English Bill: Appropriation (2010/11 Estimates) Bill — Third Reading Imprest Supply Debate 
Text is incorporated into the Bound Volume 
English Bill: Appropriation (2010/11 Estimates) Bill — Third Reading Imprest Supply Debate 
[Sitting date: 03 August 2010. Volume:665;Page:12893. Text is incorporated into the Bound Volume.] 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I move  
That the Appropriation (2010/11 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2010/11) Bill be now read a second time 
. This is an opportunity for Parliament to debate the economy and I had been looking forward to it until I saw what a mess the Labour Party had made of its internal rifts splits and divisions. 
Hon Darren Hughes 
: Well that’s rich—their worst political leader in 100 years. 
Hon BILL ENGLISH 
: I knew that those members would say that and all I can say is that they are following the playbook almost to a T including having the leader make the mistake of saying that he would throw Chris Carter out of the Labour Party. One would think that those members would have learnt but they have not. Of course Chris Carter has played exactly the right card so that it is drawn out for several months while the leader’s position is progressively weakened by Chris Carter’s other accomplices within and outside the caucus. 
Of course there is one extra bit here. Usually in the playbook that we know about the president supports the leader; that is what usually happens. The president realises that he or she has to objectively oversee a process to deal with the member who has committed an offence. But not in the Labour Party; no not in the Labour Party. The president is out in the media looking so relaxed that one would think that he has just come back from a beach holiday and he probably has—a beach in New Plymouth. [ 
Interruption 
] No Andrew Little. He should be sounding a bit uptight in the media but no he is quite relaxed. Everything is playing out. At least John Key got into the caucus before he became the leader; at least John Key got into the caucus. Andrew Little does not have to because— 
Dr Russel Norman 
: I raise a point of order Mr Speaker. We are debating the appropriations legislation and I would like to hear what the Minister of Finance’s economic strategy is. He has no responsibility for the Labour Party and this matter has nothing to do with the appropriations. 
Hon Gerry Brownlee 
: Mr Assistant Speaker you will I am sure uphold the long-held tradition that this is a very very wide-ranging debate. I think that it is being conducted in an appropriate manner. The fact is that these matters are topical to say the very least and I think it is not unreasonable that the House might give them some attention. 
Hon Members 
: Where’s the plan? 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I am on my feet. I do not have to provide anybody with a plan. But I will say to Mr Gerry Brownlee that he is almost right with his interpretation. It is not a very very wide-ranging debate; it is a very wide-ranging debate. Members are free to range over those things. It is not the Speaker’s intention to censor what people say. The public and others will make judgments about the content and the veracity of speeches. All in all it is almost a general debate. 
Hon BILL ENGLISH 
: I agree with the comment that this matter is topical but fortunately—and I say this advisedly—it is irrelevant. It does not matter now which talking head of the left faction or the right faction it is or from outside or from wherever those members will do whatever they are doing. We are getting on with the economy. 
I will outline the main components of the Government’s economic programme. This Government is dealing with a very considerable challenge in respect of the economy. The economy went into recession in early 2008 because of the mismanagement of the previous Government and that was compounded by the global financial crisis. These are some of the measures we are taking. Today we announced the policy expenditure review which is part of our overall plan for better smarter public services. In the last couple of Budgets we have reallocated about $2 billion of spending over the next 4 years from low-cost and ineffective programmes and expenditure to higher-priority front-line services. That is a process that will continue. We have had to bring under control the runaway spending habits of a Public Service that was used to getting pretty much whatever it liked. We have also had to deal with the attitude issues and the culture in the Public Service—the combination of too much money and a lot of bullying. It created among civil servants a degree of passivity and lack of confidence in their own judgment. There has to be change if we are to meet the challenges of the next 4 or 5 years so a better smarter Public Service is one of our six drivers. 
Another driver is a growth-enhancing tax system. In Budget 2010 we delivered a fairly significant shift in New Zealand’s tax system and there is a pretty simple theory behind it: those things that have been harmful to the economy in excess such as borrowing for highly leveraged property and too much consumption now face higher effective tax rates. Those things that we believe will be better for the economy over the next 4 or 5 years such as investment exports and savings are now subject to a lower tax rate. That will all come into place on 1 October this year. 
I have to say that we are one of the few developed countries—if there are any others—reducing income tax rates and taxes on savings as the world emerges from one of the more significant recessions that it has had. We have cut the company tax rate to 28 percent which will now be lower than Australia’s and is likely to remain so. The average wage earner will be around $15 a week better off after GST and a family on the average household income will be $25 a week better off even after paying higher GST. Another pretty interesting statistic is that 73 percent of all New Zealand earners will face a top statutory tax rate of 17.5c in the dollar. That is because we believe that incentives matter right across the board. If people on the minimum wage want to do an extra hour of work we believe that it is important that they get to keep over 80c in the dollar for their extra effort. 
We are also focusing on lifting education and skills. There has been good robust public discussion about our national standards policy that we are putting into place. The Youth Guarantee is another innovative policy designed to make sure that young people do not lose contact completely with education and training in the workforce. And of course we are tidying up the tertiary education funding system to make sure that it is more focused on achievement than the previous system was. So those drivers are improving the tax system better smarter public services and lifting education and skills. 
No. 4 on that list is boosting infrastructure. I must say that the timing for this infrastructure boost has turned out to be highly appropriate. At a time when the domestic construction industry is really struggling it turns out that the Government’s large-scale investment is maintaining thousands of jobs as we spend billions of dollars on upgrading infrastructure that needs to be brought up to the levels required to handle a growing economy. I will go through those in detail. The State highway programme now amounts to $10.7 billion over 10 years; the national grid upgrade now amounts to $3.3 billion over 5 years; the broadband project amounts to $1.5 billion over 10 years; and investment in schools and other buildings the Government is investing in now amounts to $2.7 billion over 5 years. But it is not just about spending the money. What is even more important is upgrading the process by which those decisions are made because it has to be quality spending when we are borrowing that money. 
We have also embarked on an ambitious programme of cutting red tape and regulation. That picks up work that the previous Government had talked about and done a bit of. We are reviewing the Resource Management Act. A couple of other Acts we are currently reviewing are the Food Act which applies to every food outlet in New Zealand and the Building Act whereby we are moving along to the legislative stage with a sweeping reform to reduce costs and compliance in the building sector. Even with tough Budgets we have also invested quite heavily in better business innovation in an ambitious trade agenda to help particular sectors and to help to encourage research and development. 
Overall this is a very balanced but energetic programme designed to get this economy up and running after a decade of mismanagement when New Zealand squandered its opportunities wasted public money smothered the business environment and prevented New Zealand from taking the opportunity of what in retrospect looked like one of the more encouraging decades that the New Zealand Government could have had. In that respect I must say that Australia did do a better job over the last 10 years and that is why closing that gap will be such a big challenge.