English Bill: Supplementary Estimates — Imprest Supply Debate 
English Bill: Supplementary Estimates — Imprest Supply Debate 
[Volume:626;Page:21296] 
Hon BILL ENGLISH (National—Clutha-Southland) 
: 
 Labour ought to listen to what people are saying about its 67c tax cuts. 
Jill Pettis 
: Not much. 
Hon BILL ENGLISH 
: That is right. In fact they are saying worse than not much. It would be better if they were saying nothing. If I were that member I would think it better if the drivers on the taxi rank outside Auckland airport were saying nothing about the 67c tax cut. Instead they are talking to every single passenger about what a waste of time it is and more importantly about how they feel taken for granted. That is the strategic hole Labour has fallen into. Dr Cullen has been so busy trying to buy the election in 2008 that he has forgotten that Labour has to get some votes in 2005. 
Hon Dr Michael Cullen 
: Oh you’re going to buy them! 
Hon BILL ENGLISH 
: Well that was what he was meant to be doing. He has taken voters for granted. The Labour back bench will realise one of the long-term truths of politics: the punters are never grateful. The voters in New Zealand have a healthy disrespect for Government. The less damage the Government does the more the voters may be grateful. But if Labour thinks that people ought to be grateful for getting back their own money the lesson of history is that they will not be. Voters who think they are taken for granted do not behave well at the ballot box when a Government is looking for support. That is the problem. 
There are middle and higher-income New Zealanders who have supported Labour at the last couple of elections and Dr Cullen and Ms Clark in particular have made the arrogant assumption that these people are social democrats of some kind. Well they are not. They are good conservative mainstream Kiwis and their support has to be earned by any party. National used to take them for granted and it learnt the hard way that it cannot. Now Labour is taking those people for granted. 
 That breach of trust between those voters and Labour is at the heart of Labour’s problems now. Dr Cullen and Helen Clark just assumed that because they were so magnificent those people would keep voting for them. I know that Dr Cullen is talking about the last election campaign—all sorts of lessons were learnt from that—but the pity is that he does not appear to have learnt them. 
I will spend some time on Dr Cullen’s accounting because it is quite important. He has tried to change the definition of the Government’s surplus. He has tried to take us back 15 years—in fact more than 15 years; it is now getting on to almost 20 years—when the Government accounts ran on—[ 
Interruption 
] The early 1990s. It was Mode B (Gross) and Mode B (Net) and all that stuff. He is trying to take us back to when the Government just ran a simple fruiterers cash-register system of “cash in cash out”. 
In fact there has been bipartisan agreement for almost two decades if one includes the time that the policy was in the making that “cash in cash out” was not the way to run a modern Government; that in fact accrual accounting mattered. Dr Cullen had one chance to change the rules which he took when he came in as Minister of Finance. He said that the current surplus was not a good way of measuring the activities of Government so he would change it. That was his opportunity and he changed it to the operating balance excluding revaluation and accounting charges. 
That turned out to be a bit of a puff of smoke in the wind because the operating balance excluding revaluation and accounting charges has been significantly different from the operating surplus in only 1 year. It makes a big difference to the management of Cabinet expenditure because nothing undermines Cabinet Ministers’ self-discipline more than finding that they have been made to make savings and then finding that the surplus gets dramatically changed because of a revaluation of the Growth Services Fund. They do not like that at all because $500 million can just get changed overnight on an accounting change when they have spent months hacking away saving $100 million. 
Dr Cullen changed the system but he did not change it to a cash system. If he had really believed what he now says about how the Government should account for its activities he would have changed it then. He now knows that because he left it until it suited him the public have no idea what he is talking about. As far as the public are concerned they believe the numbers. Why would one blame them? We spent two decades educating the public about good public policy and good public accounting and when they see a $4 billion $5 billion or $7 billion surplus they believe the numbers. 
In the last 3 or 4 months Dr Cullen has taken on the job of trying to change the public’s mind. If Dr Cullen is as clever as he thinks he is he should know that it would take a good 5 years to change the public’s view; to tell them that the actual surplus is not the surplus or to explain to the public that he has got all these other uses to which he puts the surplus which means that there is not really a surplus at all. 
Hon Dr Michael Cullen 
: So it’s not true then? 
Hon BILL ENGLISH 
: No the point is that he had the opportunity to change the rules and he left it too late. Now the public believe the numbers that have been published. They believe that the Government has an operating surplus. It is going to be very difficult for Dr Cullen in the next 3 months to change the rules that have been in place for 20 years. 
Dr Wayne Mapp 
: He will fail. 
Hon BILL ENGLISH 
: No it is worse than that. He has failed. The time for that argument is over. The look on his back-benchers’ faces shows what a revelation it has been for them. They believed what he told them which was that because he was so smart the public would change their minds just because he said they should. But in fact they have not. 
I will spend a little bit of time on the Government’s spending; in particular in my own area of education. I have had as everyone else has had the released Official Information Act request on the Budget bilaterals for education. It shows a bureaucracy and Government completely at sea when it comes to understanding what it is doing with the money that it is spending on education. The Treasury reports on the bilaterals make it quite clear that the Government has no concept of value for money in education. It has had almost no control over the expenditure of money in education—particularly in tertiary education. The official documentation of the last 3 years outlines a trail of incompetence and waste. The public because they have seen so much of it have now come to understand the incompetence of the Government with their money. 
That is the other thing Dr Cullen will have to come to grips with. Although he sees himself as some kind of fiscal hawk who has ridden the Cabinet and caucus hard on spending the public increasingly believe exactly the opposite because they see the evidence. In the public mind value for money matters. It matters more than collaboration cohesiveness and partnership—all those weasel words of the day that mean no one is accountable under this Government. The public want value for money. If there is $3 billion more spent on health they want to see $3 billion more of health services. The problem is that they see almost no extra health services. If they see a couple of billion extra dollars spent on education they like to think that some people are learning something. But they have discovered that that is not happening either. 
Jill Pettis 
: Extra institutions. 
Hon BILL ENGLISH 
: As that member will find out our polytechs—public institutions of which she is supportive—will all get into huge financial problems over the next couple of years despite the expenditure of huge amounts of money by the Government.