Volume 608 Week 24 - Thursday 15 May 2003 
Volume 608 Week 24 - Thursday 15 May 2003 
[Volume:608;Page:5761] 
Thursday 15 May 2003 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Appropriation (2003/04 Estimates) Bill 
First Reading 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Appropriation (2003/04 Estimates) Bill be now read a first time. 
Bill read a first time. 
Appropriation (2002/03 Supplementary Estimates) Bill 
Procedure 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I hereby present the Supplementary Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2003 (B.7). I move  
That that paper be published 
. 
Motion agreed to. 
Budget Statement 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Appropriation (2003/04 Estimates) Bill be now read a second time 
. 
Mr Speaker this year's Budget has been prepared amidst the most uncertain political and economic situation internationally for a very long time. The long bull market of the 1990s fed by international political and economic liberalisation and growing integration seems now a distant memory. 
In their place older and more malign factors have reasserted themselves: war terrorism and their associated fear and uncertainty; disease; and economic stagnation in many of the world's most important economies. 
Against this international backdrop the primary objective of Budget 2003 is to tell our own national story of certainty and stability. Budget 2003 delivers results in terms of gross debt net debt and the operating balance exclusive of revaluations and accounting changes which exceed the targets set in Budget 2002. It also looks forward to key fiscal indicators for the coming three year period which are broadly in line with the most recent December Economic and Fiscal Update. If events unfold over the next year as forecast this will give room for some targeted and significant moves in Budget 2004 and beyond. 
Since the presentation of last year's Budget the world has been through a period of turmoil and increasing uncertainty. The world's key economic engine - the United States - has not only slowed down but is sending very mixed signals about the short to medium term outlook. The build up to the conflict in Iraq exacerbated that situation. Equity markets continue to drift downwards or at best sideways punctuated by short unsustained recoveries. 
A growing U.S. current account deficit and a return to deficit financing at the federal level have led to a weakening in the U.S. dollar which has been the main factor driving an appreciation of the New Zealand dollar. This has placed further pressure on our tradeables sector. 
In addition to these broader influences others including more local factors are likely to impact on growth during 2003 and into 2004. Drought across much of the country particularly in areas not normally subject to drought and late frosts have led to reductions in land based production. Falling milk prices have combined with the rising New Zealand dollar to reduce returns to dairy farmers for the current year well below the very high levels experienced over the previous couple of years. The SARS epidemic appears to be impacting on the growth in tourism. Finally the very real prospect of a dry winter in combination with the independent redetermination that has reduced the Maui gasfield's reserves may be expected to impact on growth in the short term. 
All these factors will moderate the very strong growth New Zealand has experienced over the last year or so. Year to March growth is expected to have been 4.4 per cent placing New Zealand at the very top of the OECD growth ladder. The weakening factors already referred to are expected to be offset in part by a range of domestic factors. 
Net migration inflows remain strong and house prices are rising. Both will support domestic demand. Business and farm balance sheets are in good shape providing an important buffer. Monetary conditions are expected to continue to ease over the year ahead. 
On balance it is anticipated that the domestic factors will create a soft spot in quarterly GDP growth in the middle of this year dragging growth down to 2.2 per cent for the year to March 2004. Growth is then expected to rebound in the following year to 3.2 per cent as the downside factors unwind and the external sector recovers. It is expected that easier monetary conditions in conjunction with a recovery in trading partners' growth will help support the rebound in GDP growth from the latter part of 2004 onwards. 
This pattern of economic growth though it is likely to continue to be high by OECD standards over the forecast period is expected to lead to some weakening of the labour market with unemployment rising to 5.6 per cent by March 2004 and holding at that level before dropping from mid - 2005 onwards. This is also likely to be a very strong performance by international standards. 
The strength of the economy over the last year is reflected in the fiscal forecast for the operating balance exclusive of revaluations and accounting changes. That figure forecast to be $2.29 billion in Budget 2002 and $3.52 billion in the 2002 December Economic and Fiscal Update is now expected to be $4.04 billion or 3.1 per cent of GDP. 
This results in a gross debt forecast for 30 June 2003 of 27.3 per cent of GDP compared with the forecast of 28.6 per cent in Budget 2002. The corresponding figures for net debt are 14.0 per cent and 16.8 per cent. Thus for the third year in a row performance has exceeded expectations. 
The final operating balance for the year including revaluations and accounting changes is likely to be severely affected by revaluations including those in the Government Superannuation Fund and Accident Compensation scheme. Revaluations are presently estimated to total $2.68 billion reducing the final operating balance to $1.36 billion. This does not of course affect the cash position. 
These revaluations flow in large part from changes to the discount rate arising out of changing interest rates. As such they are the reverse effect of the positive impact on the operating balance of rising interest rates in earlier years and themselves are likely to be at least partly reversed out over time. The ACC revaluation is also substantially affected by recalculations based on for example a reassessment of experience of the very long tail of the most serious cases from the 1970s and 1980s. 
The forward forecasts for the operating balance have to be compared with this year's OBERAC. For 2003/04 a small drop to $3.8 billion is forecast rising thereafter to $4.5 billion in 2004/05 $5.3 billion in 2005/06 and $6.2 billion in 2006/07. Gross sovereign issued debt is projected to fall to 23 per cent of GDP in 2006/07. 
This is well below the government's stated prudent gross debt upper limit. In this light it is useful to provide some additional focus around the debt target and the fiscal possibilities that exist over the forecast horizon. 
The broadly stated target is to keep gross debt below 30 per cent of GDP. However given prudential management with a margin for risk the bias is more against increasing debt than lowering it so that there will be a natural tendency for the gross debt percentage to trend downwards over time. 
The projected decline does indicate the likelihood of sufficient fiscal headroom in Budget 2004 for some significant initiatives beyond the amount presently allowed. Whether these will in fact proceed will depend on a number of judgements about the economic and fiscal position including the level and direction of the structural surplus. 
Should present indicators prove to be accurate the Labour Progressive Government will be in a position to make some significant improvements in the level of family assistance to low to middle income families and in the incentives to move off welfare benefits into employment. Work will be proceeding on a range of possibilities over the next year with the final choice of measures in part dependent on the amount of money available. The United Future Party will of course be consulted about the shape of the proposed changes. 
One decision has already been taken in the context of this year's budget. The strength of the government's fiscal position has enabled us to move to full funding of contributions to the New Zealand Superannuation Fund a year earlier than anticipated. The Fund is expected to go to market in the final quarter of 2003 in what seems likely to be a favourable combination of a relatively strong New Zealand dollar and moderate equity prices. 
The New Zealand Superannuation Fund is part of the government's capital budget. Another large part of that is occupied by the State-owned enterprises. 
This Labour-led Government indicated on taking office that it was no longer in a preparing-for-sale" mode with respect to the SOEs but a "long term hold" one. Some 18 months ago work began on the implications of that stance for both the Crown and the SOEs. 
Because of the size and strategic significance of the SOEs it is crucial to the success of the economy that they perform well and are able to achieve their full potential to best advance the government's economic objectives. 
There is no intention to abandon the basic framework established in the 1986 State Owned Enterprises Act or to become involved in operational matters or compromise the accountability of SOE boards. 
But we do need to adjust to the post-privatisation environment. Specifically we need to get the balance right between allowing SOEs to grow and diversify and ensuring that Crown capital is available for the government's other priority areas. 
In particular I will be seeking to incorporate SOE requests for equity for significant investments into the normal budget process where commercial realities allow so that the Crown can better integrate its capital management. 
Mr Speaker the SOEs make a significant contribution to the Crown’s revenue the bulk of which of course comes from tax. 
We have shown that we are prepared to listen to rational arguments where tax is creating unnecessary problems for businesses.Our tax simplification initiatives are an example of that but most tax acts have a number of measures that are a response to problems raised by the business community.  
This is an ongoing process.Early in our first term of government legislation was enacted that allowed a deduction for research and development expenditure that is reported as an expense for accounting purposes.A private sector group has been established to report to the government on how well this is working.It would not be surprising if this results in some modifications to the law to remove any identified problems.  
The next tax bill will include a proposal to subject to GST some imported services and to remove multiple layers of GST that can be imposed on the financial sector.These are issues that have been worked through with private sector co-operation and remove deficiencies in the GST rules that were recognised but not resolved when GST was first introduced.  
A key concern of tax policy in the future will be to underpin in the tax area the government’s overall commitment to an open economy with strong international links.  
The next tax bill will include legislation to put into effect the agreement we have reached with the Australian government on trans-Tasman imputation.This agreement is a landmark.It is the first time our two governments have coordinated a common approach to tax issues.We shall look for any future opportunities to build on this.  
A tax policy priority this year is to bring forward proposals to enable overseas venture capital to be invested in New Zealand in accordance with normal international tax rules. This will ensure that New Zealand does not lag behind similar Australian initiatives in this area.Similarly the government will this year consider measures to provide a temporary exemption for migrants from tax on foreign income the cost of which in many cases must now be paid by New Zealand businesses that require the skills of those migrants.  
These are various ways the government is updating our tax system in line with our economic objectives.  
The fundamental objective of our tax system remains the raising of revenue to meet our social and economic objectives.This needs a constant programme of measures to counter the ingenuity of those who will go to great lengths to avoid tax. 
The next tax bill will include measures along these lines.One of these is aimed at schemes that are structured to offer high income investors a return from tax deductions to the extent that the investors need not be concerned with the underlying economics of the arrangement.Many of these base maintenance measures have been targeted at individual taxpayers. Large companies and the financial sector benefited from New Zealand’s strong economy over recent years.Budget 2003 provides Inland Revenue with the resources to apply the law and proposes changes to the law if that is needed to ensure that these high profits are being matched by tax payments.  
One other significant initiative in the tax area this year is the inclusion of legislation to provide for a new lower rate of tax on employers’ contributions to superannuation schemes for employees earning less than $38000. 
One very useful way to think about providing an adequate income in retirement is the World Bank approach which is based on three tiers: public provision employment-related provision and private provision.  
The Government’s current focus is on the second tier of the World Bank model employment-based superannuation.This has the most potential for getting New Zealanders into long-term savings patterns. 
The Government acknowledges that there are a number of disincentives to saving through employment-based schemes and for employers to offer these schemes. 
Within the next few weeks the Government will be introducing legislation to remove the current over-taxation of employers’ contributions to superannuation funds on behalf of low-income savers.The present tax rate on employer contributions is a flat 33 per cent regardless of income.  
From 1 April next year employers can apply a lower tax rate of 21 per cent on contributions made to superannuation funds on behalf of employees earning under $38000 a year.This should remove one of the disincentives for low-income earners to save through employment-based schemes. 
The direction of the Government’s future work in this area is to look at removing the disincentives for employers to offer these schemes and the inequity of the current tax law in overtaxing a fund’s earnings in relation to low income savers. 
The savings industry and the government are cooperating on this work which is moving in parallel with that being undertaken by the Periodic Review Group on retirement income policy. 
Mr Speaker fiscal certainty and prudence have been the hallmarks of this Government.We have resisted pressures to spend surpluses before they arrive or to give them away by means of unsustainable tax cuts.Other jurisdictions are demonstrating how easy it is to slip back into substantial deficits.It is a path we do not choose to follow if for no other reason than that we are in the most favourable demographic position we are likely to see for the next two generations or more. 
At the same time as saving for the future we need to be actively building it as well.Budget 2003 does this through a series of targeted spending initiatives aimed at smarter growth helping to build stronger and more secure communities. 
Much of the additional spending underpinning smarter growth is directed towards strengthening the Government’s Growth and Innovation Framework. 
Fostering innovation is critical to New Zealand’s growth potential.The 2003 Growth and Innovation package contains measures to increase the applied value of publicly funded research promote greater private sector investment in research and development and develop closer links between public sector research institutions and industry.$140 million plus $12 million capital is committed to new investment in Vote: Research Science and Technology over the next four years. 
A new pre-seed Acceleration Fund will be established.This fund will have $19 million to invest over the next four years in partnership with the private sector in the early commercial development of promising discoveries in our research institutions. 
Existing research funds such as the New Economy Research Fund and the Marsden Fund are being boosted substantially again. 
The 2003 Growth and Innovation package also makes a significant contribution to building skills and talent.For example the package includes an initiative to enable more active marketing of skilled potential immigrants and measures to strengthen the interface between industry and the education sector including additional resources for training schemes. 
As part of the implementation of the Growth and Innovation Framework in 2002 the government established four private sector taskforces to develop sector specific strategies.Within the 2003 Growth and Innovation package there is provision for a $110 million contingency over four years to enable the implementation of initiatives that the government undertakes in response to the taskforces’ reports. 
Business incubators are shaping up as important sources of innovative new businesses so the government is again increasing the support for them.Budget 2003 contains $6.4 million over four years to accelerate the work of the existing 15 incubators and to facilitate the development of new ones. 
Inevitably most of the businesses which emerge out of these incubators will be small businesses. They will therefore face many of the challenges that small businesses do. 
Such businesses will be assisted by the integration of Trade New Zealand and Industry New Zealand into New Zealand Trade and Enterprise the funding for which is provided in Budget 2003.New Zealand Trade and Enterprise will be able to provide seamless support for such companies from start up to the time they go global. 
While international studies suggest compliance costs for business are lower in New Zealand than in most other developed countries there is still a lot that can be done.Budget 2003 provides funding for the establishment of a Small Business Advisory Group drawn directly from the business community.This group will work with and advise the new Small and Medium Sized Enterprise Unit that has been established in the Ministry of Economic Development. 
Much work has already been done in the tax area to make it fairer for SMEs.Legislation has been passed to ensure fairer treatment for businesses having tax payment problems; measures have been introduced to allow tax pooling through commercial intermediaries and to make it easier to use payroll firms to deal with PAYE. 
In the course of development and due for release for discussion over the coming months are a number of more innovative measures to help small businesses. 
The first of these will be a proposal to align the payment date for provisional tax with that for GST at least for small and medium-sized businesses.This will assist with cash management and reduce compliance costs.A further proposal to base provisional tax on a percentage of GST turnover will add to this by allowing qualifying small businesses to match tax with cash flow more closely. 
The third proposal involves a significant cost to the Government but with significant benefits to small businesses.That is to subsidise the cost of an employer engaging a payroll firm to manage the payroll and associated tax obligations.The subsidy would be for up to the first five employees.It is possible the payroll firm would be able to take on other compliance costs as well thus further assisting small businesses. 
For new businesses a proposal to provide an incentive to pay provisional tax in the first year of business should help smooth the transition through the following year. 
It will also be proposed to simplify the multirate FBT calculation by removing the present complex mechanism that involves taking account of the employee’s total remuneration at the threshold of their marginal tax rate and by enabling FBT returns to be filed electronically. 
A range of other initiatives have begun or are in train. These include the Department of Labour developing best practice employment information; the development of a training and accreditation scheme for councillors and commissioners involved in Resource Management Act decision making; the launching of a business portal as a web-based one stop shop to provide all relevant government information; an e-commerce guide for SMEs with over 8000 copies already distributed; and simpler and more modern payment systems for road user charges. 
The purpose of all these initiatives is to assist businesses to meet the responsibilities of living in a well-ordered and progressive society at minimal costs in terms of both time and money.It does need to be said however that some compliance costs are an intrinsic part of living in such a society.Recent experiences with the building industry show the dangers – and the costs to the public – of an unthinking adherence to deregulation and front end cost minimisation. 
Mr Speaker the greatest need that businesses have is for skilled and well-trained employees.Labour is now the most important input in any modern economy and the quality and quantity of skills demanded continue to rise.Educating for a successful innovative economy is therefore a crucial theme of Budget 2003.But education is also about the development of each individual to his or her full potential and about the pursuit of values that cannot be expressed in purely monetary terms. 
Total education funding rises by $393 million to $8.2 billion for the 2003/04 year.Further increases in out years are provided for as policies that start early next year take full effect. 
Our first priority is to reduce inequalities in educational achievement by ensuring that all New Zealanders can reach their potential regardless of their background. 
We have the foundations including new assessment systems in place to do the work. Now we are shifting our focus to strengthening our education system’s ability to deliver quality education better teaching and better learning for students of every age. 
We continue our commitment to increasing participation in quality early childhood education with an extra $55 million in spending over the next four years.This includes increased funding for early childhood centres and initiatives to improve the supply of qualified teachers in particular for Maori and Pasifika communities. 
Total education funding for early childhood for the 2003/04 year rises to $421 million an increase of 8 per cent compared with the previous year. 
Budget 2003 will also drive a concerted approach to improve effective literacy teaching and learning in primary schools.It is essential that all children have the right foundations for success later in life in education and in the workplace. 
$15 million will be injected over four years bringing total spending on literacy initiatives to $25 million over that period.  
Budget 2003 sees an additional $167 million over the next four years to fund extra teachers over and above roll requirements in order to ease staffing and teacher workload pressures.From next year schools will be provided with an additional 774 primary and secondary full time teacher equivalents as part of the ongoing implementation of schools staffing improvements. 
An additional $22 million over four years will fund existing initiatives to increase the supply of teachers bringing total investment in teacher supply to over $66 million. This investment will increase recruitment and retention particularly in hard-to-staff areas or areas of subject shortages as a bulge in student numbers moves through the secondary school system. 
Our second goal is to build an education system that equips New Zealanders with 21st century skills. 
To this end we will be building the capability of students educators and institutions to take advantage of the vast opportunities available through information communications technology. 
A new investment of $42 million over four years will enable schools to connect in a safe and secure environment so they can effectively participate in the knowledge society.This initiative will help schools build their information technology and networking infrastructure so they can connect easily and efficiently to online resources.This ICT investment is over and above the government’s investment in the rollout of high speed broadband internet access to rural and urban communities nationwide by the end of 2004. 
Budget 2003 continues the work of previous budgets in putting in place a comprehensive reform of the tertiary education system.Post-school learning is undeniably important for its own sake but also has pivotal role in contributing to the skills and knowledge New Zealand needs for both its economic and its social development. 
The key decisions about the reform process have now been made and the focus of this budget is to provide predictability to the sector to enable it to concentrate on the goals of excellence relevance and access. 
We are spending over half a billion dollars to support excellence in the areas of both research and teaching. 
Budget 2003 commits $422 million to implement further increases to tuition subsidies in each of the next three years in order to maintain and enhance the quality of teaching.For the first time we are setting the funding rates for the student component on a rolling triennial basis.This means that universities polytechnics and other providers will have much greater predictability about their tuition income. 
Tertiary education organisations’ ability to achieve excellence will also be assisted through an extra $58 million over four years in capital and operating funding to support innovation and development and in particular e-learning capability. 
We are determined to make the workplace a key site of learning.We have committed $84 million over four years to give predictable multi-year funding for the Industry Training sector and to reach our goal of having 150000 trainees in place during 2005.From there we intend to work towards the even more ambitious goal of 250000 trainees in 2007. 
