Foss Craig: Debate on Budget Policy Statement 
Foss Craig: Debate on Budget Policy Statement 
[Volume:661;Page:9543] 
CRAIG FOSS (Chairperson of the Finance and Expenditure Committee): 
 I move  
That the House take note of the report of the Finance and Expenditure Committee on the Budget Policy Statement 2010 and Half Year Economic and Fiscal Update 2009 
. First of all I would like thank the members of the Finance and Expenditure Committee for their hard work and for their contributions to putting this report together and also for their contribution to the high workload that the committee gets through. I would also like to mention and acknowledge the officials who assist us and sometimes make us look a bit better than perhaps we are.  
The Budget Policy Statement confirms that the Government’s focus for 2010 will be about getting the economy growing again and ensuring that this growth is higher and more sustainable than we have seen in recent years particularly in the period 2005 to 2008 which I will come back to. As noted in the report from the Finance and Expenditure Committee the Prime Minister’s statement to Parliament outlined and set the framework for some significant changes and developments in economic and social policies that will be seen in Budget 2010. But let us just stand back for a minute and note what we need to achieve. It is not only what this Government wants to achieve but what New Zealand must achieve what it has to achieve if we are to deliver on some of the expectations we should all have of a modern economy. Our focus is on lifting the long-term growth potential of the New Zealand economy without compromising short-term objectives and those desirables that we as a modern society choose to have to look after those who cannot look after themselves. We will put responsibility accountability and transparency back into our economy and into our structure. 
We face a very challenging fiscal position. Yes it is true that 10 years of deficits are no longer in front of us but we still now have 6 to 7 years of deficits right in front of us with a very tenuous international environment indeed. This drives and demands that we show discipline in our accounts and we will have to do some realignment and perhaps make some of the hard decisions that were sorely lacking by the previous administration in the last few years. 
We do have choices though even some in this House may say to do nothing or even go backwards. But if we go backwards if we do nothing we will keep getting what we have. Thousands upon thousands of our future taxpayers our families our friends our whanau are leaving this country for a brighter economic future. We have to address that and we have to change. Let us get more ambitious for New Zealand. Let us set our sights higher and create a country that we can be even more proud of where the hard-working Kiwis so often referred to by speakers in this House can get ahead and get rewarded for their hard work and perhaps we can attract our children back home. 
How do we do that? How can we do that? We must create jobs we must raise incomes we must improve living standards and we must provide better public services to our most vulnerable. I do not think many members in the House would disagree with that but perhaps some will disagree with how we will get there. We have to change our economy. Most members in this House acknowledge that we have a consumption-led economy—borrow and hope borrow against the increase in the value of the house borrow and consume—but that is not the way to develop a country and that is not the way to move up the OECD ladder. That is not the way to keep our children in New Zealand after completing their tertiary education. 
We have to build up our financial assets in this country. We have to at least make a level playing field in those investment decisions between bricks and mortar and equities or financial decisions which have been lacking over recent years. I note that many of the imbalances in this economy began in 1999 when the previous administration massively incentivised people to build up trust structures and company structures effectively encouraging a rorting of the tax base which is totally unacceptable to me and totally unacceptable to our future taxpayers and our children. 
What will be in the Budget? We will be concentrating on six key drivers: first investing in productive infrastructure; second removing red tape and improving regulation; third supporting business innovation and trade; fourth improving education and skills; fifth lifting productivity and improving services in the public sector; and sixth strengthening the tax system. We will also put disciplines on the Crown account which is something that has not been seen for many many years. We intend to stay within a $1.1 billion operating allowance year upon year. That is quite a change but it is forced upon us by the state of the financial accounts because it was $2.8 billion in the previous administration. It had $2.8 billion of extra spending. That is now translating to an extra $3 billion - odd a year that currently has to be borrowed to fulfil some of the programmes the previous administration put in place. 
In the Finance and Expenditure Committee’s report to the House when the committee talks about those six key drivers I am fascinated and amazed to note that Opposition and Green Party members do not believe in those six key drivers to a good economy and that they strongly feel that evidence to link the Government’s six policy pillars and its growth targets is unclear and tentative at best. That means that members opposite do not believe that productive infrastructure the removal of red tape supporting business innovation improving education lifting productivity and strengthening our tax system and making it fair contribute to a better economy. I look forward to speakers from the Opposition trying to justify that statement in that report. 
We combined the Finance and Expenditure Committee’s report with a review of the Half Year Economic and Fiscal Update. I think that most members acknowledge that the risks to our economy and the global economy remain but yes things are quite a bit better than they were in the deep dark times of the global financial crisis earlier on. However they are tentative at the least. One thing I noted yesterday and I will repeat today is the fact that although the forecast accounts are looking a bit better it does not mean they are fixed; they are just looking a bit better. That demands that we keep the discipline on our spending caps have a focus on raising productivity and bring fairness and equity back into the tax system. If we do not all those forecast curves will start to go the wrong way again New Zealand’s credit rating will be downgraded our currency will fall through the floor and our expectations of a modern economy will not be delivered full stop. 
I note in the accounts that unemployment has hit a 10-year high of 7.3 percent. That is terrible. Many families have suffered for that. The only bright side is that that high is a lot lower than what was forecast earlier on as recently as the middle of last year. We must note that to get to this point and to even keep the lights on to pay for superannuation education health law and order and the insulation package we as a country are still borrowing $240 million a week—$240 million. That is entirely why we need to concentrate on those six pillars and bring some fairness and ongoing growth back to our economy. 
I would like to quickly touch on what the Opposition has offered up as solutions as its alternative Budget. Over Christmas the Leader of the Opposition announced that he would cap 16 public servants’ salaries. The Government’s Budget is something like $65 billion and the Leader of the Opposition had about 8 weeks to come up with an answer to our issues. The Opposition’s other solution is to borrow about $7 billion because of what its spending promises that it announces day after day now amount to. We are borrowing $240 million a week right now and that is another $7 billion per annum. If we listen to what Opposition members are saying in some of their blog alerts we hear that they want to increase taxes. I guess old habits die hard. I remember the first thing the then new Labour Government did in 1999 in regard to tax was to increase it from 33c to 39c in the dollar and that has created so many of the problems we now have. 
Labour’s other solution is a bus tour around the country telling everybody that GST should not be increased from 12.5 percent to 15 percent. Well that is half the story if GST is to be increased. Labour constantly does not address this—and I would love those speakers to comment on this. When the Labour Government increased GST from 10 percent to 12.5 percent what compensation did it provide to hard-working New Zealand taxpayers? What compensation did it provide to superannuitants or those on some kind of assistance at that time? The answer is absolutely none. Solutions will be coming in this Budget. It is about fairness equity ongoing growth and sustainability for our country. I look forward to the Budget on 20 May 2010.