Parker David: Address in Reply 
Parker David: Address in Reply 
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Hon DAVID PARKER (Labour) 
: 
 May I begin my contribution by congratulating John Key and the National Party on its election win and its support parties—the ACT Party the Maori Party and Peter Dunne—on their role in Government. I also give a warm welcome to all new MPs across the House. It is a wonderful privilege to be elected by our fellow New Zealanders to represent their interests in Parliament to have the faith of the people in our ability to help make decisions to improve our country and make it a more prosperous peaceful and safe place for our fellow citizens and to look after the wonderful environment that surrounds and sustains us and which if protected will sustain future generations. 
I will divide my contribution into three parts. The first is to try to put on record the state of affairs that the Labour Government left New Zealand in and to explode some of the myths that National is trying to write into history about the—in its view—difficult set of circumstances it has inherited. I will then touch on the international events that are upon the world before returning to the issue of unemployment in New Zealand. 
In its presentations in this debate particularly those made by the Minister of Finance the National Government has already tried to rewrite history. It has repeatedly stood on its feet and said the previous Labour-led Government left the affairs of this country in a poor state when it is absolutely clear that the contrary is true. When the previous Government took power gross Government debt stood at 38 percent of GDP. When we left power it was at 20 percent of GDP—20 percent of GDP—the third-lowest level of Government debt in the developed world. The previous Government left the Government accounts in a very very good fiscal position. 
I contrast that with the calls for tax cuts heard not just from National members but also from the fourth estate. I have before me particularly strident editorials published by the  
New Zealand Herald 
 and the  
Dominion Post 
 during 2007 which stated that the Government should not have been running surpluses and reducing debt but should have been paying that money back in tax cuts. That would have meant that the Government’s debt would be higher now. I think history already shows that the wise stewardship of Dr Cullen Helen Clark and the Labour-led Government was correct in running Government surpluses during a time of plenty so that Government debt could be reduced. The affairs of the State are now in very good order amongst the best in the world. The incoming National Government has a lot of room to move compared with the state of affairs in other countries and compared with what the position would have been had the previous Labour Government acceded to what were incorrect calls for inappropriate levels of tax cuts which would have resulted in the present Government not being able to afford decent social provision during the recession we have now entered. 
The second point that the National Government tries to suggest is that unemployment is somehow all Labour’s fault. The Labour Government reduced unemployment very successfully. In the last 2 years New Zealand has had if not the lowest rate of unemployment in the developed world then the second-lowest. We have flipped with South Korea between having the lowest and second-lowest unemployment rate. That is the standout performance of the previous Labour Government. People know that sharing employment is the way to share wealth to share a meaningful place in society and to reduce crime. Despite the fact that New Zealand has some problems with violent crime there is no doubt that overall levels of crime have been reduced significantly along with the unemployment rate going down. 
National would have us believe that it is on the side of the little fellow that it has constructed its tax cuts for the benefit of the little fellow when we already know that its tax cuts before Christmas came at the expense of low to middle income people in order to give more generous tax cuts to those who were already well off. That was proven by the veto put on the Table by the Minister of Finance Bill English showing that an amount of three-quarters of a billion dollars was coming out of those lower income groups to pay for tax cuts for those who are more well off. 
I will now turn to international events. There is no doubt that the world is entering the most serious recession that I have seen in my lifetime. The effects on the world will be dire. In my opinion the standout public policy challenge for the world in the next decade is how to deal with unemployment. We will see hugely rising unemployment rates around the world. Indeed some estimates—and I think they are about right—are that unemployment in developed countries and in the industrialising developing countries could rise by 6 percent or 7 percent above existing levels. A 6 percent or 7 percent rise in unemployment levels is unsustainable over the longer term for most countries particularly countries that unlike New Zealand do not have low levels of Government debt already. The United Kingdom is already burdened with levels of debt close to 50 percent of GDP rising unemployment and a very very difficult decade or two ahead of them. 
Hon Member 
: What did they do wrong? 
Hon DAVID PARKER 
: What they did wrong was that they did not bank surpluses in a time of plenty. They paid them all out in tax cuts as National would have done and they are in the cart now. 
The real difficulty arising over the medium term for democracies in the Western World is that if they have high levels of unemployment for a prolonged period and already have high levels of Government debt and are running Budget deficits then they will very quickly get into the position that Muldoon’s National Government left New Zealand in the 1980s whereby Government debt spirals and interest compounds from year to year. It is a difficult position to get out of. 
The sad reality is that at the end of this recession—and this recession will end eventually but it will be some years before it ends internationally—the world will have a hangover of residual overcapacity in virtually everything. It will be in everything from finance—which we know has massive overcapacity because of the fictitious profits that were created in derivative transactions—to resource recovery in countries like Australia to consumer goods production in China and everywhere else in the world and to large manufactured items like trucks and cars all over the world. You name it the world will have overcapacity in virtually everything at the end of this recession cycle. So the danger for the world is that we will come out of this recession cycle and will not have even a medium-term sharp rise in employment—that is the world faces the prospect of prolonged high unemployment in a way that threatens the viability of a lot of democracies. This is very serious. 
I come now to New Zealand. New Zealand’s position is not as dire as that of most other countries partly because Labour left the Government’s finances in good shape. 
Craig Foss 
: Oh! 
Hon DAVID PARKER 
: No—that is undoubtedly true. It is also partly because of the mix of New Zealand’s exports. New Zealand’s exports remain primarily food-related. Although demand for cars might halve demand for food will not. Prices might drop but demand will not halve. Although New Zealand will be hit by this recession we will not be as hard hit as other parts of the world. 
I put all this on record because against that background New Zealand should be judging the performance of this National Government in terms of rises in unemployment very harshly because New Zealand is better placed to weather this recession without having a large rise in unemployment than most countries are. It is interesting to note that some of the microeconomic decisions that have already been taken by this Government are already increasing unemployment instead of decreasing unemployment or increasing employment. 
Shane Ardern 
: How do you work that out? 
Hon DAVID PARKER 
: It is already on record that the unnecessary demise of the biofuel legislation caused the demise of a number of small enterprises—small businesses which members opposite say they stand for—and a loss of jobs. It is already on record that the unfortunate comments made by Mr Key that the Government would suspend the emissions trading scheme rather than just review details of it caused a loss of inward direct investment into the forestry industry worth hundreds of millions of dollars and caused the loss of the carbon service industry. The abolition of the research and development tax credit in order to pay for bigger personal tax cuts for those who are already well off will have a deleterious effect on unemployment. 
The latest infrastructure package does not have one significant infrastructure project south of Christchurch. [ 
Interruption 
] This is news to National but we pay tax in the lower half of the South Island too. There is nothing in that package of any significance for the lower half of the South Island. Not only do National and the Maori Party insult the southern half of New Zealand by not sending a representative to the only official Waitangi celebration in the South Island but also they add to that insult the injury of not having our fair share of this infrastructure package. It is wrong.