We will ensure that we have enough people with the right skills and we want to ensure that they use those skills in New Zealand.This Government recognises the need to address labour shortages and skill shortages in critical vocations.Communities need to be assured that critical skill gaps will be addressed.From 2004 scholarships and research fellowships will provide financial incentives to influence potential students learners or recent graduates to stay and work in vocations critical to the country.The Government is committing $23 million over four years to this initiative. 
The fee maxima policy the details of which are announced today is an integral element of the government's objective of ensuring that tertiary education remains affordable.It will provide some certainty and predictability as to the future costs of tertiary education while also providing some flexibility to providers in terms of their fee-setting behaviour and their future guaranteed income. 
Improving the transition for young people from school into employment or training is a government priority.This Government aims to have all 15 to 19 year olds engaged in appropriate education training work or other activities leading to long-term economic independence and well-being by 2007.A multifaceted approach is being taken that recognises the individuality of our young people. More than $40 million extra over the next four years will be spent to expand the Gateway programme increase the number of modern apprenticeships provide additional post-placement support services for youth trainees and pilot an individually planned and managed approach to assist at risk youth with career planning. 
Mr Speaker equipping our people with the skills necessary for success in the 21st century is a key part of the government’s social development programme. 
Realising the vision of New Zealand as an innovative knowledge based society begins and is nurtured in the home.The support and expectations of families provide the base from which children and young people build successful and responsible adult lives.  
The Families Commission initiative developed by the Labour Progressive coalition and United Future New Zealand is intended to raise the profile of family and parenting issues.  
This Budget also provides the first steps towards improvements in family income assistance.This year we are improving support for low income parents entering full time work by increasing the maximum number of subsidised childcare hours from 37 hours per week to 50. The income thresholds for Family Support Child Tax Credit and Parental Tax Credit are to be increased making this assistance available to more families.While these are very modest steps amounting to some $59 million over four years they signal this Government’s clear intention to make improvements to benefit and tax based family income assistance in the 2004 Budget subject to the qualifications I made earlier. 
In this Budget we are instituting two new measures to protect the integrity of the social security system.New data matches with the Department of Internal Affairs ACC and Housing New Zealand will augment current data matches with a range of agencies and ensure benefit accuracy.Payment accuracy will also be checked through early intervention initiatives and new reviews of benefit entitlement carried out by additional Work and Income benefit control staff.  
Alongside ensuring benefits are properly administered Work and Income staff have a vital role assisting people to move from benefit into sustainable employment.Our healthy labour market over the last year has helped Work and Income to achieve record employment placement results.  
Work and Income will be applying more resources to employment services for job seekers.Work and Income clients will benefit from additional assistance in areas such as more active work brokerage and support industry based work assessments and career coaching.Employers will gain as more people will be work ready to fill employment needs and opportunities. 
Some groups however still face additional barriers to gaining employment.In this year’s budget $21.2 million over four years is being made available to help more refugees and migrants access job opportunities and for more employers to tap into this skilled labour pool. 
Housing and health are key aspects of social development.Funding is provided in Budget 2003 for an additional 318 state houses to reconfigure 80 existing houses and to begin a major modernisation programme. 
Funding is also provided for an additional 77 community houses and for supporting the expansion of local government and third sector housing. 
Inevitably the increases in Vote: Health are very much larger.Total health operational and capital spending rises from $8.63 billion in 2002/03 to an estimated $9.61 billion in 2003/04. 
The Health Funding Package at present an additional $400 million a year up to 2004/05 is rolled out a further year to 2005/06 with an additional $535 million being provided in that year on top of funding for the first year of the phase-out of asset testing for long-stay geriatric care.This means that total health spending is forecast to rise to $10.56 billion in 2005/06. 
This continues a tendency over recent years for increases in health spending to be well above the rate of growth in nominal GDP. Operational health spending is projected to move from 5.4 per cent of GDP in 1995/96 to 6.5 per cent in 2005/06. 
District Health Boards in particular need to ensure that they manage within these forecast spending limits.Some success is being achieved in winding back DHB deficits but further efforts will be required.In particular DHBs need to understand that wage and salary increases must be met within their current forecast incomes. 
As I indicated last year the Health Funding Package is to allow for certainty in planning.It does not represent the Government’s opening offer on funding. 
Within these very large amounts particular attention is being paid to primary health care.In 2003/04 $165 million has been allocated to primary care funding and this amount will grow significantly over the next three years.There are more than one million New Zealanders enrolled in Primary Health Organisations with more than 700000 in Access PHOs that give them low patient fees. 
Around $20 million of this extra funding is allocated this year to allow PHOs to charge low patient fees for young people aged between six and seventeen to lower prescription charges to a $3 maximum for children and young people and Access PHO users and to roll out the CarePlus programme. 
Particular initiatives promoted by the Progressive Party are those aimed against drugs including funding for community programmes to combat the use of cannabis and other illicit drugs a national drug information analyst and a youth residential treatment centre to serve the South Island. 
Other programmes promoted by the Progressive Party include measures to support families carers and whanau following a suicide or serious suicide attempt and assistance to Youthline. 
Mr Speaker a primary duty of government is to keep its citizens safe.Budget 2003 commits $192 million operating funding and $64 million in capital funding over the next four years on a range of initiatives to reduce crime and the impacts of crime improve the effectiveness of youth offending interventions implement public law and criminal law changes already agreed by Cabinet speed up Treaty of Waitangi negotiations processes and maintain core service levels. 
There will be funding for an additional 50 Auckland-based police officers as well as a specialised Auckland DNA collection squad.There will be funding for two specialist police teams to deal with the rapid increase in methamphetamine laboratories plus funding to boost the capacity to investigate organised crime and terrorism. 
Victim support organisations funding will be increased as will support for youth justice programmes and pilot programmes with good prospects for success in reducing crime and improving outcomes for young offenders. 
Security at the border also receives attention. 
The Government is investing in protecting New Zealand’s reputation as a safe trading partner through a significant boost in the staffing and funding of the New Zealand Customs Service.This investment is to provide capability to inspect and x-ray high risk import and export shipments at all New Zealand sea ports. 
This year’s budget sees an increase in Customs operating expenditure for trade security of almost $9 million and a significant capital investment in x-ray technology in the order of $15 to $25 million which will be completed via a tendering process. 
Up to 130 additional staff will be employed. 
Customs will take advantage of the latest developments in mobile x-ray technology so that it can be used at all New Zealand sea ports.High risk cargo for screening will be identified by Customs intelligence analysis of all available data. 
Customs has a central role in responding to heightened international security concerns. The Service has a long history of managing the flow of people goods and craft into New Zealand to protect the community. 
Now internationally the expectation is that countries will also take action to secure the export supply chain. We must take action to ensure our vital export trade continues to flow as freely as possible in the light of new international security demands. 
Mr Speaker New Zealand's identity as a nation rests in large part on the preservation of our environment the promotion of our culture and heritage and the full participation of its indigenous people in the life of the nation. 
Preserving our environment is no longer just a matter of conservation as traditionally understood. It also encompasses participating in the international effort to slow and halt the process of climate change. Budget 2003 provides for the establishment of the Climate Change Office additional funding for the carbon monitoring system developing policy and incentives to help small and medium sized enterprises reduce emissions and the allocation of 4 million emission units to provide incentive funding for emissions reduction projects. 
Energy efficiency a key element in the climate change programme is assisted by a doubling of the size of the Crown Energy Efficiency loans scheme. 
Biosecurity capability and new organism enforcement is enhanced. Measures to achieve this include extra resources for the enforcement of the new organisms component of the Hazardous Substances and New Organisms Act and additional funding of $2.5 million a year to allow the Environmental Risk Management Authority to transfer hazardous substances to the new central regime. Other initiatives will assist in sustainable resource use. 
Budget 2003 continues the trend for the last three years in providing substantial increases in funding for Vote: Arts Culture and Heritage. Over the next four years the extra funding totals $75.9 million. This includes $11.6 million for Creative New Zealand; $2 million for the Royal New Zealand Ballet; and $8 million for the Historic Places Trust. 
The Government is committed to ensuring public service broadcasting is a key component of the country's cultural life and a vital contributor to New Zealanders sense of national identity. The additional funding for Television New Zealand and Radio New Zealand support their mandates to improve the quality of public broadcasting increase levels of local content and meet the needs of diverse audiences. 
The Television New Zealand Act 2003 which came into effect on 1 March 2003 creates new objectives for Television New Zealand. An extra $17 million over the next four years supports TVNZ in giving effect to the Charter by adding depth and quality to its existing programming and by adding programming intended to serve a greater range of New Zealanders. An additional $8 million over four years to New Zealand On Air will enable the agency to maintain levels of contestable funding for local television programming. 
An additional allocation of $14 million over four years to Radio New Zealand will enable the public broadcaster to establish FM broadcasting for National Radio and to maintain and enhance news and other programming services at a level consistent with all aspects of the Radio New Zealand Charter. The move to FM will ensure that RNZ is able to compete successfully in the national and international marketplace particularly in attracting younger audiences. 
Mr Speaker significant improvements in the position of Maori in New Zealand society have occurred over the last few years. Substantial reductions in unemployment very large growth in tertiary education enrolments and the government's programme of capability funding and devolved services delivery have all contributed to this. 
The Treaty settlement process has moved to a stage where settlements are now occurring on a regular basis. The settlements achieved under successive governments have sufficient variety to provide useful precedents and benchmarks for those to come. To assist in the process funding has been provided for an additional negotiating team. 
$6.5 million over three years is allocated for a programme of public information on the Treaty of Waitangi. This should assist both Pakeha and Maori in arriving at a better understanding of the Treaty and its relevance to contemporary issues. At the same time the Government has been refocusing capacity building funding to a more strategic basis. This will enhance the integrity and credibility of government funding by ensuring the management structure of government funded Maori organisations is strengthened. 
Work will continue on a commonsense approach to facilitating collaboration between government agencies and Maori community organisations. Solutions delivered by Maori for Maori are more likely to be successful in achieving the desired outcomes. 
Mr Speaker this Government has followed a consistent economic policy stance for the last three and a half years. That has centred around the three pillars of stable and certain fiscal policy rebalancing and moving to the mainstream previously unbalanced policies and adopting a more active role for government in facilitating economic growth. All require a more active role for government. 
It is this Government's view that the market alone will not provide the level of growth and innovation we need as a nation. A small stringy country 2000 kilometres from its nearest substantial neighbour cannot afford the luxury of ideological self-indulgence. 
As we do not leave monetary policy solely to the whims of the market nor can we afford to leave transport policy energy policy innovation policy or almost any other key driver of high economic growth. The rebalancing process continues in some of those areas as forthcoming announcements in the energy sector will make clear. 
This Government believes in making the most of New Zealanders' new ideas by encouraging and supporting them from conception through development to commercialisation. The Government cannot make these things happen but it can do much more than we have been accustomed to to help them happen. 
That is the path followed by every small to medium-sized successful OECD economy over the last twenty years. New Zealand is now in step. Budget 2003 shows an integrated whole of government approach to sustainable economic growth and innovation. It reinforces our reputation for fiscal prudence and economic pragmatism. It offers certainty and stability amidst a threatening confused and insecure world environment. And for our people it offers the security and opportunity which is their right by birth or by adoption as New Zealanders. 
This is a nation founded in hope by all who have come here over many hundreds of years. Some of us came yesterday some fifty years ago some 150 and some a thousand. What unites us is that out of those successive waves of people we are creating a unique multicultural nation whose greatest asset whose greatest source of future success lies in the skills and enterprise of our people. 
After a long period of instability bitterness and uncertainty we can now see more clearly the shape of our future. As a nation we are building on the base of the great comparative strengths in land-based industries that we have created. We are seeing emerge a kaleidoscopic collection of niche high quality businesses which can compete on equal terms in the international market. 
To support this requires a society in which all citizens are able to make a real commitment and receive a fair reward for that commitment. A society of rapidly increasing inequality of change thrust upon people from above a society characterised by mean-spiritedness bigotry and sectional greed will not deliver economic success. 
Each of this Government's budgets has built carefully upon its predecessor as we seek to realise New Zealanders' vision for our nation. This Budget is the fourth in a continuing story of certainty stability and social and economic progress. I commend it to the House. 
Debate interrupted. 
Procedure 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I hereby present the Budget 2003 Speech the Fiscal Strategy Report and Economic Fiscal Update (B.2) and (B.3) the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2004 (B.5) and the Departmental Forecast Reports and Statements of Intent 2003/2004. I move  
That those papers be published 
. 
Motion agreed to. 
Budget Debate 
Debate resumed on the Appropriation (2003/04 Estimates) Bill. 
Hon BILL ENGLISH (Leader of the Opposition) 
: 
 I move  
That all the words after “That” be omitted and the following inserted: “this House has no confidence in the Labour minority Government because it has abandoned the task of lifting New Zealand’s long-term growth prospects because it is smothering our economic vitality in regulation and unworkable policy on energy and transport infrastructure because it is overtaxing families and businesses to pay for welfare dependency political correctness and educational failure and because it has developed a culture of deceit around public accountability.” 
There is nothing like the prospect of a ministerial vacancy to get Government members on their feet. One would not know that this Budget is the one that put on the “sherry tax” and is setting aside $35 million for the America’s Cup. The real problem with the Budget is that the Labour Government has given up the task of lifting our economic prospects. It is not focused on the growth of the economy but on the growth of surpluses welfare dependency and bureaucracy. It is probably best summed up by the Minister’s own words about what he is doing for small business—the engine of the New Zealand economy. He said that the Small Business Advisory Group “will work with and advise the new Small and Medium Sized Enterprise Unit” in the Ministry of Economic Development. We are to have a new group of advisers to advise the advisers who advise the advisers to the advisers to the minister about smart growth; and of course smart growth under this Government means photo opportunities. 
We have had the best growth we will have for the decade last year. New Zealand has seen the benefits of good prices and a flexible economy. Labour has watched others grow the cake and now it is getting ready to divide the cake up. Two or 3 years ago it looked different. Two or 3 years ago the Government talked in its Budgets about a partnership with business. It talked about transformation of the economy. It talked about a growth goal and a fiscal cap to stop the Government spending too much. All of these have fallen away like a plane flying along with the bits coming off it. 
Labour has retreated from economic growth as its primary goal. It has done so with a lot of bad blood. After the Catching the Knowledge Wave conference the Prime Minister was profoundly irritated with the business view that she should do what she said she would—that is to put in place policies that promoted economic growth—but she was not conscious at the time nor was she conscious at the time the Government signed up to the growth goal that it has now abandoned to put New Zealand in the top half of the OECD by 2011. 
That is why I referred to the culture of deception. That growth goal was all through the public documents but when we revealed to the House that the Government had backed off it does the House know what Government members decided to say? They decided to say: “We never actually had a growth goal. It was informal not formal. Others talked about it not us. It was in the graphs not the text. It was in the text I signed off but I didn’t read the text or the memo that drew my attention to the text.” 
We then had the new excuse this week—that is people were not conscious when they made those decisions. We have had an outbreak of“Sars” in the Government—that is “Selective Amnesiac Recall Syndrome”. The fact is the growth goal has gone and the rhetoric in this Budget is no longer about the Government’s ambition for New Zealand’s growth rates; it is all about how it will spend it. 
Let us look at the economic outlook. The focus on the large surplus has crowded out one simple fact—that is the New Zealand economy is headed for a sharp downturn. According to the forecasts in here the growth rates will drop from 4.5 percent to 2.2 percent. If a few things go off the rails then it will be well under 2 percent. The further out we look it does not get much better. It gets up to 2.5 percent and maybe 3 percent in the odd year.The Government can increase the capacity of the economy but almost every decision it makes as exemplified in this Budget does otherwise—because Labour’s response is always more rules more tax more bureaucrats and more programmes. That is what members heard in that speech—a long long list of programmes. 
There were some pretty odd things. The Government has decided in the middle of an energy crisis to give 17 times as much money to TVNZ for the charter as it will give to energy efficiency. What we are seeing is not so much a blackout in the economy as a steady dimming of the lights—the slow strangulation of certainty and good incentives that encourage risk investment and success. This nation because it is small and distant faces a continuous need to progress its economic framework but instead we have sclerosis developing in the arteries of the economy. Let us take energy. What do we need? Well there is plenty of fuel for the energy that New Zealand needs. We need a national energy strategy powered by an effective competitive market. We need to free up the Resource Management Act sort out the rules that paralyse with political correctness the burning of coal and gas and we need some technical changes to the market. 
What have we had? We have had 4 years of policy paralysis the worst energy crisis in decades and suddenly Helen Clark has decided to talk about stand-by generation. Now this is the dirty little secret of the Budget that members did not hear today. Stand-by generation by definition will not be used under normal circumstances. It will cost a lot. One cannot pay for it by selling electricity because it will not be used normally. How will it be paid for? By tax! Will it be “Clark’s Energy Tax” or “Hodgson’s Energy Tax”? I bet it will be Hodgson’s. The proposal is a levy on the other generators. That will be passed straight through to the consumer. I challenge the Prime Minister to tell New Zealand today how the stand-by generation will be paid for if it is not paid for by a tax payable by New Zealand consumers. Of course it will be! 
Let us go to roading—again part of the lifeblood of the economy. What do we need? We need a full tool kit a lot of money and some processes that will allow our roading problems to be solved. We have to sort out the Resource Management Act. We have to cut back on the layers of consultation. We need a legislative tool kit tolling congestion pricing public-private partnerships and we need economic rather than political priorities. 
What are we getting? Well for all those Aucklanders and people in the Bay of Plenty who have waited years we are getting muddled compromises—no tools that work a ministerial veto and no progress. Government members can laugh—but all the people who supported the Government’s roading policy 6 months ago are now against it. So instead of devising small-business advisory groups to the advisers of the advisers of the advisers why does the Government not just fix the legislative structure for roading and please would Government members keep their sticky fingers off the Tranz Rail deal? 
The Government chased away Singapore Airlines and it cost taxpayers $1 billion. I tell the Prime Minister to please say nothing. She should not put her foot in her mouth. I tell Dr Cullen to please not meet anyone related to this deal because the last ones he met left the country absolutely disillusioned. 
What about welfare? We have had 4 or 5 years of the strongest job growth in New Zealand history. The welfare numbers have hardly moved and the forecasts in this Budget say they will increase. We have a number of people receiving welfare income from the Government this week: twice the population of Hamilton plus Hawera. What about the Government’s attitude? When one looks through the Budget the table that forecasts the number of beneficiaries has gone. There are now no forecasts of those numbers. They are gone. 
Do members know what else has happened? Social welfare has disappeared. It is all now paid for under Vote Social Development. So now it is a form of development to condemn people to a subsistence life for years on welfare as social development. No amount of weasel words from Steve Maharey or Helen Clark will change the reality. New Zealand has a multigenerational hard-core problem of welfare dependency. This Government is making it worse. We will break the culture of welfare dependency. 
