Brash Don: Debate on Prime Minister’s Statement 
Brash Don: Debate on Prime Minister’s Statement 
[Volume:606;Page:3292] 
Dr DON BRASH (NZ National) 
: 
 I had initially thought that I might need to respond to what Mr Maharey said but on reflection there was not a lot of substance in his speech so I propose largely to ignore it and focus on the Prime Minister’s speech. In particular I want to focus on her statement that last year the Government had set an objective of returning New Zealand’s per capita income to the top half of the OECD rankings over time. I want to highlight the fact today that there is not the slightest sign of that happening either now or in the foreseeable future.  
About 2 years back two Treasury economists by the names of Scobie and Mawson said that in order to achieve the average level of OECD living standards within one decade on reasonable assumptions about how fast those other countries would grow we would need per capita growth of 4.5 percent to 7 percent annually for that decade. In the year to September as the Prime Minister pointed out the economy grew by 3.9 percent in total—not per capita. That was described by the Prime Minister as the peak of the cycle. Yes she was correct in saying that that growth was quite good by international standards but it was good for reasons that have little to do with this Government’s policies. It has to do with the strongest export prices in more than a decade and the fact that the exchange rate fell through 1998 and 1999 reached an all-time record low in the year 2000 and stayed low through most of 2001 so that New Zealand dollar export prices were even better—the best ever in New Zealand’s history.  
We had good weather down on the farm. We had a strong upsurge in net immigration. Why? It was largely I suspect because the rest of the world was a pretty scary place last year and people came back from overseas to what was regarded as a safer place to be. I may also say as an aside that we had strong growth last year because the then governor of the central bank cut interest rates rather aggressively last year as well. Let me also say that most important the growth in the last year or two was the result of the reforms of the late 1980s and early 1990s which the Prime Minister once again described in very negative terms. It is simply nonsense to describe those policies as discredited or failed. They have been hugely successful and this Government has been the beneficiary of those policies. I could argue the case at length but it is perhaps simplest just to list the big policy changes of the late 1980s and early 1990s that this Government has not reversed. The monetary policy focus on keeping inflation under control— 
Opposition Member 
: No change there. 
Dr DON BRASH 
: —the liberalised foreign exchange market— 
Opposition Members 
: No change. 
Dr DON BRASH 
: —the liberalised banking sector— 
Opposition Members 
: No change. 
Dr DON BRASH 
: —the GST introduction— 
Opposition Members 
: No change. 
Dr DON BRASH 
: —the Fiscal Responsibility Act and the fiscal surpluses leading to a major reduction of public sector debt— 
Opposition Members 
: No change. 
Dr DON BRASH 
: —the total abolition of import controls— 
Opposition Members 
: No change. 
Dr DON BRASH 
: —the very substantial reduction of tariffs— 
Opposition Members 
: No change. 
Dr DON BRASH 
: —the privatisation of Telecom the Bank of New Zealand PostBank Rural Bank the Forestry Corporation and the Shipping Corporation; and liberalised shopping hours—none of that changed at all. The Government has not even reversed the reduction in welfare benefits of the early 1990s which it so decried at the time. It has had more than 3 years to do that. If the Government really objected why did it not do something about it? It has done nothing about it. 
 So let us be clear. The big policy reforms of the past were hugely successful and this Government has been a major beneficiary of those changes. But what do we have now? We have new obstacles to growth at every turn—for example business compliance costs. Business New Zealand has just estimated that the recent policy changes of this Government will add about $44000 a year in compliance costs to a small business employing only 20 people. We now have the highest company tax rate in the Asia-Pacific region. We have no sign of any serious welfare reform. Mr Maharey can talk about the fact that National wants to bash beneficiaries. On the contrary we care about those people. We do not want to see them rotting on the benefit system. There are nearly 400000 of them and that number has not changed much over the last 3 years—and I am bound to say that advocacy for that welfare reform goes way beyond the people who traditionally support the National Party.  
I have had emails letters and phone calls from people right across the political spectrum over the last week or two when we have made it clear—Katherine Rich and I—that we both support a major reform of the welfare system. I have had an email from a man who described himself as having been on the unemployment benefit for 4 years and he said: “You’ve got to scrap that system because I was seriously damaged by that unemployment benefit.” We have seen nothing from this Government that would lead us to believe that it has any positive measures at all in mind to reform that system; nor is there any serious attempt to improve early childhood or primary school education. Yes we can talk about its tertiary education policies—with which I must say I do not agree—but as I was driving from Wellington to Auckland over the holiday period I stopped off in Rotorua so I could ride the luge with my young 9-year-old son. I requested 10 tickets each costing $3.50 and suggested that I pay $35. The young person behind the counter who I may say was not Maori or Polynesian but Pakeha said: “Just a minute. I need to check that.” So she keyed in $3.50 ten times and said: “Yes that’ll be $35.” We are not getting to the basic problem in this country which is illiteracy among our adults and young people.  
It is little wonder that just prior to Christmas when the  
New Zealand Herald  
surveyed 120 chief executives across the country it found that only three of them believed that this Government had any credible growth strategy—only three out of 120. That is what they felt. So we had growth of 3.9 percent in the year to September 2002 described as a peak and that is consistent with the view of every other commentator I know of which is that gradually from this point on the growth rate will slow. Treasury forecast the economy slowing from its present level down to about 2.1 percent over the next decade and every other economist sees that kind of growth slow-down. But even if we achieve 3.9 percent the per capita growth is only about 2 percent. It is less than half the minimum estimated to be needed to begin to bridge the gap between us and the average of OECD countries. So in my view this was a very disappointing speech indeed with no sign at all of the Government having any policies that will be needed to lift New Zealand’s standard of living back to the level of the average of the OECD.  
Mr English pointed out in his speech that in practical terms that means New Zealand’s per capita income is more than $200 a week lower than Australia’s. On one point I agree with Mr Anderton—who has just left the Chamber. If we had more growth we could have more health spending more education better housing better jobs and a greater number of our kids staying here. It is the big challenge and sadly this Government shows no sign at all of rising to that challenge.