebateText is incorporated into the Bound VolumeGoldsmith Paul: Budget Debate[Sitting date: 20 May 2014. Volume:699;Page:18102. Text is incorporated into the Bound Volume.]PAUL GOLDSMITH (National): It is my pleasure to speak in this Budget debate. I must say it is rather galling to listen to a lecture from the previous speaker from the Green Party Metiria Turei lamenting house price costs. That is a party whose very essence has been all about squeezing and putting urban limits round cities. It is all about making sure that Auckland cannot grow because it is determined to squeeze everyone into a small compact city that is all about people getting on their bikes which would lead inevitably to a massive increase in the cost of houses in Auckland and artificially increase the value of land in Auckland hugely.Yet she has the gall to say that we do not care about housing affordability. It is people of her ilk who have caused a big part of the problem in Auckland. This Government and in particular Nick Smith are doing an excellent job at unravelling that problem and are working closely with Auckland Council to get a greater supply of houses which will make a difference to the affordability of houses and will really really change things. The Green Party also opposes any changes to the Resource Management Act. It opposes those changes. It always wants to add as many costs as it possibly can around heritage around any aspect of housing. It is the party that wants to add costs yet here it is lecturing us on housing affordability.I am very keen to talk about this Budget which as part of the National Government I am proud to be associated with. It is a Budget that is about managing a growing economy. When we look at what we have achieved it is about locking in gains from higher growth and more jobs. We are expecting as this Budget outlines another 172000 jobs in the New Zealand economy by 2018. We have seen average wages go up by $3000 in the past 2 years. Under this Budget they are forecast to grow another $7600 to $64000 per annum as the average wage by 2018. I think we have got a lot to be proud of there. We have seen lower cost of living increases. Wages will be growing by about 14 percent to 2018 but we expect inflation to be less than 10 percent. So that is actually how you improve the standard of living in this country: you get wages growing faster than inflation. We have also had the ability to invest in children and in families with a $500 million package which I will talk about later.Let us have a look at some of the figures. We have a very positive outlook for the economy with growth expected to rise over 3 percent—and rising at close to 4 percent in the next little while. That stands us in excellent stead in the OECD and amongst developed countries around the world. The New Zealand economy is growing well. The challenge that we have set ourselves is to extend that period of growth so that it is sustainable over a longer period. As always we have the Treasury forecasts that have us dropping back down to 2 percent next year because Treasury worries about the sustainability of growth in the New Zealand economy. Our challenge in all the work that we are doing around the Business Growth Agenda and all the work of the Government is to try to extend that period of growth so that we can sustain 3 percent growth for a longer period and really increase the living standards of New Zealanders.I just want to have a look at the unemployment rate. We heard Mr Cunliffe a couple of weeks ago going on about how he had promised to get the unemployment rate down to 4 percent if he ever got near Government. Well lo and behold if we look at the Budget forecasts we see it is forecast to be 4.4 percent in late 2017. So we are actually on track to make excellent progress on reducing unemployment but the main thing of course is that employment itself is up magnificently. So there are more people working hard with the opportunity to do well for themselves and their families and to receive those higher annual wages.Every Budget cycle we have a lecture from Mr Parker about the woes and perils of the current account deficit and how bad New Zealand’s deficit is and how badly we are doing. Well actually if we look at this Budget we are not doing too badly on the current account deficit. It is going to be less than 3 percent of GDP.Hon Phil Goff: Look at the projections.PAUL GOLDSMITH: And yes Mr Goff suggests that the projections are not looking so good. If we look at the projections of the Budget in 2010 Treasury was forecasting us to have a current account deficit this year of 7 percent of GDP. Oh dear it got that wrong did it not? Treasury has form in being overly pessimistic about current account deficits in New Zealand. This Government has actually been very successful in doing what it can to encourage export growth and a good net balance of payments which is putting us in good stead long term.It is true that this Government has very substantially increased net core Crown debt in the last 6 years. It will be peaking at $65 billion. We have done that very deliberately to protect the vulnerable in New Zealand through a difficult time. Again we have had a lecture from Mr Parker. Like a cracked record he is always talking about inequality. He seems to forget the massive redistribution that we have in this economy which has over the past few years been funded by debt in part. We have a situation at the moment where 12 percent of the households in New Zealand pay 76 percent of the income tax. Is Labour saying that is not enough? What would be enough? Is it really advocating that perhaps that 12 percent of households should pay 90 percent? Or maybe they should just pay 100 percent—why not? In fact why be so bold as to say it is only 12 percent of households? Why do we not just get the top 1 percent of households paying 100 percent of the tax and be done with it? I think that has been tried in other countries like Russia but I think that is what Labour thinks.What we often forget about when we talk about income redistribution and poverty in New Zealand is that roughly half the households particularly if they have children pay very little or no income tax after Working for Families is taken into account. As well as paying little or no income tax they receive basically free health care they receive free education for their children—high-class  First World education. We also receive superannuation when we retire. All of that is on the back of a highly redistributive Government system. That is something that we as New Zealanders are proud of and it is part of the reason why we have a highly successful society and culture. I do not believe for one moment that we should listen to lectures from Mr Parker saying that the solution to all our problems is even more redistribution.Moving on to responsible Government spending in this Budget this Government has an exemplary record over the last 6 years of responsible Government spending. If we look back at that terrible period of the Labour Government in the 2000s we heard another great diatribe from Mr Cunliffe—I have not seen him recently—where he told a whopper and said that under Labour there were nine surpluses in a row. What a load of nonsense. The last Budget that Labour was responsible for in 2008 led to a $3.9 billion deficit and that was largely because it had increased spending by 12 percent in 1 year—12 percent in 2008—with $7 billion of extra spending. Well this Government has not been able to continue doing that and there is no way the economy would have survived if we had continued to do that.We have had new spending in the Budget of less than $1 billion a year over the last little while. The main consequence of that is that we are back in surplus and we have been able to keep interest rates lower for longer. We have had the lowest interest rates in 50 years. Yes they are starting to go up at the moment but only from a very low base. When we talk about housing affordability in Auckland that is the most importantaspect. If you have the ability to borrow when interest rates are at around 6 or 7 percent that enables you to borrow money and buy a decent house.And yes there is no question that people in the area where I come from Epsom are worried about housing affordability. That is why the Government is paying an enormous amount of attention to the issue. It is why we are focusing so hard on getting the supply of new houses and land availability up so we can reduce that pressure. It is why this Budget reduces some of the costs of building materials. It is why we have got a bill coming through the House at the moment trying to restrain development contributions which in some councils have been like a runaway train. It is why we are trying to reform the Resource Management Act. We are not being helped by members on the other side who cry crocodile tears about wanting to increase housing affordability but do nothing about it. It is why we are determined to keep interest rates lower for longer. On that basis I do commend this Budget to the House. Thank you.