Let us get it in perspective. In the Budget Dr Cullen talked about $78 million over the next 4 years for job training. That is a big number. Do members know that if they do the same calculation for welfare spending over the next 4 years it increases by over $2 billion—$78 million dollars on job training and $2 billion more by the same measure on welfare? That is a scandal. 
Do members know what they say? In his speech Mr Anderton talked about the development of the economy and the need for people to fulfil their potential—and the answer is a Ministry of Economic Development! He says that the ministry was set up to spearhead the transformation of the economy. Well the Ministry of Social Development is spearheading the transformation of people’s hopes and opportunities into welfare dependency. 
Let me come to the surplus. Who paid for this surplus of $4 billion and rising in the forecast to over $6 billion? 
Hon Dr Michael Cullen 
: It’s too big! 
Hon BILL ENGLISH 
: Yes it is too big. That is exactly the answer. It was paid for by families and businesses. The family who wanted to change the car cannot because Dr Cullen says that it is better piling up in his office. The family who thought they might finally be able to afford insurance—one of the single biggest markers of attaining security in this country—cannot because they are contributing to the $4 billion and $6 billion. So after Dr Cullen has rattled through his programmes those are the people who pay the bills—and they pay with real money and real tax. They pay for every politically correct binge they pay every time the Prime Minister uses Air Force One and they pay for every new bureaucrat and every new programme. Then as far as Labour is concerned with what is left over they get to pay for the groceries fixing the car and school costs—and then they save for retirement. They thought they would have the money to pay off their own debts but that money is going to Labour to pay off its political debts. 
So the Minister has simply gone too far. He is trying too hard to prove his conservative economic credentials and it is costing families and businesses billions. The reason the surplus is rising to $6 billion is that with Dr Cullen’s ideological weirdness he cannot abide handing any money back through lower taxes. Even with a surplus at $6 billion there is the “sherry tax” and the new levy the “Clark energy tax”. He cannot abide handing money back. 
Actually it is bad fiscal management as well. Fiscal policy is just getting too tight but he did not make that decision consciously. He is just stuck with it because he will not hand any back through tax. In that sense it is a huge transfer of wealth from the private sector to the public sector and we can see Government members salivating because over the next 2 years there is no fiscal cap. That is why it has been removed. The Labour caucus is waiting for the opportunity to stand it up. It has moved from talking about growing the cake to now getting on with the job of deciding how it will divide the cake up. 
Hon Member 
: Good idea. 
Hon BILL ENGLISH 
: Good idea—there we go! Yes that is exactly where it is—a good idea to buy people’s votes with their own money! What sense does all that make to the students of New Zealand? Those are the people who merited not one but two credit card promises—one in each of the last two elections—that Labour would reduce the costs of tertiary education. We have seen in that the classic way this Government makes policy. It stepped in and decided that the best way to do that was just to freeze the fees. Now that defied economic reality like the need to pay more money to get high-quality international staff but they just froze the fees and took all the credit. 
In this Budget the Government lifts the fees maxima. That means someone going to Otago to do a BA next year could be paying—is likely to be paying; is almost certainly to be paying—about $900 a year more for that course. That was not in the speech. Students will think that that is a broken promise. That is what they will think. In fact in Canterbury they have already figured it out and they are protesting as we speak. 
But what will we see next? We will hear Helen Clark say: “It’s not my responsibility. The universities are putting your fees up.” That is what she will say: “I wasn’t there. I never signed the memo”— 
Hon Member 
: “I wasn’t conscious”. 
Hon BILL ENGLISH 
: Well Steve Maharey was not conscious; we can tell that from how silly the policy is. But Helen Clark and Steve Maharey took responsibility the day they froze the fees. If they wanted credit for freezing the fees then they are responsible now for the increase in those fees. I invite Dr Cullen to explain the $6 billion surplus to those people. 
I want to comment briefly on one of the Government’s running sores and that is the closing the gaps programme. What an odd little phrase it is in the Budget that we are now going to make the spending more strategic. Is that politically strategic? I am sure that is the case. No programme is more openly about cash for votes than the closing the gaps programme. It is divisive because it is purely ethnically based. All the things the Prime Minister said about the accountability for handing out $367 million have turned out to be wrong. None of the things she said would happen have happened and the crowning glory of the closing the gaps programme that costs $367 million is the self-evaluation. The people who spend the money decide whether they spent it effectively. 
That really sums up the cynical approach that taxpayers can look forward to seeing from this Government. It has now piled up $4 billion $5 billion and eventually $6 billion surpluses in its accounts and I am absolutely clear what its intention is. It is not to hand the money back although Dr Cullen has signalled some money today for low and middle-income families. We certainly support that but why is that to be handed back next year? Why is it not this year? Does he not know that those families are struggling this year? Does he not know they are working hard this year? Does he not know that the costs of sending a child to a free State school are going up this year? No— 
Gerry Brownlee 
: He doesn’t care. 
Hon BILL ENGLISH 
: He does not care because it is not election year. The Government has given up on growth. It has abandoned its growth target. It has overtaxed families and businesses and is now setting about the business of how to divide up the $4 billion surplus among its own sector groups in the run-up to the next election. This is one of the more cynical Budgets that this country has seen in a long time. 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 That must surely be his last Budget speech as leader of the National Party. That was the classic recipe of spend more tax less and diminish the surplus—all in contradiction to Don’s article in the  
Dominion Post 
 this morning. He agreed with the Minister of Finance that it was not time to blow all the surplus and increase spending and reduce taxes. He said “were I finance minister I would not do so.” so there we are. The Leader of the Opposition has had all year to prepare a decent speech on fiscal issues and the economy and all he has got is that embarrassing stuff on energy: “Please don’t put in any extra stand-by generation.”—he would prefer his cold shower like he had at boarding school! 
He attacked the Government for having a long list of programmes; I am proud of every one of those programmes and I will go for programmes over no policy any day of the week—programmes like getting school-leavers into work affordable health-care for young people more houses for the needy and more police. They are the programmes that are the substance of this Government. 
These are uncertain times internationally and of course the more uncertain they are the happier the National Party is. “Please more misery!” it cries; “Please more Sars!”. It wants more reduced growth in the OECD so that it can moan on. We all know that there are external factors that impact on our economy’s ability to grow and there is no need to rehearse them here today. We do not control those factors. What we must do is manage round them. That is what creates the stability for business and for each of our communities and that is what people look to this Government for. 
This Government’s stewardship of the economy is very strong. I congratulate the Minister of Finance on the Budget and on the stability and certainty he has brought to the management of the economy. The facts about the economy speak for themselves. The growth that has been achieved under this Government is well above OECD averages and even next year’s Budget forecast of 2.2 will be twice the OECD average. We are performing well when compared with our peers because other countries are in a worse position to cope with international circumstances than we are. 
In the last few months we have seen unemployment reach a 15-year low and it is well below the OECD average. We have seen very strong net migration. This Government wants the people with skills that are going to drive our economy and we will welcome them and treat them as Kiwis as they should be treated. 
The operating balance has come in very very strong with over $4 billion projected for 2002-03. There are good surpluses projected out ahead and gross debt is at its lowest level since the data on gross debt began more than 30 years ago. Those are very very strong economic figures and they are what give the Government the confidence to plan the partnerships for growth that it has and the steady improvement in social spending. This Budget is about steady improvements in social spending—the community knows that and that explains a lot about the high and continuing level of support for this Government. 
I want to address some of the key areas in the Budget. I see the first 3 years of this Government as having been about creating a stable platform and foundations for growth. When one comes to the second term one begins to build the house upon the foundations. One is never complacent. One keeps pushing ahead with a vision of what this country can be. This country can be prosperous. It is tolerant and inclusive and it cares about its people under a Labour-Progressive Government. We thank United Future for the support it has given us for this Budget and it has real achievements in this Budget. 
The key areas that the Government singled out for pushing along growth through innovation were in education and skills; innovation research and development; business industry and export growth; and those enabling sectors that the public-private sector task forces have been working on. This Budget follows through on all those areas. Education spending is at phenomenal levels. It is up by $393 million in this Budget. The spending for early childhood education which is the foundation of education is up 8 percent this year. There is more funding for literacy teachers the retention and recruitment of teachers and information and communications technology investment in our schools and there are big increases in support in the tertiary area. 
I want to draw special attention to an area that I know is of great interest to young people families and the business community and it is the investment that is going into skills training. I compliment the Minister of Social Services and Employment for his absolute dedication to that area and to seeing young people have the chance to get into a trade and technical training which provide the essential skills that build this country. 
I was privileged to be part of an announcement with him on Monday this week when we saw two students from Wainuiomata College who were on the Gateway programme which is an initiative of this Government. They are two young people of many who are involved with that project which is being rolled out all over New Zealand. It may be distressing to the Opposition but there is enormous expansion of the possibility for school students to be in that to have 1 day a week out of school to go to a workplace and to start earning qualifications on the programme. When one talks to the students they say that without that opportunity they would not have stayed in school and would have probably been drifting without having any work. Now they can see a career ahead. That is what we want for those kids. We have something like 25000 to 45000 young people at present who drift out of school and do not go on to work or further education. We want those kids able to contribute to this economy and that is what this Budget enables them to do. 
There is an enormous amount of extra money going into the Modern Apprenticeships scheme. We are aiming to increase the number of Modern Apprenticeships to some 7000-odd over the next few years. That is another initiative of this Government. There are tremendous goals and funding in place for the whole industry training area. That is what will drive our economy for the future. 
I want to say a word aboutscience and innovation because this Government started out 3½ years ago with New Zealand having an appallingly low level of investment in science by international standards. Over the 3½ years with some significant changes we have made a difference. The latest figures show that business spending on research and development is up by almost a third. The Government spending is up around 14 percent and the universities’ spending by 16 percent. Why is that important? It is important because what will characterise First World affluent economies in the 21st century will be the fact that they are the ones that can create their own innovation rather than buying it in from others all the time. We aim to be a nation of innovators and we will back our innovators. The Minister of Research Science and Technology has been a driving force in getting that investment up. He has done that by targeted spending by which the Government supports more and more research and design in the private sector and also by an important change in the tax treatment of science. Those two things together have produced that increase in gross domestic product that is going into science. 
This Budget has more good news in that area. It has $140 million of new operational funding in research science and technology over the next 4 years. This year the Government’s spending in that area will be up 6 percent. That is very significant. In addition one of the Minister’s priorities has been to support the incubators because bright young people are coming out of our universities and our polytechnics with ideas that have commercial potential. They need to be nurtured. The incubator programme went from nothing when we came into Government to around 15 today. There is more money in this Budget for those business incubators to support young up-and-coming businesses and people. 
Another very important initiative concerns the need that new start-up businesses have for access to capital. As a Government we have put a lot of money aside and formed joint ventures for early-stage capital but there was still a gap and this Budget delivers $19 million over the next 4 years to invest in pre-seed projects—those that are still in the very early incubator stages. The Minister has correctly identified a very real area of opportunity to get more business growth in the economy. 
There are very important changes on the way for small business generally as a result of this Budget. The Minister of Finance’s speech referred to the significant discussion document coming out in August that contains key tax proposals that will help small business. That will be followed through with a major small-business summit to be held in February next year. We are working very very hard on getting a more supportive environment for the small businesses of New Zealand. 
As part of the growth and innovation framework the Government identified those four enabling sectors that can help drive growth. They are biotechnology information and communications technology and two in the creative industries: screen production and design. In this Budget we have set aside $110 million in the next 4 years to respond to the recommendations of those task forces to build capability in those sectors and they will make a significant contribution to the growth of our economy. That is all contained in this Budget. 
On the issue of improving New Zealand’s trade and export prospects one area worth singling out for mention right now is extra support to fund not only a range of initiatives like the offshore export platforms but also increased capacity for the Ministry of Foreign Affairs and Trade which contains our trade negotiators to get out and negotiate for New Zealand. The Uruguay round of the World Trade Organization brought gains to this economy of about half a billion dollars a year. We are expecting gains as big or bigger again out of the Doha round if it succeeds and we have a role in ensuring that it does succeed. 
Social spending continues to be very very strong in this year’s Budget. Health spending is running at high levels. The particular area of initiative this year as the Minister of Finance spelt out is the support for primary health-care. We now see 700000 New Zealanders in primary health organisations which are offering lower health-care costs. That is a fantastic achievement. This year the Minister of Health is able to add to that with more funding that will lower fees for 6 to 17-year-olds and lower prescription charges for children young people and others in the primary health-care organisations. Of course the funding to charge for combating the meningococcal epidemic begins this year which is a very very important priority. 
In the housing area we have more than a quarter of a billion dollars budgeted over the next 4 years for housing initiatives. That means an enormous amount to the poor families of New Zealand. There will be more State houses—well over 3000—on the way and there will be modernisations and upgrades. There will be a great deal of activity in the housing portfolio. 
 I want to say a word about the flagship policy for United Future the Families Commission. I hope everybody in this House appreciates that the family is the basic building block of this society. If our families are healthy the society will be healthy and I hope that that commission will work with us and with all the community groups to make sure we have family policies we can be very very proud of. I am confident that we can do that ourselves. Some modest improvements have been able to be made this year on lifting thresholds for family support child tax credit and parental tax credit. We hope to be able to do more in that area next year if and when we are convinced that surpluses are structural rather than cyclical. There is also an important change in lifting the number of subsidised childcare hours for poor families which helps get them back to work. The key initiative I will be looking for next year is to see more in the welfare to work area. 
Obviously I am proud of what has been able to be achieved inarts and culture. I do think the arts culture and heritage define New Zealand as a nation and I want to see what will be possible through Creative New Zealand. Our ballet our museums and galleries and our Historic Places Trust are very very important for this society. 
The aim of this Government has been to see New Zealand rebuilt as a prosperous country an inclusive country a tolerant country and a confident country that can hold its head up knowing that it offers a standard of living and quality of life unparalleled in the world. We have been a Government that has stood for fairness opportunity security the right to have a go the chance for every Kiwi to be able to work to get an education to build a business and to contribute through the social and community sectors. This Government is about participation inclusion and the community moving ahead together. It is about security for our young people our old people our sick people and our disabled people. We are a Government with a vision and we have funded it in this Budget. 
Mr SPEAKER 
: I asked—and the Business Committee agreed—that there would be not entirely no interjections but a reasonable amount of interjection. I want to have quiet so the Rt Hon Winston Peters can start his speech in silence. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 Today marks the slide of New Zealand into the Third World as an Asian colony. If we look at the back of the  
Sunday Star-Times  
of 11 May we will see that a world expert on inventions and manufacturing says that if New Zealand does not learn to nurture its manufacturing base and stimulate the creation of new and better products it will become a Third World nation reliant on other countries’ imports. That is the view of experts abroad and today we have a Budget that has had the press gallery for the first time in my career half empty. The public gallery was filled with children and even they walked out. 
Dr Cullen spent all his time talking about Budget 2004 and forgot Budget 2003. He clearly demonstrated that he is the latest victim of the Stockholm syndrome. Treasury has demonstrably palpably captured him and there he was today parroting its mantra as though it were sound economic policy alongside this week’s Budget from Australia—a sound economy run by a decent Treasurer. And all the time the United Future party did not applaud one word of his speech and when it came to the end its members did not rise. 
I want to amend the motion put by the leader of the National Party by adding the words: “ 
that this House also records that it has no confidence in this Government’s ability to govern as it only ACTS the part and even then only in a shallow and hammish way 
.” 
But we believe that in the preparation of this Budget there have been some Oscar-winning performances. The highly paid Cabinet cast only acts like Labour Ministers: they say one thing in election year and do something entirely different whilst in Government. It is time that these theatrical thespians received the theatrical recognition they so richly deserve and we have some New Zealand First “Oscars”. In this case Oscar stands for “Obstinately Self-serving Carping and Ridiculous” when it comes to the interests of ordinary New Zealanders. Today I want this House to recognise the failings of a number of Ministers and I propose to help it do so by the presentation of these Oscars which I have just had conveniently prepared. We want to immortalise these Ministers for their failings and to induct them into New Zealand’s parliamentary hall of shame and these are the appropriate Oscars for doing that. 
The first Oscar is for scriptwriting and acting: the best adaptation performance of a responsible Budget. For this award the academy has nominated Dr Cullen for an outstanding performance in acting as a Labour Minister of Finance yet achieving a Budget surplus of $4 billion in the face of grave social service stress and tension and the starvation of extra funds for so many social interests in this country. We have a Labour Minister of Finance with a Budget surplus of $4 billion and around him he has United Future the Greens and the last rump of the Progressive party in this Parliament before it disappears in the next election. And what did they get? Nothing at all! Never in the history of politics have so many sold out for so little. Never in the history of Western politics have so many sold out so often for so little. We have a $4 billion surplus while tens of thousands of people are thrown off hospital waiting lists while police are massively under-resourced while the education system is overloaded with costs—and on top of that is paying for foreigners as well—and while the social services systems are enormously stressed. Through his outstanding acting ability Michael Cullen has fooled everyone including his own party that he is a Labour Cabinet Minister when he is really a closet ACT supporter. Most of these Ministers are never present so I have had to ask my colleague Peter Brown to stand in and take his Oscar for him. Sadly in the interests of time there will be no acceptance speeches. In fact the nomination for the Oscar for Dr Cullen came from his old mate Richard Prebble. 
The next one is for George Hawkins. He is up for an Oscar. In the preparation of this Budget he got 50 extra police for Auckland. They are short of 135 police but he got 50 for Auckland—for the rest of the country nothing. George Hawkins members will remember starred in the 21st century saga called “ 
Leak House 
”. That was his last film. Now he has a lead role in the movie he was made for: “ 
Dumb and Dumber 
”. In this movie he is to make he does not have to act; he is an absolute natural. He is living proof that anyone with half a mind to become a Cabinet Minister can become one. Whole forests are destroyed and sacrificed while George Hawkins makes up more traffic tickets. That is his law and order policy. To be fair though George Hawkins is presiding over New Zealand’s real and only real growth industry. 
R Doug Woolerton 
: What’s that? 
Rt Hon WINSTON PETERS 
: Crime. So let us have one for George Hawkins. Maybe my colleague should make an acceptance speech for him; he is not so good at it himself. 
The Pan Asian Congress has nominated Lianne Dalziel for an Oscar for make-up artistry. In only 4 years she has totally changed the face the character and the sound of New Zealand through unlimited wholesale immigration. In only 4 years she has changed the whole character and shape of New Zealand with massive immigration. Who did she ask? Nobody. Not one New Zealander was asked. Thanks to Lianne Dalziel’s dramatic and uncontrolled performance there are today 300000 New Zealanders—or people who call themselves New Zealanders—who do not speak English. Three hundred thousand! And the skills gap which was the excuse for all of this is bigger than ever before. If people are qualified professionals from Britain New Zealand does not want them. If there are qualified people from Britain who can speak English New Zealand does not want them. But if people are from the Middle East cannot speak English or are suspected terrorists we welcome them. That is the Government’s policy. If people are overstayers and need medical treatment they should go to Lianne Dalziel. She will fix the problem. She will make them instant New Zealanders. She will give them work permits even though they cannot work. 
