Boscawen John: Appropriation (2011/12 Estimates) Bill — Third Reading Imprest Supply Debate 
Boscawen John: Appropriation (2011/12 Estimates) Bill — Third Reading Imprest Supply Debate 
[Volume:674;Page:20514] 
Hon JOHN BOSCAWEN (Leader—ACT) 
: 
 This debate on the Appropriation (2011/12 Estimates) Bill and the Imprest Supply Bill has developed into a form of general debate over the Budget. I think it is very timely to look back on the last 2½ years of this John Key - led National Government. Let us acknowledge that National inherited a very difficult situation. It inherited an economy that was already in recession—it was in recession long before the rest of the world joined in—and it inherited a situation of rapidly growing increases in Government expenditure that had occurred since the 2005 election. 
The tragedy of the 2005 general election is that the result looked as though it was going to be very close so the Helen Clark - led Government went on a massive spending spree. It tried to buy the votes of ordinary New Zealanders and we are still paying for it to this very day. I suspect we will be paying for it for many years yet. The Labour Government extended the interest-free student loan scheme. It made it so generous that any student studying at a tertiary institution would be absolutely crazy not to borrow the absolute maximum amount of money they could. Why would a parent contribute to their own child’s education if they could put that money into a bank and earn interest over the many years that their child would be studying when under the interest-free student loan scheme that money can be paid back in debased dollars many years into the future? 
The extension of the interest-free student loan scheme just like the substantial extension to the Working for Families package was an indication of the massive increase in Government expenditure that National inherited. However one has to query and look very critically at how National has dealt with that situation. National did not cause that situation but it was the National Government’s responsibility to address that issue. Earlier in this debate the Minister of Finance said that the 2009 Budget focused on infrastructure. The National Government went about putting in place the building blocks for infrastructure—very important—and there was investment in roading particularly in Auckland in schools and in hospitals. 
The 2010 Budget was the tax switch Budget. The rate of GST went up so the cost of consuming went up and additional controls were put on the deductibility of depreciation so that property investment was not such a profitable business but in return we had reductions in income tax which rewarded people who went out and worked and it provided an incentive to work. It also rewarded people who wanted to save. The Minister referred this afternoon to the 2010 Budget being the tax switch Budget. Finally he went on to 2011. That was the Budget where we actually tried to get the Government books back into balance. 
I believe that the last 2½ years have seen many lost opportunities. There is no doubt that the National Government inherited a very difficult situation—the world was going into recession. In fact just this week we saw the debt crisis escalating in Europe and we saw brinkmanship in the United States just last week. If we actually look at what the Government said back in 2010 we will see that it budgeted to spend $1.1 billion on new initiatives last year and $1.1 billion on new initiatives this year. However what happened was that we had an earthquake. We had a very serious earthquake which reinforced to New Zealanders the difficult situation New Zealand was in and caused a re-examination by the National Government of its spending priorities. 
The Government very proudly told us during the Budget that it had identified $5.2 billion of expenditure over 4 years that could be reprioritised and of that $5.2 billion it allocated $4 million back into front-line services whether that be in education health justice or whatever area with a net saving of $1.2 billion. What I am trying to say is that the Government went from anticipating spending an extra billion dollars to a net saving of $1.2 billion over 4 years. That is a turn-round of about $1.5 billion a year. 
It actually took the Christchurch earthquake for this Government to have a serious examination of expenses so when push came to shove we saw a $1.5 billion turn-round. We know some of the areas where cuts in expenditure were made: in KiwiSaver by trifling around the edges of student loans and in other areas of Government expenditure. The ACT Party says that the Government has been far too lackadaisical about it. It has not identified the real issue. 
We heard the Minister of Finance speak this afternoon about the need to get our debt under control yet what do we see? We see a Budget with a $16.8 billion deficit. We know that that has been accentuated by the Christchurch earthquake. We know that of that $16.8 billion $5.5 billion relates to Christchurch. But if we take that out we would still see a Budget with an $11 billion deficit. If it had not been for the Christchurch earthquake the Government would not have taken that critical look at its expenditure. The ACT Party says that has been a lost opportunity but worse the Government has not done a good enough job of it. 
There are so many areas of wasted expenditure. One need only look at the issue of student loans. Yes the Government has made changes around the edges; yes it has said that people over 55 cannot borrow for their living costs; yes it has said that people studying to become pilots cannot borrow as generously; and yes it has said that people overseas may have to start paying interest on their loans sooner than they otherwise might. But the Government has essentially left the interest-free student loan scheme in place. A parent or student would be absolutely crazy not to borrow the maximum amount of money they possibly could. The Government is essentially telling students and their parents to borrow money for living costs and course fees and it is telling them it will not charge any interest and they can pay it back in several years’ time. 
Our country faces a crisis where we are forecasting to spend $16.8 billion more than we take in from income tax this year and just under $10 billion next year. We are facing a crisis. The Minister of Finance claims he has got the books back in order. He claims that the deficit will be back into surplus by 2015. But those claims are based on the assumption that the New Zealand economy will grow at a rate of 4 percent in 2013 and 3 percent in 2014. But if we look at the last year we see that growth was only 1 percent. This year it is forecast to be 1.8 percent but to make the books balance Treasury is forecasting growth of 4 percent. Is that realistic? 
I ask National members to ask themselves whether it is realistic to expect growth of 4 percent at a time of global financial meltdown. We do not know what is happening to our major trading partners in Europe and the United States. Yes we know that a lot of our export revenues come from Asia but we are enjoying record high commodity prices right now and we cannot be certain that we will retain those. 
The Government has also made cuts to KiwiSaver. I have said to this Parliament before that the people who gain from those cuts are the low-income earners. It is the low-income earners who cannot afford to be in KiwiSaver who are paying taxes so that the middle class gets those subsidies. It always fascinates me when Labour criticises tax cuts to the subsidies on KiwiSaver because those subsidies are being paid for by the very people Labour purports to represent. 
National inherited a crisis that was not of its own making but it could have done a lot more and still can do a lot more and the ACT Party intends if it possibly can to put a lot more backbone into the National Party’s spine following November 26. 
Sitting suspended from 6 p.m. to 7.30 p.m.