English Bill: Budget Debate 
English Bill: Budget Debate 
[Volume:608;Page:5773] 
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.