R Doug Woolerton 
: So they can lie in bed. 
Rt Hon WINSTON PETERS 
: Yes so they can lie in bed. She will give them work permits in the face of tens of thousands—100000—New Zealanders being unemployed and call them workers when nobody else is fooled in respect of that. That is Lianne Dalziel. If New Zealanders who have paid taxes all their lives need a hip or eye operation then—bad luck—they have to go on the queue. But overstayers refugees or terrorists being held in New Zealand prisons because they should not be here in the first place will go on the waiting lists above all other New Zealanders whether or not those New Zealanders have been here for 1000 years 100 years or 10 years and whether or not they are taxpayers. So this Oscar is for Lianne Dalziel. I am sorry she is not here but perhaps my colleague could take it for her. 
The nomination from the power companies is for “Blackout Pete Hodgson”. He gets it for his starring role as the political Nero of New Zealand’s energy industry  
“Fiddling While the People Freeze” 
—and watch out for the ides of June of July and of August and September this year. “Blackout Pete” blames everybody else although he has been in the job for 4 years. 
And we have the Al Gore re-election committee nomination for Helen Clark for her starring role as a political stuntman in the movie  
“Free Trade” 
. She has shown that she is the only politician in the Western World who can talk on foreign affairs with both her feet in her mouth and thanks to her brilliant performance on the overseas stage New Zealand now has only one staunch ally. Can members guess who it is? 
Hon Members 
: France. 
Rt Hon WINSTON PETERS 
: France. As they say in the Tui advertisements: “Yeah right”. She also gets a second Oscar for doublespeak for backtracking on statements for amnesia for inexcusable denials and for blaming everybody else. So here is one for the Prime Minister. 
Thousands of people who have been dragged off hospital waiting lists have enthusiastically nominated “Absent Annie” King for an Oscar. The mental health system has also put in her name for a second nomination for  
“Passing the Buck Over the Cuckoo’s Nest” 
. The present health system is sick more and more patients are being cut adrift from waiting lists hospital staff are falling apart under the stress of an overloaded system and New Zealanders have to wait in queues—or out of the queue as the case may be—whilst this Government treats everyone who is not a New Zealander and not a taxpayer first. Every refugee or asylum seeker whether or not they are genuine and every overstayer gets priority over all other New Zealanders no matter how long those New Zealanders have been paying taxes. Annette King has taken the habit of hand-wringing to new heights. Whenever she is confronted by the media she says: “Oh I’m really concerned about that.” She is like a badly trained used car salesperson. There is plenty of pre-sales talk but no after-sales delivery and no after-sales service. 
I have to say that there were other Oscar-winning performances from other Ministers who came very very close to an award. There were a lot of nominations for Rick Barker. He was nominated by the Mongrel Mob for his unforgettable part as a freedom fighter in the political hit “ 
Home Alone Detention 
”. Rick Barker came very close. During his performance as the “Minister of Freedom” he threw open the doors of the prison system especially for violent offenders and left them open. The Labour Party and every do-gooder woolly liberal in New Zealand are saying to him: “Rick we’re proud of you.” although everyone else thinks he may be a waste of space around the Cabinet table. 
Trevor Mallard got a nomination for creating the movie “ 
Red Education 
”. Margaret Wilson—now here is one—got a special commendation for creating the longest political saga or soap opera in history entitled “ 
The Treaty Settlement Millennium 
”. This soap opera is going to run for at least 156000 weekly episodes at the present rate of progress from this Minister. One hundred and fifty-six thousand weeks are going to come before she gets over there. Just as is so inimitable of her in the Budget she had a propaganda programme being costed out at $6.5 million to tell people about the treaty. But here is the issue: neither she nor Helen Clark or any other Labour Minister or member—or anybody for that matter—can tell us what the principles of the Treaty of Waitangi are. They are taking $6.5 million to tell the people but how about starting with them. They are taking $6.5 million but they cannot tell anybody what the principles of the treaty are. 
There used to be a movement in the United States 200 years ago called “Know Nothingism” Well its finest flower is over there—right there today. Judith Tizard gets a nomination for miming in her role as the “Minister of Auckland”. Can anyone name one thing that Judith Tizard has done for Auckland? Come on guys! One thing—not five! 
Rodney Hide 
: She came to Wellington. 
Rt Hon WINSTON PETERS 
: That is not bad. Rodney Hide said she came to Wellington. Parekura Horomia just beat out John Tamihere for his nomination. He is the invisible Minister of Maori Affairs. Nobody understands his answers or lines. No one knows what he is talking about and nor does he. Parliament is going to get an English interpreter to translate what he is saying in English. John Tamihere got the award for the “lion on the marae and the lamb in Parliament”. Mark Burton got the Arnold Schwarzenegger of New Zealand politics award. Almost single-handedly he has destroyed the New Zealand armed forces. 
But I go back to the Budget. This is a good Budget for some people. We have to be fair—this is a good Budget for some people. It is a good Budget as long as one is not a pensioner on a fixed income with soaring power bills. It is a good Budget as long as one does not need an eye or hip operation and as long as one has not been dumped off the hospital waiting list. It is a great Budget as long as one is not an exporter trying to cope with the rising New Zealand dollar. It is a great Budget as long as one’s house does not suffer from leaky-building syndrome and one does not expect someone to be accountable. It is a great Budget as long as one does not mind a cold shower and long cold winter nights. It is a good Budget as long as one is not one of the New Zealanders squeezed out by foreigners while trying to get a proper education for their children in their schools of their choice. It is a great Budget as long as people do not mind overseas companies taking all our resources and giving little in return. It is a great Budget as long as people do not mind the rail and road systems being in a total shambles. It is a good Budget as long as one is not a victim of crime desperately trying to get hold of a police officer. It is a great Budget as long as people are not in that situation. It is a good Budget as long as one is not a Maori living on a dirt floor in Northland and waiting for a job a treaty settlement or even some electricity. It is a good Budget as long as one is not in a family struggling to educate clothe and feed one’s children. It is a great Budget if one is not a small business struggling with compliance costs soaring overheads and bureaucratic red tape. 
This is in fact a bogus Budget for just about every other New Zealander. It tries to portray New Zealand as a nation basking in the warm glow of prosperity. Absolute nonsense! The facade of prosperity that the Budget seeks to contrive rests on one factor alone—massive consumptive immigration at a level that no other First World country would even dream of contemplating. It is a bubble that is going to burst. We are becoming a colony of Asia. We are; it is all there—I ask members to walk down Queen Street in Auckland and tell me I am not right—and never with any consent from the New Zealand people. 
David Benson-Pope 
: Oh! 
Rt Hon WINSTON PETERS 
: “Solar Dome” can make all the noises he likes. 
David Benson-Pope 
: Pathetic! 
Rt Hon WINSTON PETERS 
: I know the member is pathetic. He always has been but he need not tell us his problems. 
Every sound economist in New Zealand will explain what this bunch of actors pretending to be a Labour Government cannot explain—that the only thing driving this economy today is a level of immigration seven times that of Australia’s. But it is a bubble that is going to burst and all around New Zealand more and more New Zealanders are becoming alarmed by what they see and hear. The Government has shamelessly used a flood of immigration to generate a phoney feel-good factor. An unprecedented and ongoing infusion of migrants has created a superficial boom in consumption and housing expenditure and Mr Cullen admitted that in this Budget. He said in his Budget speech today in effect that immigration was robust and house prices would keep going up. It is all here in the Budget and that is it. 
I have to say this. When we look at it this is not the way the Labour Party used to be—a party with concern for ordinary people and a sense of nationalism in terms of our interests. This party is a bunch of sell-outs It is a bunch of internationalists. The biggest sell-out—Dr Cullen—has been captured by Treasury. Members should read the speech he made when he first arrived in Parliament. 
Opposition Member 
: Why would you? 
Rt Hon WINSTON PETERS 
: Oh yes why would we? We might like a laugh. We might see how someone can be captured by Treasury and surrounded by it. I think it is a matter of Labour members’ psychological uncertainty as people. They do not have what it takes to stand up to so-called peer pressure around them. I could speak for much longer on this Budget but I want to close by saying that this is the worst Budget I have ever seen in this Parliament. 
Hon RICHARD PREBBLE (Leader—ACT NZ) 
: 
 I did not catch the member’s amendment in his contribution but I thought he made an interesting contribution and if this were a charity debate he would have no doubt won. Given the fact that there is nothing in the Budget one might as well make it up which is exactly what Mr Peters did. 
The ACT party will oppose the Budget fundamentally because of what is not in the Budget rather than what is. This reminds me of a Sherlock Holmes story—the significance of the dog was that it did not bark. The significance of this Budget is what is not in it. If members look at the major issues facing New Zealand such as the energy crisis they may ask what is in the Budget about that? Not a thing. Now that we know that Dr Cullen is in charge of tackling the energy crisis it makes the situation more serious. There is nothing in the Budget about matters like crime and health and there is nothing in the Budget to tackle the real issues facing this country. 
Dr Cullen has conceded in the Budget that growth in the New Zealand economy will almost halve. Can we see anything to tackle that problem? On 10 April I wrote Dr Cullen a letter on behalf of the ACT Party and said: “When you can see what’s facing the nation with the uncertain economic environment and the fact that we have lost the America’s Cup Fonterra’s payout is going to be down there has been a drought and now we have the Sars epidemic it is clear that the economy needs a boost. We would be prepared to vote for a Budget that had a well-designed tax cut in it.” We did not ask for any ministerial positions in return we just said that the ACT party would vote for a well-designed tax cut. We put that in writing and signed it. It is a matter of disappointment to me—and I think a matter of great regret to the nation—that Dr Cullen has ignored that possibility. We need to have a tax cut. We need it first for the economy because the best way to give the economy a boost is to cut taxes. We also need it because when we read through the Budget we see the surplus is going to be $3.8 billion. 
As the Leader of the Opposition accurately pointed out the thing that is wrong with a surplus of $3.8 billion is that it is too much. That is a huge amount of money and it is overtaxation. The Government is going to tax ordinary New Zealanders $4 billion more than it needs to because the Government is uncertain about the environment and says: “We need it.” I say to Dr Cullen: “What do you mean ‘we’?”. That money comes from New Zealanders. Then he says he wants to keep his balance sheet looking good. What about the balance sheet of small New Zealand businesses? What about the balance sheet of the average household? I say to Dr Cullen that the average household balance sheet has never been in worse shape. New Zealanders have never owed more money on mortgages and credit cards any way we like to measure it—as a total amount or as a percentage of their income. Why is that? It is because they are having to pay an extra $4 billion. 
I will give the House an idea of how much that is. It is a mind-boggling figure. 
Hon Member 
: Have you got the solution to that? 
Hon RICHARD PREBBLE 
: I have actually. I am glad the member has now realised it is a problem and I say to him that it works out at $50 per worker per week. That is the amount of extra taxation. 
In the letter I wrote to Dr Cullen I said: “Look if you want to be a Labour Government and put it across the board to everyone then we’ll vote for that because that would still be better than the Government taking extra taxation.” I then said: “A much better idea would be to implement the McLeod tax report.” Members opposite might have forgotten but the Government commissioned a tax review. Indeed in his first Budget Dr Cullen pledged that we would have a fairer tax system. The Government set up the McLeod tax review which made it clear that the preference would be a flatter tax system. 
 For $4 billion we could have a company tax rate below Australia’s. We could give every worker in New Zealand a tax cut. Indeed the ACT party has put forward a 5-point tax plan. The first thing we should do is balance the Budget and give back the surpluses. The second thing we should do is abolish the risky Cullen superannuation scheme—heck the Government has already lost over $300 million out of the Government superannuation scheme and I now see that that has been subject to some sort of insider trader fraud. It is very risky. The third thing we should do is cut company tax rates to 25 percent. 
Gordon Copeland 
: How are we going to pay for future pensions? 
Hon RICHARD PREBBLE 
: I will help the member. The fundamental way we can pay for future pensions to the United Future party is to have a strong economy. We will not pay for future pensions by investing our money in overseas equities in a gamble. If the Government is in charge one can absolutely guarantee that it will lose it. How do we know? Because it has done it already and it will do it again. It learns nothing from its experiences. 
Does the United Future party not think that New Zealand businesses would grow if we had a 25 percent tax rate? It seems very silent. The United Future party used to be in favour of lower company taxes but that was before it went to bed with the Labour Party in return for a family commission with some sort of “PR-UN” family whereby it will advocate on behalf of homosexual couples. It comes as a great shock to United Future supporters to discover that that is what a family commission will mean on behalf of the United Future party. 
The next thing we could do with our $4 billion would be to lower the top tax rate to 25c lower the bottom rate to 18c and give every New Zealand worker a tax cut. I ask members opposite what is wrong with that. The Government would not have to cut a single thing. It could have its Maori Television Service spend $34 million on America’s Cup races— 
Hon Ken Shirley 
: I’d rather it didn’t. 
Hon RICHARD PREBBLE 
: Of course we would rather it did not and so would the country. However if that is what the Government wanted to do it could still do that and have a tax cut and one reason for that is fairness. 
But if that does not move it I have this card. I know that the Government thought it had collected up all of them but does this card ring a bell with anyone? It is a little credit card. 
Rodney Hide 
: Who’s that woman on it? 
Hon RICHARD PREBBLE 
: I do not know who it is. I cannot recognise it. The computer-created picture is named Helen Clark and the card states: “My commitment to you. We will deliver.” It is signed but I realise the Prime Minister might not have been conscious when she signed this and it might be sort of like the paintings she is into or the prediction that we will be in the top half of the OECD. However pledge No. 7 is “No rise in income tax for 95 percent of taxpayers.” I shall read that again. “No rise in income tax for 95 percent of taxpayers.” That is interesting. When one looks at this Budget for what is not in it one sees that in fact the Government has got it round the wrong way. Now 95 percent of all taxpayers in New Zealand are paying higher income tax and why is that? The reason is that when there is inflation the Minister of Finance does not have to change the tax rates he can just let inflation do it for him. 
Hon Ken Shirley 
: Fiscal drag. 
Hon RICHARD PREBBLE 
: That is right. I remember when Sir Robert Muldoon introduced us all to fiscal drag. Well it has been brought to us again by Michael Cullen. 
I asked the parliamentary library economic unit—which is a very good unit and if its staff are listening I congratulate them on the excellent quality of their work—what rates we would have to change the thresholds to in order for them to be the way they were when they were first set up. The bottom threshold is $9500. In order to have that in the same and real terms and in order for the Government to honour its pledge of no rise in income tax for 95 percent of all taxpayers that threshold should have been lifted to $13200 in this year’s Budget which is a 38 percent increase. The next threshold is at $38000 and that should have been lifted to $41800 which is a 10 percent increase. The Government’s new maximum tax rate above $60000—which shows one how much inflation has moved—has to be lifted to $65000. 
To give members an idea of the implications of that I point out that the number of New Zealanders who are now paying the 39c tax rate—we were given a promise that it was to be no more than 5 percent—is 270000 full-time workers. That means that 18 percent of the total full-time workforce is now paying the top tax rate yet even after the Labour Government was elected it repeated its pledge that that would not happen.. Well it most certainly has happened; perhaps Helen Clark just was not conscious at the time. 
I believe that the reason the Government allows the increase in taxes is that it thinks that people do not care about tax. I can tell the House that we know that that is wrong too. The ACT party decided to do a survey of businesses. We surveyed 110000 businesses and asked them whether they thought they were being overtaxed. Ninety-seven percent said that they thought they were. We then asked them which tax rate proposal they would prefer. They came back overwhelmingly in favour of the McLeod tax report. I was stunned by the number of people who replied to our tax survey and I thought it was interesting that 85 percent said they wanted to see a McLeod tax report. They wrote to us asking what the point was of working under this Government and commented that if they were paying a lower rate of tax they could grow invest and employ more New Zealanders. We decided to survey households and I started in west Auckland which is a Labour stronghold. I live in west Auckland in the good Labour suburb of New Lynn. I know that the local member does not like to live there but I am happy to. [ 
Interruption 
] David Cunliffe lives in St Mary’s Bay but he comes to visit us occasionally. He drives through and waves out of the window. I decided to put out some surveys in the Labour Party electorate of west Auckland and we got a staggering reply from ordinary New Zealanders. Ninety-three percent said they felt they were being overtaxed. Although a higher percentage would have preferred a $50-a-week increase the majority said they thought we should follow the McLeod tax report which shows that the New Zealand electorate is much smarter than Dr Cullen thinks. 
I asked some other questions. I asked people whether they supported the Cullen superannuation scheme and 75 percent said they did not. We have to ask ourselves why there is a difference between what people are saying in the survey we have done and in the Labour Party’s overall poll. I guess there are a couple of reasons. I suspect that some people who are on the taxpayer’s tit are quite happy to go on seeing higher taxes. The people who are writing back to me are the ordinary New Zealanders who are earning the money that Helen Clark spends every time she goes off in “Air Force One” to see her European friends as she does every year. 
But there is a second reason. I asked a couple of other questions which are not in this Budget. For instance there is very little in here about health. We asked people whether they thought that health had been fixed and there is some good news for Government. The good news is that 3 percent of the people who replied thought that it had been fixed. I asked people whether they thought that education had been fixed and the same 3 percent were confident there too which might show a certain connection. Of the people who were surveyed 88 percent were also very concerned about the levels of violent crime. 
However we went further than that we asked people what they thought about certain types of expenditure. We asked them how they felt about the Government financing the America’s Cup and 73 percent thought that it was not a good use of expenditure—and that was when we thought it was $5 million. We got a similar answer to Maori Television. I say to the Government that if it thinks that this sort of Budget in which it goes on spending money on behalf of New Zealanders gives it the God-given right to spray out money on America’s Cup campaigns financing that by increases in pensioners’ sherry then it is sadly mistaken. 
This Budget is fundamentally unfair. It is unfair to working New Zealanders who are paying that tax and it is dangerous because it does nothing about the fact that the economy is slowing down. 
Hon David Carter 
: It’s halving. 
Hon RICHARD PREBBLE 
: That is interesting. When we look at the growth projection of 2.5 percent and look at what the growth rate was in the last decade after the failed policies of Roger Douglas and Ruth Richardson we find that it was 3.6 percent. I like some of those failed policies. I say to my friends in the National Party that I was pleased to see Dr Brash’s statement. I would like to think that he would go a bit further. The idea that say just a 30-percent cut in company tax will solve it is not right. Company tax is just a withholding tax. We have to lower individual tax. 
