Key John: Budget Statement — Budget Debate 
Key John: Budget Statement — Budget Debate 
[Volume:663;Page:11051] 
Hon JOHN KEY (Prime Minister) 
: 
 Shane Jones was happy with that speech I have to tell you. The one conclusion we can draw from Phil Goff’s speech is that he has to stop reading those Greek economic textbooks because that speech was about borrow and hope. It was Greek economics Labour Party style. That is all Labour knows how to do. 
When I went to bed last night at 12.30 I read the  
Dominion Post 
. In the  
Dominion Post  
Vernon Small listed 10 things that are highly predictable about today’s Budget and one was a vein-popping speech from Phil Goff. 
Chris Tremain 
: He got that right. 
Hon JOHN KEY 
: No actually he did not get it right. That was not a vein-popping speech from Phil Goff. Do members know why? Other than Labour wanting us to borrow we did not hear one suggestion one policy or one good idea from Labour because Phil Goff does not know what his policies are. He does not know whether GST is going up. He does not know whether GST is going down. He does not know whether GST is coming off a cooked chicken or an uncooked chicken. Neither does the rest of the Labour front bench after that speech. Labour members do not have a clue. 
Interestingly enough in Phil Goff’s speech I did hear—[ 
Interruption 
] It is interesting that members opposite are paying more attention to my speech than they did to their own leader’s speech. But I digress. There were crocodile tears in that speech from Phil Goff but the question is this and it is a good one: did they ring true? That is an honest question that any New Zealander might ask. Let us wind the clock back to 1988 when Phil Goff was in Cabinet. The then Labour Government dropped the top personal tax rate to 33c—exactly as it is in today’s Budget. Did Phil Goff resign? No. Did he protest? No. He came down to the House and said that that reduction would allow Kiwis to keep more of their own money. I say: “Right on Phil!”; I agree with him. In 1988 that Cabinet—wait for this and Roger Douglas knows exactly what I am talking about—dropped the company tax rate to 28 percent—exactly what it is today. Did Phil Goff resign? No. Did he quit? No. He came down to the House and said this: “That will create an environment in which enterprises can succeed—both New Zealand enterprises and those attracted from overseas.” [ 
Interruption 
] Yes it is a good Budget. But wait it gets better. 
Mr SPEAKER 
: I hesitate to interrupt. The debate has been robust and that is fine but the noise has reached such a level that I am sure no one in the gallery can hear what on earth is going on because I cannot either. I have no problem with it being a robust debate and I do apologise for interrupting the Prime Minister but we cannot let it just become bedlam. 
Hon JOHN KEY 
: The truth is I have never seen so much support from Labour for a National Budget! In 1989—wait for this—Phil Goff was in Cabinet. Guess what Labour did? It raised GST by 2.5 percent. Guess what? It was with no compensation—nothing for those on benefits nothing for those on pensions nothing for anyone. Did Phil Goff resign? 
Hon Members 
: No! 
Hon JOHN KEY 
: Did he protest? 
Hon Members 
: No! 
Hon JOHN KEY 
: Did he get in a bus paint “Axe the Tax” on it and wander round New Zealand? No he did not. He said the virtues of it were great. 
Last week I read in the  
New Zealand Herald 
 something very interesting. It was Phil Goff talking to Labour supporters. He said: “should Labour regain the Treasury benches …”—note to self: the operative word in that statement is “should”—“we are going to be doing a lot of reversing.” That is what Phil Goff said—“we are going to be doing a lot of reversing.”—and we will hear about that in a moment. Well ain’t that the truth! Phil Goff has been doing a lot of reversing throughout his whole political career. But this is what he will be reversing. Today Bill English delivered control of Government spending. Well under Labour’s spending-type matters that would be reversed under a Labour Government. Bill English today delivered Government debt under control and falling. That would be reversing under Labour’s borrow and hope. Today Bill English carried on with orthodox monetary policy which is something Labour has supported since 1989. According to Phil Goff that would be reversing. Today Bill English delivered a comprehensive GST system something Labour has supported since 1985. According to Phil Goff that would be reversing. I give him one hint: he should have told Trevor Mallard before he wrote the blog in April of this year in which he had a go at the Maori Party. That is what he should have done. There has been a lot of reversing in that thing. 
It is as simple as this: if New Zealanders want to see debt go up and their country get into worse shape they should vote Labour. 
Mr SPEAKER 
: I apologise to the Prime Minister again but I cannot hear a thing. I think the Government benches need to be a little more reasonable. OK the noise at the final point was from both sides but the Opposition has actually not been as noisy as the Government benches in the last few minutes. We have to be able to hear. It is no use if we cannot hear what the Prime Minister is saying. 
Hon JOHN KEY 
: It is time to leave Labour behind but I can only make this observation: if the only thing Labour has learnt in the last 18 months is to borrow more money then those members need to go and have a good look at Greece. The only assumption I can draw is that the bus they have been on for the last 18 months has spent a lot more time on Mykonos than it has in Masterton! They need to get in the real world. 
This is a great Budget. It will get our economy going. This Budget will create 170000 jobs—170000 jobs. It is tackling the long-term issues that our economy and our country face. There will be some fairness in the New Zealand tax system. There are a lot of things in this Budget and we have delivered on many many important issues. Let us take just one of them: $1 billion for leaky homes. It is a problem we inherited from a Labour Government that spent 9 years ignoring the problem. We will see whether homeowners up and down the country who will have access to a solution to their leaky homes who are currently living in rotting dwellings and who now can see light at the end of the tunnel think this is a good Budget. 
