Cunliffe David: Debate on Budget Policy Statement 
Cunliffe David: Debate on Budget Policy Statement 
[Volume:670;Page:17055] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 This is the first opportunity I have had to address the House since the terrible events of 22 February and may I please at the outset take this opportunity to extend on behalf again of our caucus our sincere condolences and our heartfelt support to the people families and businesses of Christchurch. We are making every attempt to keep the tone of our interventions in keeping with this sad time but there are real issues in this debate which are made more pressing not less pressing by the events of the Canterbury earthquake. So it is appropriate to deal with them in this context. 
I wish it were true—in the words of the Minister of Finance who has just returned to his seat somewhere else—that everybody in the country was going through the same thing. It is not the case because some people in this country have been suffering more than others and that is part of the problem. Of course the people of Canterbury have suffered the most of all and our hearts are with them and our resources will be behind them. But that is not the only terrible unfairness that is going on at the moment. Some people in this country have had massive tax cuts and some people in this country have benefited from record export prices. Other people get stressed and depressed every time they go to fill up the petrol tank in the car or get a trolley load of groceries at the supermarket. Their incomes have not risen for several years; they have gone backwards in real terms. Those people are struggling to feed their families in the face of ever-rising prices and a higher and higher cost of living. We are getting to be two New Zealands not one. 
Under National New Zealand is going backwards. National does not have a plan to get our whole economy going and to lift all boats. National is terribly out of touch with ordinary New Zealanders. Those Ministers received their big tax cuts—each better than $240 a week. Someone on the minimum wage received 25c an hour. They received 25c an hour in the latest adjustment to the minimum wage. There is nothing fair about that. Someone earning a $1 million a year received $1000 a week back in tax and the country had to borrow an extra billion over 4 years to fund it. In the process the Government has been mortgaging our children’s future. Not only has it cut funding for research and innovation but it has refused to contribute to the New Zealand Superannuation Fund. Ironically that is about the only fund that is driving the Government’s books back towards balance at a very difficult time. The fund is up $3.47 billion. That is the very fund that the Government refused to pay into. The Government is stealing from tomorrow to make short-term tax cuts for people who do not need them today. That is not right; it is just not right. It was not right before the earthquake and it is certainly not right now. 
Before going into the symptoms and the causes of those problems can I just again note the double talk that we are getting from the Minister of Finance about the legacy that the Government inherited. He said in December 2008 that the Crown’s books were “left in reasonable shape” that the Labour Government had saved for a rainy day. What did reasonable shape mean? It meant that we were in credit to the tune of 4.7 percent of GDP by the time the assets of the New Zealand Superannuation Fund were taken into account—net credit. We have a net Crown debt now above 20 percent of GDP and rising. But that is on the current Government’s watch not the previous Government’s so let us be very clear about the historical legacy. If the Minister was being fair in December 2008 why can he not continue to be fair about it now? 
Of course we regret the events that have happened to the country beyond anybody’s control and we must pull together to address them. But the way to do that is to have a plan that provides a way forward for all New Zealanders and not just some. National is not working for every New Zealander’s family and every New Zealander’s future. Labour will give New Zealanders a fair go and make sure that everybody pays their fair share. We will protect the assets that have been built up by generations for our future and for our children. 
The raw truth is that the New Zealand economy was going backwards well before the earthquake hit. The Budget Policy Statement shows that even before the earthquake the economy was heading in the wrong direction. In the third quarter of 2010 growth was minus 2 percent. We checked with Treasury this morning and its latest estimate of growth in the fourth quarter was zero percent if not negative. Everybody is now saying that the first two quarters at least or probably most of 2011 will be negative. We are in another recession. This is not the global financial crisis recession; this is National’s recession. It has been in power for 2½ years and it is solely responsible for the policy framework that has driven us backwards. 
What is the essential error in National’s plan? Well firstly it does not have a plan. Secondly such actions as it has taken have taken from some who could not afford to give and given to others who did not need to get and borrowed in the process. That brings us to the great debt deception that has been exposed by the earthquake. The Government said in its Budget Policy Statement that this debate reviews that the country’s international debt was so high that it would have to cut new spending from $1.2 billion to $0.8 billion in order to balance the books—that Government debt was the problem. That flies in the face of the truth which is that 90 percent of New Zealand’s high international debt was not Government debt; it was private debt. It was private debt that was built up by people borrowing to bid up each other’s house prices and make their bankers rich—bankers like the Prime Minister. 
Borrowing for housing speculation made this country at risk. When that was happening what was Bill English saying? He is an expert on housing. He was saying: “Tax cuts.” That would have inflated the bubble more and it would have prevented us from building up a Government surplus for a rainy day which he at least had the grace to acknowledge in December 2008. If we had followed his advice then we would be in a worse position now with less in the kitty to fund the earthquake recovery and less to cushion us from growing international debt. 
The second part of the deception is this: if it was a priority on 21 February to cut Government services and maintain tax cuts in order to pay down debt why is it that after the earthquake the whole cost can be put on to international debt and that once again those who could afford to spread the cost are immune? Why is it that the wealthier New Zealanders those on very high incomes who got the bulk of the windfall in the 2009 and 2010 Budget tax cuts are immune from any revision of the tax rates that would help spread the cost? 
Why is it that it is now OK to put what we cannot save straight on to international debt which was the very thing a month ago that the Minister was railing against even though it would mean fewer doctors fewer nurses fewer policemen fewer firemen and fewer people who would be there in the process? 
What did the Minister say to the Finance and Expenditure Committee? He said to public servants: “Don’t dish up waffle. Go and find a new job.” Those were his words and they were precisely the same public servants who have come up trumps—come up trumps—in the response to this tragedy. I ask where we would be without a professional Public Service with the very people whom this Government was running into the ground to fund its tax cuts. It is a great great shame that it has taken something as tragic as the Christchurch earthquake to prove the untruth that it was all the Government’s fault. It was never the Government’s fault. It was 90 percent private debt because everybody in New Zealand—you and me included—borrowed to bid up house prices and build up private debt. That was the folly. Yes New Zealand is paying for it— 
Hon Trevor Mallard 
: Not me; I live in Wainui. 
Hon DAVID CUNLIFFE 
: —oh well there we go—but the solution to that is not to run the economy down by cutting the Government’s Budget to the point where it cannot be a force for good.