We also have to do something about issues that are not tackled in this Budget. There is nothing in this Budget about the Resource Management Act accident compensation or the Occupational Safety and Health Service. This Government has done nothing in the Budget about the issue of transport. The transport issue in Auckland is costing $1 billion a year. When we go through the Government’s transport figures we see that although it has increased the price of petrol and road-user charges the Government itself has taken the bulk of that extra money—that is the money needed to get Auckland moving again. The money that is needed to have a decent infrastructure for the whole country has not been spent. 
What we really have is a re-announcement of the health tax. When Mr Peters was giving out the prizes I wanted to say to him that he should have given a prize to Annette King. She is a sort of Pavlova—the one who retired repeatedly. She has announced the $400 million extra spending in health 400 million times. It is still the same amount of money and indeed half of it is the catch-up for the amount that she did not have in the previous 2 years. We then find out that $165 million is going to primary health. We can guarantee that hospital waiting lists will increase but actually they do not because people get taken off the hospital waiting lists and go on to the active review list. Any bureaucrat who counts that list will be fired. It is the best-kept State secret in this country’s history. No one knows how many people are on the active review hospital waiting list but we know that the real number must run to tens of thousands of New Zealanders. Were they referred to in this Budget? No they were not. 
As I said the real significance of Michael Cullen’s Budget is not what is in it but what is not in it. There are no tax cuts nothing to get the economy moving and nothing to tackle the real problems facing New Zealand such as the fact that our traffic is snarled up our lights are going out and our growth rate is being halved in the next year. Instead we have a Government that is on autopilot and which thinks that with the help of United Future it will be able to solve problems. 
I failed to mention earlier that the Government has taken out benefit numbers but I have a copy. I know that it is a State secret but I would like United Future to look at these figures. They show the number of domestic purposes beneficiaries the number of invalid beneficiaries the number of sickness beneficiaries and the number of unemployment beneficiaries and as a result of this Budget according to the Treasury’s predictions those numbers will increase. I would like to hear from Peter Dunne as to how his party could vote for a Budget that will increase the number of people on benefits. That is not what he said during the last election. 
ROD DONALD (Co-Leader—Green) 
: 
 The Budget surplus is a fraud. It is built on the backs of Kiwi kids living in poverty hard-working low-income families who need a tax break and our young people who are shut out of affordable tertiary education. New Zealand is paying a high price for Dr Cullen’s $4 billion Budget surplus. Today’s Budget could have marked a turning point for the Government. If Labour had cooperated with the Greens this Budget would have contained significant measures to future-proof the economy strengthen our social fabric and protect our environment. It does not. 
Of course there are many good initiatives in the Budget including several Green projects that continue from the last term. But it is not a Budget that Labour can be proud of. In fact it is one that Don Brash or Bill English would dearly have loved to deliver despite all their rhetoric because it might be damp around the edges but it is tinder dry in the middle. That is why on behalf of the Green Party I move  
That the amendment to the amendment to the amendment be amended by omitting all the words after “has no confidence” and substituting the following words: “in the Labour-led minority Government because of its failure to invest in achieving a self-reliant economy its refusal to properly nurture a just society and its unwillingness to seriously protect the environment.”  
The Budget itself is a house of cards. It depends on the global casino economy recovering. It depends on the release of genetically engineered (GE) organisms in New Zealand not destroying our export markets. It depends on the high exchange rate not crippling domestic manufacturing and not blowing out the trade deficit even further. It depends on the Government Superannuation Fund’s overseas investments not losing any more millions and it depends on business people believing that Michael Cullen is doing a better job than Don Brash or Bill English would. The Government is safe on that last point. In our view National’s economic prescription is worse than Labour’s. That is why the Greens have moved their own no-confidence amendment and will not be supporting National’s amendment. 
However every year our sense of frustration grows. I do not want to look back in 30 years’ time and try to explain to my children that I was in Parliament when we failed to stop GE when we ran out of Maui gas when we watched the rail network run into the ground when we failed to meet the needs of poor families and when we did not invest in the young people whom every one of us will depend on in our retirement. 
What will convince the Government to adopt our policies? It has taken a second energy crisis in 2 years for energy efficiency and conservation and renewable wind and solar energy even to begin to be taken seriously. It took a string of biosecurity incursions for Green concerns about poor border control to be faced up to. The Government is only now getting serious about buying back the rail-track more than 2 years after we first called on it to do so. 
When will the Government accept that the Green Party has the only realistic strategy for future-proofing the economy strengthening society and protecting the environment? Clearly not today. But I will place on record what we believe the Government should be doing. The energy crisis is the most glaring example of the failure of successive Governments to do their job. The energy crisis is a crisis of leadership a crisis of vision a crisis of common sense and a crisis of determination. To quote a former colleague it does not take “rocket science” to know that Maui was going to run out. The 1973 gas contracts made the decision to use the gas fast to use it wastefully to pay for it whether or not we used it and to use it all up in 30 years. The Greens have been warning for those 30 years that using most of that gas for electricity generation rather than as a direct fuel was wasteful. Two-thirds of all the energy value of the gas burnt at Huntly goes up the stack or into the Waikato River. Now that it is running out a mere 2 years earlier than was always expected there is no plan to fill the gap. 
For 30 years we have been promoting the use of gas for heat. We have been promoting insulation of homes and water heaters solar heating for domestic hot water wind generation for electricity industrial motors properly sized to their load wood-waste fired boilers in the forestry industry and a whole host of other measures. The 1975 Values Party manifesto called for an expanded Ministry of Energy Resources to coordinate the use of all energy sources and bring down a comprehensive energy policy aimed at preventing further increase in energy consumption increasing the efficiency of energy use minimising the consumption of non-renewable resources and environmental disturbance and discouraging high energy intensive industries. Imagine where we would be today if we had had MMP then and the Greens had got into Government and been able to implement that policy. We would certainly not be facing an energy crisis and old people would not be worrying about freezing in the dark this winter. 
Thank goodness we did get into Parliament and Jeanette Fitzsimons was able to introduce the Energy Efficiency and Conservation Bill. When National was in power it certainly was not interested in the energy-efficiency standards in the national strategy. Max Bradford even described the bill as “a huge and massive step back to a Stalinist approach to central planning.” At least Labour had the good sense to pass the bill and agreed to the Green’s Budget bid for an extra $3 million in funding for the Energy Efficiency and Conservation Authority. 
But that is a fraction of the investment we need to make to achieve the permanent savings and renewable energy targets we are capable of. One would think that in the middle of an energy crisis the Government would be pouring resources into solving the problem. It thinks it is but it has its priorities wrong. Today’s Budget provides only $12 million to the Energy Efficiency and Conservation Authority for efficiency and renewables while State-owned Meridian Energy plans to spend a hundred times that—$1.2 billion for a power generation scheme that will destroy the Lower Waitaki River. In the time it would take to build this leviathan the Government could help develop the New Zealand – based solar wind and energy-efficiency industries to deliver the same energy as Project Aqua. The energy crisis not only highlights the failure of the market model and the refusal of successive Governments to plan regulate and invest properly it also highlights the culture of waste that has permeated society. Investment and waste are two sides of the same coin. Do one to avoid the other and we actually make a profit. 
When Jeanette Fitzsimons’ bill was introduced in 1998 the Parliamentary Commissioner for the Environment said: “There is significant risk to the New Zealand economy and our way of life if energy efficiency is not improved. Addressing energy efficiency across all sectors has the potential to bring substantial cost savings to the Government businesses and the public and reduce impact on the environment.” We still have not learnt that lesson. And we still have not learnt the lesson about biosecurity. Despite the painted apple moth and a host of other biosecurity incursions in recent years the Ministry of Agriculture and Forestry inspects only 24 percent of the sea containers arriving at our wharves. By the ministry’s own statistics 39 percent of containers are contaminated in some way which means approximately 60000 contaminated containers are opened without any sort of inspection and their contents let loose on our environment. The Government said it would cost $60 million a year for a 100 percent inspection of containers. So far it has spent $90 million on painted apple moth eradication alone. 
Threats to our biosecurity are one of the hidden costs of free trade. The more goods we import the greater the threat to our economy and exports. A Reserve Bank and Treasury report earlier this year on the macroeconomic impacts of a foot-and-mouth disease outbreak should be a wake-up call for the Government and all New Zealanders. As Federated Farmers President Tom Lambie said: “The reality of 20000 job losses and a $10 billion drop in GDP reinforces the need for Government to ensure that biosecurity is resourced to the same level as other security agencies. It isn’t.” 
There is the very real possibility that if a Government fails to extend the GE moratorium due to be lifted in October the very thing Tom Lambie is concerned about will happen because of a deliberate move by Government rather than by accident. Unfortunately Labour is determined to force GE on New Zealanders despite research given to the Government showing that under realistic conditions there are more likely to be negative effects for the economy rather than positive effects from GE release. 
Yesterday we learnt that the Government’s determination knows no bounds. It is actually backing a United States case to the World Trade Organization to force the European Union to lift its moratorium on GE products. If ever there was a case of shooting oneself in the foot this is it. Not only has Helen Clark undermined her relationships with European leaders but the Government—perhaps unconsciously—is destroying our marketing advantage in Europe by on the one hand helping the US increase access to our second-largest market and on the other hand degrading our clean green image which is exactly why European consumers like our products. 
Wisdom appears to be in short supply. If the Government were a wise investor it would invest in the children of New Zealand. Unfortunately it is not wise. After 4 years of a Labour Government 30 percent of our children still live in poverty. Despite the Government’s claim that its key priorities include supporting a productive and cohesive society reducing crime and the impacts of crime and investing for the future Dr Cullen says children will have to wait until next year. 
A Budget surplus is not real if it means that children have to do without the basics of life. If those children grow up in impoverished conditions the State will pay in the next 10 15 20 years and beyond. Poverty costs. If families cannot afford food for a basic healthy diet health-care services and healthy accommodation the country will pay in lower educational attainment higher health costs from hospitalisations and additional health-care later higher unemployment and higher crime. Children from most deprived areas are more than twice as likely to be admitted to hospitals than those from less deprived areas. So we applaud the Government’s moves to improve access to primary health-care but the Government is still treating the symptoms and not the underlying structural problems. 
Families do not have enough income. The Government should have targeted family support packages this year and not wait a further year. The cost of $28 million for a Families Commission will not send one child to school with warm clothing and a decent breakfast inside him or her. Research from the Child Poverty Action Group shows that since 1986 the poorest one-child family in New Zealand has had a rise of only $5 a week in family support. Adjusting for inflation that family should now be receiving $74 a week; instead it receives $47. 
This Budget is woefully inadequate in redressing this appalling situation. Yes it includes $34 million over 4 years but this increases the income thresholds for family support by less than $500. Adjusting family support to reflect cost of living changes since its implementation would have cost $250 million—just 6 percent of the surplus. The Government should not stop there. It could even afford to implement Green Party policy to restore the family benefit as a universal child allowance at a cost of about $600 million a year. 
The irony will not be lost on people of all political persuasions that while the Government is putting off providing proper funding to ensure that children are brought up decently to become the healthy well-educated and productive adults we need to secure our future the Government is determined to gamble that future on the casino economy. Dr Cullen’s “super fund” will have $1.9 billion sitting in it by the end of June and this Budget will add another $1.9 billion to that sum. 
Instead of investing that money wisely in New Zealand and New Zealanders the Government has instructed the guardians of the “super fund” to play the overseas sharemarket. We already know from bitter experience of the Government Superannuation Fund that that is an extremely risky gamble. Since Dr Cullen required that fund to be invested off shore in October 2001 it has accumulated net losses of $233 million and the shares it bought are worth 35 percent less than their purchase price. The pro-market zealots tell me that the share price will recover but I am not convinced that dead cats bounce. In any case it was not prudent to stake $1.5 billion at a time when the sharemarket was going through its period of significant volatility. 
Even if the sharemarket recovers the Government Superannuation Fund will need to earn 9.6 percent after tax for the next 8½ years to achieve its investment target of 6.5 percent over the decade. Even if the sharemarket were booming instead of busting we would challenge the wisdom of the Government strategy. Our opposition to the “Cullen fund” is backed up by an OECD study which concludes that private capital appears to be more productive than public capital in the short term but that the converse is generally true when a long-run perspective is taken. 
While the Green Party is pleased that the Government has increased funding for tertiary subsidies by 3 percent this will not address the significant funding shortage in the area nor give any comfort to students wanting lower fees and an affordable education. Student debt has grown by $2.5 billion since Labour has been in office. At the end of March this year the debt was $5.4 billion. Women graduating today with a bachelor’s degree can expect to spend the next 28 years paying off their debt. What does that do for family life? 
The Green Party wants to see fees reduced to $1500. We want to see the reintroduction of universal student allowances. We want to see tertiary institutions funded at an appropriate level to attract and retain quality staff. We know that this is an expensive item but we fully believe that it will be paid back in full from higher levels of productivity and increased tax revenues from graduates who want to stay and work in New Zealand. The Green Party supported the introduction of the fee maxima but at the same time it warned the Government that it could not use it as a mechanism to squeeze tertiary institutions financially so that they would have to lower quality. We believed—perhaps foolishly—that the Government would deliver on its promise to students to make education affordable and we are very disappointed. 
It is time for the Government to face up to its commitment to our young people and invest more in tertiary education reduce fees fund tertiary institutions at a reasonable rate and provide all students with a living allowance. Almost 50 percent of children from the lower socio-economic group leave school without a qualification. These children will not be equipped to provide the level of skills and expertise that an innovative economy needs. The Government is providing more funding for industry and innovation but for the sake of our future families need more support now so that they can contribute to this vision the Government has. We applaud the Government’s additional funding for teaching in New Zealand. This helps but again it does not help families that are still paying for their children’s education through so-called voluntary donations and fees. It costs $30 million a year for a free State education. But we need to do more than invest in our young people. We need to make sure New Zealand is a place that they will want to live in. 
The Government says all the right things about sustainable development on the international stage but back home there is an enormous gulf between rhetoric and reality. There is no doubt that we are living beyond our natural income and consuming our environmental capital. There is no doubt that the economy is a subset of society and that both depend on the environment but persuading the Government—both elected and bureaucratic—to acknowledge and act on that reality seems well nigh impossible. 
A Green Budget would begin the vital task of aligning economic and fiscal incentives with ecological imperatives. Ecological tax reform is a simple idea. It shifts taxes off work and enterprise and on to waste pollution and scarce resources. Those who waste and those who pollute pay more while clean business pays less and everyone pays less income tax. It is common sense if we want a sustainable economy and it is happening now in many European countries. In New Zealand we have yet to begin any serious attempt at ecological tax reform and this Budget does nothing to change that. The Government’s only commitment in that area is a carbon tax which is set so far in the future that many in business still hope they can lobby their way out of facing up to climate change for a few more years. 
Our tax policy is to remove all income tax on the first $5000 of income for everyone. Low-income people will feel the benefit most but everyone will get something. We will gradually replace the lost income tax through eco-taxes starting with taxing climate change and carbon monoxide emissions and ensuring that diesel users pay their fair share for the health costs of their emissions. This is part of our broader approach to a shift to measuring our success as a nation rather than as a business. Gross domestic product tells us nothing about whether what we are growing is adding to or subtracting from our well-being. As part of the Green’s Budget packages agreed with Labour last term work was begun on broadening our national accounts. We are a long way from measuring sustainable national income yet but we have to do that if we are to have any meaningful concept of growth and development that is real. 
The Greens are working with the Government to bring New Zealand into the mainstream of international transport thinking. Years of obsessions with cars and trucks alone have brought our largest city to a standstill and our national rail system to the brink of collapse and it has created serious health problems among adults and children. Make no mistake: until Labour was elected New Zealand had some of the most extreme road-focused transport policies in the developed world. The transport objectives agreed by the Greens and the Government focus on economic development safety and ability and on public health and the environment. They are extraordinarily well balanced and sane. Although the allocation of funds is still focused on roading it has begun to reflect broader thinking. Cooperation with the Government on transport highlights that we can work together where we have a common cause even though we have fundamental differences in other areas. 
We are pleased to note that the Government recognises the merits of Green Budget initiatives from the previous term by continuing to fund several ongoing projects in this Budget. However no Budget speech would be complete without me mentioning at least one of those fundamental differences—trade policy. The Government’s fixation on free trade is the root cause of the $1.87 billion trade deficit for the year to March. Instead of investing over $30 million in Team New Zealand the Government should be promoting import substitution for a Buy New Zealand Made campaign. It is time we showed some loyalty to our own country. 
Hon PETER DUNNE (Leader—United Future) 
: 
 I was intrigued that the speaker who has just preceded me stated in the closing moments of his speech that the Greens could work constructively with the Government on matters of common cause and then moved a vote of no confidence in it. That is the sort of constructive engagement that I do not think any responsible Government would welcome or deserve. 
The spark of excitement that most New Zealanders feel when they return home after a period overseas at finally being back in the best little country in the world sums up the vision that United Future has for this nation. That vision is founded upon a couple of core principles. Firstly that every child deserves the best start in life regardless of his or her circumstances and secondly that when we build strong families in this country we build strong communities and from that a strong nation. 
Last year when the Budget was introduced—and I am sure the Minister will recall this—I was critical in my Budget speech of the fact that the word “family” did not appear once. What a change 12 months makes; what a change there has been this year. There is a renewed emphasis which we welcome on families as the cornerstone of our society and on recognising not just the economic contribution that families make but also their social contribution and the fact that they are the glue that will hold this country together. 
It is important that we get a Families Commission established to advocate for their issues to ensure that their concerns are represented and to ensure that we are starting to implement policies that will over time turn round the $6.5 billion cost to our economy each year of family breakdown. In that context $28 million over 4 years is a very astute investment and we are delighted that it has come to fruition. We have enjoyed working with the Government to bring that about. But there are other measures in this Budget that will also start the process of assisting our families to develop to feel strong and thus to contribute to a good and growing nation. 
I welcome the indexation of family support and child and parental tax credits that the Budget will introduce from April next year. Members may well say—and some might dare suggest—that that could have been done a long time ago. The reality is that it was not done but it is being done now and it will be an ongoing and positive step for many New Zealand families who will welcome it. 
I am delighted to see the establishment of a special parenting education programme which is budgeted at $11 million. It never ceases to amaze me that with every new technical device one acquires there comes a huge kit on how to use it. The most basic function of any adult in this country is to be a parent yet there is very little in the way of back-up and support for them. One is assumed to know it all. A programme of this type will be an important start in that direction. That is good and it will help to achieve our overall objective. 
There is better funding for pre-school education programmes. How many times have we heard experts say that the dollars invested early in a child’s life pay a considerable return later on? That is why pre-school education is important. That is why giving every child the best opportunity to get access to early childhood education is important and we welcome the steps that the Budget contains in that regard. 