We are living in very difficult economic conditions but today this Government delivered a record amount of expenditure on health care—$2.1 billion more over 4 years. But I want to make a very important point: it is not just about more money; it is actually about how we spend that money. It is about value for money. It is about putting more money on the front line. It is about more money for nurses and doctors and for retaining people in our system. It is about more money for subsidised drugs not just more money for the sake of it. 
The same is true of education. There is a record spend-up on education. There is 4 percent extra for operations grants for schools up and down the country. 
We need to put science at the heart of our economy. This Budget makes a step in that direction. When Labour had billions and billions of dollars to spend it did not spend it on science research and development. Labour members will want to talk about their rinky-dinky little fund which never actually got off the ground. Not one dollar of that fund was spent because it was 9 years too late. What have we done in science research and development? Well we have given a huge amount of money to those companies that want to use that technology. We are linking the Crown research institutes universities and private institutes to our businesses so that those businesses can be smarter. 
When it comes to infrastructure this Government is investing in the future of New Zealand though infrastructure even if we are having to bail out KiwiRail which Labour bought for far too much simply for political and ideological gain. We campaigned on ultra-fast broadband as a device to change New Zealand. 
Hon David Cunliffe 
: Where is it? Where is it? 
Hon JOHN KEY 
: Well actually in the Budget—hundreds of millions of dollars of expenditure. The Crown Fibre Holdings board is making tremendous progress. This is a country getting ready to be wired so that we can deliver to New Zealanders their opportunities to connect with the world through a low-cost highly efficient world-class leading technology; we are letting small businesses in New Zealand all of a sudden connect to the world. 
But in the end this Budget with not a lot of money to go around has tackled one very core thing which is the unfair and inappropriate way in which the tax system has evolved in this country. Today that is what we have done. Let us forget about the rhetoric from the Labour Party and go to what Treasury is telling us: there will be 170000 new jobs and nearly 1 percent growth. Even at Treasury’s most pessimistic view this Budget will grow our economy by 1 percent extra. That is thousands of dollars to everyday Kiwis in their pockets in their households and in job security. That is what a good tax system does. 
Let us have a look at some of those taxpayers. Under the previous Labour Government someone earning $39000 a year paid tax at the rate of 33c in the dollar. Has the National Government stood back and accepted that? No it has not. It has effectively halved that rate to 17.5 percent. But that lower rate is not for just a few New Zealanders; three-quarters of all New Zealanders will face a top statutory rate in this country of 17.5 percent. Let us put that another way: three-quarters of New Zealanders will get to keep 82.5c in the dollar. That is about an incentive to get out there and train work and get ahead. That is two-thirds of the tax package. Let us understand the size and scale of this tax package. Four billion dollars of personal tax cuts are being delivered from a Government that is struggling with an economic environment that is difficult. That is commitment. Those cuts are worth $15 billion over a 4-year period. Where will that money go? Two-thirds of it will go to those on the bottom two personal tax rates. That is fairness. 
What will this package do? Let us think about the young couple that have recently got married. They earn $50000 each. As a result of this package they will have choices because they will have thousands of extra dollars in their hands. Even if they decide to consume the lot they will still be better off to the tune of thousands of dollars and if they want to save if they want to buy a house they will now have the choice to do that. We in National are believers in a property-owning democracy; if people want to live in their own homes if they aspire to own their own homes National is the party that believes in that. Today through this Budget we have delivered the opportunity for New Zealanders to live up to that dream to have that opportunity and to get out there and build their own homes. 
There are many other component parts of this package but one of them is about making sure there is fairness in the system fairness to all New Zealanders. Labour members will spend a lot of time talking about tax cuts for the rich but they have missed a simple point: the rich in New Zealand largely do not pay the top personal rate. The rich funnel their incomes through trusts and today we have essentially aligned all of those incentives. We have made sure that when people who are well off go to their accountants it is to talk about how to grow their businesses it is to talk about how they can do better in their lives not to work out ways in which to get round an “envy tax” that was put on by the Labour Government for no good reason. 
National has been fair across the board which is unlike Labour when it increased GST with no compensation. We have recognised the cost on low-income and fixed-income New Zealanders and have done something about it. Let us take the married superannuitant couple who have no other income—no other income. As a result of this Budget even if they consume every dollar they receive through superannuation they will be over $500 a year better off. 
In the months and years ahead I guess that Labour members will have to consider what they would do. If they decide to put on a high personal tax rate—for those on let us say more than $100000—will they be getting the rich to pay more tax? No the rich will continue to funnel their incomes through trusts. 
What we have delivered today is extreme efficiency in the tax system. We have lowered taxes on savings—we have aligned them at 28 percent—and we have done something very special: we have given New Zealand companies a head start over their Australian counterparts by cutting the company tax rate to 28 percent. A lot has been made of Australia but here are the facts. Before this Budget only those who earned more than $228000 paid less tax here than they would have paid in Australia. Do members know what the result of this Budget is? It takes that amount from $228000 to $55000. That is about competitiveness with Australia! 
In the end this was a Budget about growth a Budget about jobs a Budget about the future of New Zealand a Budget about getting on top of debt a Budget about keeping our expenditure in order and a Budget about fairness. When I look at the millions of New Zealand who will be better off after this Budget I am left with only one conclusion: this was a Budget for the many not the few.