Brash Don: Appropriation (2004/05 Estimates) Bill — Third Reading Imprest Supply Debate 
Brash Don: Appropriation (2004/05 Estimates) Bill — Third Reading Imprest Supply Debate 
[Volume:619;Page:14947] 
Dr DON BRASH (Leader of the Opposition) 
: 
 Members will not be surprised to learn that I disagree with almost everything the Minister said and I rise to oppose the resolution. It is very clear that there are now two quite different visions for New Zealand and one is of smugness and complacency which sees everything in the garden as rosy. The reality is that when this Government came to office in late 1999 the economy was growing at almost 5 percent per annum. Why? Basically it was because the 1980s Labour Government—and let me give credit to that Government which was very different from the present Labour Government—and the National Government of the 1990s carried out reforms that put this economy in a great place to grow. And in addition we saw a steady decline in the New Zealand exchange rate starting in 1997 which gave a huge boost to New Zealand export industries and to agriculture in particular. 
Growth has also been quite good since then; let us be frank about that and I acknowledge that. But why? Let us look at it again. It is because of the reforms of the 1980s and 1990s and the declining exchange rate through 4 years and then an uncertain world environment which produced a flow of immigrants from poorer countries into New Zealand over the last couple of years. There was a big flow in the years 2002 and 2003. It is very clear that over the last 10 years growth has been caused by factors that have nothing to do with the present Government’s policies at all—nothing at all. 
Let me quote from the last OECD report on New Zealand. It states: “Underpinning this improved performance over the last decade has been the programme of reforms that began almost 20 years ago. These reforms have boosted the economy’s sustainable growth rate and its resilience to recent adverse shocks. The slide in relative living standards vis-à-vis the OECD average seems to have been arrested but”—and this is a very important qualification—“a further acceleration necessary if New Zealand is to move back into the top half of the OECD as the Government is intent on doing is still not in sight.” 
That is the reality. The good growth we have seen has nothing to do with the present Government’s policies. The Minister seemed to imply that more regulation more holidays and more taxation would somehow increase the growth rate. That is what he seemed to be saying. I do not know of any objective observer who would say that more regulation more taxation and more holidays would improve our growth rate—not any. [ 
Interruption 
] 
Madam DEPUTY SPEAKER 
: I want to warn members that this constant barrage is not allowed. 
Dr DON BRASH 
: I make the point that the OECD report went on to say that many of the Government’s policies—its policy on company tax rates its policy on infrastructure its policy on the Resource Management Act its policy of picking winners its policy on the labour market and its policy on welfare—were damaging our growth prospects. That was in the OECD report. The reality is that the current gap between our income and that of Australia—about $200 per week—shows no sign of reducing and if the Government projections on both sides of the Tasman are correct the gap will continue to get wider. Yesterday I was in mid-Canterbury and a pharmacist complained to me that she could not—[ 
Interruption 
] 
Madam DEPUTY SPEAKER 
: There has been a fair amount of interjection on both sides. That is just too much. 
Hon Bill English 
: I raise a point of order Madam Speaker. As is your right you stood from the chair previously to intervene about the constant stream of interjections. Since then both of the Government whips have interjected almost continuously—in fact I think they got worse after your intervention. You have now risen again and intervened after waiting for a good period to see if the interjections would drop off—and they did not. I think the House would like reassurance that if your intervention is ignored again particularly by the Government whips who are responsible for order amongst the Government benches you will take decisive action. 
Hon Dr Michael Cullen 
: I think the member makes a fair point but I point out that during the 10 minutes that I spoke I was subject to constant interjections from Mr Ryall Dr Nick Smith Dr Lockwood Smith Mr Simon Power and a number of others who could not control themselves for the entire 10-minute period—to the point where I was tempted to find the pharmaceutical cabinet to try to help them during the process. 
Madam DEPUTY SPEAKER 
: There has been a barrage of interjections from both sides as I indicated and I will certainly take action. I have warned members on both sides. 
Dr DON BRASH 
: The reality is that if the projections of the two treasuries are even approximately accurate the gap between our living standards and those of Australia will continue to get wider. Over the last 5 years we have seen approximately 25000 Kiwis net leave this country each year most of them going to Australia. If the gap keeps getting wider we will have a situation whereby nurses doctors teachers plumbers builders you name it will continue to leave. In that sense New Zealand is like other Pacific Islands where the reality is that their most skilled people continue to leave. That is the situation we face. 
The other vision for New Zealand is that of the National Party. Our vision is of a country that is growing so that we can reduce the gap between our living standards and those of Australia. It is a vision whereby every child leaves school able to read write and do basic arithmetic. It is a vision whereby people get off welfare and do not stay on it year after year decade after decade. It is a vision whereby everybody is treated equally under the law whether they be Maori Pacific Islander Asian or of European descent. [ 
Interruption 
] 
Madam DEPUTY SPEAKER 
: That has been ruled out previously. I say to the Government whip that it will not be tolerated. 
Dr DON BRASH 
: The Government has basically given up on what it repeatedly claimed was its highest objective—namely getting New Zealand back into the top half of the OECD. On present projections that will not happen in the next two decades and we certainly will not overtake Australia any time soon. 
The Budget projected that growth over the next decade will be on average about 1 percent slower than over the last decade. The Budget simply fails to deal with the real issues facing this country. The Government claimed in the Budget that it wanted to encourage people off welfare and into work. What does the Budget do? It raises the effective marginal tax rates for people trying to get off welfare and into a job to between 80 and 90 percent. Let us take the case of a one-income family earning $38000 per year. It has two young children and is living in an average suburb in one of New Zealand’s major cities. The impact of the Budget is that by 2007 that family will take home about $43000. In other words it will take home more money than it earns. Contrast that with its neighbours earning $60000. What will they take home? They will take home about $45000 which is a difference of just over $2000—about 50 bucks per week—for earning an extra $22000 per year. That is supposed to create an incentive for people to get off a benefit and into employment. It is supposed to create an incentive for people to get more skilled. Who would get more skilled with a 90 percent effective marginal tax rate? 
This Budget might be excused for failing to fix the growth problem if it actually did something useful to get people off welfare and into work. The sad reality is that an 80 to 90 percent effective marginal tax rate simply will not achieve that. The Government’s vision is limited and mediocre. The Government rests on the laurels of the 1980s and 1990s and frankly if this is the best we can achieve we simply will not deliver the kind of New Zealand we want for our children and grandchildren.