Prebble Richard: Debate on Budget Policy Statement 
Prebble Richard: Debate on Budget Policy Statement 
[Volume:615;Page:11529] 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I rise to speak to the Budget Policy Statement for this year. It is a statement that is presented by the Government looked at by a select committee then debated. It is a matter of regret that we have stopped having debates in this House. What we get instead is a series of statements that are nothing to do with what was held before and people do not even have the decency to at least debate what has been put forward. 
I would like briefly to debate all the comments made in this debate. Mr Rod Donald from the Green Party put forward the proposition that we should take the $6 billion surplus and spend it all on children and in particular on benefits. He said that we should do that because—and he is quite right—there is a growing number of children who are in benefit families. It is a great shame that the Green Party does not take any interest in economics. If it did its members would realise that people—even their supporters—respond to incentives. If we were to follow his advice we would have more people in benefit-led families. As he just eloquently told us those people who are on benefits do not enjoy a good standard of living; they actually end up in dependency. If the Greens ever do end up in power—and at the moment the Labour Party’s only prospect of being in Government is to be with that extreme-left group—we will have a New Zealand in which more and more New Zealanders are on benefits. Somehow he tells us that would be a sounder economy. It is a shame he does not know any of the history of the last 50 years. The countries that have followed the advice he suggests are in terrible shape. 
Then we had Mr Peters making a vitriolic attack on Mr Brash. We discovered why: apparently Mr Brash visited Tauranga. Well so what? But then Mr Peters put forward a rather novel notion. He said that when he was Treasurer he drove down the dollar. I thought to myself I wonder who the Governor of the Reserve Bank was when the dollar reached 39c and did that governor intervene? We all know that Don Brash was the governor at that point. When Mr Peters—who now tells us that Don Brash was a 14-year failure—was Treasurer did he replace the Governor of the Reserve Bank? Did he make any changes to Reserve Bank policy? Of course he did not. That had to be one of the sillier speeches made by Mr Peters. The other statements that he put together showed that what might have had an influence on economic policy was his being economicallyilliterate. 
We had a contribution from Mr Anderton who told us that we should go to a musical— 
Once Were Warriors. 
 No doubt it is a moving musical. Of course Mr Anderton apparently can watch the whole of that musical without realising that it was written by a Mr Alan Duff and without realising that Mr Duff is making a protest against the sort of social welfarism that Mr Anderton and Mr Rod Donald put forward and is pointing out that it has put Maori into a terrible poverty trap. Mr Anderton watched the whole musical and missed the entire point of the musical the book and the film! 
John Key 
: That was the real New Zealand. 
Hon RICHARD PREBBLE 
: And that was real New Zealand! Then we had contributions by Mr Key and by Clayton Cosgrove who argued about the country’s economy. Let me try to make a contribution there. Mr Cosgrove said that the economy grew well last year—which is true—and took total credit for it. Then Mr Key said that perhaps there might be some other reasons and pointed out something that Mr Cosgrove did not get around to mentioning—that one of the things the Budget Policy Statement does is project what growth there will be. I make the point to the whole House that the growth that the Government gets has been inherited. Where do those policies come from? If we look at the OECD an independent source we find that in December last year the OECD said that the economic growth in New Zealand at the moment goes all the way back to the reforms that happened in the 1980s and early 1990s—under Roger Douglas and Ruth Richardson. That was what the OECD stated and I invite the member to read that report. I ask the same member whether he accepts the policy projections that are in that document. [ 
Interruption 
] He does? That is progress. If he decides to read it— 
John Key 
: Growth to 1.5 percent. 
Hon RICHARD PREBBLE 
: Mr Key is absolutely right. Treasury predicts that economic growth will fall and states that it will actually fall under the policies introduced by this Government to 1.5 percent. The Government cannot be happy with that. [ 
Interruption 
] Well I do not think the Minister has actually read the policy statement because growth is the priority of his own Government. It sees its most important task as building the conditions for increasing New Zealand’s long-term sustainable rate of economic growth. The Government is failing in its own target of lifting economic growth. 
How can that be? I suspect that it is because the policies this Government is introducing do not assist growth. Let us have a look at some of the policy statements. The most recent a decision that is clearly productivity reducing is to give everyone another week’s leave. Even Mr Cunliffe can work out that if we were to do that it would affect productivity by 2 percent. That is a measure done by this Government. But lower production will also lower the utilisation of capital. 
Then there is the question of tax rates. We have had a bit of debate about that. Our Minister of Finance likes to point out that the tax cuts under National did not result in an increase in productivity. Therefore he says tax cuts do not work. There might be another answer might there not? Those two tax cuts made by National were targeted at lower-income families something this Government says it will do again. Given what we now know tax cuts having been done twice does anybody in the House think that such a tax cut when the Government does it in the Budget will improve productivity? Well does it matter? This Government says that its No. 1 economic goal is to increase economic growth yet it will introduce a tax cut that—as the Government itself knows—is the politics of redistribution not the politics of growth. 
It is worth asking the House why growth and prosperity are important. It is simply that—and it is something that even Mr Peters grasps—one cannot have a first-class education system or health system without a first-class economy. It is also worth noting that the $6 billion surplus—a huge amount of money—came from taxpayers. The vast majority of taxes in this country are paid by middle-income New Zealanders. If this Government really wants to get the economy going and to have some fairness we should have a tax cut aimed at middle-income New Zealanders. I say to National that a tax of 30c in the dollar is a good move but it will not cut it. We should look at what the McLeod report stated. The Government paid $1 million for it and I understand that Dr Cullen threw it at the wall asking why he had paid $1 million to get a report that he could have got free from the ACT party. That report told him that if he wants to improve the economy he has to cut the taxes of the people who invest in and grow the economy and a flat rate of tax is best. 
I say to the Government that if it is serious about wanting to improve growth and productivity—and it knows it ought to—it should give that $6 billion of taxpayers’ money back to the people who own it and they are the taxpayers. If one finds a purse full of dollars in the middle of the road one gives it back to the owner. This Government finds itself with Treasury’s purse bursting with money. Why do we not give it back to the owners? The great advantage of that is we would get economic growth and prosperity and the sort of New Zealand that most members of this House actually want to see.