English Bill: Budget Debate 
English Bill: Budget Debate 
[Volume:647;Page:16389] 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 What is striking about this Budget is that it is all about the Labour Party. When we listen to Dr Cullen and Helen Clark describing it they do not describe it in terms of what it may do to deal with the challenges New Zealand faces in delivering the kinds of incomes that New Zealanders expect and the kinds of incomes New Zealand will need to deliver to compete for its own people and keep their talents here. Labour members talk about it all in terms of political manoeuvring around the National Party. Well we are very proud to have the Government acknowledge that this Budget is essentially about Labour losing an argument with the New Zealand public over surpluses and tax rates and we are very pleased that National has been able to play a role in winning that argument. 
There is no doubt that the Budget whatever it says about Labour’s pre-election political manoeuvrings is a defeat for the idea clung to strongly by Labour through its whole term in office that the point of the tax system is to get as much cash as possible out of the pockets of New Zealanders so that Labour can spend it better than them. The previous speaker Moana Mackey summed that up by saying that Dr Cullen had successfully until now resisted the pressure to squander the surpluses. That means that he has resisted the pressure to let people keep some of their own money that he did not need. That is Labour’s definition of squandering. [ 
Interruption 
] It does allow him to squander it. The fact that he taxed so much means that he had the spare cash sitting around on his balance sheet to go and spend what will amount to over $1 billion to buy back New Zealand rail when he could have achieved his environmental social and economic objectives without having the taxpayer spend over $1 billion to buy it. It is a catch-up Budget. It is the Government losing an argument. It is too little too late and that is how the public are seeing it. 
I think to finally underline the fact that it is a Budget that is all about Labour and its manoeuvrings and not about New Zealand is the way in which Dr Cullen and Helen Clark crafted the run-up to the Budget and the content of it as a legacy Budget. Dr Cullen believes that he at least will be able to ride off into the sunset as a defeated and departing member of Parliament and Minister of Finance saying that he never gave in to the “rich pricks” he never gave in to the people who earn $50000 and who believed that they were paying more than they should to finance Labour’s various whims and fancies. And he will be able to do that. The speeches he gave in the run-up to the Budget were all about the principles he was applying. I take issue with one of those principles. He cries crocodile tears about equity; about how he has made sure that everything Labour has done has been equitable. Well when it comes to taxes that is simply not the case. The distributional effects of the tax changes made by the Labour Government in no way correspond to the rather pure social democratic view that Dr Cullen is trying to propagate at the moment. In fact a lot of his distributional decisions have been focused on winning the votes of people whose political influence corresponds to larger incomes rather than to Labour looking after the people who it believes will always back it. 
Let us measure this Budget by some of Dr Cullen’s benchmarks because there is an issue of credibility here. We know that the Budget is all about Labour and its political manoeuvrings so is it possible that Dr Cullen would be able to execute the Budget he has laid down and that Helen Clark means to see it through? I would say the answer to that is no. They have written a Budget as if they will not be overseeing it. How do we know that? The first point is to measure Dr Cullen by his own benchmarks. He always said he would not borrow for tax cuts. He has run a cash deficit of $12 billion when 6 months ago the cash deficit for the next 3 to 4 years was $2 billion. The bond programme will be almost double what it was. I can imagine what Dr Cullen would say if National had presented this plan. He would be screaming from the rooftops that National had borrowed for tax cuts. The issue here is not so much whether the Government should do some borrowing in the context of the Government’s books. It is not that significant. The issue is whether we can believe what Labour members say. They say what they think suits them at the time. Dr Cullen has said for years that he would not borrow and then under political pressure and when he is losing an argument with the New Zealand public he does borrow. That of course raises the prospect that he would repeat the same act with tax cuts that he did last time which is to promise them before the election and abandon them afterwards. 
That brings us to the issue of spending. Dr Cullen Helen Clark and all the Labour members have behaved as if every dollar they have spent has been spent wisely and effectively. I think the public know without being told that that is certainly not the case. Labour members have also said that any departure from their spending plans means a cut for doctors and nurses and teachers. Dr Cullen has departed from his previous spending plans by cutting the forward allocation from $2.1 billion to $1.75 billion—in fact it was $1.75 billion in 2009 $1.79 billion in 2010 and $1.8 billion in 2011. So why does this matter? Well those are actually fairly small spending allocations for Dr Cullen and I do not think anyone believes that he will be able to stick to them. Let us look at the last 3 years and at how much extra money the Government has spent. In 2005 Government spending increased by $3 billion—$3.013 billion. In 2006 Government spending increased by $4.4 billion. In 2007 Government spending increased by $4.7 billion. This year 2008 it estimates—before the Toll purchase—that it will increase by $3.3 billion. Who believes that with increases of $3 billion $4.4 billion and $4.6 billion Labour would stick to $1.75 billion? It would not it could not it does not know how to. 
This is a good-times Government. The only kind of Government those members know how to run is one where they get billion-dollar windfalls before the Budget and before the election and they go out and spend it. What they should be focusing on is how to get New Zealand through this downturn and on to a higher growth track. That is not what is in this Budget. What is in this Budget are Labour’s political manoeuvrings. What should be here is a recognition that some of the prosperity we have enjoyed has been borrowed and that while households are paying back that debt in the next phase of economic growth the next economic cycle all our prosperity will have to be earned. We will not be able to legislate for it or borrow it; we will have to earn it. That is where National’s plans are focused. National is focused on getting through this downturn and then getting in place the kinds of policies that will encourage allow and reward New Zealanders for earning prosperity because that is how we will get on to a higher growth track. Labour has signalled very clearly in this Budget that is has given up on the worthy ambition it started out with which was to lift New Zealand into the top half of the OECD. It has given up on that. 
R Doug Woolerton 
: We know what Labour’s doing. Tell us about National. 
Hon BILL ENGLISH 
: I do not need to tell that member that day after day National is out there setting out its five-point plan to New Zealanders offering some hope and some confidence and demonstrating that if they elect National they will have a Government that understands that it should make sure that every taxpayer’s dollar is spent well. 
R Doug Woolerton 
: No that’s not what they are telling me. 
Hon Harry Duynhoven 
: What about some detail? 
Hon BILL ENGLISH 
: I have to say to those members that we are being very well received. There is absolutely no doubt about that. We are being very well received. 
Dr Cullen’s Budget is now pretty much consigned to history as a manoeuvre by Labour in its pre-election run-up. The next 3 or 4 months will be about the issues that matter which are the plans to get us through this downturn lift our economic performance and lift New Zealanders’ incomes.