It is also important that people have the opportunity of living in safe and secure communities. The work that my colleague Marc Alexander has been able to do with Phil Goff to get good victims rights legislation in place and get good support in this Budget for the organisations that work with victims and support their efforts will contribute to safer communities. This will send a more important and powerful signal that the corner has been turned from the times when all the rights were with the offenders and the victims continued to suffer long after the crime perpetrated on them had been committed. That is a welcome step and it will contribute to safer and stronger communities in the future. 
The Minister signalled one other aspect of the Budget well in advance—and it almost became a repetitive mantra in the days beforehand—when he talked about certainty and stability. I say to the House that every business every social group every school and every organisation I talk to in New Zealand says that in a time where the only certainty worldwide is uncertainty the thing they crave and need to make their plans for their future is certain and stable direction. That comes from the top down. 
It is important that we have a system of Government that is certain and stable and that delivers predictable outcomes. That is why we entered into a confidence and supply agreement with the Labour-led Government. We wanted to ensure that the wish expressed by New Zealanders at election time could be carried through for a full 3-year term and that we were not going to get a repetition of the circumstances that occurred between 1996-99 and 1999-02 where things suddenly evaporated because it is important for this country that people have certainty and stability. 
It is important for our democratic tradition that the people’s choice of MMP be made to work. This party is committed to doing that and we have demonstrated over the 10 months since the election that we are able to make a positive contribution in that regard and work productively for the benefit of this country. 
I contrast that with the previous speech from the Green co-leader and I contrast it with the experience of New Zealand First in Government. Small parties had a bad name. People wanted small parties to exercise their influence but not to be the tail wagging the dog or throw their toys out of the cot when they did not get their own way. We have engaged with the Government. We have not always agreed. We have had some public disagreements and we will continue to do so but we work on the basis of good faith and no surprises. We work constructively and positively and by and large we are delivering the stable Government that New Zealanders seek and deserve. We will continue to play our part in continuing to achieve that and I see this Budget as very important in that respect. 
This afternoon the Prime Minister herself acknowledged the contribution we have made and I am grateful for that. My colleagues have enjoyed the relationship that we have established thus far but I say to the Labour Party that we have a few more things we will be asking for over the next 2 years and beyond. Already we have made a difference. The Families Commission would not be on its way to becoming a reality were it not for United Future. There have been small but significant changes made to the Resource Management Act in the last week—and there is more change to come—that this House had shown itself incapable of embracing over the last 4 or 5 years for a variety of reasons. We were able to provide the initiative to get those changes moving ahead. 
Last year the changes to Television New Zealand and Broadcasting Communications Ltd—the splitting of the two into separate organisations—came as a result of discussions we had originally with the Minister of Finance and then with the Minister of Broadcasting and brought into play a situation that most people in this House wanted but could not quite see a majority for establishing. That will be to the benefit of all New Zealanders in the years ahead. That demonstrates the role that a small party—not seeking to overplay its hand but seeking to play the game constructively and positively—can achieve working alongside a larger partner. This Budget is the start of that process. 
Earlier this week the Minister made a comment that is highly relevant in respect of Budgets. He said that essentially there were two parliamentary occasions only in the current environment: the Prime Minister’s statement at the beginning of the year setting out the Government’s goals for the parliamentary year ahead; and the Budget where the Minister effectively reports on the achievement of those goals over the last 12 months and then puts some figures to the goals that have been projected for the 12 months ahead. 
That is a far cry from the days when people—and members of this House used to do it—went out on Budget day to stock up on petrol alcohol and all sorts of things just in case an excise bill was to be rushed through and passed by midnight on that evening and when New Zealanders literally clung to their radios or hung around their television sets in awe—and in some cases in dead fear—of what the Minister of Finance might unleash upon them that evening. We have seen cases in the past where whole industries were wiped out overnight by Budget announcements. I think of the caravan and boat industries in the early 1980s as a classic example. 
Those days have gone. Thanks to the Fiscal Responsibility Act and the Public Finance Act which were the efforts of successive Governments we now have a far more stable and predictable environment. I do not think there should be criticism of any Minister of Finance for delivering a Budget speech that is largely predictable. That is the basis on which most of us live our lives. We actually seek certainty and direction. We want to have some absolutes. We do not like drama. We had an Oscar-type speech a little earlier this afternoon from the leader of New Zealand First. It was great entertainment it was hilarious but it did not make any substantive contribution whatsoever to the policy debate or to the sum total of human knowledge in this country. It was probably forgotten as soon as it was delivered. People would have had a laugh and moved on with the reality of their daily lives. 
That is the point that escapes a lot of people. In today’s world that certainty of direction where we are able to make our own plans confident that Government will not come along in the middle of the night and overturn them is what most people want. They want to be able to get on. They want to know the norms within which they can operate. They do not want the intruding hand of Government screwing the scrum or tipping them over before they have got very far along the path. 
This Budget is a further step in the direction of recognising the opportunities and the rights that people expect in that regard. But it is important not to become complacent. It is important not to see a Budget as an end in itself—just as a mechanical document or a set of figures—because without vision the people perish. I forget who said that but it has been said many times. Without hope there is no chance of a future. 
Hon Jim Anderton 
: The Old Testament. 
Hon PETER DUNNE 
: It is in the Old Testament. I defer to my colleague. 
Hon Jim Anderton 
: You should know that. 
Hon PETER DUNNE 
: Divinity was never a particular strength of mine I say to Mr Anderton. I feel more comfortable with my colleague here who said it was Adam Smith but never mind. 
What is important now for this country in moving forward is that we do use the strong economic base we enjoy—and I endorse the comments of Dr Cullen and ironically Dr Brash that this is not the time to be spending surpluses—to create some hope to create some direction and to start to focus on some of the issues we need to address over the next few years. I want to suggest a few of those at this point. 
A lot has been said about the tax burden on New Zealanders and my colleague Gordon Copeland I imagine will say more about that a little later in this debate. I think there is an opportunity now prudently to pick up the message that is contained in this Budget of beginning to index certain of our transfer payments and to start to look at a way in which we can cut back on the insidious bracket creep that is now returning to our income tax structure. I think we do need to look at some modest form of indexation of tax rates. Of course that will be costly but I believe we are in a position where we can start over the years ahead to work in that direction. That is certainly something we will be pushing for. 
Much has been made in this debate and elsewhere and will continue to be made of the infrastructure crisis this country is facing in roading energy rail and a whole range of areas. One of the things we think ought to happen—and my colleague Larry Baldock has stressed this from time to time and on many occasions—is that we need to start to invest more in infrastructure through progressively transferring some of the excise gained on fuel from the consolidated account into a dedicated roading account. That measure has widespread support. Organisations like the Automobile Association and others have campaigned on it for years. It is now time to give that idea the serious attention it deserves because every day every one of us who travels over our roads or uses our rail system—or even dare I say it uses our airlines—recognises the failure of infrastructure in this country. I had the experience recently of getting on an Air New Zealand aircraft all ready to go from Wellington except two key components were missing. It was the middle of the afternoon and there were no pilots. That surely is the definition of an airline on the way to the Third World let alone a merger with anyone else. That is the sort of thing we need to start to address. 
The New Zealand environment is one of those things that New Zealanders who return home or even people who live here feel passionate and strong about. It is one of the great things about being a Kiwi. That clean green image permeates all of us. But the problem we have at the moment is a Department of Conservation that sees the environment not as a treasure to be enjoyed by all New Zealanders but as some preserve to be locked up and shut off from us in case we dare use it—we might upset the apple cart. The treasure of the New Zealand environment is the ability of New Zealanders to get out and enjoy it. The treasure of the New Zealand environment is to recognise the balance between sustainable development and our traditional environmental strengths. I think we have to redouble our efforts in the years ahead to look at certainly redressing the imbalance that there is at the moment but also using the millions of dollars we invest in conservation to ensure that all New Zealanders have an opportunity to get out there and enjoy the environment we are conserving. 
It has always struck me as absurd that we say “No you can’t actually go to Kapiti Island without a permit or even to Matiu-Somes Island in Wellington Harbour. We’re conserving them for future generations.” The current generation would not mind the chance to use a little bit of them and in that respect I want to pay a passing tribute to the Karori Wildlife Sanctuary here in Wellington which is striking that balance properly. This is an issue that will be more prevalent in years to come in other parts of the country as well. 
I want to speak about another issue and that is the question of our overall security. I have talked about law and order and I have talked about the security of our environment but the security of our world requires that any country regardless of its circumstances has access to adequate defence. I know there is controversial debate at the moment about whether having defence forces means we are prepared for war but the reality is that a small country like this cannot ever hope to defend itself. In fact many larger countries cannot hope to defend themselves either. That brings into focus the need for a better integration and more positive use of defence forces. 
I say that if the Europeans who have spent most of the last several hundred years fighting each other can now come together in the European Union and under the leadership of NATO surely Australia and New Zealand two of the allegedly closest countries culturally in the world ought to be able to come to some agreement on an integrated approach to defence and foreign policy. I am not talking about subjugating the foreign policy of either country to the whim of the other. I am talking about a much more positive integration of our forces on matters where we agree in order to be able to operate effectively. We do it now in an ad hoc way. We did it very effectively in East Timor. Just as we have closer economic relations with Australia maybe there will be an opportunity over the next few years to start to forge closer defence relations with Australia. 
I conclude on this point. All the things that each member who speaks in this debate over the next week wishes for this country have to be paid for and the only way we can do that is to build a sound secure and stable economy. This Budget is a step in that direction. The recognition that it gives to the role of families as bedrock as a starting point for our country is a very important add-on because it recognises the contribution that every single New Zealander has the capacity to make. In that respect I think the message from this Budget is clear. The Government will support people in their opportunities. It will not ride heavily on their backs but it will say that when we get strong functioning families we will get strong functioning communities and the combination of those will be a nation of which all of us can be proud and that will play its role constructively and positively in an increasingly uncertain and indeterminate world. If we achieve that we will have made huge progress as a nation. 
Hon JIM ANDERTON (Minister for Economic Development) 
: 
 I congratulate the leader of United Future on that constructive contribution to the debate. A little less congratulation goes to the leader of the National Party who warned us in his speech that the coalition Government was getting ready to spend up and said what a terrible thing that would be. Then he said we should spend all the surplus now. I was a bit confused by the message. I think that indicates that Bill English will not be with us for very long. 
I have just returned from Europe and I can say to this House that the European tiger economies Ireland and the Scandinavian countries Finland Sweden and Denmark all indicated to me from their Finance Ministers down up and sideways that they would very much like to have the growth rate that New Zealand has had in recent years the future outlook that we have and the performance of the New Zealand economy. Sometimes I wish that the Opposition politicians—and we have all been there—did not wallow so much in wishful thinking about how bad they hope the economy will become so that they can have some kind of an opportunity. We should all be celebrating the fact that our economy has done extraordinarily well in world terms and that our people have benefited as a result. 
We are often accused of somehow being lucky. I do not know how one makes oneself lucky but we are accused of being lucky. It is funny how lucky one becomes when one actually has good policies and works hard at implementing them. It is a bit like Gary Player who when he was once told how lucky he was with his putting after winning the PGA title in America said the more he practised the more lucky he was. We are practising at being a good Government. 
I want firstly to congratulate Dr Cullen. I watched the Opposition members’ faces during his speech and I put myself in those members’ position. I almost felt a bit sorry for them because I saw on their faces the expression of people who were hearing about a very forward-looking constructive programme for this country—one set of policy developments after another—and it must have really felt like a nail in the coffin every time one of those positive policies came across. I can sort of understand that and if the National Party members contributed a bit more in a constructive way to debate and progress in this country one could almost feel sorry for them—but I have not gone quite as far as that yet. 
I begin by congratulating Dr Cullen on yet another highly positive and constructive Budget—his fourth on behalf of the centre-left coalition that was elected in 1999. My party the Progressives seeks above all else to be part of a Government that facilitates job creation. We want New Zealand to be a place where every young person with no exceptions is in work training or education because that is central to our goal of both economic and social well-being. If people listened to that Budget speech carefully they would have heard that the goal of this coalition supported by United Future is to have every young person who leaves school in a job work or training by 2007. I would hope that it would happen faster than that but the fact that we can talk about that with credibility shows how far we have come from the period when young people in this country were leaving school in despair because they had no chance of any future. In region after region—in the north I say to John Carter—it is exactly the same. Now young people right throughout this country know there is a future in their own land and they feel good about that—as I do on their behalf. 
The best way of ensuring that the dividends for New Zealand will be there to pay for the investment and better job opportunities and employment growth is first to ensure that the Government’s finances are in order. That is important for both domestic and international credibility. The Budget of 2003 shows that Dr Cullen is more than delivering on the fiscal front. No one can reasonably doubt—they can unreasonably doubt but they cannot reasonably doubt—his sound handling of the Government’s finances. Dr Cullen’s management of the economy and the sound state of the Government’s finances are the reasons that this coalition can also take so many other measures to improve social well-being. 
I always say to people around the regions of New Zealand that we cannot have a first-class social welfare system education system and health system unless we have a world-class economy. The economy has been central to what Dr Cullen and this coalition Government have been about over the last 4 years or so. In my view I would have to go back—and people might say “I would say that wouldn’t I?”—to the 1935-49 Labour Government to find a Government that has been as progressive as this coalition has been in terms of the future of this country. I think that is the quality of the Government that this country has been offered. 
National Party members can smile at that but they should look at their poll figures to see what New Zealanders think about it. New Zealanders actually agree with us and it is easy to see why they do. I am proud to be—and I wish some of my former colleagues would be proud to be—part of a progressive Government that is delivering. If those people had had enough patience they would be sitting around the Cabinet table in Government delivering things to the people of New Zealand. That is why I think I am here and why some of my former colleagues are not as a matter of fact—if members want to go down that road. 
This Budget builds on the framework established to support and promote future economic development. It encourages the development of new ideas and commercialisation. It is light years since the people of the Manawatu could come to a function like the launching of the biotech centre in the Manawatu to take advantage of all the biotechnology scientists we have in that region and have a plan to commercialise all the good ideas that are developed through research and development. When did that ever happen under a former administration? The answer is that it did not happen. Now we have region after region contributing to the well-being of this country. When under any former Government was every single region in New Zealand in a positive growth mode? That has not happened since Adam played halfback for the Israelis actually. Here it is quarter on quarter on quarter and year on year with the regions of New Zealand now delivering. 
Budget 2003 reflects a whole-of-Government approach to sustainable economic development and innovation. Measures in many portfolios focus on improvement in skills and talent our international connections and our innovative capacity. There is a growth and innovation package of nearly $400 million over the next 4 years to support sound and smart investment in strategic industries. 
I read an article in the  
New Zealand Herald  
this morning that stated Jim Anderton was a hands-on sleeves-rolled-up Minister of Economic Development but that one business failure overwhelmed 99 business successes. I could not believe that. Let us just think about it. What an extraordinarily negative culture that is. People sit an exam and get 99 marks out of 100 but the one mark they do not get overwhelms the 99 they did get. How does that work? What kind of negative philosophy does that represent? It is about time we actually celebrated success in this country and we have a lot of it to celebrate. 
 We are combining the existing economic industry and regional development funding of $112 million with the Trade New Zealand funding of $65 million and with growth and innovation framework funding to lift New Zealand’s development path. In nation after nation that I visited recently there was an important emphasis on new technology on business development and on growth in the regions. The OECD on investigating what New Zealand is doing has said that Industry New Zealand and the Ministry of Economic Development are at the cutting edge of world-class standards in terms of the development of our economy. 
I would challenge the Opposition parties who criticise the context and content of this Budget to say that they would change the way in which we are doing things and would change the way in which we have a growth rate that is well above the OECD average. [ 
Interruption 
] As I said before the leader of New Zealand First came into the House there are countries around the world—countries that we have looked up to in terms of their economic performance over the years—that are in envy of New Zealand’s performance in the last 3 or 4 years. 
Rt Hon Winston Peters 
: What’s the research and development tax in Australia? 
Hon JIM ANDERTON 
: The member should go to Germany and see what that is like. He should go to Scandinavia and see what those countries are facing. We are doing extraordinarily well. 
Budget 2003 allocates funding for our World Trade Organization negotiations. It has funding for a range of initiatives including increased funding for business incubators and for adding weight to the strong portfolios in business industry and regional assistance programmes. The regions of New Zealand are in the best heart that I as a member of Parliament in my political career of nearly 39 years have ever seen. The regions of New Zealand have a Government that for the first time stands with them in partnership. They know that. They appreciate what is going on and they will never elect people who will not stand with them in the way that this Government has done and will continue to do. 
CLAYTON COSGROVE (NZ Labour—Waimakariri) 
: 
 I rise in support of this Budget. I must say that I was struck by that extraordinary speech by the Leader of the Opposition. I did not think that in my life that I would ever hear a Tory Leader of the Opposition attack a Labour Government for being a tight prudent fiscal manager. I did not think I would ever see that day. History has been made in this Parliament because a Leader of the Opposition—a National Party leader—has accused this Labour Government of doing that. Normally National members have accused us throughout our history as the Labour Party of taxing and spending. Now they say we are too prudent. They are saying that the Minister of Finance Dr Cullen is too prudent and has too tight a hand on the reins and that a $4 billion surplus is just too good and too much. That is incredible. 
This Budget shows a stark contrast between this Government and the Opposition. We have a Budget of certainty a Budget and a Government of stability and a Minister of Finance who engages in fiscal prudence all in an international environment of world volatility and uncertainty politically and economically. Every line item in this Budget—this is the stark difference between the parties and it hurts the National Party—and every financial commitment is a knife in the heart of the National Party. We can see that written on the faces of the National members today. Their heads are down. They are the party of progress the party that was born to rule and after two major election defeats they have not become used to being in Opposition. 
The Budget provides evidence of this Government’s commitment to our people. This Budget strengthens the social contract between this Government and our people. It strengthens the social contract that says we are willing to encourage innovators and entrepreneurs and will assist those who are down on their luck. This Government is a sound custodian of our country’s economy and it will continue to build a sound platform from which our citizens and their families can enhance their lives. The Budget highlights show how we are to do that. I know that the National Party is disappointed with the Budget highlights. National members are craving and clawing for anything negative that they can try to ram down the throats of the people. 
We have a $4 billion surplus. We have an additional $140 million over 4 years plus $12 million of capital for research science and technology. We have $73 million over 4 years to promote trade. There is more investment in skills training so that 5000 of our young people will be on Modern Apprenticeships. 
Total spending on education will increase by $393 million to $8.2 billion over 2003-04. There are taxation-smoothing initiatives that will help to grow our small and medium enterprises. Unlike the National Party we know that our small to medium sized enterprises provide 85 percent to 90 percent of our jobs. This Budget is a sound Budget; it is a certain and stable Budget. It is a prudent Budget and I suspect that the Minister of Finance has been a bit tight on the reins. Why do I say that? It is because he knows that we live in uncertain times and because he wants to ensure that the surpluses are locked in in a sustainable way for our country. 
