Fenton Darien: Budget Debate 
Fenton Darien: Budget Debate 
[Volume:673;Page:19130] 
DARIEN FENTON (Labour) 
: 
 It is a pleasure to take a call in this Appropriation (2011/12 Estimates) Bill debate on Budget 2011. I have listened to many of the speeches today from National Government members and I believe that they know deep in their hearts that this Budget is a Budget that hurts but does not help. This Budget is a giant con on the New Zealand public. It is a recipe for more borrowing asset sales cuts to front-line services and economic stagnation. 
Many National members have spent more of their time talking about Labour than about National’s Budget. It is a very very interesting phenomenon is it not? It makes me think they are very very worried and it confirms for me just how out of touch they have become with Kiwis who are struggling to make ends meet. I think that deep down National members are quite embarrassed. I think Sam Lotu-Iiga is very embarrassed by this Budget. We can tell. 
This Budget confirms what we already knew: National has no idea how to get our economy moving. It is reverting to the same old policies of past National Governments: asset sales and punishing low and middle income earners. 
The truth is that the New Zealand economy is in a fragile state. It is barely emerging from a deep recession where it has lingered much longer than it should have because of bad policy directions from the National Government. For 3 years now John Key’s National Government has promised us that good times are just around the corner and we are supposed to believe that from this Budget. We are supposed to believe that from the Budget’s projections for hundreds of thousands of jobs and 4 percent growth. For goodness’ sake! 
Under this Budget New Zealand will continue to go backwards. Reductions in the deficit in the future rely on the sale of our assets and the Government—this is the cheating and the con thing about this Budget—has already banked that money just as it has already banked the $1 billion cuts in public services even though no one knows where they are coming from. 
The Budget is a litany of broken promises from this Government. A disgraceful deception is being visited upon the people of New Zealand. Job growth—170000 jobs in the next 4 years—is predicated on shonky figures that do not stack up. They are fairy tale figures. We have had those airy-fairy promises from John Key in the past. Do members remember the National leader’s promise that 4000 jobs were going to be created with the cycleway? What did we get? We got 200. Somehow now we are expected to believe the magic numbers in this Budget. Even Treasury is saying that those figures are not quite right. It has seen them before in past Budgets and they do not stack up. 
Along with all of the other things we have heard from the National leader John Key is his promise to close the wage gap with Australia. But now the 30 percent wage gap with Australia has become a competitive advantage according to Bill English. A couple of weeks ago Paula Bennett declared to this House that any job is a good job. I thought that was incredibly revealing because it shows a stark difference between John Key’s National Government and the Labour Opposition. Of course people need jobs and the best way out of poverty is jobs but they must be decent jobs not jobs at any cost. They must be jobs that are paid a fair rate for a fair day’s work. That is why Labour will increase the minimum wage. 
I will talk about the minimum wage and why we will increase it to $15 an hour because we have heard denigration from the Minister of Labour and others. Let us be honest. New Zealand workers have low wages compared with other developed countries and raising the minimum wage is just one effective part of lifting pay rates to build a solid base for a high-wage high-skill and high-value economy. There are other parts to that base and other colleagues have talked about them. The truth is that New Zealand has a huge inequality gap and the gap between low incomes and high incomes grew significantly after last year’s tax cuts for the rich. 
The National Government members have consistently said they want New Zealand to catch up with Australia but they fail to acknowledge the wage differential. Now they are saying it is a competitive advantage. The wage differential is a huge problem for New Zealand’s economy. It is not just our skilled workers who are leaving in droves for Australia; many unskilled workers are leaving too because they can earn so much more even on the minimum wage. The minimum wage went up last week in Australia. It has gone up to an equivalent of NZ$20.29. But many more Australian workers receive that. Australia has a system that recognises skill. It has a system that recognises industry. There is a whole range of minimum wages. 
The Minister of Labour said today that 6000 jobs would be cut if we increased the minimum wage to $15 an hour. There have been numerous studies on increasing the minimum wage including increasing the minimum wage for youth—people under 18. The truth is that there are mixed views but the ILO the International Labour Organization which is the United Nations body for workers’ rights and employer-employee relationships says that increasing the minimum wage contributes to both hiring and firing and it depends on the country’s conditions and on what is happening in that particular country. 
The interesting thing about this is that the counterargument that increasing the minimum wage increases unemployment implies that dropping the minimum wage increases employment. Do we have any evidence of that? We have never seen any. There is no such evidence. In fact during the 1990s when the youth minimum wage for workers under 20 was $4.20 an hour we had the highest youth unemployment we have ever seen in this country. 
The good thing about raising the minimum wage is that it increases demand in the economy. Low-income people spend most of what they earn. Increasing the minimum wage is a much more effective measure for the economy than tax cuts for people with already high incomes. Actions speak louder than words. In tough times we have to make choices and we have to choose priorities. 
The difference between this Government and the Australian Labor Government’s Budget which we saw a couple of weeks ago is very stark. Despite lower unemployment in Australia than in New Zealand there is a strong focus in its Budget on jobs and skills. Instead of focusing on job creation—and I really do not think this Government knows what that means—this Government has repeatedly cut taxes. That seems to be its only strategy. It has cut taxes. So those on personal incomes and those benefiting from company profits have had a bonanza with a total cost of the two tax cuts since National became the Government of over $5 billion a year. 
It is no wonder that we now have a National Government Budget that is trying to convince the New Zealand electorate that there is no alternative to further cuts in Government spending. The last time I heard that was from Ruth Richardson and Bill Birch. 
There are other cuts in the Budget and if I had time to talk about them I would. For example this Government appears to have given up on productivity and worker engagement. The Government thinks productivity comes from building more roads. It does not seem to understand that productivity changes happen in the workplace. Yes businesses grow our economy but who is part of business? Who helps create business? Who helps create the wealth? It really intrigues me that our Government believes that the workers who actually do the work are not part of the economy and this Budget confirms that. 
The Government has cut a number of things in the Budget. I have not got time to go into them but I do want to mention while I have the chance the cuts to health and safety funding. This comes at a time when we are seeing more people dying and being hurt in our workplaces than ever before. The Department of Labour is being forced to reduce its role in health and safety. The number of people who are being trained as health and safety representatives is being cut by two-thirds. It has been proven over and over that worker engagement is a critical part of improving health and safety but the shameful record of this Government is that it has cut health and safety funding and tragically the price of that will be paid in more workplace accidents and deaths.