Groser Tim: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — In Committee Third Reading 
Groser Tim: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — In Committee Third Reading 
[Volume:647;Page:16349] 
TIM GROSER (National) 
: 
 I shall take just a brief call. Obviously I want to leave the next leader of the Labour Party the final word. I recall about an hour ago a Minister of the Crown literally saying that this was the finest Budget in New Zealand’s recent history and describing the author of the Budget Dr Michael Cullen as the finest financial administrator New Zealand has seen in recent times. I think we have to agree that in politics a little bit of exaggeration is fair. A little bit of hyperbole is part of the game and we all understand that. But it reminds me of a very cynical political statement that comes out of the Russian school of politics which is about as cynical as one can get. Obviously I know only the English version so I will change it slightly to keep the language within parliamentary language rules. It states: “You can mislead the people and you can mislead them often but know when to stop. Know the point where you have completely lost your credibility. You should stop at that point.” A Minister of the Crown is using such language to describe what is not just one Budget—let us be plain about this. What we are debating today and what New Zealanders will be debating in their living rooms is not one Budget; it is a Budget in a sequence of nine. We are debating the legacy of this three-term Labour Government in terms of economic management. 
To use another cliché: “One swallow does not make a summer’s day.” One Budget out of nine is not what we are debating today. We are debating a legacy of 9 years of a definite set of political choices. One thing I absolutely agree with Mr Darren Hughes on is that there is a choice. He is absolutely right. There is a choice to be made. New Zealanders are to be given that choice as they should be. That choice is between two completely different sets of priorities. 
Let us look at this outrageous claim in the context of some facts rather than just pure rhetoric. Labour inherited an economy that grew in the last year before it took office by 4 percent in real terms and that averaged 3.5 percent real growth in the preceding 8 years. Labour has now delivered us an economy in which everything is going south. Labour inherited an economy in which inflation—by the way several times this morning we heard some absolutely ludicrously wrong figures from the Government—peaked at about 14 percent and it was tracking down to about 2 percent when Labour took office. For the last 4 years it has been about 3.5 percent and trending up to 4 percent. 
Of course although I do not have the time to develop the analysis of the difference between tradable and non-tradable contributions to it people who have looked at the facts know that the fundamental problem here in terms of inflation peaking upwards on Labour’s watch has been in the non-tradable sector. What is the gorilla in the room in the non-tradable sector? It is Government spending which has increased from $32 billion to $60 billion in this 9-year period. This is the legacy of the finest economic manager New Zealand has ever seen? Labour had unemployment that had peaked at around 11.1 percent in 1991 and from memory the Maori rate of unemployment had peaked at an atrocious 21 or 22 percent in 1991. It had tracked down progressively throughout the 1990s down to 6 percent unemployment generally with the Maori rate still unacceptably above that. 
Since the roots of good economic performance are of course laid in years in terms of the past there was almost nothing short of a Mugabe-style approach to government—which is not the expression I would use personally because of the same issue about credibility—but there was nothing this Labour Government could do or did do that was going to dramatically alter the first 5 years of its term in office. Labour came in with all this favourable wind behind it. What do we have now? We have a very significant large loss in employment in the last quarter. Unemployment is tracking up. We had interest rates at a little more than half the level 9 years ago of what they are today. That is the legacy we are debating today. 
Hon Member 
: And the 90-day bill rate is going north. 
TIM GROSER 
: Absolutely right. We had massive surpluses built in by responsible fiscal management and we are now heading south. 
The tragedy in all this is that the centrepiece of this ninth debate if one likes on this legacy is about tax; and tax as many other people have pointed out quite correctly is not just a matter of putting money in people’s pockets. That is a very important aspect of it when people are under pressure but it is also fundamentally about incentives. Had Dr Cullen and this Government used the good years to put in place 9 8 or 7 years ago tax structures that would have incentivised New Zealand’s middle class one can bet one’s bottom dollar we would be seeing real economic consequences of that right now in a very positive way. We would have seen productivity which has tanked in the life of this Government. Total factor productivity growth which averaged 3.2 percent in the 3 years before it took office is now 0.4 percent; labour productivity growth which was around that level is now 0.5 percent—another aspect of the legacy of the “finest financial administrator” of the generation as described by a Minister. 
We would have seen real economic returns from those decisions and from those investments in New Zealanders. In fact we have all seen the estimates from economists that if productivity had actually held up at the rates Labour inherited New Zealand would not have an inflation problem. If we did not have an inflation problem we would not have had an interest rate problem; and if we did not have an interest rate problem we would not have seen exporters—at least they have had some relief in the last few months—buckling under the pressure of an exchange rate that puts them under an enormous competitive disadvantage. So that is the real legacy we are debating. 
We have had ambitious words from the Government in this 9-year period but very little action to back them up. We have had the words: “knowledge wave conference” “growth and innovation framework” “economic transformation” and “sustainability” in every sentence in every Minister’s speech. We have had this force-fed down our throats for 9 years but where has been the delivery? When we look at the facts we are looking at a slowing economy rising unemployment high interest rates that are putting New Zealanders under pressure and drastically reduced productivity gains. Where does this evidence lead? I tell members that it leads to a conclusion that is so radically different from the Minister’s words I quoted at the beginning of my comments. It leads us to the conclusion that New Zealand fundamentally now needs a change of Government.