We have a 4.4 percent growth rate and the lowest unemployment for 15 years. I want to contrast those achievements and this Government’s performance with what we have from members on the Opposition side of the House. As I watched Mr English’s speech I noticed two reactions from the Opposition members. I have never seen Gerry Brownlee look so happy and I have never seen Don Brash cringe so much. Don Brash is actually a tight fiscal manager—that is how he likes to portray himself. He portrays himself as a tightwad who is tight on the purse spends nothing drops taxes and holds back on expenditure. Yet Mr English said that the Government was too tight. Mr Brownlee who is like piggy in the middle was the happiest man today especially given the leadership problems that National faces. Then we heard the extraordinary statement that Mr English was against more power generation. 
If we compare this country’s statistics with Australia’s we can see that we are in a sound position. I compare our record with that of the National Party. Over there on the Opposition benches is a National Party that has no real purpose. It is a party with no heart and no pulse—dead. The walking dead of the National Party are over on the Opposition side of the House and they are politically bereft of any ideas. 
 I say to the National Party that we have written a Budget today. If that party has any policy it should put up an alternative Budget. The National members are self-confessed economic geniuses so they should put up an alternative Budget. If they have ideas for this country let them articulate them. If they have new policy let them put it on the table and promote it and then we can do what the people of New Zealand want us to do. When we have some proposals and some policy from the Opposition to match against our Budget we can have a debate. We can have a contest of ideas and challenge each other’s logic—and in some cases intelligence—so that we get the best from a policy debate. 
But there is a problem with that: we have only one side this Government that puts up policy and a Budget and we do not get anything from the hollowed-out party that purports to be an Opposition. Those members are the walking dead. They have no pulse. The political paramedics have been in in two elections and disposed of them. The body bags are out and the body count judging by the leadership issue is going up. That is interesting. National is a party of lazy people who will not put up policy or counterarguments. Don Brash in yesterday’s  
Dominion Post  
proposed three policies: cutting benefits switching the emphasis in health to private hospitals and doing away with school zoning. Those are all policies that the National Party was rejected on in two elections. The National Party the party of mediocrity has put up three tired old alternatives to our Budget. 
National members talk about layabouts and bludgers. Don Brash wants those so-called—and I do not like the term—layabouts and bludgers to line up and do some real work. But when National members talk about layabouts bludgers and lazy folk they should look at their own number. None of National’s spokespeople including Mr Key and Mr Carter from the C team and a couple of others—I see two of them here in the House—have put up any proposals. They have been in Opposition for how long? For 3½ years. How long has it been since we had an election? Have we had one policy idea or one alternative Budget? National members say they have a plan for assisting people in this country. They say they have a plan for this economy but they will not put it up. What do we hear from them? The best thing that they can do as they did yesterday is to complain about interjections. 
I am proud of this Budget. I challenge members of the Opposition to put up or shut up. We see what has happened in the polls. We see as a Government that people believe in the direction that we are taking this country. Let us look at the achievements—the spending on education trade training and health. There are spending rises of $711 million next year to $9.6 billion. Do we have a health policy from the Opposition? There is not one policy. There are three tired old policies released by the great doctor. Those three policies—benefit cuts the promotion of private hospitals and school zoning—were all rejected in two elections. I say to National Party members that if they want to engage with people they should go out into the streets and listen to folk. They should say to people that there are people of talent in this country who are doing very well that there are people of talent—[ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
CLAYTON COSGROVE 
: I do not need your protection Mr Assistant Speaker. I appreciate it but I relish interjections from that member. I appreciate your concern but I say let the Opposition bring him on. Every time that member opens his mouth he puts the sword right into his own side again. He would be better advised to take a call and tell us what the National Party’s health policy is. But will he do that? No because that party does not have one and that speaks volumes. 
I invite National Party members to celebrate the success of this country—to go out and say to people that we have a few issues but we are doing well as a country. Sure we can always do better. But I say that for 3½ years we have been a Government of doers and builders not an economic vandal as National was in the 1990s. Under the previous National Government unemployment averaged 8.1 percent for 9 years. What is it today? It is 4.9 percent—the lowest it has been in 15 years. National was the economic vandal of the 1990s. I relish these debates because every time we can put the sword into members on the Opposition side of the House we show them up as the economic vandals that they were. They are not builders. National the great party of progress still feels it is born to rule but people are crying out for a strong Opposition so that we can test ideas in an intelligent way. I challenge and invite those members to put up some policy ideas or to shut up. This is a good Budget and it will be supported. 
Hon DAVID CARTER (NZ National) 
: 
 I guess that contribution from the new junior member for Waimakariri says it all. I expect that Dr Cullen would have said to those members in caucus: “Go in and talk positively about our good Budget.” But did that member mention one positive initiative? He spent his whole 10 minutes on a tirade against a lack of alternatives from the National Party. I say to that member to get out of bed a bit earlier and read the  
Dominion Post  
in the morning. He should have a look at page B5 of today’s  
Dominion Post 
 where Dr Don Brash has a quite sizable article outlining what he would have done if he had been Minister of Finance. 
I will pick up on one or two things. Clayton Cosgrove says that there is no policy and no alternatives. In respect of one option Don Brash suggests that on the tax side of the ledger we could move towards a flatter tax structure. On the spending side he suggests we could do a lot more to promote economic growth. I think that when people analyse this Budget today they will realise that it will go down in history as the Budget that halved New Zealand’s growth rate. Dr Cullen himself— 
Clayton Cosgrove 
: No wonder you got sacked as finance Minister. 
Hon DAVID CARTER 
: The member tries to say I am wrong. Dr Cullen himself said— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I am sorry to interrupt the honourable member. I say to the member on my right that he cannot use the word “you” across the Chamber. 
Hon DAVID CARTER 
: I raise a point of order Mr Speaker. If the member is going to continue to interject would you at least ask him to move to his correct seat at the back of the House. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Would the member please continue. That only applies if the member has moved near in order to facilitate interjection but he is not doing that at the moment. I will be the judge of that. 
Hon DAVID CARTER 
: I hope that remains. 
Rodney Hide 
: I raise a point of order Mr Speaker. The Standing Order provides that a person cannot change his or her seat to facilitate an interjection. That is precisely what Clayton Cosgrove has done. Speakers in the past have certainly upheld it against members of the Opposition if they have done that. I do not understand why Clayton Cosgrove who is trying to pretend he is in Cabinet should be allowed to advance his position and interject. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No I refer the member to Speaker’s ruling 53/2. Mr Cosgrove has been sitting in that seat for quite some time. He did not move purposely to facilitate interjection. I have made the ruling and I thank the member. 
Hon DAVID CARTER 
: Before Mr Cosgrove winds up again I ask him to look at pages 2 and 3 of Dr Cullen’s speech where he himself says that growth this year—2003—will be 4.4 percent and growth next year will be 2.2 percent. I know that the member is not bright but I suggest that he gets his calculator out as it will clearly demonstrate that growth will halve next year because of the Budget and policy of Labour. That is very serious. Damien O’Connor laughs about that. He finds it quite satisfactory for our growth rate to halve in 12 months and he laughs about it. He should go back to his electorate and laugh in the faces of his constituents who will see their standard of living continue to decline. More and more West Coasters are leaving the West Coast. 
Hon Damien O'Connor 
: They’re not. 
Hon DAVID CARTER 
: They are. The population continues to decline and that is why the boundaries of that electorate continue to move north. 
We used to hear a lot in previous Budgets about a partnership with business. I recall Dr Cullen’s first Budget talked about working with business to do something about growing our economy. I tell him to start working with business and advance policies that will actually help. When we look in this Budget to see what he has actually done to help we find and I quote him: “Budget 2003 provides funding for the establishment of a Small Business Advisory Group drawn directly from the business community.” He goes on to make a huge promise to business; he says that in February 2004—wait for it—we will have a summit of small to medium sized enterprises. 
Hon John Tamihere 
: Yes. 
Hon DAVID CARTER 
: John Tamihere says “Yes’. He will be asked to go and so will Stephen Tindall Hugh Fletcher and all those other well-known—[ 
Interruption 
] They will go. They will be there. It will be another talkfest. However I remind members that Dr Cullen’s first Budget called together such a group—the Alan Dunn compliance cost report. 
Rodney Hide 
: What happened then? 
Hon DAVID CARTER 
: They came back with a book about that thick with 100 recommendations that would help business. It was totally ignored and got the same treatment the McLeod tax review got. The Government should stop talking rhetoric about helping business and get on to it. 
I certainly have a message for United Future as it lines up to support this Budget. I know that it knew at the last election all the challenges that faced New Zealand. Its members used to talk about lifting New Zealand back into the top half of the OECD. They used to talk quite genuinely about raising the living standards of all New Zealanders. Yet when we come to vote on this Budget they will go into the Ayes lobby. They will happily support a Budget that halves New Zealand’s growth rate. I remember the promise from United Future: “We’re going to do something about health waiting lists. There is no mention in the Budget of reducing health waiting lists. 
Ron Mark 
: They’ve just cut the waiting lists. 
Hon DAVID CARTER 
: I am glad that Mr Mark noted that. In Christchurch the board did a marvellous job in cutting the health waiting list. Suddenly it took 7200 people off the waiting list. 
John Carter 
: Who? 
Hon DAVID CARTER 
: The Canterbury District Health Board took 7200 people off the waiting list and said there was no money for operations. Annette King said “We’re cutting the waiting list.” and United Future is prepared to believe that. Well the waiting list can be easily reduced if the numbers are just cut off—if we do not give people an operation and. tell them they will feel better tomorrow. That is pretty easy to do. 
What about law and order? Remember all those passionate speeches on television from Peter Dunne about a safe society and law and order? I looked at what we get for law and order and I saw that we get 50 additional police and a DNA mobile squad with a budget of $2 million a year. 
I listened to Mr Dunne’s contribution. He said that after the election New Zealanders wanted his party to support the Government. I say to United Future and to Mr Dunne that he is in absolute fantasy land if he thinks he is delivering to New Zealanders. I just remind Mr Dunne who congratulated Michael Cullen because the Budget had been delivered without surprises that only a week ago we sat in this House under extraordinary urgency and passed a tax bill. Mr Anderton and Mr Dunne tend to forget about that. It raised $18 million. 
Hon John Tamihere 
: Come on get a bit of passion into it. 
Hon DAVID CARTER 
: I will give a bit of passion. I have come across a letter signed by Mr Jim Anderton. Mr Tamihere will know about this one. It is addressed to a Mr Philip Gregan Chief Executive New Zealand Winegrowers. The letter is about a report  
Taxing Harm 
 which talked about the possibility of increased taxes on sherry. Mr Anderton had this to say: “The ministerial action group would certainly not raise taxes without the fullest consultation with the industry.” I am not sure whether Jim Anderton MP for Wigram and leader of the Progressive party was really conscious. 
I am running out of time and I want to catch up on one or two things that are very serious including the issue of biosecurity. There have been 24 breaches of our biosecurity borders this calendar year. I was hopeful that there would be something for biosecurity. I found a little press release from the Hon Jim Sutton. 
Rodney Hide 
: Who? 
Hon DAVID CARTER 
: The Hon Jim Sutton. He used to sit over there. He has issued this press release—but not as Minister of Agriculture so the farmers have again been missed out completely. As Minister for Biosecurity he has issued a small press release announcing $2.5 million for passenger aircraft and mail clearance over the next 4 years. That is $600000 a year for biosecurity. Mr Sutton should compare that with the $18 million a year the Government has just grabbed off the poor sherry drinkers after no consultation. 
This Budget does nothing to lift our growth rates. As Mr Cullen said and as Mr Cosgrove now agrees growth will halve. There is no attempt to fix the growth rate and lift the sustainable growth rate of New Zealand nothing for our infrastructural problems and nothing to address the power crisis. This is a very sad Budget. 
RODNEY HIDE (ACT NZ) 
: 
 I raise a point of order Mr Speaker. I beg your indulgence because I think you have given the House a mistaken interpretation of Speaker Harrison’s ruling 53/2. You said that it was OK to interject from one’s seat as long as one had moved there for another purpose. However if you read the ruling you will see that it states: “. . . A member may move to such a position for another reason but if the member then embarks on a series of interjections it would be reasonable to assume that the original purpose had been overtaken by the desire to interject. The member would then be breaking the convention and should return to the member’s seat or desist from interjecting.” The member has stopped interjecting so that has been taken care of. But I was concerned that some people assume that as long as they moved to a better seat before they started to interject it would be OK. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I thank the honourable member. Each case is judged on its merits. I have judged accordingly. 
MARK PECK (NZ Labour—Invercargill) 
: 
 From the preceding speech I cannot tell whether that member supports the amendments of the Leader of the Opposition or the Green Party’s amendment to the amendment. Indeed I am not certain what that Opposition member believes. However I can say to him that Jim Sutton did sit on that side of the House and it is precisely because of the Budgets of the good doctor that he is now sitting on this side of the House and doing a marvellous job as Minister for Trade Negotiations. 
I wish to do two things in my speech today. Firstly I want to talk a little bit about trade and issues in the Budget around that. Secondly I want to talk a bit about the Budget itself. I want to give the answer to the myth that the National Party has no policy because it does. I want to go through what some of that policy is as we look at this Budget. First of all I want to comment on the issue of trade. We have been harangued by the Greens to essentially give up on trade and put all of our superannuation contributions into New Zealand. I remind Green members that if we were to do that sort of thing in New Zealand we would certainly set ourselves a recipe for going back considerable centuries in terms of our economic growth. In fact we would not have economic growth; we would have a huge economic decline as well over one-third of our economy comes from trade. Members of the extreme left who have taken part in this particular debate simply do not understand that unless borders are open and people are able to trade the lowest paid in the world are consigned to abject poverty. Over half the world’s population lives on less than US$2 a day and consigning those people to Trade Aid shops keeps them in poverty. For a country like New Zealand open borders are very important. 
It is time that Green members came into the real world. If they understood about gross domestic product (GDP) they would understand that one of the factors in GDP is net exports. The only economies in the world that do not run a net export account in their GDP are places like North Korea. If those members want New Zealand to be like North Korea then we must stop trading. The economic principle is that trade can make us all better off. I suggest the Greens have a seminar on that and start to learn about it. 
Secondly I want to look at the Budget. David Carter regaled us—frankly I cannot understand why he was put up as the first speaker following the Leader of the Opposition— 
Clayton Cosgrove 
: Where’s Don Brash? 
MARK PECK 
: Where is Don Brash? That will be a speech of some interest. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
MARK PECK 
: I withdraw and apologise. I meant to ask why Don Brash had not taken a speech at this point. 
We will hear two things from Opposition spokespersons: they want us to spend more and they want us to spend it now. But Don Brash will tell us that the recipe is considerably different. It will be fascinating to follow the debate. However I want to pick up on something David Carter said—that is why do we not speak about the Budget? It is a good Budget. One knows it is a good Budget when the Opposition is as flat as it is. The only speaker who gave any life to the debate at all was Winston Peters. At least he managed to handle the debate with a considerable amount of humour by awarding Oscars. He even had one or two on the other side of the House clapping him at the end of his presentation. Listening to Bill English one did get the impression that it was over. 
We have economic growth at 4.4 percent and Dr Cullen was quite clear in talking about the world economy and the issues that will lead to a downturn in economic growth this year. We cannot do much about Sars (severe acute respiratory system) or about conflict in the rest of the world but we are in a robust position to be able to come through that period of time. Just recently I was able to hand out an export incentive award to Henley Industries in Invercargill. That particular company is a design-build company developing conveyer belt technology for the food industry and new oxidation pond technology to improve water quality. 
 That is innovation. That company does something in Southland that nobody else does. It had a go at going from being a design-build company into production. It will have to employ new workers. John Key is inanely interjecting. He should look at the fact that this is a company that managed to pull itself up by its bootstraps. It was struggling and about ready to go down but it took a punt on design-build and through its own efforts managed to create new products in a niche that nobody else in Southland has filled. In the process it developed new jobs for Southlanders. That is something I thought John Key would have welcomed—a “pure market” approach. The Government did help with something that that company could not afford and that is patenting intellectual property so that particular advantage is held in New Zealanders’ hands for 20 years. That is a very good use. 
But I want to caution my side of the House against thinking that the National Party does not have a policy. It does; it is a policy that has been around for some time and it is the policy of its spokesperson Don Brash. I recently reread Don Brash’s speech to the Catching the Knowledge Wave conference on 2 August 2001 where he sets out a very clear prescription for a pure “more market” approach to the economy. Dr Brash’s view is a very simple view: there should be no Government unless it is about protecting the privilege of the wealthy and unless it is about property laws. It is as simple as that. 
Dr Brash does in fact believe that the Government has a role to invest in education because that saves the wealthy having to support their sons and daughters when they go on to higher education. Dr Brash believes in an army and a strong police force. Why does he believe in those things? He believes them because they are about protecting the property rights of the wealthy. He does not believe in income support for those a little down on their luck. Indeed he talks about drug tests for those on benefits. Now a drug test for a beneficiary costs $25 a test so for about 1000 people to be drug tested one is talking millions of dollars. He would appropriate money to drug test beneficiaries but he would put a cap on the amount of time they could be on the benefit. Don Brash would also say that there should not be a minimum wage in the economy because that causes unemployment. What Dr Brash forgets is that there is a huge debate about the Phillips Curve which is about the trade-off between unemployment and economic growth. Decent societies do not let people fall to the floor. 
I want to tell my colleague the Hon Dr Michael Cullen that he has done a superb Budget in that respect. It is about spending the surplus and spending it wisely because we are investing in the capital of this nation and in the people of this nation. What sold the Budget for me was watching the faces of the Opposition as Dr Cullen delivered the Budget. They know that they no longer have any place in the middle ground of economic debate. They know that the only way they will now get themselves a political niche is to move further to the right. That landscape has been taken by Rodney Hide and he holds it— 
Rodney Hide 
: All the time! 
MARK PECK 
: Yes on his own and he holds it well. This Budget sets out an agenda for further incremental improvement over time and as we get through the tough year coming up the Government has already signalled much more for those who need a hand-up and the ability to contribute to society. It is a good Budget; it is fiscally prudent. The numbers add up and it sets the agenda for an ongoing period of reform into the future. I know that the good doctor will write many more Budgets in the future. 
RON MARK (NZ First) 
: 
It would be nice to be able to say that it gives me great pleasure to rise and speak in this Budget debate but I guess for the men and women who patrol our streets at night there is very little in this Budget to give them pleasure. In recognition of those people I am wearing a police tie here in the Chamber today to demonstrate New Zealand First’s commitment to the police force and the focus we are giving in their support to scrutinising this Government’s books. New Zealand First takes the policing of our nation personally. It is not about politics it is quite personal because people like myself our deputy leader Peter Brown and our president Doug Woolerton all have siblings in the police force. We have a lot of family in the police force and we hear first hand off the ground the problems they are facing. 
