Cunliffe David: Budget Debate 
Cunliffe David: Budget Debate 
[Volume:626;Page:20806] 
Hon DAVID CUNLIFFE (Minister of Communications) 
: 
 It is said that Budgets are complex matters but in the end they are really simple. This morning on the way to caucus I was pleased to meet with a group from Blockhouse Bay Intermediate school. I asked them a simple question: “Do you think your parents would want cuts to health and education or do you think they’d rather have a tax cut?”. The answer was that they want schools and hospitals. That is what New Zealand wants. 
When I went around the country last week talking about the Budget—and I have been all the way to Invercargill and right through the Waikato and the Bay of Plenty—the answer was consistent. When people know the facts their choice is clear. They want good Government not cheap Government. They know three things about this Budget: one it is good for New Zealand; two it is good for Kiwi families; and three it is good for business. I will explain why. The reason this Budget is good for New Zealand is that there is no such thing as a free lunch. One can see that over 3 of the next 4 years we will be cash-negative. There is no pot of gold. 
 There is no mountain of cash that Dr Cullen can simply find on the seventh floor of the Beehive and distribute around the country to all and sundry. This graph shows that we are spending all we can responsibly afford to spend in order to keep Kiwi families afloat. If we were to promise tax cuts or additional spending any responsible person would ask how we could do that. Dr Brash is promising tax cuts but he will have to borrow money to fund those cuts. Who would borrow in order to give a tax cut? A household could not be run like that. 
Darren Hughes 
: The Tories would. 
Hon DAVID CUNLIFFE 
: The Tories would do it; they would borrow to fund a tax cut. The second thing New Zealanders understand is that if they have a Labour Government then under its Working for Families package they will be better off than having some fictitious tax cut under National. It is really quite simple: a family on around $38000 with two kids will be around $120 a week better off by the time the Working for Families package has been fully brought in. Under National how much better off will they be? About $30 or $40 a week if they are lucky but their mortgage will have gone up because interests rates will be higher. There is no free lunch. National should be asked what it is not going to spend money on. People should ask National what they will not get by the time that party has another Ruth Richardson effort on the New Zealand Budget. 
Families are better off with Labour. Under Labour people will have investment in health care. The health budget has gone up by about 60 percent since Labour was elected. There is another $1 billion a year for hospitals and primary health care which has been an extremely successful strategy that is being rolled out to all income groups. There will be 400 new teachers as part of a half a billion dollar additional investment in education and 1000 new police officers as part of an additional investment in New Zealand security. So people can see that this Government is carefully and prudently balancing the needs of ordinary New Zealanders with the need to run very strong books in order to ensure our future prosperity. That is why next year for the first time since Vogel borrowed for the railways the Government will be a net creditor. The assets in the superannuation fund will outweigh Government debt and the New Zealand Government will be a net creditor for the first time in all those years. 
The Opposition carps about the Government’s net worth increasing. What would the country rather have: a Government with sound Budget finances that provide a platform for the rest of the economy or a profligate Opposition whose spending promises do not add up? Here are a few of those promises. We reckon that the cost of their tax cuts is worth about $2 billion or conservatively $1.75 billion. 
Over 10 years that will be $17 billion. They have already made about $4.5 billion worth of promises in relation to transport over the next 10 years. They want to four-lane State Highway 1 all the way from Wellington to Auckland. 
They are promising $4 billion for defence in order to be level with Australia. For law and order they are promising nearly $1 billion. In education I reckon the sum is about $20 million and for the superannuation fund $2 billion is required. If that is all added up it is about $55 billion worth of spending promises from the Opposition. Where is the money coming from? How can they do all that and still give a tax cut? The numbers do not add up—talk about voodoo economics! I do not think even George Bush would engage in voodoo economics of that kind. 
The other thing I heard is that New Zealanders know that their businesses will be better off under Labour. When I went around the country last week I found that small-business owners know that this Budget fixes a lot of the problems that have been on their minds for many years. Tax cuts of $1.8 billion are targeted for small businesses for Kiwi businesses and that is what matters to them. Fringe benefit tax provisional tax and actively managed funds’ taxation are fixed in this Budget and savings incentives are provided. Depreciation regimes are also fixed. For Kiwis who want to save for their nest egg for their retirement or for their first home under KiwiSaver there is $1000 for each person to get them started and up to $5000 over 5 years for the deposit on their first house. Kiwis know that that matters to them. Kiwi families know that with that initiative with what we have done with mortgage guarantee insurance and with what we are doing with the Working for Families package they will be better off under Labour. That is true both individually and as part of a country that is secure whose books are well managed and that can hold its head high in the company of developed countries the world over as we sail into the new century. 
Business is better off families are better off and the Opposition’s promises simply do not add up. If it is not enough for people to believe us then they should believe the OECD which stated: “Any additional fiscal stimulus beyond that already planned would put the projected soft landing at risk and would be offset by higher interest rates in order to bring the economy back to a sustainable growth path.” For example if taxes are cut what happens? Interest rates go up people with mortgages pay more and the value of the tax cut is gone overnight. So not only— 
Rodney Hide 
: Rubbish! 
Hon DAVID CUNLIFFE 
: “Rubbish!” says that bloke. The members of that bloke’s party could not add to save themselves. They reckon on a flat tax rate of 25c which would need $5 billion to $6 billion worth of spending. Can people imagine what would happen to interest rates if Rodney Hide ever got near Treasury? Good Lord—no wonder they would not open the doors to the guy! Alan Bollard would have a hernia. He would say: “Oh my God! Who taught this guy to add?”. We do not know whether anyone taught him to add; there is no evidence of it so far. This Budget is good for families good for business and good for New Zealand. It is a good Budget.