Parker David: Debate on Budget Policy Statement 
Parker David: Debate on Budget Policy Statement 
[Volume:623;Page:18896] 
DAVID PARKER (Labour—Otago) 
: 
 It is with pleasure that I rise to speak on the Budget Policy Statement 2005. The published document records that the country’s finances are in very very good shape. This Labour-led Government has overseen the wise stewardship of the economy under the wise leadership of the Rt Hon Helen Clark and her very able Deputy Prime Minister and Minister of Finance Dr Cullen. The finances of the New Zealand Government are in the best shape they have been in for decades. 
The amount of gross Crown debt owed by the Government equalled 35 percent of GDP when this Government came to power in 1999. That was down from a terrible 70 percent of GDP left by the National Government under Mr Muldoon in the 1980s when $1 in $5 of tax was being spent on interest payments. This Government has reduced it further from 35 percent of GDP to 24 percent of GDP this year so that we are in the good position where only $1 in $20 of tax is being spent on interest payments rather than $1 in $5. The position for net debt which is net of assets that the Crown holds is even better especially when the Superannuation Fund is taken into account. As Mr Anderton mentioned earlier it is projected in this Budget Policy Statement that within about 5 years net Crown debt will be obliterated and the Crown net position will be positive—which will be for the first time in decades. 
Alongside that very wise stewardship of gross Crown debt the economy has prospered. Unemployment is now down to 3.8 percent—something we should be saying “Hooray!” about in the streets. New Zealand now has the lowest rate of unemployment in the OECD. 
Helen Duncan 
: A good Government. 
DAVID PARKER 
: A very good Government. That means we have more than 250000 more people in jobs compared with 1999 and 100000 fewer beneficiaries. In turn this has contributed to New Zealand’s growth rate in recent years being amongst the highest in the OECD. Not only is New Zealand’s performance better relative to earlier decades but it is also better relative to OECD averages. Indeed the performance of New Zealand compared with OECD averages is even more impressive than the comparison with New Zealand alone. The rest of the world has had declining growth rates while New Zealand’s growth has stayed amongst the highest in the OECD. 
Against that background of strong finances the Government in last year’s Budget announced that most of the additional money that was available to be spent by the Government would be directed to families with children. The Labour Government believes that that is the right thing to do and I most certainly support it. One of the reasons why it is important to do so is that in the prior two decades between 1986 and 2001 there was a lamentable concentration of wealth amongst the top 10 percent of New Zealand families. The top 10 percent of households garnered an increase in disposable income in real terms of around 30 percent. The next 70 percent of the population stayed relatively static and the bottom 20 percent of households went backwards. During that period the income inequality in New Zealand increased most markedly and amongst those who suffered most were families with children. FO That is why the Government is quite firm in its viewpoint that the tax concessions that are able to be made ought to be directed to families with children. 
As we heard from the Hon Steve Maharey today during question time the effect of that on child poverty is most dramatic. It has been studied and it was announced today during question time that the effect will be that New Zealand’s rate of child poverty will halve—in fact it will more than halve—so that rather than a greater proportion of families being below the poverty line as measured by their being on half of the median income that proportion will markedly improve. The report referred to was a 2005 Unicef report called  
Child Poverty in Rich Nations 
. It showed that in New Zealand in 2000 16.3 percent of children were living in households below the poverty line. That figure had worsened by 2 percentage points during the 1990s. By contrast New Zealand is absolutely charging forward so that after the Working for Families package comes into effect a very low percentage of children will be living below the poverty line. 
We have heard some inaccurate statements in this House about crocodile tears being shed over the average wage rate and it has been asserted that the average wage has not moved up enough between 1990 and 2004. The reality is that the quarterly employment survey shows that between 1999 and 2004 average household incomes increased from $663 per week to $770 per week. That is a very significant increase in itself but that average in itself underestimates the true increases in income. The reality is that when 200000 people are put back into work generally they are the 200000 people who are less employable than the people who were already in the workforce. Therefore on average they are lower skilled and lower paid. So the extra 200000 people who are in work actually suppress the average wage because those 200000 people earn less than the average wage. So the reality is in fact much better than is shown by the quarterly employment survey figure which in itself shows significant improvement from 1999 to 2004. A better measure is the total amount that is paid in salaries and wages to employees—to people working in New Zealand. That number increased from $45 billion in 1999 to $59 billion in 2004. There was a 31 percent increase in the total compensation or earnings being paid to employees over that period. That is a much more meaningful statistic and it shows that the earnings of workers during that period have increased most substantially. 
One of the other catchcries we hear from the National Party—we heard it again from Dr Brash today—is that crocodile tears are being shed over an alleged lack of performance compared with Australia. It is worth recording once again that the statistics do not bear out Dr Brash’s comments. In 1980 Australia was positioned at No. 10 on the GDP per capita rankings in OECD countries. New Zealand was positioned at No. 18. By the end of that decade Australia had gone back six places from position 10 to position 16 while New Zealand went back only one place from 18 to 19. In the 1980s New Zealand’s performance relative to Australia’s was better. That was a decade of primarily Labour Government—and Mr Prebble and others played an important role in that which I acknowledge. 
But the 1990s saw an austerity visited upon New Zealand that was not visited upon Australia. The 1990s the decade of National Government—andthe decade when Dr Brash was in charge of the Reserve Bank—saw Australia go forward four places in the GDP per capita rankings from position 16 to position 12 while New Zealand went back by one place from position 19 to 20. So the big gaps arose during the 1990s when the National Party and Dr Brash were in control. In the most recent years of course the rate of growth in New Zealand has exceeded that of Australia so that gap is once again being narrowed.