For a start I will congratulate a couple of people on the Labour benches on receiving their Oscars. The first one is Rick Barker. He was nominated by the Mongrel Mob for his unforgettable part as a freedom-fighter in the political hit  
“Home Alone Detention” 
 and for the outstanding performance in his portfolio that saw people released onto the streets after being sentenced to jail for violent crimes. As a reward he got promoted. Boy some of us do not understand how things work over on that side of the House. I can name a number of people who deserve the job far more than that hapless character but he has an Oscar and he should take it home to show his folks. 
The other award is the one that Winston Peters gave Lianne Dalziel who keeps her head in the sand and ignores one of the major problems facing the police force today—a problem recognised by everybody except her her Government and her Minister of Police. That Minister got an amazing award from Winston Peters for—actually I think he should have got his award for outstripping the growth performance of the Minister of Finance. George Hawkins along with the Minister of Justice has produced higher growth figures in crime than the Minister of Finance has managed to achieve with his much-lauded economic control. 
Here is the real tragedy: despite the crime figures we are seeing and the increase in violent crime in particular nowhere in this Budget do I see anything to address a problem that is growing in Auckland and is now being talked about on the streets of Auckland. What is the dilemma that is facing our bobbies on the beat? It is escalating immigrant crime and it is the side effect of an open-door immigration policy that lets every Tom Dick Harry and Osama bin Laden into the country. People over that side of the Chamber put their hands over their ears and eyes and say: “Oh racists! Xenophobes! You are just whipping up public fear.” They should open the  
New Zealand Herald  
of 10 May and look at what the police are saying. For God’s sake I just wish that this Minister of Police this Minister of Finance this Prime Minister and this Minister of Immigration would read a paper! If they talked to the police what would they hear? For the benefit of those who do not listen the article states: “Asian students in Auckland are falling victim to kidnap and extortion crimes at the rate of one a week. … Police believe this is the tip of the iceberg and say many more similar crimes are not being reported by Asians who tend to shy away from dealing with the authorities for cultural reasons.” But some say that that is not happening! “Detective Inspector Gavin Jones the Auckland city district crimes manager yesterday linked a rise in kidnappings to the growing number of Asians in the city.” Hello! Is anybody listening out there? He saidextortion— 
Government Member 
: No one! 
RON MARK 
: Well the Government is not listening. He said extortion-type crimes amongst students were a big issue for Auckland police: “Reported kidnappings in the district have risen in the past three years”—that is Labour’s term of Government—“from three to 10 to 23 so far this year.” And there is more: “Mr Jones said kidnapping was a ‘crime more commonly committed by Asians on Asians’.” 
We are talking about a rising immigrant crime wave. The police are in the front line dealing with it and where in this Budget is George Hawkins’ focus? He is out to ticket everyone going to church. He has determined that the police will rake in $90.6 million in traffic fines. I was astounded that a quota sales system was not set up like the Ministry of Fisheries one where we would tender out the quota on the road put out the old net and trawl them in.George Hawkins would tender a quota for big trucks a quota for little nannies going to church and a quota for parents going to footy on a Saturday so that they could hook in all that money. 
What sort of money is this Government in its lousy Budget giving the police to deal with this rising immigrant crime wave? It is $17.49 million over and above the amount last year. That is pathetic; that is lousy; that is cheap. But oh no he sits there and the Minister of Finance reads out very seriously that the Government is putting in another $10 million to establish funding for two specialist teams that will concentrate on methamphetamine. Hello! What a surprise New Zealand—the teams already exist! They are not new; they have been operating for years; they are the AOS and the STG. That is baloney; that is flim-flam. It might well be that some money from that lousy $17 million increase is being slipped off to one side to prop up a task that has been going on but it is nothing new. It is smoke and mirrors. I would give George another Oscar for acting that one out. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: According to Speaker’s ruling 6/1 (Supplement) the member must not refer to another member by his first name. Please use his full name or portfolio. 
RON MARK 
: I would give George Hawkins another Oscar and another one because he is known. But this is deception—those teams already exist. The Minister of Finance has just told us that they are new teams; they are not. 
Where is the police focus going to be? It is certainly not going to be on relieving the pressure on those new New Zealanders who came to this country thinking that it was a safe society. It absolutely astounds me that this Government is saying: “Oh we are going to focus on safety in the community and we welcome in all these new New Zealanders. They are going to help build our economy but we don’t give a stuff if they get kidnapped murdered maimed bashed up and chopped up with meat cleavers because immigrant crime does not exist. Just because we are getting more immigrants in here doesn’t mean that this new crime profile actually exists.” 
Well it does exist. It has not been addressed in this Budget at all. It is more of the same: “Hear no evil see no evil pretend it will go away.” But it will only get worse—as the police officers in Auckland have already been brave enough to say. The crime has almost become a standing joke at the Auckland District Court where last month after dealing with his third such offender in a week a judge asked if it were “Chinese kidnapping season”. 
Dail Jones 
: That’s a judge! 
RON MARK 
: That is a judge. I have seen nothing from this Government to address that problem. Its own statistics—and it took a long time to get those out—show that the only figures it keeps on ethnicities are on Maori. Get that John Tamihere! Definite statistics are kept on the following ethnic groups: not known other Maori Indian and Negro. Why is that? This Government does not keep definite statistics on Filipinos or Koreans and I do not understand that. When I went searching through places of birth the statistics showed that the violent crime statistics of people born in China have rocketed by 297 percent in 5 years. 
Hon Member 
: How much? 
RON MARK 
: By 297 percent in 5 years! If members look at the statistics of people born in Hong Kong they will see that theirs have rocketed by 100 percent in 5 years. If we contrast those locations with Northland we see only a 13.9 percent increase in violent crime. Kiwi increases are way down immigrant crimes are rocketing and this Budget completely ignores the problem. The money going into that vote will be used for fishing for traffic tickets on the road as Mum and Dad go to footy on a Saturday. That is wrong. 
Ninety-two percent of people in this country told this Government to focus on violent crime serious crime and tougher law-and-order legislation. What do we have instead? We have Rick Barker letting violent criminals out into the street on deferred sentences and he did not even know he had done it. That member has had 4—coming up 5 and going on 6—years and we have not seen anything despite 9 years of promises about what he would do when he got here. The situation has only got worse and it is not going to get better with a Budget for the police like this one. 
DAVID CUNLIFFE (NZ Labour—New Lynn) 
: 
 Would the real National Party economic policy please stand up? Is it that of Don Brash who is backing Michael Cullen’s Budget of fiscal prudence and fiscal headroom or is it that of Bill English who says “The surplus is too big”? Why do the two of them not get together and actually talk about it so that they may agree on a single policy? We know why they do not: they hate each other. Don Brash is still learning politics 101 and he has not read up to the page that states one should not white-ant one’s leader if one does not have the numbers. Don Brash announced he was running against Bill English while Bill English was still shoring up his last gasp of votes. 
How did Bill English do it? He did it by playing the race card again—by promising to axe the Maori seats and in the process kissing goodbye to the very last Maori vote that National might ever have had. But Bill English cannot count. Otherwise he would have known that by 2020 one-third of our workforce will be Maori or Pacific Islander. If we do not have an inclusive social policy and an inclusive economic vision that brings those constituencies along and gives every New Zealander the opportunity to be the best that he or she can be then this nation will be the poorer for it. But that does not matter to Mr English. He just wants to keep his job away from Don Brash Gerry Brownlee Simon Power or any other National MP who can smell a political vacuum when he or she is in one. 
The message to Bill English is that when one is in a hole one should stop digging—but he did not do that. He said the Government “had abandoned the growth strategy” but Mr English was wrong again. There has been 4.4 percent growth which is one of the very best rates in the OECD. By definition we are on track to be in the top half of the OECD because we were at the top of the league table this year. At 4.9 percent we have one of the lowest unemployment rates in the OECD. There have been over 100000 new jobs created in the last year—that is 100000 people who are not receiving the dole and who are paying taxes. Success breeds success. That is why there is a $4 billion surplus on the Operating Balance Excluding Revaluations and Accounting Changes in this Budget. With the accrual basis we need to take out some paper re-evaluations for the Government Superannuation Fund and the Accident Compensation Corporation but that still leaves a healthy $1.3 billion surplus. Don Brash agrees with Michael Cullen saying he should not spend it but save it because there are rainy days on the horizon. 
But members should understand this. Even in doing that and in bringing forward the full superannuation contribution we have gross debt down to 23 percent of gross domestic product. That is below our own target of 30 percent and is below the National Party’s target of 25 percent. For the first time in our history since Prime Minister Vogel first borrowed money to build the railways we project that by 2008 the Crown will be a net creditor with no net debt at all. 
Bill English says the Budget does nothing to promote growth—that is rubbish. But members should not believe me; they should believe this. There will be $140 million over 4 years excluding capital for research science and technology. There will be $110 million over 4 years to implement the task force recommendations for biotechnology information and communications technology and the creative industries. There will be $73 million over 4 years to promote overseas trade. There will be $19 million for pre-seed business start-ups and $6.4 million for new business incubators. The Government is putting its fiscal punch where its strategy is. 
The growth strategy is not just about seed funding for new technology and new ventures. The Treasurer and Minister of Finance Dr Cullen has announced today a major review of the State-owned enterprises portfolio. Because of the State-owned enterprises’ size and strategic significance he said we need them to contribute to the growth objectives by giving optimal returns on taxpayers’ funds. In short if we are not to privatise them—and we are not—we had better ensure that they are well managed in the taxpayers’ interests. We also need to integrate the balance sheets of the State-owned enterprises portfolio into the Crown’s capital budgeting process. As the Minister notes the long-term hold review will not alter the fundamentals of the State-Owned Enterprises Act nor will it impinge on operational matters that are the preserve of the boards’ governance processes. This is a project whose time has come. 
I am a relatively new member of this House and it fascinates me that at about this time every year in the Budget process an enormous amount of time and energy goes into the new spending. In effect that is the last 1 percent or 2 percent of what the Government spends. I am very supportive of the Minister of Finance’s plans to have a value-for-money exercise run which looks at the other 98 percent of the money that we spend on a rolling basis throughout the year. I believe that is a very very sensible thing to do. It will ensure that the taxpayers’ investment is always spent wisely and that the returns on that investment are monitored wisely. I was in a select committee meeting today where I heard about some very good work that is being done in the Department of Child Youth and Family Services and I commend that work to the House. 
It is also very important to recognise that the growth and innovation framework is not just about the three key enabling sectors that we have prioritised. It is part of an ongoing drive to modernise not only the economy but also the Government’s own machinery. That is why we have brought through the review of the centre which looks at managing for outcomes not outputs—at getting the job done that we really want to get done and not just making and counting widgets. It also speaks to the whole-of-Government approach that we are taking to make sure that departments talk to each other about what they are trying to do that they work as a team and that they work in partnership with and not against each other. That is why we are talking about devolution—and I recognise my colleague the Hon John Tamihere here. We recognise that the devolution of Government services is sometimes to the community sector sometimes to the private sector and sometimes to the local government sector. The point is that the closer to the beneficiary of a policy the decision is made the more likely it is to be a good decision—a practical common-sense down-on-the-ground decision. 
That is why we want to modernise and streamline the State sector so that it is fast flexible and responsive to genuine human need. That is a 21st century type of smart Government in the public interest. It is neither the old-fashioned bureaucratic statist model of the 1960s nor the do-nothing hands-off we-don’t-care model of the 1990s which saw the gap between the rich and the poor in this country widen ever more. 
This Budget has a cool head and a warm heart. It maintains strong fiscal discipline and at the same time feeds into a monetary framework that allows interest rates to come down in order to boost growth. It is a Budget that runs healthy surpluses recognising the threats on the international horizon of severe acute respiratory syndrome (Sars) international instability and high exchange rates. It gives the Minister of Finance fiscal headroom to tackle the problems of the year ahead as he needs to do. But this Budget is more than that. It spends over $500 million per year on new health-care services and puts $167 million into new teachers for our children in order to reduce class sizes. It is a Budget with a social heart that will see us building hundreds of new State houses. As a west Auckland MP I can only commend that; the waiting lists for State houses are huge and growing. 
I am very very proud to be a member of a Government that has preserved its fiscal cool head and its social warm heart and I commend to the House the fourth Budget of the Hon Dr Michael Cullen who will go down in history as one of the very best Ministers of Finance that this country has ever seen. 
GORDON COPELAND (United Future) 
: 
 I welcome the announcement in today’s Budget that family support and child support tax credits will be adjusted for inflation from 1 April 2004. However I want to mention that the present rates were set in 1998 and United Future would have preferred to see a movement for inflation from that time but I welcome the announcement confirmed today that those questions will be addressed very seriously by the Government in next year’s Budget. I also welcome the reduction in tax rates on employer-funded superannuation schemes. 
I revert for a moment to families. There are a couple of comments I would like to make about what is in the Budget. Firstly I welcome the $11 million that has been set aside for a safe and positive parenting programme but I question the method of that programme’s delivery. The Budget states that it will be done via a media campaign. I would very much prefer the Government to issue vouchers to parents so that they could go along and attend positive parenting courses which would be provided by the great number of community and voluntary organisations in this country that already have very good programmes in place and indeed would encourage other organisations to develop new and innovative programmes because it is a very important area. 
One of the key parts of United Future policy which I am sure we will not see advanced in the term of this Government but which nevertheless we want to keep on the radar screen is income-splitting for couples who are raising children. Wherever I go in this country I find people coming to me and saying that they voted for United Future because of our income-splitting policy. There are many many families in this country where one of the parents has taken time out from the workforce—sometimes for just a short time—to raise his or her children. In those cases the other parent is paying quite a high rate of tax. It would be much fairer and more beneficial if they were able to split that single income fairly and pay reduced tax rates. 
I also say that while I welcome the reduction in tax rates on employer contributions to superannuation funds we need to go much further in that area. At the present time we are actually discouraging private superannuation savings. There is a maxim of public policy that says if one discourages something there will be less of it and if one encourages something there will be more of it. We need to do more to encourage private savings for superannuation purposes. I believe we should do that by providing a front-end incentive which would be a tax rebate on the first $2000 saved by a person each year. We also need as the Budget has signalled to straighten out the anomaly we have at the moment whereby the income earned by a superannuation fund is taxed at a rate that is much higher than the marginal tax rate of many of its members. 
 I must say too that I would have preferred to see the Government take this opportunity to make some fundamental changes to the tax system. Earlier this week we saw the Australian Government reduce taxes for the average Australian and as far as I know the sky has not fallen in across the Tasman. 
With the surpluses this Budget has delivered—and I applaud those—we could have helped ease the tax burden on families and businesses. Changes that I will continue to push for include an adjustment to the present tax bands for inflation since 1 April 2000. This would have given all taxpayers a reduction of somewhere between $1.16 and $16 per week. Failure to make that adjustment amounts to an increase in taxation something that the Government specifically pledged it would not do. In the longer term I would also like to see the tax bands shifted in the direction of a flatter set of tax rates. 
I also want to continue to advocate that the company tax rate be lowered immediately from 33c to 30c. This would give immediate benefit to the approximately 65000 companies in New Zealand that form the bedrock of our economy. Tax reduction at that level would be an immediate spur to new investment and the creation of new jobs. It would make New Zealand business competitive internationally and attract overseas investment to this country. At the moment New Zealand businesses are hampered by the fact that their capital costs are higher than in many overseas jurisdictions including our nearest neighbour Australia where interest rates are currently 0.75 percent less and have been 1 percent less for most of the last 10 months or so. 
The major difference though between what United Future perhaps would have done in this Budget and what the Government is doing is to do with the ideology that governs Government expenditure. Were we the Government we would want to encourage the private provision of tertiary education health services prisons and roading so that we had a mixture of private and public provision in those areas. I believe that would mean that all New Zealand taxpayers would get more bang for their buck. We would have better outcomes it would save the taxpayer money and I believe that the resulting competition would be healthy for all concerned. It is a pity in my view that the State provision of those things is core Labour Party policy because I think common sense would say that we could achieve a lot better outcomes by shifting the base a little. 
I would also like to talk specifically if I may about some balance sheet issues tonight. The Budget indicates that Government debt is well inside the target the Government has set for itself and of course I applaud that. But it does mean that there is capacity to borrow money specifically for roading and other transport infrastructure developments. New Zealand has a triple A rating at Government level and roads typically have a 60-year life. For example the road between here and the Hutt Valley is well over 60 years old. This is the perfect situation whereby the Crown using its high credit rating which would give it a very very competitive interest rate should be planning to borrow so that we can get ahead and build the roads we need particularly in Auckland where gridlocking is costing the country $1 billion. 
I also want to comment on the Land Transport Management Bill. I believe that in that bill we should leave open all the possible options and scenarios for funding roading. It makes no sense to me that we should hamstring ourselves and say yes it can be done one way but no it cannot be done another way. We have given local government in this country a power of general competency yet for some reason this House does not seem to be prepared to give Parliament itself if one likes a power of general competency—in other words that we can look at common-sense solutions and innovative funding solutions for getting on with roading and infrastructure development and we badly need to do that. 
The other thing about this Budget that troubles me is that it forecasts an increase in our already quite large balance of payments deficit of $26 billion over the next 4 years. That is an average of $6.5 billion per annum. That is a worry because New Zealand is already an indebted country. We are indebted at this stage to the tune of about $70 billion—not of course from Government borrowing which is very low but through private borrowing. 
 If we look at the balance sheet of the nation we see that it is like having a massive mortgage on a house and we need to address that because far too much of the income we earn here has to go off shore to service that very very high level of overseas debt. In that situation too it is wrong for the New Zealand Superannuation Fund to contemplate investing so much of its money overseas. I go back to the analogy. If one has a mortgage on one’s house most investment advisers will say that the first thing one should do is pay down the mortgage. We have a big mortgage on this nation’s balance sheet and we should be paying it down. My specific suggestion is that the Government should lend the New Zealand Superannuation Fund guardians the money that is going into the fund at the 10-year Government stock rate then let them use their investment expertise to try to cap that—to try to make something more for the Government. But it is fundamental that we look at reducing our debt. [ 
Interruption 
] It would just change the whole way in which they invest those funds. 
The last thing I would like to mention has to do with population growth. United Future believes that we should be deliberately growing the population of this country to add at least 0.5 percent per annum to gross domestic product growth. More people means more productivity. It means that there will be people around to actually pay pensions. When I hear people railing against immigration I think to myself sometimes: “Well who do you expect to pay your pensions?”. We have a real problem in New Zealand—that is that many of our young bright people go and live in Australia. That will have a great effect on New Zealand’s demographics in terms of the number of elderly as we move forward. Therefore in United Future’s view we have no option but to offset that with positive net immigration aimed at a target figure and against some policy settings. 
Debate interrupted. 
The House adjourned at 5.57 p.m. 
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